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Metal Bulletin report today European APT price $269-275 per mtu, up form $250-256 per mtu last week. Lots more light this week, and a point of interest, the price now up $100 per mtu from its low point of $172 back around March 2016. Wolf income is now being boosted by around $8000 per tonne since the low price point, not a chance now of the doors being locked up, as someone on this board predicted a while back!!!. With a bit more detail forthcoming from Wolf on July/August production, new equipment installations going well and funding, the view on this share may be moving from hold to buy. Anyone other ideas on this, the shorters long term day may be done here?
Yes RWK, confirmed by Metal Bulletin today Chinese Tungsten Grade 1 88.5% now $270-285 per mtu, up from $250-256 per mtu, an 8% jump wow. Will be interesting to see how MB assesses European APT price this Friday.
Metal Bulletin European APT Price $250 - 256 per mtu, up from $248 - 256 last week. Tiny bit more light this week WD43, and supply remains tight. Some more info on the equipment question having re-read the Activities Reports back to 2016. Wolf reported that 'The ore mined has a much finer particle size than will be the average over the mine life, and for which the processing plant was primarily designed', and 'The ore will become increasingly coarse over the next 12 months, the coarser particle size will be closer to that for which the processing plant was primarily designed and as such should have a consequential improvement on recoveries'. Summarising all I have read, my opinion is that Wolf made the decision to design the processing plant to deal with coarse material and not fine material. It was probably a commercial decision then, and the financial risk of working through the fine material would rest with Wolf, so there is probably no question to answer here. The subsequent equipment breakdowns is another matter, and GRES may still have some responsibility there, but we do not know/have not been told enough detail yet, and it maybe worth asking if Wolf intend to be making any further claims against GRES for equipment design or operational failures in the future. On the recent RNS about resolving LFN, Wolf have obviously come to the decision that the design/performance of the vibrating table/other equipment generating noise was not/has not been to design or operational requirements, and GRES are responsible. The Bond is a part of the Conditions of Contract agreed between Wolf and GRES, and is used to protect the Client (Wolf) against performance failures by the Contractor (GRES) which could be financial of contractural. The Bond value usually represents 10% of the contract sum. Hence £7.5m of the contract value of £75m. It is not now a question of GRES being agreeable or any compromise solutions, those discussions have probably been had and are over. And shutting down vibrating screens at the weekend is a Wolf decision relating to the surrounding community, for which the cost may not be recoverable under the Bond. Wolf have given formal notice to GRES that they will act on the Performance Bond, that is that and the issue will be sorted. The outstanding issues are slowly being resolved, but the largest remaining for all is the increased debt and how this will be sorted.
Metal Bulletin European APT price now $248-256/mtu, up from $240-248/mtu last week.
Thanks everybody for your comments so far, we are getting closer to answers on the equipment question to put to the grey suits. I have researched further back from 2013 to 2011, and you all should take a look at Wolf website/Investor Relations/ASX announcements/2011 tab/16 May/ Feasibility Study Report, for more interesting info. In the Mining Resource section Fig 3 and 4 there are graphics of the relationship between time and the excavation of fine granite and course granite, and in the Metallurgical section Fig 9 there is a flow diagram that indicates the processing procedure and the sizes of particles to be treated. Process Guy - would be good to have your thoughts on Fig 9. The expectation was to recover 58% of tungsten in fine granite. At the time of the study the APT price was $460/mtu, and expectations were that the price would fall, so the financial outcomes were therefore based on an APT price of $360/mtu. (If only they had a crystal ball then!!) A key paragraph for me is ' There is significant mineralisation in the surrounding country rock which currently has poor metallurgical recovery. Testwork on this material may provide a solution to improving recoveries. The continuing tungsten price rise may also render the killas economic'. Was this testwork ever undertaken? If yes was the information produced in time and issued to GRES to incorporate into the processing plant design? If no did Wolf at that point consider that the APT price was high enough and take a risk on not achieving the expected 58% recovery? It would seem that this is what has actually happened in the last 18 months with recovery in the fine granite only 25%, but the APT price has dropped far below anybody's expectation and turned less of a profit into more of a loss. The truth is out there, as Mulder and Scully would say.
GRES site an interesting view RWK, with the production figures for tungsten and tin they outline there should be no problems! The circle does not square somewhere though because with the basis as a 3Mt per annum mine the recovery % would not produce those figures. GRES appear to be a professional outfit, with wide geographical experience, and they say in their design section that production guarantees are made to Clients on the equipment designs they develop. I think if the GRES design or equipment installed was flawed, Wolf may have been pushing a claim against them already. The speculation/opinion I posted on 26th April is still relevant. It was known that the softer fine kaolin type material existed above the coarser granite, GRES may have offered two design/equipment solutions to maximise tungsten production from each layer which was commercially considered and rejected on cost grounds, or Wolf may have instructed GRES for a single design solution and took the commercial risk decision that the APT price was high enough at the time to cover the cost of working through the soft material at reduced profitability for about 12 months. The actual answer is not known at this stage, but Wolf have never mentioned in any reports that the design was flawed, only that equipment failures have been happening, and RC interview comments about poor Chinese kit breaking down.
After some more research on the contractural responsibilities for the design of the equipment in the processing plant, by June 2013 GRES were awarded the 'EPC Contract'. This was a £75m Engineer/Procure/Construct contract for the design, construction and commissioning of a 3Mt/per annum tungsten and tin mineral processing plant plus associated infrastructure producing an average of 3450 tonnes/per annum of tungsten trioxide and 450 tonnes/per annum of tin concentrate. It would seem that GRES had the contractural responsibility to design the processing plant and its equipment. The issue will be - was the information package GRES received as part of the Contract from their Client (Wolf) specific enough to enable GRES to produce a design, and construct a processing plant that could deliver the required production above or not. The answers obviously become a commercially sensitive area, as admitting where the responsibility lies may mean accepting some financial responsibility for the extra money that has been required. It may end up in legal process. So
Richam - Yes in broad agreement with your post earlier. Going forward in simple easy to understand terms, if and when Wolf can report in future to all that they are excavating and processing 9500-10000 tonnes of material per day, and are producing 10-11 tonnes of tungsten concentrate a day, we will know that recovery is then around 50% (0.22%WO3 grade x 0.5 x tonnage processed), and they are achieving what they set out to do. Metal Bulletin reported today that European APT price is $240 - 248 per mtu up from $230 - 235 last week. The price has now come up 10% in the last 3 weeks, and another $10-12 rise will, according to Wolf previous projections, mean break even point at around 3500 tonnes tungsten production. The biggest question remains - Why has the processing equipment that was acquired not provided a 50% recovery from the start? With the lower recovery achieved to June 2017, there are now around 1000 tonnes of tungsten concentrate lying around Drakelands unrecovered, probably in the Mine Waste Facility, that has lost around $17,000,000, of income in the financial year!! Shareholders must ask basic questions about who holds contractural responsibilities for the equipment design, and if it is not Wolf, who is it, then who holds financial responsibilities to compensate Wolf. With the new boss moving to the area this month it must be sensible for a meeting to be arranged with Wolf men in grey suits and interested UK shareholders to understand the issues and obtain some answers. All those who want a meeting please post back.
Good to have you posting again, tough decision to sell out, but when the foreman of the Jury tells the verdict around October time it still may not be too late to get another slice of the pie. Who has to take financial responsibility for the Chinese kit question has not been fully answered yet, depends if Wolf or GRES had contractural control to approve the designs and set the design requirements for the equipment.
Welcome Daveeeed, Check out my post last Saturday, in essence Wolf will be in the red to the tune of around A$50m for year end June 18, and only produced about a half of the tungsten they projected. Full production is still behind schedule and the tungsten (APT) price has fallen lower than expected since the project development commenced on site, (Albeit now recovering). Debt has increased by £40m with a further £5 available, and locals are bugged by low frequency noise from the plant equipment. As Old Fool 13 says this is a play on the ability of Wolf to turn it around in 6 months and the APT price climbing above US$ 250/260per mtu in about the same period. Just read all that, why the hell am I still invested here? Must be a bit of pure faith along with others and research of the facts, or perhaps just stupidity!!
The tide has gone out to a very low point in the fishpond recently, and maybe all life has been extinguished before it begins to turn inward again. Good to know your hand has the high ranking cards. It's a pity the view from the Peaks is not coming through at the moment, could be misty up there, hope it clears. On the ground it would seem that the mine visits that were planned for the summer months have been stalled, maybe everybody has been told to put their shoulders to sorting the more important problems with urgent action and spread the words afterwards.
Quite right RWK, good spot. Where I posted APT should read 'tungsten in concentrate', I will be more accurate in future. What is your take of the report and the prospects for Wolf?
The Q4 report not as good as I had hoped, but not a tale of woe either, richam and leapfrog both reasonably accurate in comments. Looking at the facts and figures for 2016/17 year to June - Wolf dug out approx. 2.495m tonnes and processed 1.198m tonnes of material, producing approx. 1120 tonnes of tungsten and 120 tonnes of tin. Income approx. A$ 23.5 m and exp A$75 m, with expenditure of A$33 expected Q1 2018 up on Q4 2017. Actual W Grade up to 0.22%, up on expected 0.18%, Recovery 25%, below expected 50% the lower recovery due to fine tungsten particles being lost. This to be addressed by redesign and equipment changes over the next 3 months which should also improve run time, hence the increase in expenditure of A$6m for development and A$5m in production in Q1 2018 (See Form 5B) LFN with vibrating trays being addressed by not working this kit at weekends temporarily whilst further assessments made with local community. The production reported in the last 2 weeks of June is most interesting with average throughput for 8 of 14 days, 9000 tonnes per day with max of 9927 tonnes. If that rate continued for 2017/18 year processing would be up 50%, and on the Jan - June figures of about 1.5m tonnes excavated Wolf can dig out enough to feed the processing plant at that rate. Going forward Wolf planned to dig out 3.75m tonnes of material with 7 day working. APT production averaged above 5 tonnes per day with 6 of 14 days av at 6.29 tonnes per day. This represents a 31% recovery, so whilst improving this is still the key area that needs resolution, as Wolf need to produce 10 tonnes of APT per day to achieve 50% recovery. Going forward Wolf's plan was to improve recovery by 5% per year up to 65%. Wolf exploring material quality below current levels for next 2 years of excavation, and strategic review of financial alternatives and third party funding probably to be announced in October around time of release of Annual Report. Next 6 months are critical for the turnaround plans that are being implemented. The APT price moved up again yesterday with Metal Bulletin reporting $230-235 per mtu up from $226-231 last week. Wolf share price flat on Q4 report, has sentiment reached its lowest point, or does the financial debt position still hold the share back, with possible dilution for shareholders??
Will Wolf be able to provide positive news in the June Activities Report, out in the next 7-10 days, or is it to be another tale of woe??? Its time Wolf reported that production of APT and tin is up by a significant amount, they confirm that recovery percentages have improved, equipment problems are largely now sorted and specify target dates when maximum production will be achieved. All this is necessary to halt and reverse decrease in confidence and the lowering share price. Information on forward finance restructuring may also be announced. I view this as an extremely important report, anything less will surely be very negative. Any other thoughts please....
RWK - Metal Bulletin APT price yesterday at $226-231 per mtu, up from $218-226 last week. There are also recent reports of upward pressure on APT prices due to shortness of supplies in Europe.
Also interesting to note RWK that Cornwall Resources Ltd is a 50-50 joint venture holding company between Strategic Minerals Ltd ( Aim quoted) and New Age Exploration Ltd (ASX quoted). NAE originally owned Redmoor from 2012,and SML bought into it with £840K investment Feb 2017 for 50%. They hold a 15 year exploration lease, and option for 25 year mining lease subject to planning and other approvals for the area around Kelly Bray near Callington where Redmoor is situated. CRL ultimate parent company is also NAE, and Resource Capital Fund are in the background financially, as with Wolf Minerals. The current director of CRL is also a director of SML, and 2 other directors of SML were directors of CRL but resigned previously. CRL made a presentation to Parliament in November 2016 about the potential at Redmoor and mentioned that Wolf hade a processing capability at Drakelands, albeit Redmoor is tin/tungsten wheras Drakelands is tungsten/tin. SML share price has risen 10 fold in last year or so on the back of this and other resources developments, but there would a be a long way to go before production if the drilling at Redmoor confirmed that the predicted ore deposits were actual.
Yes RWK, if apt price moves up another $30 by December, (as it has in the last 6 months) then with 100% production profitability is likely. My only concern is hearing at the LFN meeting of more problems with processing plant kit and the mine static again Wolf need to get it sorted or the already reduced credibility that they have will suffer even more. Await June Activities Report at end July with interest. If you do need to come this way in December to install your boot into somebody, can I suggest a tungsten toecap, the normal steel toecap variety may not cut it at this mine!!
Just picking up on Pastyman's comment on production, Wolf were asked about noise levels at maximum production, and said they were currently at 'about 60% of maximum production' and would be achieving maximum production in 'about 6-8 months'. From an investors viewpoint it would seem the processing plant machinery downtime issues are not fully resolved and will drag back income again for this, and quarters up to the end of December!! If 60% of maximum production being achieved now, this would give approx 500-600 tonnes of apt to the end of June quarter up from 270 tonnes in March quarter. The new funding package to be announced shortly, will probably therefore have to cover another 6 months production and could be in the order of £25 - 30 million. At maximum production mine may break even at current apt price. Any thoughts?
Ran out of words!! Last sentence - Did you attend Old Fool 13? if so do you have opinion on what transpired?
Evening All, my summary events:- There were about 65 people attending the meeting, chaired by GWP Consultants, who have been employed by Wolf to act a an independent 3rd party co-ordinator for LFN and blasting issues. Also 2 representatives from the Environment Agency, 1 from Building Research Establishment and Wolf Sustainability Manager. New CEO Lucas not there, but sent message to the meeting. Wolf advised that there were to be further staff changes with Ken Scott leaving and Alex Danson commencing in July. Wolf had addressed LFN issues, but all the design changes and modifications made to the processing plant to date had not yet resolved the issue of LFN at 16hz level. They apologised to the meeting for this, but said they are expecting to find a solution with further sound testing information. They had identified the vibrating screens and underpans were a problem area, which could be run in antiphase or relocated, bunding could be provided, or equipment could be adapted to operate in a higher sound range. Wolf reported that plant was currently down due to an 'oil' problem? At this point the local residents and chair of Parish Council became vocal saying it was time these issues were sorted as 21 months had gone by and the LFN was not only affecting day to day living, but also property prices would be reduced if there was no resolution. There was more discussion about the meeting not being advertised effectively, and I got the feeling that it had been under advertised by those organising the event. It was also said that EA were slow and failing in their duty to residents, but they countered by saying this sound phenomeon is hard to identify and resolve and there is little current literature or guidance on solving the problem. The Environment Agency then advised that Wolf was not complying with the operators Environmental Permit granted at Planning, and in order to get concrete information to demonstrate that what residents were reporting was in fact a reality, a testing regime inside individual properties would be put in place to recognised NANR 45 procedure. The EA also said that Wolf were a responsible operator and had been working hard, and would continue to work to resolve LFN issue. The length of time that LFN is experienced will increase as Wolf approach maximum production, but the sound level will not increase. The EA were pressed hard to provide a timescale to start, and to provide the results for the NANR 45 testing regime, but would not commit fully. I could not understand this, as they are the experts and surely the residents needed a reasonable response on the time frame to give everybody some confidence. The EA can impose future recommendations to complete corrective action on Wolf, and if Wolf dont comply court action could follow, but this would be a last resort. EA/BRE advised other sound issues would require separate investigation. Another meeting would be arranged to report back. Did you attend Old