Hunterresources 🪙

Tungsten West is pretty much the only near-term, at scale Western tungsten supply outside of China. As a UK mine which is backed by government funding it is a unique asset in the global critical minerals market. Hannam & Partners, recently estimated the NPV of the asset at £936M but that was at $1,000/mtu and $800/mtu pricing. Tungsten is currently trading beyond $3,000/mtu! At spot prices, the implied EBITDA covers the entire £71m NWF restart capex in just 3 to 4 months - exceptional by any mining standard and makes the current valuation very cheap. Pricing has sky rocketed but the driver is structural, not cyclical. The metal has moved from an industrial commodity to a critical defence material and is used in armour-piercing ammunition, missile guidance systems, aerospace components, and semiconductors. Chinese export controls have severed the West's primary supply chain and there is no short-term substitute for the metal. As for the asset, Hemerdon is one of the largest tungsten and tin deposits in the Western world. Tungsten and tin concentrate was produced last month and production starts in the next couple of months. Full capacity next year will see the mine ramp up to nameplate capacity to 500t per hour over the course of 2027 with further expansion offering further upside. On 21st May, the company advised - "In response to recent market conditions, the Company has commenced a project to materially increase the production capacity of the operation, including significant additional capacity in the new build programme currently underway." This lever is a material additive and should see further recognition shortly. Massively, the NWF deal with the UK Government removes the primary overhang that had suppressed the share price - restart financing risk. The government also secured the right to ringfence up to 50% of Feasibility Study tungsten production, reflecting the strategic importance of the asset to UK defence and nuclear industries. From the FT, the CEO added that the company was in “advanced” talks with a refiner that would buy some of the tungsten and process it into a form that industry can use. Court declined to name the refiner but said it was not based in China. A refiner partnership clearly transforms Hemerdon's commercial proposition. GTP and H.C. Starck are the most likely candidates(?) given their pure-play refining focus and closer proximity to Hemerdon. The fact that talks are described as "advanced" suggests this could be announced imminently. All in all, very material cash upside coming with the shares very cheap here but that won't last. I will be adding to my already large holding if the shares linger here for much longer. #TUN