(Sharecast News) - Spain and Portugal-focussed tungsten, tin and gold exploration and mining company W Resources updated the market on production at the La Parrilla tungsten and tin mine in Spain on Thursday, as it completed a £0.83m fundraise to relieve recent pressures on cash flow.
The AIM-traded firm said that while the third quarter was its best ever, the production report warned of a number of challenges adversely impacting production, with some of those continuing throughout the fourth quarter.
It said heavy rains in December led to production stoppages caused by wet crushed ore blocking the silo.
That, the board said, was compounded by only having access to mid to low-grade ore, associated maintenance issues and supply chain bottlenecks for replacement parts.
All of the challenges negatively impacted production during the fourth quarter.
However, were it not for the challenges, W Resources said it believed production would have been "very close" to the lower end of the previous production guidance issued.
As a result, the company said it needed to adjust full year guidance to 520 tonnes of tungsten and tin concentrate, compared to its previous full-year guidance of between 650 and 750 tonnes of concentrate.
W Resources said it expected to be in a position to issue a fourth quarter production report later in January.
Looking at the first quarter of 2022, the firm said it was expecting production to improve "significantly" as the open mine pit was drained of water, giving access to higher-grade ore bodies.
In addition, the crushed ore stockpile area was expected to be finalised by the end of January 2022, while improved maintenance solutions had now been implemented and spare parts stock was being built up again to avoid future bottlenecks.
Looking at its fundraise, W Resources said the challenges it encountered in the fourth quarter led to "unexpected pressure" on cash flow, leading to support being offered from its offtake partner ICD through an investment of £0.78m.
Additionally, a further £55,106 was invested by Symmall, as trustee of the Masterman Superannuation Fund of which the company's chairman Michael Masterman was both a beneficiary and trustee.
Symmall subscribed for 918,434 shares on the same terms as ICD, with the placing at a 26.3% premium to the company's share price as at 31 December.
W Resources said ICD, its offtake partner for tungsten concentrate, was supportive of the company's development, and was showing a "great deal of confidence" in the firm and the potential of the mine at La Parrilla, due to the quality of concentrate it had delivered to date.
"A number of challenges encountered towards the end of 2021 have resulted in a much lower performance than we had envisaged," said Michael Masterman.
"Once again the management team at La Parrilla have overcome these challenges and as we start to mine and process higher-grade ore we are seeing increased levels of production, higher recovery rates and increasing utilisation rates.
"Lower-than-expected production levels have put some stress on the company's cash flow - I am therefore delighted with the support being offered to us by ICD."
At 1417 GMT, shares in W Resources were down 2.63% at 4.63p.
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