Hargreaves Services expects £10m cash inflow after Tungsten West fundraise

(Sharecast News) - Hargreaves Services said on Wednesday that it expects a £10m cash inflow following a fundraising by Tungsten West, as the transaction accelerated payments and led to the termination of a key mining services contract.

The AIM-traded environmental, infrastructure and property services group said it had received the remaining £3m due under the deferred consideration linked to its 2019 sale of the Hemerdon tungsten and tin mine in Devon.

It said the payment settled outstanding instalments previously scheduled over future years and resulted in the release of security held over the mineral lease.

In addition, Tungsten West had indicated its intention to terminate the mining services contract, under which Hargreaves had been providing mining operations at the site.

The companies had agreed a £7m compensation payment to Hargreaves, due by 15 May 2027, which would be recognised as a non-recurring gain in the current financial year.

Hargreaves said the combined effect of the accelerated £3m payment and the £7m compensation would result in a £10m cash inflow, effectively bringing forward and de-risking several years of expected income.

However, the settlement removed previously-anticipated recurring revenue of £1m annually in the 2027 and 2028 financial years.

The group added that it remained in discussions with Tungsten West over potential future opportunities related to the Hemerdon asset.

Excluding the impact of the transaction, trading across the business remained in line with expectations and has not been affected by the conflict in the Middle East.

"We are pleased to see the successful completion of the latest Tungsten West fund-raise which accelerates the return of the three remaining £1 million annual instalments," said chief operating officer Simon Hicks.

"The decision to terminate the mining services contract is positive for both parties and results in a material cash inflow to the group effectively representing the acceleration and de-risking of several years of trading activity."

At 1128 BST, shares in Hargreaves Services were up 4.11% at 799.55p.

Reporting by Josh White for Sharecast.com.

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