Brazilian tungsten project grinds to halt amid drought

30th October 2012 By: Henry Lazenby - Creamer Media Deputy Editor: North America

TORONTO (miningweekly.com) – What has been called the most severe drought north-eastern Brazil has seen in 30 years has prompted TSX-V-listed Largo Resources to suspend operations at its Currais Novos tungsten tailings reprocessing plant.

The availability of water from the 11 wells currently in use had dropped by half as a result of the drought, which has affected the north-east region of Brazil over the last year.

In addition, the level of the water in the lake, which is also used as a source of water, had dropped to a critical level. Rainfall over the last nine months in the Currais Novos region was only 58 mm according to the Rio Grande do Norte state government agency, Empresa de Pesquisa Agropecuaria do Rio Grande do Norte, compared with the long-term average range of 600 mm to 800 mm.

“Owing to this extraordinary environmental situation, operations will be suspended imminently at Currais Novos. As a result of this suspension, full production of tungsten concentrate will not be achieved by November,” the company said in a statement.

Largo said it was initiating an investigation of alternative water sources, which could include drilling additional wells. Largo had also re-engineered water reticulation in the existing circuit to optimise consumption once operations resumed.

The company said it was unclear for how long the suspension might last. It added that all predictions suggested that the rainfall this year would resume as normal, which should remedy the water availability moving forward.

The operation was targeting producing 23 000 t units of tungsten for this year.

Meanwhile, the company reported it was making progress at its fully owned Maracás vanadium project, also in Brazil, which was scheduled for production from the end of 2013.

Procurement of about 70% of the equipment and material for the project had already been placed and delivery of long-lead items was either on or ahead of schedule, with the most critical of these, the rotary kiln, scheduled for delivery in time for commissioning in the fourth quarter of 2013.

Detailed construction planning regarding electrical-mechanical construction had been completed with electro-mechanical site construction activities scheduled to start in February 2013.

Largo said the projected capital expenditures were currently tracking below the overall budget of $232-million.

The company’s Toronto-listed shares traded flat on Tuesday at 21.5 Canadian cents apiece.