TIDMWLFE
RNS Number : 1754L
Wolf Minerals Limited
24 April 2015
24 April 2015
Wolf Minerals Limited
Quarterly Activities Report
For the Three Months Ended 31 March 2015
Specialty metals development company, Wolf Minerals Limited
(ASX: WLF, AIM: WLFE) ("Wolf" or "the Company") is pleased to
provide the following update on its Drakelands open pit mine
("Drakelands") currently being constructed at the Company's world
class Hemerdon tungsten and tin project ("the Project") in Devon,
southwest England, for the three month period to 31 March 2015.
Highlights for the March 2015 quarter include:
ü Construction of Project 85% complete as at quarter end.
ü Construction remains on schedule and fully funded with
commissioning commenced, and initial production expected Q3, 2015
for on time delivery to offtakers.
ü Initial grade control drilling programme completed with
results aligning with ore reserve definition drilling.
ü Development expenditure of A$24.4 million for the quarter.
ü Ore reserves increased by 34% within existing planning
permission.
ü Temporary go-ahead for 24 hours a day-seven day working at
Drakelands Mine received from Devon County Council.
ü Major investor, Resource Capital Funds V L.P. ("RCF")
demonstrates continued support by exercising options.
Commenting on the March quarter performance, Wolf's Managing
Director, Russell Clark said:
"This has been another successful quarter for Wolf.
Commissioning at the Hemerdon Project has commenced, our staff have
relocated from Plymouth to our completed administration office on
site and we plan to be introducing ore into the plant in July
2015."
"The initial grade control drilling has confirmed our
expectations with regards to tungsten and tin grades and tonnage
and will provide critical ore body information for the next
eighteen months."
"Recruitment of our employee team is progressing well, with key
technical and commissioning personnel now in place."
"The seven day operation will, if permanently approved, provide
us with over 27% more operating time, giving us the option to
produce significant additional tonnage of tungsten and tin
concentrates with no additional capital expenditure requirements.
It also provides the opportunity to lower operating costs, pushing
the operation further down the cost curve of tungsten
production."
"The 34% increase in Ore Reserves, which has resulted from
steepening the open pit walls within the existing planning
permission boundary, is effectively an increase in mine life of 34%
or around three years, assuming a five and a half day working
week."
"It was very pleasing to see our major investor, RCF, exercise
just over half a million options at the end of the quarter, showing
its continued support for the Project and for Wolf and their
confidence in tungsten as a strategic speciality metal for the
future."
"The Project remains on schedule and fully funded through to
positive cash flow, and we look forward to progressing the Project
further in the next quarter."
Project Construction Update - Commissioning Commenced
The construction of the Project commenced in February 2014.
At the end of the March 2015 quarter, construction was 85%
complete and remains on schedule. The Project's
Engineering-Procurement-Construction ("EPC") contractor, GR
Engineering Services Limited (ASX: GNG) ("GRES"), has commenced
commissioning of the plant, with the hand over to Wolf scheduled
for the third quarter of 2015.
By the end of the March 2015 quarter, further significant
progress had been made at the site including:
-- All structural concrete pours are now complete.
-- Structural steel erection is 97% complete and wall cladding
of the processing plant buildings is well advanced.
-- The majority of plant equipment has been installed within the processing plant buildings.
-- High voltage power is now connected to the site.
-- The administration building has been completed and staff have
relocated to the site from the Plymouth office.
-- The "fit out" of the laboratory has commenced and the
laboratory will be commissioned in the second quarter of 2015. A
laboratory manager and a number of laboratory personnel have
already been employed for the Project.
-- Continued progress on the Mine Waste Facility. This facility
accommodates the waste from both the mine and the processing plant
and is one of the key components of the Project. Construction
activity at the facility is on track to be available for the
scheduled plant commissioning.
-- Development of the open pit continued with the excavated
waste used in the construction of the Mine Waste Facility. There is
no overburden removal required to access the orebody, as it is
exposed at surface from historic operations.
-- Over 100,000 tonnes of ore are stockpiled at the mine. This
ore was extracted during the mining of waste used for the
construction of the Mine Waste Facility and will form the basis of
the initial feed to the processing plant. The "run of mine" (ROM)
ore pad in front of the crusher bin will be constructed in the
second quarter of 2015.
-- Recruitment of key professional staff has continued with the
Company having 39 employees working directly for Wolf Minerals (UK)
Limited at the end of the March quarter. Recruitment of the
remainder of the workforce is advanced.
-- At the end of March there were over 400 people working at the Project site.
-- Scheduled tree planting, stone wall and bat shelter
construction activities were completed during the quarter.
The total development expenditure for the March 2015 quarter was
A$24.4 million with the majority related to payments for
construction progress to the EPC contractor and the mining
contractor.
Grade Control Drilling Programme Completed
A grade control drilling programme commenced in October 2014 and
is now complete. Approximately 20,000 metres of drilling was
undertaken, with drill holes averaging around 25m in depth and were
drilled on a 12.5m by 12.5m pattern across the whole ore body,
excepting where the stockpile of ore is located.
The grade control drilling programme will provide tonnage and
grade information for approximately the first 18 months of ore
mining. At the end of the quarter 64% of the results of samples
sent for analysis had been received.
Initial indications of the results show an excellent correlation
with the resource model, which builds confidence in the planned
production schedule. Tungsten grades are consistent with the
previous model and in places there appear to be increased Tin
grades in some areas of the deposit compared to those in the
model.
Additional data have also been gathered for Iron, Arsenic,
Sulphur, Uranium and Thorium and results show that levels of these
deleterious elements in the soft granite are much lower than
expected. Work will now progress to create a grade control model to
incorporate all of these newly acquired data and allow accurate
planning and reconciliation during the mining process.
Ore Reserves and Mineral Resource Estimate restated to be 2012
JORC Compliant
As announced on 25 March 2015, the new Ore Reserve at the
Project is 35.7Mt at 0.18% WO3 and 0.03% Sn (reported above a 0.05%
W (0.063% WO3) cut-off), which is a 34% increase on the previous
Ore Reserve reported in the Definitive Feasibility Study ("DFS") in
2011.
It comes as a result of a six hole geotechnical drilling
programme which targeted the perimeter of the open pit, completed
in Q4, 2014 (refer Announcement dated 1 December 2014).
Consistent with Wolf's expansion plans for the Project, the
drilling programme was designed to better understand the strength
of the wall strata with a view to steepening the final pit slopes,
resulting in a deeper open pit and increased Ore Reserves. The
programme was successful and concluded that the pit walls can be
steepened. This has resulted in a new pit design that takes the pit
floor approximately 65 metres deeper, increasing the Ore Reserves
by 34% (detailed in Table 1 below). This equates to a 34% increase
in mine life or around three years, assuming operations work five
and a half days a week.
Table 1 - Table showing 2015 Ore Reserves compared to the
previous 2011 DFS Ore Reserves.
Reserve Tonnage WO3 Grade Sn Grade
Category (Mt) (%) (%)
---------- -------- ---------- ---------
2011 DFS Proved 23.5 0.19 0.03
-------------
Probable 3.2 0.18 0.03
Total 26.7 0.19 0.03
------------------------ -------- ---------- ---------
2015 Update Proved 27.9 0.19 0.03
-------------
Probable 7.8 0.15 0.02
Total 35.7 0.18 0.03
------------------------ -------- ---------- ---------
The increase in pit depth is such that it extends into Inferred
material below the bottom of the majority of the drill holes in the
deposit. As such the current pit design includes granite
mineralisation that cannot be reported as Ore Reserves under JORC
2012 guidelines. However, Wolf intends to undertake additional work
to increase the confidence of the resource at depth, with the aim
of potentially further increasing the 2015 Ore Reserves detailed in
Table 1 and further extending the mine life.
Wolf also announced a new Mineral Resource Estimate for the
Hemerdon Project. The previous Mineral Resource Estimate (401.4Mt
at 0.13% WO3, 0.02% Sn), reported in the DFS of 2011, was compliant
with the JORC 2004 code. The JORC code was updated in 2012 and Wolf
has provided details of the revised Mineral Resource Estimate,
compliant with the new code. The revised Mineral Resource Estimate
is detailed in Table 2 below:
Table 2 - Hemerdon Project Mineral Resource Estimate, JORC
2012
Mineral Resources Tonnage WO3 Grade Sn Grade
(Mt) (%) (%)
Measured 39.9 0.18 0.02
Indicated 18.7 0.16 0.02
Subtotal: Measured + Indicated 58.6 0.17 0.02
Inferred 86.6 0.14 0.02
---------------------------------------- -------- ---------- ---------
Total: Measured + Indicated + Inferred 145.2 0.15 0.02
---------------------------------------- -------- ---------- ---------
It is reported above a 0.05% W (0.063% WO3) cut-off. There have
been no new data relevant to the resource since the 2010 estimation
and the broader mineral inventory remains unchanged.
In order to establish the conformity of the current resource
with JORC Code 2012, SRK prepared the Table 1 of the Code
(Checklist of Assessment and Reporting Criteria), which shows that
all aspects of the resource estimation were covered in 2010.
The reduction in resources is related to Section 20 of the code,
and in particular the "prospect for eventual economic extraction".
The historic metallurgical testwork indicated that recovery of
tungsten within the Killas (the meta-sedimentary rocks surrounding
the granite body) was possible. However, no further testwork has
been completed at this time. Accordingly, Wolf currently considers
it prudent to exclude the Killas hosted mineralisation from the
resources, to be revisited in the future. Therefore only the
granite portion of the resource has been considered.
Once the mine is operational Wolf will look at the metallurgical
opportunities available with the Killas, such that it may be
available to be included in future Mineral Resource Estimates.
Both the Ore Reserve and Mineral Resource Estimate upgrades for
the Hemerdon Project are supported by a JORC 2012 Table 1
"Checklist of Assessment and Reporting Criteria" and were signed
off by Competent Persons. This document was provided as Appendix 1
to the Company's Announcement dated 25 March 2015. A copy of this
Announcement can be found on the Company's website
www.wolfminerals.com.au. The Company confirms that it is not aware
of any new information or data that materially affects the
information included in that market announcement and, in the case
of estimates of mineral resources or ore reserves, that all
material assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to apply and
have not materially changed.
Temporary Go-ahead for Seven Day Working at Drakelands Mine
During the quarter, Devon County Council ("DCC") granted Wolf
the go-ahead to increase the primary crusher's operating hours at
the Project, providing the opportunity for increased production and
improved metal recoveries (refer Announcement dated 24 March
2015).
The DCC will temporarily allow the primary crusher to work 24
hours a day, seven days a week. Previously, as a condition within
the Planning Permission, the primary crusher was restricted to
running for only five and a half days a week.
The go-ahead for the extended operating hours followed extensive
community consultation and support from Sparkwell Parish Council
which voted unanimously not to object to the proposed change.
The six month trial will commence when ore crushing starts and
will provide Wolf with the opportunity to commission the plant and
ramp up production at the Project without weekly interruptions. If
the trial is successful, Wolf will apply to make the change
permanent, resulting in an increase in available operating time of
more than 27%, which in turn will provide the opportunity to
produce significant additional tonnage of tungsten and tin
concentrates with no additional capital expenditure requirements.
It also provides the opportunity to lower operating costs, pushing
the operation further down the cost curve of tungsten
production
ISO 14001 Certification for Environmental Management Systems
In April 2015 the Company was informed that it had been
successful in being recommended for ISO 14001 certification for its
environmental management systems at the Project.
The implementation of an environmental management system is a
condition of the Environment Agency's permit for the Project and is
required to be in place prior to the commencement of processing
tungsten ore.
Certification to the ISO 14001 Standard provides assurance to
all stakeholders that the environmental impact of the Project is
being managed, measured and mitigated as it develops through
commissioning and into operations.
Continued draw-down of GBP75M Senior Debt Finance
At the end of the quarter a total of GBP42.5 million of the
GBP75 million senior debt finance facilities had been drawn to fund
the construction of the Project.
The senior debt finance facilities comprise a GBP70 million term
loan facility and a GBP5 million bond facility, and have been
provided by a consortia of leading, global mining financiers;
UniCredit Bank AG, London Branch, ING Bank N.V. and Caterpillar
Financial SARL.
The Project remains fully funded from existing facilities
available to the Company through construction and to positive cash
flow.
Construction Progress - Time Lapse Photography and Updated
Corporate Video
The Company's website has time lapse photography showing the
progress of both the processing plant site and mine site which can
be seen at:
http://www.wolfminerals.com.au/irm/content/live-streaming-video.aspx?RID=326
In addition the Company has updated its Corporate video which
contains footage of recent construction activities and can be seen
via Company's website home page at www.wolfminerals.com.au.
Mining Tenements
As at 31 March 2015, the Company has an interest in the
following project:
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 June 2015 quarter, Wolf will continue to progress the
development of the Project, with a focus on completing construction
and continuing commissioning of the processing plant. Details of
proposed activities include:
-- Completing structural steel erection, mechanical equipment
installation and cladding of the buildings.
-- Finalising construction of water holding structures required by the Planning Permission.
-- Progressing the construction of the Mine Waste Facility to a
point where process plant commissioning can take place.
-- Completing equipment installation in the laboratory, and
commencing sample analysis required during process plant
commissioning.
-- Commencement of wet commissioning of the processing plant.
-- Continuing recruitment and training of operations personnel.
Corporate
The Company issued 714,796 shares issued during the quarter:
-- As a result of RCF exercising unlisted options, a total of
578,430 shares were issued to RCF. Details of the options exercised
are as follows:
o 478,012 @ A$0.3330 per option
o 100,418@ A$0.3898 per option
The unlisted options were granted to Resource Capital Fund V
L.P. under a Facility Agreement dated 25 October 2011 as part
consideration for the provision of funding to the Hemerdon
Project.
-- A total of 133,366 shares were issued to the non-executive
Directors under the Directors' Share Plan ("Plan") as approved by
shareholders at the last year's Annual General Meeting held on 21
November 2014. Under the Plan Directors receive a portion of their
fees in shares allowing the Company to preserve its cash
reserves,
Promotion and Marketing
The Company's share price increased by 48% during the three
months ending 31 March 2015.
The Wolf Board visited the Project site in March to inspect
progress and the Project's readiness for commissioning.
Two groups of 20 investors/brokers/media representatives also
visited the site in March, which generated significant press
coverage including articles in The Times and The Financial Times
(London).
The Company's latest Investor Presentation is available, via the
following link:
http://www.wolfminerals.com.au/IRM/ShowCategory.aspx?CategoryId=340&FilterStyle=B&archive=true&masterpage=3&year=2015&RID=378
ENDS
Wolf Minerals Limited
Russell Clark +61 8 6364 3776
Numis Securities
John Prior/James Black/Paul Gillam +44(0)20 7260 1000
Newgate
Tim Thompson / Adam Lloyd / Ed Treadwell
/ Helena Bogle +44 (0) 20 7653 9840
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 is developing the third largest global tungsten resource
at its Hemerdon project, located in southwest England. The Company
has strong cornerstone investors and project finance and
environmental permitting is in place. Wolf has also secured all
major contracts for the project, with GR Engineering appointed as
the EPC contractor and CA Blackwell being awarded the Mining
contract. Production is expected to commence in mid-2015.
The Company also has two "live" cameras viewing the site as it
nears completion. To view the live streaming at the project site
please visit:
http://www.wolfminerals.com.au/irm/content/live-streaming-video.aspx?RID=326
Definitions and Glossary
"DFS" - the definitive feasibility study relating to the
Hemerdon Tungsten and Tin Project, the findings of which were
published by the Company on 16 May 2011 and available for review at
www.wolfminerals.com.au
"JORC Code 2012" - the Australasia Code for Reporting of Mineral
Resources and Ore Reserves 2012 Edition which sets out the minimum
standards, recommendations and guidelines for the Public Reporting
of Exploration Results, Mineral Resources and Ore Reserves in
Australasia.
"Inferred"- as defined in the JORC Code 2012, is that part of a
mineral resource for which quantity and grade (or quality) are
estimated on the basis of limited geological evidence and sampling.
Geological evidence is sufficient to imply but not verify
geological and grade (or quality) continuity. It is based on
exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes.
"Indicated" - as defined in the JORC Code 2012, is that part of
a Mineral Resource for which quantity, grade (or quality),
densities, shape and physical characteristics are estimated with
sufficient confidence to allow the application of Modifying Factors
in sufficient detail to support mine planning and evaluation of the
economic viability of the deposit.
"Measured" - defined in the JORC Code 2012, as that part of a
measured Mineral Resource for which quantity, grade (or quality),
densities, shape and physical characteristics are estimated with
confidence sufficient to allow the application of Modifying Factors
to support detailed mine planning and final evaluation of the
economic viability of the deposit.
"Proved & Probable" - the economically mineable part of a
Measured or Indicated mineral resource. It includes diluting
materials and allowances for losses which may occur when the
material is mined. Appropriate assessments, which may include
feasibility studies, have been carried out, and include
consideration of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social
and governmental factors. These assessments demonstrate at the time
of reporting that extraction could be reasonably justified. Ore
reserves are sub-divided in order of increasing confidence into
Probable and Proved.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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