Drakelands tungsten mine could raise its annual ore throughput to approximately 3.8 Mt as the company has received permission from the Devon District Council to operate its crusher seven days a week.
Drakelands is an open pit mine in Devon owned by London-listed Wolf Minerals. It started production in September 2015 and says it should be one of the world’s most significant producers of tungsten outside of China by the end of this year.
Since Drakelands started production, low tungsten prices and processing plant problems caused revenue to be lower than projected and this has had an impact on cash flow and debt repayment.
However, the company sought to address its cash flow problems during 2016: it has secured short term bridging finance and, with the extension of mining permissions to 2036, Wolf has been able to reschedule its debt repayments beyond 2021.
This landmark decision allows the company to mine its current reserve and to align its debt repayment schedule more closely with the improved life of the mine.
The Drakelands processing plant is designed to process coarser ores than have been treated in the ramp up to full production. To address this, Drakelands has been forced to reduce the flow rate of ore feed, which has led to a shortfall in tonnes processed and concentrate produced.
However, mining is transitioning to harder, coarser ore over the next 12 months. This type of ore will allow efficient plant operation and improved recoveries. In fact, the performance of the plant has improved since the start of 2016 and the September quarter saw a significant upturn in ore processed and tungsten produced.
Tungsten concentrate prices improved in October and are once again trading in the $195-205/mtu range. Wolf’s management believes that the current over-supply situation in the market will tighten as it expects to see less material exported from China, and little new supply from projects, while demand should pick up on forecast GDP growth. However, this could take some time to come to fruition.