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Hazelwood Resources: Challenging China; Warren Buffett’s #1 Metal
Thursday, July 24, 2014 by Proactive Investors

http://www.proactiveinvestors.com.au/companies/news/56462/hazelwood-resources-challenging-china-warren-buffets-1-metal-56462.html

Hazelwood Resources Ltd. (HAZ.AX)

The Chinese are hoarding it, and Warren Buffett is investing in it.

Prices and demand have been steadily increasing for years.

Precious few new mines of this metal are coming on line, and existing mines are being depleted at an alarming rate.

Tungsten is more than just an extremely hard metal. Indeed, modern life virtually revolves around it and, in most cases, there is no substitute.

But Hazelwood Resources (ASX:HAZ) is stepping up to the plate, and is now has the ability to provide an astonishing 25% of non-Chinese global ferrotungsten requirements.

HAZ boasts growing tonnages of high grade deposits at the exploration, development and production stages.

At its flagship ATC Ferrotungsten plant in Vietnam, production and grades are soaring, and customers are lining up… one quarter of planned output is now covered by offtake agreements.

Recent shipments averaged a record grade of 78.5%, and HAZ is looking at tungsten sales revenue of $50 million THIS YEAR…

Global majors won’t want HAZ’s tungsten footprint getting any bigger, and shares are currently trading well below our estimated fair value, which also makes for one very attractive takeover target.

Not that we’d like to see HAZ being acquired… the real upside will come from the unfolding growth story – right now.



GLOBAL TUNGSTEN POWERHOUSE

We know that sounds a bit of a stretch for a $40 million ASX junior… but Hazelwood boasts the ability to deliver 25% of non-Chinese world tungsten requirements - now.

Its ATC Ferrotungsten Plant in Vietnam began production last year, and has already pumped out over 800 tonnes of product.

These 800 tonnes generated around $30 million in cash for HAZ… remember its market cap is just $40 million!

It has a 60% stake in ATC – this is the largest and most advanced ferrotungsten plant outside of China - with an option to move to 100% via payment of US$7.5 million in cash or HAZ shares.

The ATC plant has a 50 year investment license, is located right on the coast, connected to grid power, and is adjacent to the largest port city in Vietnam.

This ideal location and access to infrastructure will help keep operating expenditures low for the life of the mine.

From April 2013 to January 2014 alone, HAZ produced over 10% of the non-China market for ferrotungsten, and sold to customers in Japan, Europe, Russia, Ukraine, USA, and Brazil.

What’s involved in making ferrotungsten at the ATC plant?

Take some tungsten concentrate, add coke, add ferrosilicon, some scrap steel, electrode paste, then refine at over 3,000 degrees Celsius to produce >18 tonnes per day ferrotungsten output.

Crush the raw ferrotungsten product to end user requirements...and package for export.

Simple...err well no it’s not...but that’s why ATC is a major success story but known to only a few up until now.

HAZ’s ferrotungsten product continues to meet specification requirements from foundries and steelmakers worldwide… and soon, by end of 2014, all the cash HAZ is bringing in will begin to outweigh operating costs.

When this happens, and HAZ starts raking in real, after tax profits, the market is really going to get interested…

There are just not that many mineral producers, that are producing on the scale that Hazelwood is, and verging on profitability, that are capped under $50 million.

MORE BIG NUMBERS

The upside here is unreal – HAZ is targeting 1,500 tonnes production in 2014, and further expansion into 2015.

HAZ’s ATC plant has a max capacity of 4,000 tonnes per annum… once producing at capacity, HAZ will be pulling in A$150 million cash every single year: