15 Feb 2022 08:16
15 February 2022
W Resources Plc
("W" or the "Company")
Q4 2021 and January 2022 Production Report and Finance Update
W Resources Plc (AIM:WRES), the tungsten, tin and gold mining company with assets in Spain and Portugal, announces its Q4 2021 and January 2022 production report for the La Parrilla mine in Spain.
Q4 Summary
· Tungsten recovery rate of 31% (Q3 2021: 58%)
· Tungsten concentrate grade of 64.8% WO3 (Q3 2021: 66.7%)
· Tungsten ("WO3") concentrate production of 89.7 tonnes ("t") (Q3 2021:168.3t)
· Five shipments made - four tungsten concentrate (78t) and one tin ("Sn") concentrate (18t)
· Second water dam completed in November 2021
· Plant utilisation is at 73.7% compared to 87.1% in Q3 2021
Key Metrics
· A total of 240,597t of Run of Mine ("ROM") ore fed to the La Parrilla plant in Q4 2021
· Total tungsten WO3 and tin concentrate production of 104.8t
· Tungsten WO3 concentrate production of 89.7 dry metric tonnes ("dmt")
· Tin concentrate production of 15.1 dmt
La Parrilla Production Summary
Production in Q4 2021 was impacted by the following:
· Limited access to medium and higher-grade ore caused by a two week delay in blasting
· Delays in accessing medium and higher-grade ore as the open-pit was drained of water, now complete
· Heavy rain fall constrained the crushed ore operations, however, the crushed ore stockpile will resolve this issue
· Supply chain issues resulted in problems accessing some spare parts and whilst the situation is improving it still continues as we move into Q1 2022
Following the period end, the Company now has access to higher-grade portions of the La Parrilla ore bodies, the open-pit has been drained of water, an area has been cleared for the crushed ore stockpile and improving preventative maintenance is helping reduce processing challenges.
La Parrilla Production Summary | Q4 2021 | Q3 2021 | Variance |
Actual | Actual | Comparison | |
WO3 contained metal (mtu) | 5,818 | 11,229 | -48% |
Sn contained metal (dmt) | 7.5 | 12.5 | -40% |
Total contained metal (dmt) | 65.7 | 124.8 | -47% |
January 2022 Production Update
· Tungsten ("WO3") concentrate production of 42.7 tonnes and 2.1 tonnes of tin concentrate
· Three shipments were made during the month totalling 49.0 tonnes of tungsten concentrate
During the month of January a fault with the electromagnetic separator reduced the amount of completed concentrate that could be produced. This problem was corrected towards the end of the month with a number of bags of work in progress being reprocessed during early February.
LNG Pricing Increase and plant maintenance shut down
In January 2022, the Company was notified by its supplier of liquified natural gas ("LNG") that prices have increased by 425%. Whilst the Company is taking steps to reduce its reliance on LNG generated power by drawing more power from the existing electricity power line which serves the mine and looking to reduce its power consumption In addition, the Company is seeking to have second power line connected to the mine and believes this and possible access to solar energy will reduce its reliance on LNG.
The Company decided to introduce a two week maintenance shutdown to carry out a number of important and significant maintenance tasks which should improve concentrate recovery and production going forward. Production is due to recommence next week and the Company looks forward to seeing an improvement across the board. The Company also notices that during the maintenance shutdown LNG prices whilst still very high, have been falling.
The Company's Cash Position
Following a poor Q4 2021 the Company's cash position was lower than expected and the significant increase in the price of LNG has added an additional complication. As a result, the Company will need to raise funds in the very short term. The Company has been exploring additional sources of finance to strengthen its Balance Sheet and expects to complete this fund raise, which is expected to be in the form of debt, later this week.
The additional funding will in part be used to fund some items of Capital Expenditure at the mine as well as providing an increased working capital buffer.
Michael Masterman, Chairman of W Resources, commented: "The challenges encountered in Q4 arrested the progress made at La Parrilla over the three previous quarters, where we had quarter on quarter improvements in total concentrate production.
"Further work on the elimination of crushed ore blockages by building a stockpile of crushed material, as well as installing an additional connection to the grid power supply to mitigate against potential power outages and increasing gas prices is ongoing and we believe these actions will allay further challenges in the year ahead. The 425% price increase in LNG since January has also been a price shock impacting cash flow and as per the other challenges we are resolving, we are working at pace to resolve this by reducing our reliance on LNG.
"Clearly we are working hard to build production by improving recoveries, plant utilisation and reducing the number of production stoppages. With tungsten and tin prices reaching record highs at the start of 2022 we are determined to work towards solid and sustained production growth.
We are very pleased with the progress we have made in raising additional funds and look forward to updating the market in due course."
Q4 2021 Overview
Construction of the second dam was completed in November 2021, which was the final phase of the permanent solution to mitigate the water issues at La Parrilla.
As a result of the processing and production challenges, the recovery rate for tungsten during Q4 was 31% and ROM feed decreased to 240,597t for the quarter.
Recovery rates during Q4 were adversely impacted upon by excessive wear and corrosion of parts in the plant, the quality of available ore and the amount of clay fines which saturate the thickeners and reduce throughput as well as a number of mechanical issues. Due to the corrective measures taken, the Company expects better recovery rates in the year ahead.
La Parrilla Production Summary | Q4 2021 | Q3 2021 | Variance |
Actual | Actual | Comparison | |
ROM feed: tonnes mined (wmt) | 240,597 | 279,196 | -14% |
Strip ratio | 2.28 | 3.53 | -35% |
Jig plant: tonnes processed (dmt) | 208,223 | 207,327 | 0% |
WO3 feed grade (ppm) | 895 | 934 | -4% |
WO3 recovery (%) | 31% | 58% | -47% |
WO3 concentrate (dmt) | 89.7 | 168.3 | -47% |
WO3 concentrate grade (%) | 64.8 | 66.7 | -3% |
WO3 contained metal (mtu) | 5,818 | 11,229 | -48% |
Sn feed grade (ppm) | 286 | 263 | 9% |
Sn recovery (%) | 13% | 23% | -43% |
Sn concentrate (dmt) | 15.1 | 24.1 | -37% |
Sn concentrate grade (%) | 49.8 | 51.9 | -4% |
Sn contained metal (dmt) | 7.5 | 12.5 | -40% |
Total concentrate (dmt) | 104.8 | 192.4 | -46% |
Total contained metal (dmt) | 65.7 | 124.8 | -47% |
Recovery and Plant Utilisation
Tungsten recovery decreased during Q4 from 58% to 31%, with tin recovery falling from 23% to 13%. Plant utilisation decreased from 87% to 74%.
Health and Safety
During the period there were six accidents and three minor injuries. Additional training has been provided to all of the staff involved. In addition, due to the contagious nature of the new Omicron variant, the Company reported six cases of Covid-19 during the quarter. W has re-established initial preventive and testing measures to keep further infections to a minimum
Shipments
W completed four shipments of tungsten concentrate totalling 78t and one shipment of tin concentrate totalling 18t in Q4 2021.
La Parrilla Shipment Summary | Q4 2021 | Q3 2021 | Variance |
Actual | Actual | Comparison | |
Tungsten concentrate (t) | 78.0 | 180.0 | -57% |
Tin concentrate (t) | 18.0 | 40.8 | -56% |
Commodity Pricing
Tungsten scrap and European ammonium paratungstate ("APT") tightness have pushed the APT price to more than a three-year high of US$330-US$335/mtu - Fastmarkets MB, 25 January 2022.
Since the LME Tin price began to rally in March 2020, the commodity has more than tripled in price, closing on 24 January 2022 at US$42,800 per tonne - Fastmarkets MB, 24 January, 2022.
Employees
The number of staff employed at La Parrilla mine as at 31 December 2021 was 129 compared to 124 as at 30 September 2021.
Juan Garcia Valledor, Head of Environmental, Health & Safety at the La Parrilla mine departed the Company in January 2022. The Company has decided to allocate the roles and responsibilities of this position to other members of the management team.
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Shipments
The historic shipments from La Parrilla are as follows:
Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | |
Actual | Actual | Actual | Actual | |
Tungsten concentrate (t) | 59.2 | 100.0 | 180.0 | 78.0 |
Tin concentrate (t) | 20.0 | 19.3 | 40.8 | 18.0 |
The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Enquiries:
W Resources Plc Paul Hailes investor@wresources.com www.wresources.com | Grant Thornton UK LLP Colin Aaronson / Harrison Clarke / Samuel Littler T: +44 (0) 20 7383 5100 |
Broker Alternative Resource Capital / Shard Capital Alex Wood T:+44 (0) 207 186 9004 www.altrescap.com | Damon Heath T:+44 (0) 207 186 9952 www.shardcapital.com |
Alma PR Justine James M: +44 (0) 7525 324431 wres@almapr.co.uk |