minesite article 17/04/13

April 17, 2013

Thor Mining’s Molyhil Tungsten Project Remains Economic, In Spite Of Recent Weakness In Commodities Prices

By Robert Tyerman


These are challenging days for Thor Mining, the Australian AIM company with tungsten, nickel and gold projects in Australia.But executive chairman Mick Billing is determinedly upbeat as he awaits the results of Thor’s current £2.05 million fund raising in a frosty stock market climate.
“I am hoping we’ll get half of that”, he maintains.

It won’t be easy, with the shine now firmly off commodity prices, gold suddenly out of favour and the company’s own share price down from a year’s high of 2.15p to a mere 0.38p, 0.07p below the present funding price (before warrants).But Billing maintains that the demand for tungsten internally in China bodes well for the price. And he insists even half the funds sought “would let us do most things on our Priority One list”.In any case, Thor has a backup plan. Mick notes the “encouraging nickel and copper trends” newly identified by soil geochemistry at the company’s Dundas project in Western Australia, and adds that work is ongoing at the Spring Hill gold project, also in Northern Territory.For the time being though, the company’s flagship remains the Molyhil tungsten and molybdenum project in Australia’s Northern Territory.



Here, Thor boasts a resource of 4.5 million tonnes at a grade of 0.3% WO3 and a reserve of 1.6 million tonnes at 0.4% WO3.Billing says Thor’s target is to boost the reserve figure to 2.6 million tonnes to support production of 500,000 tonnes a year while converting some of the numerous other tungsten occurrences within the licence into new resources. Billing argues Molyhil could be fully in production a year after funding is in place and says he is currently in talks about possible off-take agreements with potential customers, from whom he expects feedback about the quality of concentrate from Molyhil.



“Uranium levels were a bit too high, but we have attended to that”, he explains, adding that Thor is also trialling new sorting techniques and other ways of upgrading the product and reducing costs.It is consulting an Australian wolfram company on some of these issues. Billings quotes projected capital expenditure of A$70 million for Molyhil, against Thor’s depressed AIM value of £3.5 million, which suggests a partner will be needed, though he argues “there is a margin for savings”, on engineering and other expenses. On operating prospects, he says “I’d like prices a little bit higher”, especially as the “present strength of the Australian dollar is hurting us” in markets denominated in US greenbacks.“Tungsten at US$350 to US$380 per metric tonne unit would work for us”, he says. That implies the recent European selling price of US$355 - compared with $550 at the beginning of 2012 - is bearable, provided the currency calms own.



Looking further ahead, Billing comments: “I would like more resource and a bit longer life”. But the area is very prospective, and he notes “we are surrounded by 30 known nickel deposits”, all outcropping and ripe for brownfield exploration. On Molyhil itself, Billings professes to be “fairly upbeat”. Again, he concedes it won’t be easy. “Tungsten is a brute of a commodity, but it is much less dodgy than it was.”China, the world’s major producer, used to dump surplus stocks on world markets, as did the old USSR. But today’s China needs to use its tungsten and even curbs exports.

Meanwhile, work is also ongoing at the company’s gold project at Spring Hill in the Northern Territories, which at present claims an estimated 450,000 ounce resource.

Thor has 51 per cent of Spring Hill and is in the process of taking that to 80 per cent. It’s also probing other targets there, not pursued by previous owners, with grades in the range of two to three grammes of gold per tonne of ore.“We might sell Spring Hill to people down the road or joint venture it”, suggests Billing. Thor’s present partner is Western Desert Resources, also a Thor shareholder, and the two are discussing using an under-employed plant nearby.

Billing also hopes that Thor, which lost a sharply reduced £960,000 in the year to last June and has so far drawn half of a A$1 million three-year bank facility, will raise enough in the current funding to continue gold and nickel exploration at Dundas.

So far, exploration here has delivered encouraging findings, including nickel at up to 80 to 100 parts per million.


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