Member Info for Valuation-it-is

TUNX "Interestingly Orion invested at IPO for TUN and were lined up to provide royalty and debt financing for TUN. "

It seems that all their previous CPs are now fulfilled, so do you think Orion is there in addition to EXIM bank? If so Orion might take some equity or pay upfront for a royalty. At the time the documents stated:-

Tungsten West has conditionally secured US$[49] million (approximately £[35.7] million) in project financing from Orion, comprising:

l US$[21] million (approximately £[15.3] million) investment repayable by reference to revenue derived from metal and aggregates; and

l US$[28] million (approximately £[20.4] million) senior secured debt facility. Further details of the Orion Senior Loan Agreement and the Orion Investment can be found in paragraphs 11.19 and 11.20 of Part 7 (Additional Information)

M_wall

One thing that could be done in an emergency would be to give TUN permission to process the vast quantity of ore sitting in the MWF whose grade is similar to the other resources. This would mean that theproblem of the lack of replacement front end could be bypassed as the material is already mined and crushed. I believe TUN has already tested its back end plant and found all is OK. Normally it would take the EA years to give this approval but if war spreads, necessity might override the EA processes.

V interesting graph. It looks as if the statement degradation of 7% for every 365 cycles is only true for the first 730 cycles though. After that the decline is lower.

Pj70 "the lack of an RNS for the offtake agreements ........."

It looks as if the offtake agreements were already notified to shareholders in the IPO documentation. So there would not be an RNS as nothing new has happened. See posts earlier today which contain the relevant extracts from the IPO documents.

SquirelShares (Referring to the offtake agreements ) " Is the price already set, or does it follow market prices? "

Given the NPV of the project jumps by $152m if the price of APT rises by $100 an mtu, it looksto me as if the offtake prices are not set but are connected to the then current market price.

SquirelShares

Here is an extract from the IPo document re the off takes ( in 3 posts)

Wolfram Offtake Agreement

Drakelands Restoration entered into a supply agreement for the sale of tungsten concentrates with Wolfram Bergbau on 3 August 2021 (the “Wolfram Offtake Agreement”), pursuant to which Wolfram Bergbau has agreed to purchase a minimum of 285,000 mtu wolframite concentrate mined and processed at the Mine (the “Concentrates”), which is to be delivered regularly during the term and in accordance with the Wolfram Offtake Agreement (the “Wolfram Total Contracted Quantity”).

The Wolfram Offtake Agreement shall end on the later of (i) the last day of the last month set out in Exhibit 1, which is Q1 2028; or (ii) the day on which the Wolfram Total Contracted Quantity has been delivered for Wolfram Bergbau.

The Wolfram Offtake Agreement is conditional upon Drakelands Restoration having entered into committed funding facilities for amounts sufficient to develop the Mine operation to a capacity of at least 110 per cent. of all committed long-term offtake agreements by 31 March 2022 or any later date agreed by Wolfram Bergbau and Drakelands Restoration. In such case, should the parties be unable to agree on a later date, Wolfram Bergbau may terminate the Wolfram Offtake Agreement by written notice to Drakelands Restoration unilaterally with immediate effect. Wolfram Bergbau may also terminate the Wolfram Offtake Agreement with immediate effect by notice in writing to Drakelands Restoration if (i) specified project milestones are missed and Drakelands Restoration cannot reasonably demonstrate that mitigation efforts are being implemented that ensure that the Mine is reaching a capacity of at least 125 per cent. of the then committed offtake agreements by 31 December 2023; (ii) Drakelands Restoration fails to deliver the Wolfram Contracted Quarterly Quantity minus an additional allowance of 20t WO3 in Concentrate for two consecutive quarters; (iii) a material breach of this agreement by Drakelands Restoration occurs, which is either not capable of remedy or, if capable of remedy, has not been remedied within 45 days of Drakelands Restoration receiving notice of such breach from Wolfram Bergbau; or (iv) a direct competitor of Wolfram Bergbau obtains a stake of more than 49.99 per cent. of the project or Drakelands Restoration, directly or by way of assignment.

Drakelands Restoration may terminate the Wolfram Offtake Agreement if any of the following events occurs and is continuing in relation to Wolfram Bergbau, upon written notice to Wolfram Bergbau: (i) a breach of any payment obligation of Wolfram Bergbau under the Wolfram Offtake Agreement involving an amount in excess of US$500,000 which is not in dispute between Wolfram Bergbau and Drakelands Restoration and which has not been so remedied within fifteen

Business Days of Wolfram Bergbau receiving notice of such breach from Drakelands Restoration and which identifies that breach as potentially giving rise to a right in Drakelands Restoration to terminate the Wolfram Offtake Agreement; (ii) a material breach of the Wolfram Offtake Agreement by Wolfram Bergbau occurs which is either not capable of remedy or of capable of remedy has not been remedied within 30 days of Wolfram Bergbau receiving notice of such breach from Drakelands Restoration; or (iii) Wolfram Bergbau is the subject of receivership, administration, liquidation, or bankruptcy or subject to any other form of insolvency proceedings or analogous proceedings in any applicable jurisdiction..

SQuirelShares

The IPO document states continued

"GTP Offtake Agreement

Drakelands Restoration entered into a supply agreement for the sale of tungsten concentrates with GTP on 28 September 2021 (the “GTP Offtake Agreement”) pursuant to which GTP has agreed to purchase a total contracted quantity of 20,400 ton WO3 of Wolframite mined and processed at the Mine (the “Material”) in accordance with GTP’s specifications (the “GTP Total Contracted Quantity”).

The operative terms of the GTP Offtake Agreement will enter into full force and effect on the date of first completion of any financing or fundraising concerned with the Mine (the “GTP Effective Date”), which is expected to be the date of Admission.

The term of the GTP Offtake Agreement shall be from the GTP Effective Date until the later of the following: (i) 10 years from the date of first delivery of the Material (“GTP Initial Term”); or (ii) delivery of the GTP Total Contracted Quantity.

Upon completion of the Initial Term only, the GTP Offtake Agreement will be automatically extended for an additional two years unless any party provides written notice to the other party not less than 12 months prior the end of the Initial Term that it wishes the term to expire at the end of the Initial Term.

GTP shall have the right to terminate the GTP Offtake Agreement in the event that Drakelands Restoration defaults under the GTP Offtake Agreement, provided that the default is not remedied within 30 Business Days after GTP provides Drakelands Restoration with a written notice.

11.15 Afrimet Offtake Agreement

Drakelands Restoration entered into a supply agreement for the sale of tin concentrates with Afrimet Resources AG (“Afrimet”) on 27 September 2021 (the “Afrimet Offtake Agreement”), pursuant to which Afrimet has agreed to purchase any mineral bearing tin concentrate (Cassiterite) mined from the Mine, which is expected to be 2,375 dmt +/-10 per cent. for the term of the Afrimet Offtake Agreement.

The Afrimet Offtake Agreement commenced on 27 September 2021 and will continue for five years commencing with the first delivery pursuant to the Afrimet Offtake Agreement, unless terminated in accordance with its terms. Both Afrimet and Drakelands Restoration have a right to terminate the Afrimet Offtake Agreement on 10 days written notice if Drakelands Restoration fails to commission the processing plant, or fails to deliver the first container of 25 MT of marketable product within 24 months from the execution of the Afrimet Offtake Agreement.

Pursuant to the Afrimet Offtake Agreement, Afrimet has agreed to make a prepayment facility available to Drakelands Restoration, which is subject to the terms and conditions of the Afrimet Prepayment Facility Agreement summarised at paragraph 11.16 of this Part 7."

It will likely, but not necessarily, be an exchange of Convertible loan notes held by major investors - many of whom are also shareholders,- for new shares in the company. So the company is not looking to place them on the market. What the CLN holders do with the new shares is anybody's guess. See the note in the last set of accounts on the subject which I referenced in a previous post.

Gingy: What makes you think the CLN conversion shares are going to hit the market? Anyone who has bought the CLNs in the last 2 years or so, clearly believes in the story, which is far better now than it has been for years. They will be looking at the NPV of the project which at an APT price of $500 per mtu is $342m. Not only is the APT price above that now, but there are a number of upside scenarios which could take the NPV higher. By the time we get to conversion, i.e. 31/12/25 the financing route will probably have been decided.

TUNX - I think you are right - the offtakers are probably the same as at IPO hence no RNS announcement on the subject since then.

Assuming the CLNs are converted and we end up with around 1.2bn shares at 31/12/25, at a 10p share price mkt cap would be £120m, still a fraction of the NPV of the project........................... Question is will it get finance? Answer seems to be - highly likely given the geo political situation, the squeeze on tungsten supply and hence the rise in price of APT. I got the impression from the presentation, that TUN management were considering different options re financing.

My estimates are on my post of 9 Sep 2025 11:05 - I hope they are helpful.

V Interesting

Translation

"Europe's dependence on China has a different dimension for defense raw materials than for raw materials in general," warns our CEO Stefan Müller in the Handelsblatt article. Tungsten West plc's Hemerdon Mine could solve this dependence on tungsten. An estimated 3400 tons per year of the metal, which is indispensable for weapons production, can be produced from 2027, a significant world market share. For the restart of the project, 93 million US dollars are needed. And once again, #Europa threatens to be left behind. More on this in the Handelsblatt article by Judith Henke: https://lnkd.in/dwN7EV7e #Aufrüstung #Rohstoffe #KritischeRohstoffe #Defense #Tungsten Alistair Stobie

Pj70

That would be my estimate of the approx NPV/share of the project

1. If it gets financing

2. If it gets built on time/to budget

3. If it gets into production as envisaged by the feasibility study

4. If the APT price stays at $700/mtu

Until those conditions are satisfied though, you can expect a big discount to be appropriate between that and the share price and as I mentioned there may be CLN holders who want to reduce their holdings - having been effectively locked in for several years.

The outlook has been transformed over the last five or so weeks with tungsten outperforming even gold over the last year. Whilst the share price began to creep up in May, it doesn't seem to have reacted much to the recent change in the APT price. If you think the APT price is going to stay where it is or go even higher, then you would probably also not be surprised if the share price reacted positively.

I expect the mood of the presentation on Friday will be upbeat. Good luck.

Pj70.. Sorry if I wasn't clear No I am not suggesting that - I am drawing attention to the likely value per share if production is financed and starts on time.

"If so, dividing the project NPV of US $646m by the number of shares, 1276.7m, would give an indication of the possible direction of travel for the share price should the financing fall into place. "

Having said that some CLN holders may want to sell after their loans are converted.

Jdbanzi - Take a look at the link..............

Linear interpolation would suggest the NPV of the project is around $646m. *See calc and references at bottom

The number of shares in issue now, diluted for options and warrants is 206,036,591.

See page 4 of https://www.tungstenwest.com/_files/ugd/3e92e8_932957c5a3aa4ddfb3e2a5d38720f7ea.pdf

To that number has to be added shares to be issued on conversion of the CLNs and the rolled up interest thereon which I estimate to be around £32.12m

likely to be converted at 3p/share, so around 1070.667m extra shares. (See page 53 of https://www.tungstenwest.com/_files/ugd/3e92e8_afac44501b964d8282a804393547bd23.pdf )

That will leave the total at 1276.7m shares.

Are any further share issues needed? The company states it needs $93m for "Capex and pre-production opex" See page 16 of

https://www.tungstenwest.com/_files/ugd/3e92e8_932957c5a3aa4ddfb3e2a5d38720f7ea.pdf again. So it remains to be clarified whether any further equity issue is needed to fund that. However EXIM bank has indicated by way of its LoI (See RNS of 28 August) that it "is able to consider financing up to US$95 million..."

So perhaps little or no extra equity is needed. If so, dividing the project NPV of US $646m by the number of shares, 1276.7m, would give an indication of the possible direction of travel for the share price should the financing fall into place.

Any further increase in the price of APT would further improve the potential. With the US, Europe and the UK all keen to get their hands on a supply of tungsten, selling an offtake agreement on favourable terms should be a rare, pleasing, task for TUN's hitherto stressed but tenacious management.

*NPV $190m at APT price of $400/mtu, and $342m at an APT price of $500/mtu. Therefore the extra $100 on price gives an extra $152m of NPV. An extra $300 on price suggests an extra $456m on NPV, i.e. 190m+456m or $646m

(See page 16 of https://www.tungstenwest.com/_files/ugd/3e92e8_932957c5a3aa4ddfb3e2a5d38720f7ea.pdf )

Https://www.bbc.co.uk/news/articles/cm2dzlrm0jno

I wonder if any of the approx £50m will be going to production of tungsten for armaments..............................................................

Https://x.com/Geo_Critical/status/1965014497434960096?t=AjseN_nzKiY4Uatfp5O6Mw&s=19

Https://rareearthexchanges.com/news/the-pentagons-rare-earth-ultimatum-ban-on-chinese-materials-by-2027/