29th Jul 2016 14:41
LONDON (Alliance News) - Wolf Minerals Ltd on Friday said it made good progress at its Drakelands open pit mine in Devon in the three months to the end of June, but said certain challenges at its processing plant meant it was now speaking to lenders about further funding.
The tungsten producer said has it has mined more than 1.6 million tonnes of ore to date at the site in southwest England, and work continues to progress on schedule thanks to good weather in the spring months.
However, manufacturing faults at its processing plant meant there was an extended maintenance shut down in June to undertake replacement of worn out parts, which hit production of tungsten concentrate during the period. Wolf Minerals noted that the production of tungsten concentrate has also been hindered by the very fine nature of the ore.
"As a result Wolf has not met its contracted supply commitments to major customers. In these circumstances, the contract term is automatically extended until the product shortfall is supplied and a price reduction is activated," Wolf Minerals said, noting that it was in discussions with its customers in relation to this shortfall.
"Given the ongoing challenges with the processing plant and continued softness of the tungsten price, the company is exploring ways of strengthening its financial position ahead of declaring commercial production," said Managing Director Russell Clark.
"Whilst the company had significant cash holdings of AUD35.0 million at the end of the quarter, these ongoing challenges have led to us being in default of a minimum forward cash flow forecast requirement, and we are in dialogue with our lenders as to the way forward," Clark added.
Shares in Wolf Minerals were up 15% at 7.74 pence on Friday.
By Hannah Boland; [email protected]; @Hannaheboland
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