Wolf Minerals Limited Quarterly Activities Report (3787N)

TIDMWLFE

RNS Number : 3787N

Wolf Minerals Limited

29 January 2016

29 January 2016

Wolf Minerals Limited

Quarterly Activities Report

For the Three Months Ended 31 December 2015

Specialty metals producer, Wolf Minerals Limited (ASX: WLF, AIM: WLFE) ("Wolf" or "the Company") is pleased to provide the following update on its recently developed Drakelands open pit mine ("Drakelands") at the Company's world class Hemerdon tungsten and tin project in Devon, southwest England, for the three month period to 31 December 2015 (the "Quarter").

Highlights for the Quarter include:

ü Ramp-up of the processing plant at Drakelands underway following handover from GR Engineering Services ("GRES") late in September 2015 quarter.

ü Commenced site works for a replacement public road to facilitate future development.

ü Submission made to Devon County Council to extend the term of the Drakelands planning permission to 2036.

ü Total cash expenditure of A$18.2 million for the quarter.

Commenting on the Quarter performance, Wolf's Managing Director, Russell Clark said:

"The handover of the processing plant in the latter part of the previous quarter was a major milestone in the development of Drakelands. The focus in the December Quarter was on understanding the plant in an operating environment and building plant run times.

"The Company is looking towards the longer term and to this end has made an application to extend the life of the Drakelands planning permission as well as undertaking a number of geological projects to further improve understanding of the orebody."

Drakelands Operations

Overview

The weather during the Quarter was variable, with good progress made in the mine and Mining Waste Facility ("MWF").

Wolf took control of the Drakelands processing plant from GRES in late September 2015 and during the Quarter the Company focused on its personnel gaining experience in operating and maintaining the plant.

The trial of 24 hour operations, seven days a week, in the processing plant is continuing. The Company is keen to maintain this arrangement and remains engaged with the Devon County Council and the local community to achieve this objective.

An application was submitted to the Devon County Council during the Quarter to extend the duration of the planning permission at Drakelands. The planning permission was granted in 1986, with a 35 year life, and an extension is being sought until 2036.

There was one lost time injury during the Quarter when an employee on night shift slipped on steps within the processing plant hurting his leg. Safety is a core value of Wolf and extra inspections of all handrails and lights within the processing plant have since been undertaken as part of the Company's safety effort.

The total cash expenditure for the Quarter was A$18.2 million, including A$11.3 million on development and A$3.4 million on production, as the Company transitioned into the ramp-up of the processing plant.

Mining Activities

A total of 471,229 bank cubic metres ("BCM") of material was mined during the Quarter with activities predominantly focused on the extraction of ore from benches on the western side of the pit.

A series of trial blasts were successfully completed in October with ground vibration and noise data collected. Blasting on a regular basis is anticipated to commence in the March quarter.

The future development plan for the MWF requires Wolf to construct a replacement public road and site works for this road commenced during the Quarter. Additional site works were also undertaken on storage ponds, surface water management and reinforcement of haul roads.

The Company has commenced a number of geological projects to further improve understanding of the Drakelands orebody including 3D modelling, structural mapping of the pit and a small diamond drilling program to gather additional data on particle size and the distribution of mineralisation.

On 11 January 2016, after the Quarter end, it was announced that CA Blackwell Group Limited ("Blackwell"), the mining services contractor at Drakelands, was being acquired by Hargreaves Services plc ("Hargreaves"). Hargreaves is an AIM listed leading supplier of solid fuels and bulk material logistics and operates nine open pit mines across the UK. Initial positive meetings have been held between senior representatives from Wolf and Hargreaves.

Processing Plant

Wolf took full operational control of the Drakelands processing plant from GRES in the latter part of the September 2015 quarter. Wolf continues to work with GRES on the punch list of items that were outstanding at hand over and this work is expected to be completed in the March 2016 quarter.

During the Quarter the Company concentrated on building understanding of the plant in an operational environment and increasing overall run times.

Plant run times increased steadily before manufacturing faults in a number of pieces of equipment in late December 2015 resulted in unplanned down time. The faults are covered under warranty and are being rectified in conjunction with the manufacturers and GRES.

GBP75M Senior Debt Finance

No repayments of the GBP75 million senior debt finance facilities were due during the Quarter.

The senior debt finance facilities, comprising of a GBP70 million term loan facility and a GBP5 million bond facility, have been provided by a consortium of leading, global mining financiers; UniCredit Bank AG, London Branch, ING Bank N.V. and Caterpillar Financial SARL.

Mining Tenements

As at 31 December 2015, the Company has an interest in the following projects:

 
 Tenement      Location      Interest   Status   Grant Date 
---------  ---------------  ---------  -------  ----------- 
 Hemerdon   United Kingdom     100%     Leased   10/02/2014 
---------  ---------------  ---------  -------  ----------- 
 

All tenements are held by Wolf Minerals (UK) Limited, a wholly owned subsidiary of the Company. No farm-in or farm-out agreements are applicable. No mining or exploration tenements were acquired or disposed of during the quarter.

Planned Upcoming Activities

In the quarter to March 2016, Wolf will continue to progress the operations at Drakelands, with a focus on ramping up the processing plant.

Details of proposed activities include:

   --    Continuing the trial of seven days a week, 24 hour operations of the processing plant. 
   --    Increasing overall plant run times and building throughput tonnages. 
   --    Commencement of regular blasting as part of the mining activities. 
   --    Continuing to build the MWF. 

Tungsten Market Trends

The tungsten market is relatively opaque due to its concentrated structure, with only a small number of tungsten concentrate suppliers and consumers outside of China.

Prices for tungsten concentrates tend to follow the same trend as prices for ammonium paratungstate ("APT"), which is the key intermediary product in the tungsten supply chain. APT prices for spot market transactions are published by several data providers including Metal Bulletin and Metal Pages with prices established through surveys of buyers, sellers and other industry participants.

The average APT Price published by Metal Bulletin for the Quarter was US$178/mtu (FOB Europe), a 14% reduction from the average price for the September quarter, and almost 50% lower than what it was when construction commenced in March 2014.

During the Quarter demand for tungsten concentrate remained sound in Japan and Europe as a result of steady output from the automotive sector. Demand in other regions remained low as a result of soft conditions in the mining, oil and fracking industries and the economic slowdown in China. Current market conditions appear to have resulted in some supply being withdrawn from the market with some producers reportedly shutting down.

Corporate

The Annual General Meeting was held on 16 November 2015, with all resolutions put to the meeting being passed unanimously on a show of hands.

The Company issued 124,593 ordinary shares during the Quarter to the Company's Non-Executive Directors under the Wolf Minerals Limited Directors' Share Plan approved by shareholders at the Company's Annual General Meeting on 16 November 2015. Under the Plan, non-executive Directors receive a portion of their fees in shares, allowing the Company to preserve its cash reserves.

The Company issued 1,982,545 performance rights during the Quarter to the Managing Director and other senior executives. The performance rights were issued in accordance with the Wolf Minerals Limited Performance Rights Plan, as re-adopted by shareholders on 21 November 2014 and vesting is subject to a number of conditions as specified in the Plan.

Investor Relations

The Company has continued to promote itself in Australia and the UK with a number of roadshows and targeted investor presentations being undertaken.

The Company's latest Investor Presentation and corporate video which contains footage of recent activities can be seen at the Company's website at www.wolfminerals.com.au.

ENDS

 
Wolf Minerals Limited 
 Russell Clark                        [phone] 
Numis Securities 
 John Prior/James Black/Paul Gillam   [phone] 
Newgate 
 Adam Lloyd / Ed Treadwell / 
 Helena Bogle                         [phone] 
 

About Wolf Minerals

Wolf Minerals is a dual listed ("ASX: WLF", "AIM: WLFE") specialty metals company. With global demand for tungsten rising and future global production expected to be constrained, Wolf Minerals has recently completed the development of a large tungsten resource at its Drakelands Mine, located at Hemerdon, in southwest England.

This information is provided by RNS

The company news service from the London Stock Exchange

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January 29, 2016 02:00 ET (07:00 GMT)