Thor Mining 12 to 18 months behind, needs £40million – a risk...

Thor Mining 12 to 18 months behind, needs £40million – a risk taker’s punt says Robert Tyerman

Mick Billing, executive chairman of South Australia-based Thor Mining (THR), claims the company could have its near-five million-tonne Molyhil tungsten and molybdenum project, in the country’s Northern Territory, in production by the end of next year. But first, he explains Thor must prove its ore-sorting technology can significantly enhance the economics of the project and then, with an AIM value of no more than £3 million, coax some £40 million from investors, financiers and/or prospective customers, for the capital expenditure required.

This looks a formidable challenge for Thor, whose shares were floated on AIM at 2p in 2005 and have now fallen to mere 0.18p. Billings admits the company is ’12 to 18 months behind’ in its plans, but insists ‘I’m too stubborn to give in,’ citing the technical operations at Molyhil and likely trends in the world tungsten market, which is still dominated by China, source of 80 per cent of world supply.

Thor recently reported that process improvements at Molyhil suggested a 13 per cent or $12 cost reduction from $90 a tonne cost envisaged in a key 2012 feasibility study. The company said its improved ore sorting techniques could achieve a ’25 per cent upgrade and reduction in mass feed ‘relatively cheaply’, according to Billings, enabling the project to produce ‘8 per cent more metal from an annual ore tonnage cut by 290,000 tonnes to 380,000 tonnes.

The feasibility study implied a 7 per cent increase in ’revenue factors’ could justify a 50 per cent resource hike, says Billings, who argues ‘with a fair wind we could get an upgraded feasibility study in June.’ First, he says the company hopes its laboratories will confirm the ‘ore sorting does not interfere with producing a saleable concentrate with enhanced recoveries’, after some inconsistent results and a spiking of uranium levels.

Then ‘we will update Molyhil’s reserve,’ currently 1.6 million tonnes with 0.6 per cent W03 tungsten tioxide equivalent, the 2012 study having identified a wider resource with 13,100 tonnes of W03 at 0.28 per cent. Thor, whose backers include investment concern Lanstead Capital (which recently injected £750,00 at 0.3p), has an off-take partner for 75 per cent of Molyhil’s output in Global Tungsten of Pennsylvania, which analysts think might be approached for funding, though Billings maintains ‘we have no plans for a partner’.

Molyhil has attracted other entrepreneurs in the past, but tungsten’s notorious volatility, with applications from steel making and mining to light bulbs and jewellery, has proved a deterrent. The price has swung from below $200 a tonne in 2009 to nearly $500 in 2011 and now hovers around $370.

Dumping by China and from other strategic stockpiles bedevilled the market, but, now, it is claimed, an industrialising China wants the stuff itself, implying a potential price-boosting world shortage. Thor, which also has gold projects at Spring Hill in Northern Territory and Dundas in Western Australia, is a risk takers’ punt.