03 March 2022

Tungsten West Plc

("Tungsten West", the "Company" or the "Group")

Hemerdon Project Update
EPCM Contract signed

Tungsten West plc (LON: TUN), the mining Company focussed on recommencing production at the Hemerdon tungsten and tin mine ("Hemerdon" or the "Project") in Devon, England, is pleased to provide a project update, following the achievement of a number of significant milestones.

Since successfully listing on the AIM Market of the London Stock Exchange, Tungsten West has been advancing the development of Hemerdon which is one of the most advanced mining projects in England and is expected to be a key future global supplier of tungsten and tin. Tungsten is classified as a conflict mineral and given there is a significant risk that the EU and the US will not have sufficient access to tungsten concentrates in the near future, it is also classified as a critical mineral, making Hemerdon a highly strategic asset to the Western Hemisphere. Currently the three major sources of tungsten concentrate are China, Vietnam and Russia.

The Company has now signed the Engineering Procurement and Construction Management ("EPCM") contract with Fairport Engineering Limited ("Fairport"), which is advancing the design and build of the Project. Tungsten West has taken receipt of important long-lead equipment items, including the innovative X-Ray Transmission ("XRT") Ore Sorters, with the rest of the long-lead items ordered and scheduled for delivery within the Company's timetable. The Company has also made a number of key personnel appointments as part of its planned growth to ensure it has the skills needed for a successful construction and ramp-up.

Key Highlights:

·      EPCM contract signed with Fairport, an experienced contractor with a proven track record in delivering successful projects, particularly in the UK

·      The detailed design work for the front end of the processing plant is well advanced

·      Key hires for project delivery and operation have been made

·      Long lead items have been ordered, with some already delivered, including:

o  Seven TOMRA XRT ore-sorters manufactured and delivered to the UK

o  Crushers and screens all under fixed-price contracts

·      Inflationary cost pressures remain within the Company's bankable feasibility study ("BFS") contingency limits

·      Commodity prices are robust and significantly in excess of those assumed in the BFS model:

o  Ammonium Para-Tungstate at $335 - $345 per MTU (10kg) versus modelled price of $275

o  LME tin at $45,000 versus modelled price of $24,000

o  In steady state production Tungsten West is estimating production of 3,500 t.p.a. (3,500,000 MTU p.a.) of tungsten in concentrate and 500 t.p.a. of tin in concentrate

·      The Company has a strong balance sheet and cash position

·      Conditions precedent for the drawing down of the Orion Mine Finance royalty and project debt facilities are on track and advancing well

Max Denning, Tungsten West CEO, comments:

"We are extremely pleased with progress at site, particularly the onboarding of Fairport Engineering to undertake the detailed design and construction of the project. We are looking forward to working with Fairport as we move towards restarting full production at Hemerdon, with a substantially improved processing route, through the introduction of XRT ore-sorting and upgraded processing equipment. The Company has assembled a strong projects and operations team, and we remain confident in our progress.

"Fundamentals around our core commodities, tungsten and tin, are strong and support even better project economics compared to our feasibility study at Hemerdon. The Project is, and will increasingly become, a highly strategic and important project to the UK and European supply chain of critical minerals."

Paul Fitton, Fairport Engineering Chairman, comments:

"Fairport Engineering is extremely pleased to have been appointed under the EPCM contract to design, deliver and construct this prestigious project in the UK, particularly following recent events placing further importance on the production of 'conflict' minerals. We have established a full team on site and the design process is progressing on schedule."

EPCM Contract Awarded

After a competitive process Tungsten West is pleased to announce the choice of Fairport as the Hemerdon Project EPCM contractor.       

UK based Fairport Engineering was founded in 1982 and has developed over time to become one of the leading bulk materials handling and processing specialists in the country. They are experienced in delivering projects in multiple industries, including Power, Biomass, Alternative Fuel, Coal, Quarrying, Minerals, Cement, Advanced Recycling, Waste, Ports and other heavy industries. Former clients have included: Scottish and Southern Energy, Cemex, Saint-Gobain, Lafarge, Tarmac, RWE nPower, Hanson, EDF, Brunner Mond, Tate & Lyle, Imerys, ABP, Peel Ports, and Lytag.

Equipment Orders

The upgrade and refurbishment of the existing processing plant at Hemerdon is centred around the optimisation of the existing concentrator circuit as well as the introduction of a new crushing and screening circuit that will then feed into a new X-Ray Transmission Ore Sorting Stage. These upgrades will streamline processing, minimise plant downtime and improve recovery rates. After significant test work, Tungsten West engaged TOMRA to supply the 7 units that are required to treat the run of mine throughput. This consists of 6 duty and 1 standby units. Orders and deposits for these units were placed in Summer 2021 and the Company is delighted to announce that the units have now been delivered to the UK and await final transfer to Hemerdon where they will be installed in the front end of the processing plant.

About XRT Sorting: https://www.tomra.com/en-gb/sorting/mining/sorting-equipment/com-series/com-xrt/how-it-works-xrt  

Screens

6 new screens and 11 vibrating pan feeders have been ordered from Vibramech of South Africa at fixed prices.  These will replace the existing large screens, which caused the low frequency issues, and were a key contributor to plant downtime under Wolf Minerals. Delivery is expected in Q2 2022.

Tungsten and Tin Market Update

Tungsten prices have increased steadily since the BFS was completed. The latest Fastmarkets assessment of European APT prices stand at $335-$345 per MTU. (1 MTU = 10 kg). The Tungsten West BFS financial model is based on an APT price of $275 for the first year of operation, rising to $325 by year 5. Annual production at Hemerdon is forecast to be 3,500 t.p.a. (3,500,000 MTU p.a.) of tungsten in concentrate with a 78% payability, meaning at current prices, forecasted annual tungsten revenues are $92.8m

Tin prices have been one of the best performing commodities over the last 12 months. Latest LME cash prices stand at over $45,000 per tonne. The Tungsten West BFS financial model is based on a LME Tin price of $24,000 per tonne. Short term annual production from Hemerdon is forecast to be 500t of contained tin in concentrate with a 95% payability, meaning that at current spot prices annual revenue is be expected to be $21.4m per annum.

Key Hires

The senior management team required to deliver the Hemerdon project is now in place with the following key roles having been filled:

·      Aggregates Managing Director

·      Project Manager

·      Construction Manager

·      Technical Services Manager

·      Process Plant Manager

·      HR Manager

·      Aggregates Technical Manager

Orion Royalty and Project Finance Facility

 As set out in the Company's AIM Admission Document, a number of conditions precedent (CPs) are required to be met in order to draw down on the $21m Orion Mine Finance royalty and on the $28m project finance facility. Satisfaction of these CPs is well advanced and once completed will enable first draw down.

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