Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me from Hazelwood Resources to discuss its recent capital raising is Managing Director, Terry Butler-Blaxell. Terry welcome to FNN. You’ve just raised 7.5 million to fund Stage 1 of your ATC Ferrotungsten Processing Plant in Vietnam, why did you decide to build your own plant?
Terry Butler-Blaxell: The Plant we’re building in Vietnam is part of our downstream processing strategy and is part of our integrated tungsten business; it’s where the value is created. We’re also proposing to build a mine in the East Pilbara of Western Australia – that’s part of the value chain but the most important part of the value chain is what you do beyond the mine, and that happens where we make our ferrotungsten. It makes a lot of sense to own or have control of the part of your business where the value is created the most.
So that’s how we’re going to make a difference in the tungsten game. It’s controlling not only the input but the processing and that’s how we’re going to be a significant player.
Clive Tompkins: And why in Vietnam?
Terry Butler-Blaxell: Well Vietnam is a terrific environment for foreign direct investment. There have been a number of Western, Korean and Japanese companies operating there for many years. It’s a very good place for manufacturing and processing businesses such as the ones - the one we’re proposing to establish this year.
Logistically it’s a very good location for procurement of raw materials, there is a very good port nearby – it’s the largest port in Vietnam. We’re only probably an hour away from that port. There’s abundant power in the form of coal fired power which is the best type for our type of activity. The permit in and approvals process is very rapid indeed compared to doing anything in Australia. Within a hundred and fifty days our plant buildings will be erected and ready for the furnace to be installed. So there’s a number of reasons why you’d go to Vietnam – it’s a much faster start up and the infrastructure is quite good.
Clive Tompkins: When we last spoke your Chairman, Mark McAuliffe mentioned the purity of tungsten from Big Hill, what bearing if any does this have on the type of plant you’ll be building?
Terry Butler-Blaxell: Well without a decent quality feedstock no plant has a hope of success, particularly in ferrotungsten. Our high purity feedstock that we’ve demonstrated we can make from Big Hill is well suited to ferrotungsten production. We can produce a high purity ferrotungsten product from a high purity feedstock. So, you know, having the high purity feedstock is an absolute essential thing if you want to be a quality player in the game.
Clive Tompkins: Terry funding is for Stage 1 of the Plant, what capacity will this allow you to process?
Terry Butler-Blaxell: Stage 1 of our Plant has a capacity of 2.4 million kilograms per annum of contained tungsten, or equivalent to about 3000 kilograms of the metal. That’s the Stage 1 Plant, that’s going to be ready for switch-on at the end of this year.
Stage 2 of the Plant is a second furnace. That will have another 2.4 million kilograms of contained tungsten capacity, so total install capacity will be about 25% of global supply. We also have licensing in place and the engineering to do a Sodium Tungstate Plant which is a different type of product. You can process low-grade feedstocks and waste materials that are created during your ferrotungsten processing. So it’s a multifaceted operation and the start of many things to come in downstream processing for this Company.
Clive Tompkins: And will tungsten from Big Hill be ready in time?
Terry Butler-Blaxell: No Stage 1’s going to be ready way before Big Hill’s ready. We’re going to be procuring feedstock from the market and will be making money early next year. Big Hill is currently the subject of a definitive or if you like, bankable Feasibility Study. We’ve just come out of a pre-Feasibility Study for Big Hill that suggests we should develop the mine to provide secure high quality feedstock and enable ramp up to Stage 2 of the Plant. About 2012 we envisage Big Hill will be ready.
Clive Tompkins: Finally when can shareholders expect the first sales of tungsten?
Terry Butler-Blaxell: The first sales of tungsten are projected to occur in the March quarter of 2011 after a commissioning and ramp up phase. The commissioning should take a month to successfully complete. We’ll be procuring feedstock and considering switching the furnace on towards the end of this year.
Clive Tompkins: Turning to the capital raising itself, you sold 37.5 million shares at 20 cents, who supported the issue?
Terry Butler-Blaxell: Hartleys Limited in Perth were the broker to this offer and they placed these shares with a range of institutional and retail investors, both local and overseas.
Clive Tompkins: Last question. Where is your market cap now?
Terry Butler-Blaxell: Market cap’s approximately $40 million. It took quite a hit during the downturn in the markets recently - we were suspended for most of that time and as soon as we came out, we got hit fairly savagely. We’re currently priced around the level of our placement, so we expect to recover a fair bit of value as we complete the construction of our project in Vietnam and start production.
Clive Tompkins: Terry, congratulations on getting to this point.
Terry Butler-Blaxell: Thank you.
