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ASX- and AIM-listed Wolf Minerals Limited (LSE:WLFE) has secured additional funding needed to start the Hemerdon Tungsten Project in southwest England, the specialty metal exploration and development company said today.
The company’s majority shareholder, Resource Capital Fund V LP, agreed to provide a funding package of US$82 million (£51 million) secured against the said project.
This follows the A$115 million (£75 million) senior debt finance facilities obtained by Wolf Minerals from a syndicate of lenders.
“The funding package will allow Wolf to continue the development of the Hemerdon Project and commence its construction,” the company said in a statement.
Wolf Minerals is developing an open pit mine, which will become the world’s fourth largest source of tungsten, popularly known for its use in light bulb filament but is more heavily used as hard metals employed in mining, oil, and construction industries.
China currently controls about 60% of the world’s demand for the heavy metal.
The Hemerdon tungsten project holds about 117.1 metric tonnes (Mt) of measured and indicated resource and about 401.4 Mt in measured, indicated, and inferred resources.
A definitive feasibility study released in May 2011 showed the said project has a post-tax ungeared net present value of A$114 million (£74 million) at an 8% discount. The mine was expected to have a 10-year life with a 21% internal rate of return and a payback period of 3.25 years.
According to the DFS, the mine offers more potential as mineralisation is still open at depth and along strike.
Loan Details
The funding package provided by RCF consists of US$75 million (£46.8 million) 12-month bridge finance facility and US$7 million (£4.4 million) for a 2% royalty on gross revenue from all metals and minerals produced from the project granted to RCF.
Part of the loan will be used to repay the A$6 million (£3.9 million) debt granted by RCF in August 2011.The said loan, however, requires Wolf Minerals to raise A$20 million (£13 million) in equity financing.
Delighted
Wolf Minerals said it needs shareholders’ approval for the said loan, which in turn are subject to several conditions, including necessary approvals from authorities and granting of permits and licences.
Wolf Managing Director, Humphrey Hale said the management was “delighted” for the continued support of RCF, 31.63% owner of Wolf Minerals, and stated the company will now move forward with mine development and construction plans.
In London, Wolf Minerals shares gained 9.1% to 15 pence at 12:15 GMT, as investors favoured the latest development of the tungsten mine project.
