Tungsten West (LON: TUN) shares are up 12% this morning which we do think is a little too much for such an inconsequential announcement. Yes, we agree, £400,000 is real money and we'd like to have that ourselves. But it's also a one off issue here. For what they've done is process the remaining ore that was left lying around last time the Hemerdon mine was closed down. True, that does mean that their processing circuits work which is nice, but that is pretty much all it means. They've produced two lots of tin concentrate, two lots of tungsten concentrate. And until they gain all the relevant permits to allow full on mining again that's it.
That is, this is an event, for sure, but it's not the start of an interesting process.
Just for the avoidance of doubt we're quite certain that there's tin and tungsten there at Hemerdon to mine. We're just not certain that what's there is worth mining. For the Cornish industry didn't close down because the ores were worked out. That industry closed because other deposits elsewhere were cheaper to exploit - therefore the global price for both metals came down so much that it wasn't worth bothering to mine in Cornwall. Sometimes, and for brief times, global prices have climbed to the point where reopening might make sense. But as happens they've not remained that high for that long.
For, of course, if tin - say - prices rise high enough that the hard rock mines of Cornwall are worth reopening then that's also likely true of those in the Krusny Hory (First Tin, European Metals) and many other places around the world. At which point the increased supply depresses prices again and so the mines become not worth running again. This being the issue - potential tin supply is high at higher prices. Therefore higher prices tend not to persist.
Tungsten West share price from London Stock Exchange
As we've said before about Tungsten West we are unconvinced of the long term viability of the project.
There is also that other great unexplained here. Mark Thompson left Tungsten West suddenly and completely. We'd all rather like to know why. What is it that led to that leaving and the associated slump in the share price? Until we know what that is- for example, it could be doubts about project viability - then we're sceptics once again about the project.
Just to repeat, we don't doubt there's tin and tungsten there. We're just not sure about the economics of extraction, something that depends upon the global tin price - something that's rather weak at present.