High-grade Australian tungsten producer ramps up production

Tasmania is home to a high-grade tungsten mine, which has been borne out of a deposit that was first mined in 1917. Operations ceased in 1990, but has since had brand new processing infrastructure built around it, with a simplified flowsheet that will drive efficiency – all in a higher tungsten price environment.

Tungsten has become a commodity of strategic significance in recent years, having been named a critical mineral by the UK, Europe, Japan and Australia. The growing supply risk that is brewing from China’s continued dominance over the market is being compounded by the forecast doubling in demand from defence applications over the next 5 years and the commodity’s inability to be substituted.

This is part of Dan Porter’s investment thesis being Group 6 Metals (ASX: G6M). He stated: “85% of the world’s tungsten comes out of China at the moment, and we’ve seen the world looking to shift around its supply chains. So this is a unique asset that’s very well positioned, and it’s got strong interest from US defence departments and also European manufacturers.”

PURE Asset Management invested as part of a syndicate in G6M through a senior secured loan of $10 million with an 8.5% coupon. This was coupled with 97 million warrants that have a $0.13 strike price, a sweetener that Dan Porter expects to see significant upside from as the company scales up their tungsten mine according to their production ramp up schedule.

The initial 13-year mine life, which is underpinned by reserves of 4.4Mt @ 0.92% WO3, is broken up into three stages. The first goes for six years, which will involve an open-cut mine producing 386ktpa of ore yielding an average of 192kmtu of WO3, before moving into years 6-11 which involves delving into the high-grade underground mine that will produce 264,000tpa of ore yielding an average of 314kmtu of WO3. Finally, years 11-13 involve a high-grade, low strip open-cut closing pit producing 425ktpa of ore yielding an average of 295kmtu WO3.

Some of the optimisations made to the processing flowsheet have resulted in higher recovery, lower cost and most importantly – lower risk. While G6M continued the use of the historically proven and simple gravity separation for coarse ore separation, and have a 60t/hr ore feed rate with additional spare operating capacity of 15-20%, they have optimised fine ore separation through the use of multi-gravity separators (MGS).

MGS removes calcite from the fine ore stream, which is where the final concentrate is recovered from a small flotation circuit. This results in lower flotation costs and higher recovery – around the 78% mark.

After relieving a bit of stress from their balance sheet through a total of $52.5 million in equity raisings throughout 2023, G6M is now rapidly ramping up production. The removal of significant overburden and better access to high grade pits is reducing the strip ration and increasing the grade of ore, and the company is aiming to reach monthly nameplate production capacity by Q4 2023.

Click here to view more videos from Daniel Porter‘s The Insider: Meet the Fund Manager session.

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