The firm which bought the Drakelands mine near Plympton for £2.8million 18 months ago has completed a feasibility study and is now looking at options for reopening the site.
Tungsten West Ltd has said it will look to raise finance off the back of the feasibility report, and that it will cost £30million to £40million to restart production.
The company acquired the mine at Hemerdon, on the edge of the city, in 2019 when previous owner Wolf Minerals Ltd went into administration.
Since then the company has carried out initial test work and discovered the ore, thought to be the largest reserve outside of China, was ferberite and not wolframite, which meant a new processing route had to be devised.
In 2020 the firm said modifications, rebuilds and other restart costs were predicted to fall between £30million to £40million, with a six-month rebuild time before the mine can be in full production again.
Tungsten West today repeated that its objective is to reopen the mine, but could not comment on the amount it would cost or the financing method “as all options are being reviewed”.
Max Denning, chief executive of Tungsten West, did say: “It is our firm intention to bring the Hemerdon mine back into production and we are currently looking at various options at how best to do this.
“We have a strong commitment to responsible mining practices at Tungsten West, and we will be applying the highest industry standards to this mine.”
When Tungsten West bought the mine it said about 200 jobs could be created and now Mr Denning says: “We believe that this project will bring significant social and economic benefits to the South West of the UK whilst also being strategically important for the wider UK as Tungsten becomes an increasingly essential commodity.”
Tungsten prices fell to a record low in July 2020, but have since recovered, However, with Covid levels still high in some parts of the world, there is potential for fluctuations.
Global vehicle production has been stifled by the pandemic, and the move towards electric vehicles throws a shadow over demand for tungsten, which is used extensively in the automotive sector.
However, other markets are growing, including use in so-called “superalloys”, which are strong and heat-resistant, and in semiconductors as the pandemic increases use of tech devices.
In 2020, Mr Denning said Tungsten West’s lower operating and production costs put it in a strong position, as does the fact that production is dominated by China and therefore Tungsten West could benefit from guaranteeing security of supply.
He said the company was in talks with several potential customers and also renewable power projects which could provide green energy for the site.
The mine shut when previous owner Wolf Minerals Ltd ceased trading, having lost £100million on the venture, in late 2018.
It meant that firm, which owed £70million to creditors, made about 200 staff redundant overnight. The mine only began production in 2015 but just over three years later closed with Australia’s Wolf Minerals going under. That was because it failed to produce enough metal, saw global prices tumble and was saddled with enormous debts.
There were fears the Drakelands mine could close as early as 2016, and so when Wolf finally went into administration on October 10, 2018 it seemed like the inevitable conclusion to a doomed venture.
Wolf Minerals wound up having to tell the London Stock Exchange it was no longer in a position to meet its short term working capital requirements and ceased trading immediately, sending home more than 200 workers.
In 2019 Tungsten West bought the land and some infrastructure from a firm called Drakelands Restoration Ltd, part of the North East’s Hargreaves Services Plc, which took over the vast site in 2019. Hargreaves Services lost £8million in the doomed Wolf Minerals venture.
Tungsten West’s largest shareholder is Guernsey-headquartered Baker Steel Resources Trust, part of a group of Baker Steel investment businesses, specialises in mining and minerals and has a global portfolio, mainly in equities, of 15 predominately unlisted natural resources companies.
Financial statements to the year ending March 31, 2020, revealed the London-headquartered company had net assets of £5.57million.
