Contracting group GR Engineering says the start of a $123 million works package at Wolf Minerals’ Hemerdon tungsten and tin project in England is a welcome boost in a murky mining services market.
The contract, which was initially announced in March, includes construction and commissioning of a 3 million tonne per year processing plant and associated infrastructure at the Hemerdon mine, wich is located near Plymouth.
The deal was subject to a number of conditions, including Wolf securing a financing package for the Hemerdon mine, which was finalised last month with international financier Resource Capital Fund.
Wolf said it had made the first $US10 million drawdown from the $US82 million financing package today.
GR Engineering managing director Joe Ricciardo said the company was well-experienced in the construction of processing plants, and the works package was well within its capabilities.
“Obviously in times where work opportunities are limited, we are even more excited,” Mr Ricciardo told Business News.
“Things in the mining space have contracted quite severely and it is a direct flow-on from how miners are looking after their capital expenditure, assuming they have capital to spend.
“In a lot of cases there are projects that they just can’t get finance for because of depleted commodity prices and all the hurdles that you have got to go through in getting finance, while equity raising in this market is almost impossible.”
Mr Ricciardo said the Hemerdon contract, as well as the company's extensive operations in West Africa, was vindication of a strategy implemented three years ago – to chase business opportunities internationally.
Wolf Minerals managing director Humphrey Hale said the company was excited to formally commence construction at Hemerdon.
“The first draw-down of the funding package provided by RCF represents a major milestone for the company and our plans to bring the project in to production as a world-class tungsten and tin mining operation,” Mr Hale said in a statement.
At 1:40PM, WST, Wolf shares were up nearly 6 per cent, at 27 cents, while GR Engineering’s stock was steady at 41 cents.
