SMALL CAP IDEA: Strategic Minerals can capitalise on tungsten demand with its Redmoor Project

Behind a four-metre wall of hay bales hides a truth machine. Well, a drill rig to be less dramatic.

Its rhythmic clanking is barely audible against the holiday traffic of the A388, with cars towing caravans headed for Cornwall’s tourist traps.

It is one of three similar machines within walking distance of each other, there to test a thesis already partially proven.

That this area, once synonymous with tin mining, is host to a globally significant deposit of tungsten, a critical metal used in aerospace and defence, semiconductors, and possibly the key to unlocking nuclear fusion.

The Redmoor Project’s licence area covers 23.68 square kilometres of the Tamar Valley and is being developed by AIM-listed Strategic Minerals, through its Cornwall Resources subsidiary.

Redmoor the focus

Strategic Minerals also has assets in Australia (soon to be sold) and New Mexico, where it generates revenue from magnetite stockpiles.

But the main value and all the upside reside with Redmoor, which as well as tungsten is host to tin, copper and silver mineralisation.

My visit is to drill pad two, which sits in the shadow of Kit Hill, adorned by an ornate 19th-century chimney, which speaks to the area’s mining heritage. 

The haystacks enclose a two-crew yellow rig, which punctures the soil at an angle that will then find the ore body hundreds of metres below the surface.

The whole set-up looks rudimentary, a little flimsy. But in mining terms, it is a surgically precise piece of kit that is supervised over every centimetre it covers.

It and the other rigs will drive 22,500m of geological ‘pin pricks’ into the ore body (and outside the current mineralisation). The resultant drill core is then sorted, cut, photographed and logged in a warehouse no more than 500m away.

Well-backed

Backed by £8.7million raised by parent SML, the company has a simple aim: to take a deposit it already knows is there and define it with enough confidence to move from promise to plan.

This is infill drilling, the geological equivalent of joining the dots.

Cornwall Resources has already established that the ore body exists. What the rigs are doing now is tightening the grid, filling the gaps between earlier holes to firm up confidence in the size and grade of what lies beneath.

And it is not a modest undertaking. That 22,500m makes it the largest continuous diamond drilling programme undertaken from surface in Cornwall, and indeed in Britain, this century. The target for completion is the second quarter of 2027.

Planning permission carves out seven pad locations across the site. From them, the company intends to complete at least 44 resource infill drillholes, plus a further nine bored specifically for metallurgical testing, samples destined not to map the ore body but to interrogate how cleanly the metals can be pulled from the rock.

At this point it should be noted that the ‘truth machine’ behind the hype is not drilling blind. Back in March, Strategic Minerals ran the numbers on what Redmoor might actually be worth, and they are startling for a deposit of this size.

Favourable geology

The geology helps explain them. Redmoor sits in the Cornubian province, where fluids driven off cooling granite laced the surrounding rock with wolframite, cassiterite and copper sulphides, concentrated here into a sheeted vein system running roughly a kilometre along strike and plunging some 760m down. A compact footprint, but a rich one with some of the highest grades of tungsten globally.

The economics reflect that density. The base case points to an after-tax net present value of $1.54billion and an internal rate of return of 40 per cent, built on a pre-production spend of just $109.7million. Push tungsten pricing higher and the upside case reaches $2.71billion.

Those figures rest on a tungsten price well below where the metal actually trades; recent benchmarks sat above even the optimistic scenario. The resource, all 17.4 million tons of it, is classified entirely as Inferred, the lowest confidence tier. Which is precisely what the rigs are there to change.

The comprehensive infill data set being collated in this latest campaign is expected to land in the first quarter of next year. And it will be the cornerstone of the feasibility studies required for the underground mining of the ore.

The hope then is to deliver a working operation in as little as three years that could bring hundreds of jobs and millions in follow-on investment to the area.

Though, as managing director Dennis Rowland is quick to note, the timeline to production is aspirational and conditional.

Many moving parts

It relies not just on internal geological and financial modelling that is in its control, but also on external funding and the planning process, which in the UK has been turned into something akin to a game of 3-D chess.

The options for mining are manifold at this point and will be directed by the data that emerges during the infill drilling, and what can be sited where within what is a rural setting speckled with housing, set across farmland near the hamlet of Kelly Bray, north of the market town of Callington.

The value of this operation lies in the way the world is changing. Tungsten is the metal that lets other things be made: the carbide tips on the drill bits and cutting tools of virtually all advanced manufacturing, the heat-dissipation layer barely an atom thick laid across AI semiconductors, a stabiliser in fast-charging car batteries.

You may never see it in the finished product, as Rowland puts it, but you don’t get the finished product without tungsten.

Booming demand

If demand is booming, then it’s being exacerbated by China, which accounts for around 85 per cent of world tungsten supply. And over the past year it has been pulling the drawbridge up. By that I mean curbing exports, then reversing course to soak up global scrap that would otherwise have re-entered the market.

Washington has banned Chinese-sourced tungsten from military end-uses and, tellingly, from the manufacturing of them too. It is the rare-earths problem in a different metal: not that the West lacks the rock, but that it lacks the supply it controls.

The most striking demand may still be theoretical. Inside a fusion reactor (picture a hollow doughnut lined with armour to withstand a stream of radioactive neutrons), tungsten is the only material anyone has made work; beryllium was tried and produced waste with a half-life measured in hundreds of thousands of years.

Each reactor swallows roughly 3,000 tons of the metal. That is close to Redmoor’s entire projected annual output, for a single reactor. Britain is pouring £2billion into fusion research and wants to lead the world in it, an ambition, Rowland notes, with no future if there is no domestic tungsten to build it.

Geopolitics may play its part, but the project’s grade is the stand-out feature. Redmoor’s resource runs at around 0.5 per cent tungsten trioxide against an industry norm of 0.15 to 0.25 per cent (double the usual, and that is after the high grades are smeared across the whole deposit). One vein intersected last year assayed at 22 per cent.

Punching above its weight

To match roughly the same tungsten output, the Hemerdon mine over the Devon border must move some three million tons of rock a year; Redmoor would move 600,000. A small mine built to punch well above its weight.

Recent critical-minerals reforms (which Rowland was consulted on) are shifting planning policy so that qualifying mineral projects start from a presumption in favour rather than neutral, with only genuine negatives counting against them.

He is more measured about government funding: a pot he’d hoped would be ‘meaningful and quite large’ was whittled to £50million, of which perhaps £25million is open to mining, processing and recycling to share between them.

One should conclude, then, that the bill for ongoing development will be largely bankrolled by the private sector, with some potential for more government grants

This brings me neatly to the usual cautionaries that should come with this deep dive. I can only tell the story as presented, through conversations with management and my own background research. Readers should always conduct their own due diligence.

This is small-cap mining, where access to ongoing funding is at the whim of a sometimes-capricious market driven by risk aversion. Planning and permitting could also be an issue, though the local community appears supportive and management is more than cognisant of these downstream challenges.

But if the stars align, Redmoor could help restore Cornwall to the international mining stage.