Transitional month for Specialty Metals’ tungsten operation
The last few months have been a transitional period for Speciality Metals International Limited (ASX:SEI) as the company completed its acquisition of Mt Carbine Quarries Pty Ltd (Mt Carbine Quarries), an entity that owns and operates the Mt Carbine quarry and Mining Leases ML 4867 and ML 4919.
Consequently, the company had plenty of positives to reflect on in its report for the three months to 30 June, 2019, particularly given the group is a near-term tungsten producer.
SEI’s wholly owned subsidiary, Mt Carbine Quarrying Operations Pty Ltd, commenced operating the quarry as of the 1 July 2019 with the handover transitioning smoothly from both an operational and customer perspective.
Aside from the Mt Carbine acquisition, the June quarter saw the commencement of the unincorporated Joint Venture between Speciality Metals and Cronimet Asia Pte Ltd for the development of the Mt Carbine Tungsten Tailings Retreatment and Stockpile Projects.
These events mark the beginning of a new era for Speciality Metals as it now focuses on bringing the Mt Carbine Retreatment Plant back into production with orders for all major components now placed.
The completion and commissioning of this work is still on-schedule to occur during the December quarter of 2019.
Move to production could trigger share price action
Since signing the Cronimet Joint Venture Agreement work on the electrical, pump reconditioning and replacement has commenced, and orders for new equipment have been placed.
Contractors have been engaged to complete the required concrete formwork and remove old equipment surplus to the new plant design.
It is expected much of the upgrade and reconstruction work will be completed in the September quarter.
The company has engaged its environmental consultants to assist with the reactivation of its pre-existing authorities for the recommencement of the Tailings Retreatment and Stockpile Projects.
Significant work has also been completed by the company’s geological team with respect to tenement maintenance and reporting to the relevant government authorities in both Queensland and New South Wales, and this will continue throughout the December half.
Management has previously indicated that the group should be in a position to commence tungsten production in the December quarter of 2019, and as is usually the case with companies approaching production this could provide share price momentum.
Indeed it would appear from the following chart that investors are looking to catch the stock at a relatively cheap price prior to the crucial lead up period to production with the company recently hitting a 12 month high.