Tungsten: Drakelands operator Wolf Minerals goes into administration

Tungsten miner Wolf Minerals ceased trading shares on the AIM and appointed administrators on 10 October, after it failed to conclude discussions with its key financial stakeholders on securing longer term funding solutions for the company’s operations. 

Wolf noted that it was no longer able to meet its short-term working capital requirements in order to continue operations at the mine, located at Hemerdon in Devon, UK. It follows suspension of the company’s shares on the ASX in September, after Wolf deferred the release of its annual report to continue funding discussions. Wolf has appointed Ferrier Hodgson as voluntary administrators.

Roskill view: 

The announcement comes as a blow to the tungsten market, with concentrate purchasers welcoming a new source of supply from a western company when Drakelands was commissioned in 2015. Timing, however, was not fortuitous, as Wolf came online during a period of depressed tungsten prices that extended into mid-2017. The company also encountered initial difficulties in ramping up production, owing to the fine particle size of ore from the near-surface weathered portion of the granite deposit, which affected recoveries.

Market participants report that availability of tungsten concentrates outside of China has been tight for several years. The potential mothballing of Wolf’s 2,600tpy (contained W) mine in the UK would only serve to tighten the market further.

Speaking at the International Tungsten Industry Association conference in Chengdu on 27 September, tungsten analyst Jessica Roberts presented Roskill’s latest supply/demand projections for the sector, which indicate that a further 10-12ktpy W of new mine supply will need to be brought on-stream by 2028.

Four tungsten projects are currently at the construction/commissioning stage, which could contribute nearly 4.5ktpy of capacity in 2019. These include Saloro’s Barruecopardo project in Spain, W Resources’ La Parrilla project also in Spain, Wolfram’s Zabytoe project in Russia, and Premier African Minerals’ RHA project in Zimbabwe. In addition, tungsten miner Almonty Industries announced on 4 October that it was in the late stages of finalising debt financing with KfW IPEX-Bank for the development of its Sangdong project in South Korea.

Roskill’s Tungsten: Global Industry, Markets & Outlook report will be published this month. To discuss the tungsten market with Roskill, contact Jessica Roberts: jessica@roskill.com