JOHANNESBURG (miningweekly.com) – Tungsten miner W Resources has started negotiations with multiple debt financiers to raise $24-million for the expansion of its La Parrilla tin and tungsten mine in the Extremadura region of Spain.

The Aim-listed miner has appointed specialist debt advisory group BurnVoir Corporate Finance to assist with arranging the financing for the expansion, known as the T2 project.

W Resources will require $27-million for the project, which will increase the La Parrilla mine rate to two-million tonnes a year, taking tungsten concentrate production to 2 500 t/y and tin concentrate production to 500 t/y.

The company aims to receive firm term sheets for debt funding by the middle of the year, with financial close targeted for the third quarter of 2017.

Chairperson Michael Masterman said on Tuesday that the credit metrics for the debt component of the financing were strong and that the company was engaged in discussions with multiple debt financiers.

“The finance team, led by BurnVoir, is highly confident of completion of a debt financing of around $24-million. La Parrilla's comparatively low capital cost allows us to target the financing of La Parrilla with a sustainable quantum of debt with limited dilution to existing shareholders,” he said in a statement.

The company is also negotiating vendor finance in respect of the key capital components of the T2. Contractor allmineral Aufbereitungstechnik, which was awarded the design and construction contract for the jig and mill at a price of €4.98-million ($5.24-million), is providing vendor finance for just under 50% of the contract price.

In addition to the debt finance and the vendor finance, W Resources will be looking to secure an additional $3-million in equity or customer finance to complete the funding of the T2 capital expenditure.

Securing a debt package took longer than anticipated, which pushed back the timeline to production by some months. The company is now targeting the completion of construction of the T2 phase in the second quarter of 2018, with production restarting in the third quarter of that year.

The miner is also considering an expansion, known as the T3.5 project, to 3.5-million tonnes a year, and has the ability to further increase production and lower operating costs.

The revised capital cost for the combined T2 and T3.5 projects is $45-million. This is $7-million less than a 2015 internal definition study, owing to optimisation work.

The revised cost estimate is based on firm bids for the major crushing, jig and concentrator plant, together with third party quotations for key engineering, procurement and construction management and bulk earthworks contracts.