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  • Hazelwood Resources Notches Strong Ferrotungsten Production 0 comments
    Aug 3, 2014 11:53 PM

    Hazelwood Resources (ASX:HAZ) has moved onto a solid recurring production platform at its ATC Vietnam Ferrotungsten Project, transitioning from batch campaigns.

    Ferrotungsten is a specialty metal and used in the production of high speed steels, tool steel and temperature resistant alloys.

    The June quarter saw 254 tonnes of ferrotungsten lifted from the ATC project furnace with produced grades exceeding 78% tungsten content.

    During the period shipments of 275 tonnes occurred, with 80% of provisional payments having been received.

    Cash receipts from product sales of $8.3 million were received during the quarter. Final sales settlements continued to be received throughout July.

    At June 30, cash and liquid assets (inventory) were $14 million. This included a $2 million placement from a Vietnam focused institutional investor.

    During the quarter, a term loan for US$4 million was drawn to facilitate on-going growth of the ferrotungsten business.

    ATC Vietnam plant

    Process yield to date is at 96%, with a targeted metal yield of 99%.

    The ATC Ferrotungsten plant is the largest capacity, most advanced facility of its type outside of China, producing a quality product that meets the specifications of end-users around the world

    Product Sales

    ATC Ferrotungsten has forged a reputation as a reliable, supplier and a global brand. Provisional payment (80%) was effected on bill of lading ex -Haiphong under the global sales agency agreement with Wogen.

    The product was distributed to the usual range of mainstream end-users in Japan and Europe. New business was concluded with a customer based in India.

    Final settlements with end-users occurred throughout July. Only minimal amounts of ferrotungsten stock from the June quarter's production remain unsold. Much of the remaining stock position has been kept to fulfil Long Term Contracts (offtakes) with certain customers in Japan and Europe.

    Approximately 25% of the proposed output for 2014 is under term-deals.

    Tungsten Market and Feedstock

    The ferrotungsten market price has recovered to around $43/kg by the end of June.

    Feedstock pricing risk is managed via APT (ammonium paratungstate) and ferrotungsten-based formula pricing mechanisms with an extended quotation period that better matches the period of production and sales.

    Some recent softness in the tungsten APT market has provided opportunities for favourable fixed price feedstock contracts which have potential to improve the ferrotungsten refining margin.

    There is potential for future vertical integration with Hazelwood's 100% owned primary tungsten projects in Western Australia. The Big Hill Tungsten Deposit and Mt Mulgine Tungsten Project host near surface resources and are being evaluated as potential future sources of feedstock for Hazelwood's downstream refining business.

    Analysis

    Hazelwood notched a solid quarter at the ATC plant moving to a regular production and reporting platform. 2014/15 holds out promise of the best prospects in the life of the company.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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