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W Resources (LON:WRES) is a tale of two mines,” says Michael Masterman, sipping a steaming cup of coffee in a quiet restaurant in Islington, North London.
He’s in town to keep investors apprised of progress at W’s two tungsten projects in Spain and Portugal, and also to keep the lines of communication open for when the time comes to finance.
That may not be far away now, but there’s still a little bit of work to be done yet.
“Both mines keep improving,” he says.
Even so, it’s clear where the focus is.
“La Parrilla’s been a big flagship for us. We’ve ticked the big approvals, we’re going great on the geology, and we’re moving forward with the metallurgical work and the engineering.”
Recent newsflow backs that up.
In the run up to Christmas the company announced very high grade intersections at La Parrilla from surface including 40 metres at 0.32% tungsten trioxide (WO3) from surface, 56.2 metres at 0.21% WO3 from 47.5 metres, and 19 metres at 0.2% from a depth of 21 metres.
Masterman was thrilled, and not just because of the grades and the shallow depths.
He also points out that these intersections occurred on what had previously been considered the very edge of the orebody.
So, is there substantially more ore to be had at La Parrilla?
It’s perhaps too early to tell for sure, but these results have certainly opened up that intriguing possibility.
Another solid drill result followed a week later, meaning that as 2015 drew to a close, W’s La Parrilla project really finished on a high.
The next significant step will be what Masterman calls the “final investment decision.”
Will the board of W Resources give the green light for the company to go out into the market and look for funding?
Masterman isn’t quite ready, but it won’t be long now.
“There are a number of things we need to do to toughen up the execution plan,” he says.
“But that runs in parallel with the financing. There will be a JORC resource update, a new mine plan and plans for pit shells in the New Year, and the updated metallurgical work will go into the formal financing decision.”
The continuing positive news flow from La Parrilla also helps, but even more crucial is the low cost.
Masterman is aiming to get La Parrilla up and running for the modest sum of just US$16mln. Compared to other peers in the tungsten space, like Wolf Minerals (LON:WLFE), which spent upwards of US$100mln getting its Hemerdon mine going, that looks cheap.
But there are practical reasons why.
For one thing, the infrastructure’s already there. This is a project that was producing economic ore from old tailings not more than a couple of years ago.
The earthworks are in place. The concentrator’s there. What’s more, the ore is coarse-grained, meaning that expensive processing methods are unnecessary.
That said, a new crushing circuit will be necessary, as will a new jig, but all told the expense will be relatively low.
All of which may explain why Masterman is so often smiling when he talks of La Parrilla, even though the tungsten price hasn’t exactly been kind of late.
He’s confident operating costs will be low too, and that by the time the mine comes into production at the end of 2016 or the beginning of 2017, there’ll be some choice margins on offer.
It remains to be seen whether the tungsten price will be in full recovery mode by then, but Masterman is sure that that moment is coming soon.
“It’s an exceptional time to develop a project,” he says. “The optionality of the mine is substantial.”
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