Wolf restructures debt after Drakelands problems

Metals producer Wolf Minerals has secured a debt restructure with its creditors and a £20 million ($A32 million) loan with a major shareholder, after running into problems at its Drakelands mine in southern England.

Perth-based Wolf told the market today it had been faced with underperformance of the processing plant at Drakelands, coupled with finer tungsten ore than originally expected.

“In addition to these challenges, the tungsten price has remained lower than anticipated despite a constrained supply of tungsten concentrate globally,” Wolf said in a statement.

“In the processing plant a work program involving equipment changes and design modifications is under way and gradual improvements in production are expected during implementation of the program over the coming quarters.”

In order to maintain financial strength, Wolf has entered into an agreement with its creditors to defer all senior debt principal repayments until January 2018, with the tenure of that debt extended until June 2023.

Wolf currently has £64 million of outstanding debt under its debt facilities.

Wolf has also entered into an agreement with major shareholder Resource Capital Funds for the provision of a £20 million bridge facility for a maximum 12 months from first drawdown.

The company expects to make an initial £6.5 million drawdown by the end of the month.

“The executed agreements enable Wolf to continue its focus on improving operations at the Drakelands mine to enable the project to reach its true potential,” Wolf managing director Russell Clark said.

“We are starting to see improvements in production following the commencement of the work program in the processing plant and remain confident that Wolf, with its large production capacity and location in a first world country, is well positioned within the global tungsten market.

“The company values the continued support from its lenders, major shareholder RCF VI and its affiliates; and major customers.

“The combination of the standstill, restructure, new funding support from RCF, and support from our customers enables the company to focus on the success of Drakelands.”

Wolf shares have been suspended from trade on the ASX since the end of September, and will be reinstated after the company’s annual report is released to the market.

Wolf shares continue to trade on the AIM.