The company which owns Plymouth’s vast Hemerdon tungsten mine is to start selling shares on the London Stock Exchange which will value the business at £106.2m and allow it to fully start production.
Tungsten West Plc said the intention to proceed with an initial public offering (IPO) would net the firm £39m before expenses. And it said it already has raised £36m from investors which means it is expecting to have enough cash to fully start production at the mine on the edge of Plymouth.
Tungsten West Ltd, which bought the mine out of receivership for £2.8m in 2019 has previously said that full production could be possible as soon as late 2022.
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About 50 people are currently employed at the Hemerdon mine, but this is forecast to rise to about 300 once full production is met. Hemerdon is the second largest tungsten reserve in the western hemisphere, and the third largest in the entire world.
Tungsten West will now offer 65,000,000 new ordinary shares, about 36.7% of the issued share capital of the company, at £0.60p per share and has applied for admission to trading on the Stock Exchange’s Alternative Investment Market (AIM).
Admission is expected to occur at 8am on October 21, 2021, with a market capitalization, the overall value of the company, of about £106.2m.
The net proceeds of the float, together with the £36m project financing from a fund managed by Orion Resource Partners, will be used by the company to carry out £44.6m of improvement works at the Hemerdon Mine and bring the mine back into commercial production.
Also, £12m of the cash raised will provide general working capital and £3.1m will be used to pay fees and expenses related to the share issue.
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Tungsten West directors believe the IPO and admission to AIM will raise the profile of the business and its products and provide a supportive platform on which to grow the business further through in-licensing of additional technologies or selective acquisition.
Max Denning, chief executive of Tungsten West, said: “We are pleased to announce our decision to list Tungsten West on the London Stock Exchange’s AIM market, providing the opportunity for 海角视频 stakeholders and interested parties to invest in the 海角视频-based Hemerdon mine, the third largest tungsten resource in the world.
“In addition to being exciting for the 海角视频 mining sector to have a project that is in the advanced stages of development, the mine will be producing strategically important materials that are vital for the manufacturing of new technology, including those that will aid the 海角视频 in its net-zero goals.
“With the proposed £39m raise announced today, and the £36m funding package from Orion, we will be fully funded for the development of Hemerdon back into production.
“We look forward to welcoming new investors into this compelling business and working with all our stakeholders to ensure that the newly reinvigorated Hemerdon mine is a beacon of mining excellence in the 海角视频.”
Tungsten West’s Bankable Feasibility Study has shown an extensive reserve of about 63.3Mt (metric tons) at 0.18% tungsten and 0.03% tin, as well as 37.4Mt of saleable aggregate material. The company estimates that the life of mine is currently 18.5 years with the opportunity to extend this through future investment.
Tungsten is used to make drilling and cutting tools which are used widely in the tech sector and in construction and automotive industries, and is likely to be in even more demand when electric car production is increased in the next few years.
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Tin is vital for circuit-board production, and the mine single-handedly made the 海角视频 the 15th largest producer in 2018, and with the potential to crack the top 10.
The Hemerdon Mine already has the majority of its infrastructure in place, with previous owner Wolf Minerals Ltd having invested more than £170m into the development of the mine and its processing facilities, which include an open pit mine, mineral processing facility and mine waste facility.
With a substantial amount of existing infrastructure, the development costs associated with re-starting the mine are estimated to be £44.6 m. This existing infrastructure also means the rebuild is only expected to take 12 months, with parts of the restart project already underway.
Having acquired the mine out of receivership, Tungsten West completed a significant amount of work to enable it to understand and address the issues historically experienced by Wolf Minerals, including a 6,113m geological exploration drilling programme and several technical studies.
The company has identified the past issues experienced by Wolf Minerals that required rectifying. One of the main issues was a poor mineral process route design, with several items of equipment causing plant downtime and hindering the recovery of the tungsten and tin.
Tungsten West has therefore designated a substantial proportion of its rebuild costs to modifying and updating the processing plant and expects operating time to improve from about 53% under previous operatorship to the industry standard of about 81%.
Tungsten West has also implemented a number of initiatives to ensure minimal impact on the surrounding environment and community, including optimising the plant’s Low Frequency Noise to ensure minimal environmental impact.
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Since taking over the Hemerdon Mine, senior management have kept a regular and open dialogue with communities, engaging with stakeholders to establish a transparent relationship. The mine will provide multiple job opportunities, many of which the company will be seeking to fill from the population in Plymouth and Devon.
Philip Clegg, portfolio manager of Orion Resource Partners, said: “Orion is delighted to make its substantial investment into Tungsten West, securing the recommencement of mining in the South West of the 海角视频 and the creation of new jobs. We look forward to supporting the Tungsten West team as they rebuild Hemerdon, restarting production of a suite of raw materials critical for the technology, decarbonisation and construction sectors, locally and globally.”