EDITOR: | August 11th, 2015 | 1 Comment

Almonty – Cornering the Tungsten Market

| August 11, 2015 | 1 Comment

It is rare to find a Tungsten miner with more than one project let alone four on the go at one time. As I noted a few weeks back the quantum leap for Almonty (TSXV: AII) was its move on Woulfe Mining to bring the Sangdong project into its portfolio. This was on top of the company’s existing two projects in Spain and it’s rapidly advancing Wolfram Camp mine in Australia. However it is useful to go back and look at the company’s original projects in Spain, one of which is the cash-generator for the new outreach.

The Los Santos Mine

The Los Santos scheelite deposit is in the province of Salamanca in western Spain and was originally investigated by Billiton starting in 1979. It is 180 km west of Madrid, 50 km south of the city of Salamanca and 1 km east of the town of Los Santos.


After 1980, Billiton completed an exploration campaign which included 249 trenches and 231 diamond drillholes. In addition in one of the zones, Los Santos Sur, an 825m underground ramp was developed, along with level development at the 950m elevation, which provided bulk samples as well as underground drilling access. Billiton went as far as to carry out a pre-feasibility study of the prospect. By 1985, however, with a prevailing tungsten price of US$81/mtu, the project was not considered viable.

Ownership passed into the hands of Sociedad de Investigacion y Exploracion Minera de Castilla Leon S.A (SIEMCALSA), a publicly-owned company of mining and geological consultants based in Salamanca. In 2007 the deposit was purchased by Daytal, which at the time was 100% owned by ASX-listed Heemskirk Consolidated (HSM.ax). The mine was originally opened in 2008 and commissioned in July 2010.

The Los Santos Project was acquired by Almonty in September 2011 from Heemskirk and represented the QT for the listing of Almonty on the TSX-V.


Under Billiton, exploration was focused on skarn mineralisation on the margin between the Bejar granodiorite and the surrounding Cambrian metasediments. The discovery of the Los Santos tungsten bearing skarns was the result of regional geological reconnaissance and the targeted night-time use of ultra-violet lamps to disclose the presence of the tungsten mineral, scheelite (CaWO4) which fluoresces under ultra violet light.

A period of intense exploration activity followed, including diamond drilling and some preliminary engineering including the aforementioned ramp.

The tungsten occurs mainly as scheelite within massive pyroxene skarn. The skarn bodies are generally narrow steeply dipping structures. The deposit is made up of a number of discrete zones, six of which have been modelled for the current resource estimate. The strike length varies for each zone, but zone dips are fairly uniform across the deposit, varying between 60o to 90o. Within each zone, the skarn mineralisation is located within a number of individual beds, separated by barren lithologies. The major skarn beds vary between 2m and 20m in width; there are, however, numerous thinner bands measuring tens of centimetres.

The latest resource dates from June 2013:


Two years of production since publication would have depleted this resource but exploration is on-going to replace reserves.


Almonty is a strong believer in contract mining and employs this method at Los Santos to maximize its flexibility. The open pit operations are conventional drill and blast operations, based on mining 10m benches in waste, and 5m benches in ore, with 0.5m of sub-drilling.

The aerial view below shows the main pit with the green structure to the left being the processing plant and the Los Santos South (Main) pit being the bright white patch just right of centre. Towards the town at the top of the photo is a smaller Las Cortinas pit that has been developed over the last few years.


Future Expansion

Exploration in recent times has been directed towards the lower parts of the deposit as the company believes that underground development has the potential to materially extend mine life.

In an area to the south of the Los Santos Sur pit, some small skarn extensions were blocked out for underground mining, resulting in approximately 94,000 tonnes of underground ore. It is felt that it should be possible to access these underground stopes through adit access from the pit, as well as by extension of the existing underground development. In this blocking out process, a cut-off grade of 0.3% WO3 was used. The underground mining cost of $30.42 per tonne was derived from estimates from local Spanish mining contractors. The blocking out was based on a cut-and-fill mining method, with 5m lifts.


Based on the current underground resource, a 15,000 tpm operation has been evaluated by management. This would involve a 15 metre crown pillar remaining between the open pit and the underground development. This would provide an additional four-year mine life.

Exploration drilling results demonstrate that substantial potential exists below delineated resources

The current processing optimization plan consists of:

  • Increase production to >90,000 MTU per annum
  • Plant process refinement expected to result in a 40% recovery improvement and increased throughput
  • Operating costs, excluding waste rock movement, to be reduced and sustained between US$125-135/MTU from ~US$190/MTU at acquisition (achieved US$98 for the six months ended March 31, 2015) –
  • Improved strip ratio, improved plant recoveries and streamlining personnel costs, improved throughput
  • Further extend mine life to 10+ years (from four years at acquisition) – Drilling targets identified to further delineate the resource and explore newly discovered structures

On another score the company has been considering the issue of tailings recovery. With the recent improvements in mill recovery, as well as the further improvements with the planned scheelite flotation facilities, an overall mill recovery of 70% should be achieved. This has meant that specific areas where tailings have been deposited still contain economic WO3 grades. The resource estimate from 2013 projected that there was 3,105 tonnes of in situ WOgrading at 0.16% recoverable In the tailings.

The Second String – Valtreixal

This property came into Almonty’s hands in March 2013 when it entered into an option agreement with SIEMCALSA (the same parties that vended Los Santos to Heemskirk) to acquire a 51% interest in, and be the project operator of, for total consideration of Euro 1.4 million. This deal was later rejigged and in January of this year it announced that it had made the third installment payment of €300,000 (instalment payments to that date totalled €700,000). Almonty now owns a 25% interest in the project and has an option to acquire the remaining 75% ownership interest through €1,700,000 in additional installment payments over the next 18 months.

The Valtreixal Sn-WO3 project is located in the northwestern Spanish province of Galicia, approximately 250km from the Los Santos mine. It is quite common that tin occurs alongside Tungsten in Spanish Tungsten deposits. This site is a past producer with extensive underground workings.

A historical resource estimate (not NI43-101 compliant) for the Valtreixal property of 8.65 million tonnes of mineralization at a grade of 0.23% Sn+WO3 (0.10% Sn + WO3 cut-off). This was prepared on the basis of the applicable mineral resource standards in Spain.

Almonty has been carrying out additional exploration activities on the project and produced a new resource estimate in the second half of last year, which can be seen below.

Valtreixal  – NI 43-101 Mineral Reserves/Resources  (as at Aug 31, 2014)

WO3 Equivalent (%)
Inferred 7,410 0.12 0.20 0.27

The company now classifies the project as being in Pre-Feasibility mode.


There are two themes to the Almonty Industries Inc. (TSXV: AII) story that catch the imagination. The first is the obvious one, the long overdue creation of a consolidator in the fragmented Tungsten space. The second though is the reestablishment of Spain on the mining map. Once the leading mining nation in Western Europe, the country fell off the radar when it joined the EU and the good times rolled. Now that the EU gravy train has been derailed its back to basics and the fundamental truth that mining makes jobs for isolated communities has come back to the fore.

One thing investors should also keep in the back of their mind is that the Barruecopardo Tungsten mine a few hundred kilometres south on the Portuguese side of the border is apparently now back in play as the major Japanese trading house, Sojitz, has struggled to get into the mining mindset. The irony of Almonty buying this asset is that the management team at Almonty has sold the asset, last decade, to Sojitz for an extraordinary price. Picking this up would be a major coup.

So Los Santos is now the cash generator that is funding the further expansion of the Almonty empire. While Valtreixal is on the horizon as a future project the company is rightly pushing for geographical diversification in the short term with Australia and South Korea next off the blocks with Valtreixal keep up its sleeve as the follow-on when Los Santos starts to wind down. There is currently nothing we can fault in the Almonty tungsten mine consolidation strategy.


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  • Mike Taylor

    Thanks for your analysis of the Almonty situation Chris. Although relatively rare, a similar consolidation happened once before, around 25 years ago, also involving Beralt. Last time around it was led by Avocet who, apart from gold mines in Malaysia, also had holdings in an interesting network of tungsten facilities taking the W from ore to APT

    Regina (Peru)
    Malaga (Peru)
    Lermontov (Russia)
    Bishop/Pine Creek (USA)

    August 12, 2015 - 11:10 AM

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