Wolf Minerals says it has just two days to lock in more funding
Mining & Resources
Tungsten producer Wolf Minerals says it needs to secure funding within the next two days or it won’t be able to meet its short-term working capital requirements.
Wolf (ASX:WLF) has been working with its key financial stakeholders to come up with longer term funding solutions before the expiry of a “standstill” period on October 28.
A standstill period is where a lender pauses its demands for repayment and grants the borrower more time to restructure its debt.
Wolf said it expects to conclude talks with its financiers this week, but if it “cannot satisfactorily conclude its discussions with those stakeholders within the next two days, it will not be in a position to meet its short-term working capital requirements after that point in time”.
The company remains suspended from trading while it tries to secure additional funding.
Wolf is generating cash flow from its Hemerdon tungsten and tin project in Devon, southwest England, but at the end of June it had $115.7 million worth of outstanding debt and less than $20 million in cash.
Just before the end of the June quarter it secured an additional £65 million ($120.2 million) loan from Resource Capital Fund VI.
Wolf was also estimating a cash burn of $39.5 million for the September quarter.
The company needs the extra cash to support the ramp up of production from its Drakelands open pit.
Wolf has faced several issues (Stockhead columnist Tim Treadgold covered them in September last year) a including a weak market and low prices for tungsten and operational difficulties.
Tungsten has the highest melting point of all metals and has major applications in machine tools (drill bits and cutting tools), as a toughener in steel alloys, in ammunition and armoury, and a range of other applications.