Hemerdon miner locks in eight-year US offtake with Elmet Technologies as shares climb on the news.
Tungsten West (AIM: TUN) shares rose 8% on Wednesday after the company confirmed an eight-year supply agreement with US producer Elmet Technologies, giving its Hemerdon mine in Devon a long-term route to market and an indicative deal value it put at more than £1.4bn.
The jump came as investors welcomed the certainty offered by a multi-year contract, even though the company was careful to stress that the headline figure is not guaranteed revenue and will instead depend on tungsten prices, exchange rates, delivered volumes and a variable pricing mechanism built into the agreement.
Under the terms of the deal, Tungsten West will supply Elmet, part of The Elmet Group, with 1,000 tonnes a year of contained tungsten trioxide over eight years, with scope for Elmet to process a further 500 tonnes annually at Tungsten West's request to help meet UK government and industry demand.
The agreement follows August's commitment from the National Wealth Fund to invest up to £71m in Tungsten West, alongside an option to acquire up to half of Hemerdon's tungsten output, underlining the growing state and industrial interest in securing critical minerals supply chains between the UK and US.
Chief executive Jeffery Court described the tie-up as a landmark for the company and a step towards establishing Hemerdon as a strategically important Western source of tungsten, while ministers framed it as part of a broader UK-US critical minerals partnership. Attention now turns to how quickly Hemerdon can ramp up production to meet the agreed volumes, with actual proceeds ultimately hinging on market prices and delivery performance rather than the headline £1.4bn figure.
This report is based on Tungsten West’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Ray Harrington on Unsplash.
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