Wolf Minerals, devon-based miner, the operator of one of the few active mines in the UK, said it has been encouraged by improvements in the tungsten market despite losses widening by 18pc in the last year.

In its full-year report, Wolf said pre-tax losses for the year to June 30 had widened to 74.5m Australian dollars, or £44m, from £37m in the 2016 financial year.

The company, which is based in Australia and Plymouth, said the cost of sales had increased from £29m in 2016 to £44m last year. Aim-listed Wolf operates the Drakelands mine near Plymouth, which employs around 200 people.

Concerns were raised earlier this month that the Devon-based miner may need to tap its owners for funds after it extended its loan facility with Resource Capital Fund, its biggest investor.

In Wolf’s annual report, chairman John Hopkins said: “The tungsten market improved slowly during the first half of the year before building momentum at the end of the financial year.”

He said the price rise was due to reduced supply from China, where the costs of production have increased.

“The very limited new supply of tungsten coming to market in recent years is expected to support prices at higher levels as demand continues to grow,” he said.

“The board is encouraged by the recent price strength and the potential for longer term market equilibrium at these higher prices, providing Wolf with the opportunity to maximize its strategic value.”

Analysis of latest tungsten market in China from Chinatungsten Online: The tungsten market is quiet in the first half of October, but the frequent environmental protection policy in major producing areas is stimulating the market. Some sellers believe that the price decline in recent months only is a phased adjustment. With the stricter control of environmental protection policy, tungsten prices are expected to rise.

Dual-listed Wolf Minerals (ASX:WLF,LSE:WLFE) fell more than 5 percent on Tuesday (October 3) after posting an 18-percent increase in pre-tax losses for its tungsten-tin Drakelands mine in the UK.

The company recorded a loss of AU$74.6 million in the 2017 financial year, up from AU$62.7 million the year prior, but said it has been encouraged by improvements in the tungsten market.

“The tungsten market improved slowly during the first half of the year before building momentum at the end of the financial year,” Chairman John Hopkins said in a press release.

Tungsten prices have surged over 44 percent this year due to reduced supply from top producer China. The Asian country has been fighting pollution by closing down mines and enforcing production quotas.

“The very limited new supply of tungsten coming to market in recent years is expected to support prices at higher levels as demand continues to grow,” Hopkins added.

Wolf’s flagship asset, Drakelands, is one of the UK’s few active mines, and is the world’s fourth-largest producer of tungsten. The metal is used in cemented carbide, alloys and other construction applications.

“The board is encouraged by the recent price strength and the potential for longer term market equilibrium at these higher prices, providing Wolf with the opportunity to maximise its strategic value,” Hopkins commented.

The company also reported an increase in revenue to AU$24.7 million from AU$8.6 million the previous year. Cost of sales rose to AU$76.4 million from AU$50 million year-on-year.

In the coming financial year, Wolf Minerals’ initial focus will be to complete its “operating turnaround plan” to improve availability, throughput and recoveries in a safe and sustainable manner at Drakelands.

Some concerns about the plan surfaced in September, when the company extended its credit facility for the project with its biggest investor, Resource Capital.

“I’d be surprised if the tungsten price rise alone can save them. You’d have to say it’s going to be difficult. The question is: if at the end of this [turnaround] it’s not generating cash, then what happens next?” Martin Potts, analyst at FinnCap, said at the time.

On Tuesday, Wolf Minerals closed down 5.56 percent in Sydney, at AU$0.09, and down 0.95 percent on the LSE, at GBX 5.20. The company has surged about 20 percent since the beginning of the year.

Rare earth market quotation: Chinese rare earth prices are weak amid lanthanum oxide and cerium oxide price stabilize. In July and August, the surge in the rare earth products price triggered high production, which pressed downstream industries and rapidly changed the relationship between supply and demand.