Evocutis PLC - Investment in Producing Tungsten Mining Operation
RNS Number : 1168A
Evocutis PLC
18 December 2014

18 December 2014

 Evocutis Plc

("Evocutis" or the "Company")

Investment in Producing Tungsten Mining Operation, Brazil


Evocutis Plc (AIM: EVO) is pleased to announce that it has signed a Binding Term Sheet ("BTS") to acquire an initial 10% interest in Brazil Tungsten Holdings Limited ("BTHL") which owns a 25 year lease over (with the option to extend) the producing Bodó Tungsten Mine in Rio Grande do Norte, Brazil, by investing US$1m in new capital in BTHL for the specific purposes of mine expansion.


Evocutis will acquire the 10% interest by subscribing for new shares  ("Subscription Shares") that represent a 10% shareholding in BTHL. Evocutis also has an exclusive option to increase its holding in BTHL to 20% within 60 days by investing a further US$1million towards mine expansion, subject to certain conditions.


David Lenigas, the Company's Chairman, commented:


"Evocutis sees the specialty high tech metals sector as an exciting place to invest and these funds will be specifically directed at increasing tungsten production over the coming year from the Bodó Tungsten Mine in Brazil."


About the Bodo Tungsten Mine, Brazil:

BTHL is headed up by mining specialists Stephen Fabian, Paul Berndt and Mark Burridge. BTHL owns, through its wholly-owned subsidiary, Bodó Mineracao Ltda, the Bodó Tungsten Project ("Bodó"), which is located in Brazil's Seridó Tungsten Province in the State of Rio Grande do Norte. The Seridó Tungsten Province is Brazil's most important tungsten producing region and hosts the majority of Brazil's tungsten reserves. The project is located adjacent to highway RN203 and is 200 km west of the State capital of Natal.

Bodó is a high-grade tungsten operation employing 96 people, and is currently operating at the rate of about 60 tonnes of ore production per day from underground operations.  The ore is being processed through an onsite treatment plant with a current capacity of about 200 tonnes per day. Tungsten concentrates are sold to the global export market under an existing sales agency agreement with Wogen Pacific Limited.

Total tungsten tri-oxide (WO3) mined from January-November 2014 has been 4,351 metric tonne units ("MTUs") with 2,722 MTUs recovered.

It is intended that the funds provided by Evocutis will be specifically used to provide the necessary working capital to expand and improve the existing operations. For the mine, funds will be utilised to refurbish an existing incline shaft and advance underground development so that daily ore production can be tripled. For the mill, funds will be utilised to modify the plant which is expected to improve tungsten recoveries from approximately 65% to anticipated recoveries of over 80%, by adding grinding equipment to fully liberate the tungsten mineral.

Beyond this, the directors of Evocutis believe significant further growth potential exists from both continued underground development and several potential open pit mining areas already identified which have the potential to support continued cost-effective growth to levels of production a multiple above current levels.

BTHL's holdings consist of one mining lease and two exploration licenses totalling 189.6 hectares. The Bodó mining lease 000.894/1944 is surrounded by the adjacent exploration licence areas; 848.129/2006 (9,965 ha) and 848.129/2006 (281.75 ha).

The Departmento Nacional de Produção Mineral (DNPM) Mining Licence 000.849/1944 was first issued on 2nd April 1948. The current lease was issued to Metais do Seridó S.A. on 3rd November 2009, it will expire on 3rd November 2039, but there is a right to extend the licence for a further 30 years. The neighbouring exploration licences of Tarantula and Area Sul were also issued on the 3rd November 2009.


The Bodó Mine when acquired by Brazil Tungsten Holdings Limited had a Simplified Licence (Licença Simplificada) which allows extraction of 4,500 t/m (approximately 185 t/d). This Simplified Licence was granted on the 26th March 2012 and is valid until 22nd September 2016. Brazil Tungsten, after consultation with the local authorities, intends to convert this to an unlimited operating licence (Lincença de Operação) when production is ramped up in the future.


Tungsten Overview:


Tungsten is a rare metal and is classed as a critical raw material and a strategic metal due to its concentration of supply from China (83% of world supply) and due to its importance to industry, aerospace and defence.


The main end-use application for tungsten is in the manufacture of cemented carbides, also known as hardmetals.  Cemented carbides accounted for around 55% of tungsten consumption in 2010 and are, therefore, the main driving factor behind tungsten demand.  The steels and alloying sector represented around 23% of global consumption with tungsten used in tool, stainless and full alloy steels, as well as in superalloys.  Tungsten-based alloys are also a significant market for tungsten in this sector.  Mill products manufactured from tungsten metal, which are mainly used as filaments in the lamp industry, and for electrical and electronic contacts, had a 14% share of the tungsten market in 2010, while other uses, principally chemical applications and products, such as catalysts and pigments, accounted for the remaining 8%. (Source: Roskill information Services 2012; http://www.mmta.co.uk/tungsten-market-overview)


Transaction details:


The consideration for the initial 10% interest in BTHL shall be paid as follows:

1.         Evocutis will pay BTHL US$250,000 within 7 days of signing of this BTS, which was executed yesterday.  This sum will be a deposit for the Subscription Shares.

2.         Immediately on satisfaction of the conditions precedent, Evocutis will make a further payment of US$750,000 to BTHL towards the costs of expanding the operations at the Bodó Mine.  On payment of this sum (and taking account of the deposit paid), the Subscription Shares will be issued as fully paid up Shares in BTHL, which represents a 10% shareholding of BTHL.

The transaction is subject to the condition precedent that the obligations of the parties under this BTS being finalised into a formal Investment Agreement within 60 days of signing of this BTS.




MTU                 metric tonne unit                     the unit by which tungsten raw materials are                                                                         bought and sold, equivalent to 10kg.

WO3                tungsten tri-oxide                    the chemical entity by which the grade of
                                                                        tungsten products and their mass is usually



For further information, please contact:


Evocutis Plc

Donald Strang, Executive Director

+44 (0)20 7440 0640


Cairn Financial Advisers LLP

James Caithie/Paul Trendell/Carolyn Sansom

+44(0) 20 7148 7900




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