Dolphin Tungsten Mine Gets Tasmanian Government Support as Group 6 Restructures

Eric Abetz, Tasmania's minister for business, industry and resources, said on Monday (February 10) that the state's government is providing support for Group 6 Metals’ (ASX:G6M) Dolphin tungsten mine.

Under a debt-to-equity agreement, the government will convert its existing AU$10 million loan into an equity stake in Group 6, a move it says will secure King Island jobs and support the mine’s long-term future.

"This is intended to be a short to medium-term investment to help stabilise the mine through challenging global conditions," said Abetz, adding that the deal is part of a larger turnaround plan for Group 6.

He noted that Dolphin is responsible for an average of 95 direct jobs and supports many local businesses.

Dolphin is a brownfield asset that was initially in operation from 1917 to 1992.

Group 6 commenced commercial production at the mine in 2023. According to the company's website, the mine’s JORC-compliant mineral reserve stands at 4.43 million metric tons grading 0.92 percent tungsten trioxide (WO3).

During the latest quarter, Dolphin produced 11,405 metric ton units of saleable tungsten at an average grade of 56 percent WO3. The company sold 9,332 metric ton units of WO3 in tungsten concentrate for the period.

The support for Dolphin falls under the Tasmanian government’s 2030 Strong Plan for Tasmania’s Future, which allows the state to co-invest in strategic project that it believes to be beneficial.

“The Tasmanian Government remains committed to working closely with the company to support the mine’s ongoing operations and ensure its long-term viability," Abetz noted in Monday's release.

Its debt-to-equity conversion plan remains subject to regulatory and shareholder approvals.

In December 2024, Group 6 announced a recapitilisation plan to address "unsustainable leverage" and "significantly" reduce its total debt. The plan was agreed upon with senior and subordinate lenders and larger unsecured creditors, with AU$67.2 million of Group 6's debt and accrued interest costs being converted into ordinary shares.

The plan gave Group 6 a further AU$23.75 million in funding from the existing senior lenders, and also introduced board and management changes, with Kevin Pallas being appointed executive chair.

"The current debt levels and finance servicing costs within the business have become unsustainable. The new board is now eager to proceed with this transformation plan, affording the Company both near-term liquidity and a sustainable go-forward capital structure," Pallas said in December's press release.

Australian tungsten companies and projects could play a pivotal role in global markets moving forward.

Earlier this month, threats to tungsten supply were in focus following China's announcement of stricter export restrictions on the metal, along with tellurium, bismuth, molybdenum and indium.

Tungsten-focused companies outside the Asian nation have caught attention in light of the news, with Almonty Industries (TSX:AII,ASX:AII,OTCQX:ALMTF) CEO Lewis Black saying the situation "is going to get worse."

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.