Hemerdon Tungsten Project Pre-Construction Update

20 January 2014 Wolf Minerals

Hemerdon Tungsten Project Pre-Construction Update

· Review of capital and operating costs

· Forecast tungsten prices have strengthened

· EPC contractor to commence project construction this month

Specialty metals development company, Wolf Minerals Limited (ASX: WLF, AIM: WLFE) (Wolf, the Company) is pleased to provide the following update on recent and planned activities at its world class Hemerdon Tungsten and Tin Project (Project) in the southwest of England.

Project Milestones

On 16 May, 2011, the Company announced the results of its Definitive Feasibility Study (DFS) for the Hemerdon Project.

Since completing the DFS, Wolf has successfully advanced the project to now being 'construction-ready', with the following key milestones achieved in recent months:

Financing

· A US$75 million Bridge Finance Facility secured from major shareholder, Resource Capital Funds, to commence design and construction work;

· Senior Project Finance Facilities of £75 million from ING, Unicredit and CAT Financial are in place;

Operational

· £75 million fixed price, fixed term EPC contract awarded to GR Engineering Services (ASX: GNG) for the design and construction of the process plant;

· £85 million Mining Services contract awarded to CA Blackwell Ltd to mine the open pit and build the mine waste facility;

· All major permits to proceed with development have been received; and

· The properties to be acquired as a condition of the Planning Permission have all been purchased.

Wolf is now finalising the arrangements to complete project funding in parallel with project site activities.

Project Timetable

The Project remains on schedule to commence earthworks this month with construction scheduled to commence during Q2 2014. First production is timetabled for the second half of 2015.

An indicative timeline of activity through to production is available in an updated presentation, on the Company's website.

Capital Costs

Since announcing the positive results of the DFS in May 2011, detailed design for the Project has been undertaken. The capital costs for a 3 million tonne per annum project have been updated to reflect this detailed design work and to account for any variance in costs in the period of time since the initial costs were estimated in the DFS.

The updated capital cost of the project totals £123.2 million. A breakdown of the updated costs is made up as follows:

As at 1 December 2013 there were £106.7 million of capital costs remaining.

It is important to note that the EPC contract which Wolf has for the construction of the process plant is a fixed price and fixed construction term contract of 24 months from date of commencement (June 2013). In addition, the properties to be acquired as a condition of the Planning Permission have all been purchased.

Financing

Wolf is also obligated to fund certain bonds, over-run facilities, debt service reserve account and producer shortfall guarantees as required under the project finance facilities. These are currently estimated as follows:

Funding of these facilities will be managed through cash or letter of credit facilities, or a combination, and has yet to be finalised.

The US$75 million Bridge Finance Facility ("RCF Bridge Finance Facility"), secured on the Company's Hemerdon Project, is due to repaid by 7 June 2014. First draw-down of the Senior Project Finance Facilities of £75 million is subject to completion of conditions precedent (many of which have already been satisfied) customary for a financing of this nature including repayment of the RCF Bridge Finance Facility.

Operating Costs

As previously reported, the Company has appointed a mining contractor, an EPC contractor and has also recruited a local management team. With these key components now in place, the Project's operating costs have also been updated from those reported in the DFS to reflect current costings.

The updated average C1 cash cost for the operation is US$109 per mtu tungsten (mtu = metric tonne unit = 10kg).

Note: C1 cash costs: The costs of mining, milling and concentrating, onsite administration and general expenses, property and production royalties not related to revenues or profits, metal concentrate treatment charges, and freight and marketing costs less the net value of the by-product credits.

Tungsten Market

The Tungsten market has strengthened since the release of the DFS with growth occurring in all major regions around the globe. Since 2011, some of the potential future producers of new tungsten expected to come on-line have not materialised due to technical and financing challenges. This may result in demand for tungsten outstripping supply in the short to medium term, and is expected to coincide with the scheduled commencement of production at Hemerdon, in mid-2015.

The forecast prices for tungsten that Wolf used in the DFS have undergone independent review resulting in an increase through the life of the project and are shown below.

The 2011 DFS study used an APT price of US$360/mtu.

Wolf Minerals' Managing Director, Russell Clark, said:

"During 2013 the Company worked through the numerous financing, permitting, property purchases and lease negotiations with great success. With these critical aspects now complete, our focus in 2014 is to construct the project and ensure that funds are in place to support construction in-line with our timeline for the commencement of production in 2015. The review of capital and operating costs, combined with the updated tungsten price forecasts have reaffirmed the Board's view that the project remains financially attractive and provides confidence to embark on the construction program. The forecast imbalance between tungsten supply and demand in the short to medium term may lead to an increase in tungsten prices, and is expected to coincide with the commencement of production at Hemerdon. "

ENDS

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 the South West of England. The Company has strong cornerstone investors and project finance and environmental permitting in place. Wolf has also secured all major contracts for the project, with GR Engineering appointed the EPC contractor and CA Blackwell being awarded the Mining contract. Production is expected to commence in mid-2015, and the project will produce approximately 3,500 tonnes of tungsten in concentrate and 450 tonnes of tin in concentrate per annum. Offtake contracts are also in place.

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