Bodó Tungsten begins offtake discussions for mine restart
Dear Shareholders and Interested Parties,
With the dramatic price spikes in coal and wheat this week due to the tragic events unfolding in the Ukraine, we have received a lot of questions about tungsten supply given China and Russia control 87% of the market.
We also saw the news that Germany as a Nation will more than double its military spend to €100 billion to rebuild its army. Military use accounts for only 8% of tungsten demand annually which compares to > 80% in WW2 when our Bodó tungsten mine was supplying the US Military.
Importantly, strategic stockpiles of tungsten in the US, China and Russia seem to be at critically low levels. Given there is almost no new supply for at least 12 months we want Bodó to get ahead of this and restart our mill as soon as possible.
Tungsten prices continue to climb since our acquisition in January. The price is set each Friday afternoon and this week it rose 2.5% to $35,000 per tonne for APT and a healthy 11.5% for Ferro tungsten. Of the 14 smelters that produce Ferro tungsten globally, 12 are from China and 2 from Russia.
See our latest presentation on Bodó on the link below.
Gold and silver account for 100% of Pilar Gold's current sales but we hope that tungsten might be 20% of our group sales by the end of 2023. We are planning to make two hires to fill the positions of General Manager and Geologist at Bodó. Pilar Gold's Head Geologist Paulo Aguirre and his amazing team are becoming so busy on our Sertão, Pilar and MLSE gold drill programmes that Paulo thinks we need a dedicated geologist who knows the Bodó orebody like one of his children. We are in advanced talks with both candidates.
As part of the process we have also started discussions with a potential offtake partner for our tungsten with a proposed five year exclusivity agreement. Trafigura have been amazing supporters of our gold business and we hope we can find an equally supportive partner in tungsten. Our Bodó mill is in good condition and its high-grade clean concentrate of 64% W03 was well liked by the market when it last produced in 2017.
We have set aside C$500,000 of the current C$5 million fund raising to commence those plans and expect that cashflow from our gold business and an offtake cheque will fund it thereafter. Our capex to restart will be less than $5 million making the payback on this investment potentially less than one year.
Our current round at 70 Canadian cents with a full warrant of $1 is closing next Friday, valuing our 4 Production Hubs in Brazil at just US$120 million. In reality, as an investor you are getting Bodó Tungsten for free. Take a look at the current market cap of Group 6 Metals on the ASX and their King Island Scheelite project. This will help give you a guide to what Bodó might be worth to Pilar shareholders. King Island rains a lot more than Bodó and has a golf course that rivals St Andrews.
We hope to update you on our Sertão drilling programme next Friday and are getting very excited about the prospect of it soon becoming one of the highest grade gold mines in the industry. It will be a very exciting day when the first truck carrying Sertão ore arrives at our Pilar mill later this year. If you have any questions don't hesitate to call us and thank you again for your support.
Regards,
Jeremy Gray | CEO
jeremy.gray@pilargold.com
UK: +44 7769 388376
Charles Chebry | President
charles.chebry@pilargold.com
CA: +1 403 680 8511
Edward Balme | Head of Investor Relations
edward.balme@pilargold.com
BR: +55 65 99354 9387
