5 Apr 2022 07:40
5 April 2022
W Resources Plc
("W" or the "Company"
La Parrilla and Funding Update
Temporary Suspension of Trading in Ordinary Shares
W Resources Plc (AIM:WRES), the tungsten, tin and gold mining company with assets in Spain and Portugal, announces that the operating and commercial conditions in Spain at the La Parrilla mine continue to be extraordinarily challenging.
Key challenges:
· The recent Spanish truck drivers dispute has stopped delivery of critical spare parts to the La Parrilla mine and the collection of tungsten and tin concentrate shipments.
· Liquefied Natural Gas ("LNG") prices for delivery to the mine remain at highly inflated levels of up to seven times higher than the average monthly charges in 2021 and previous years.
As a result the Board has no option but to temporarily suspend production and operations at La Parrilla, due to shortage of key spare parts and the very high LNG prices that place an excessive cost burden on the mine. The Board has assessed that it is best to wait for a stabilisation in prices prior to recommencing operations. The Company is also investigating the possibility of LNG price support with its offtake partner and customers which would enable an earlier resumption of production.
The Board notes that similar shut downs have been initiated in Spain by many other small and medium sized businesses including the major steel plant operators.
During the shutdown period the Company is applying for Spanish government support under the Expediente de Regulación Temporal de Empleo ("ERTE") employment retention programme and it is confident this support will be received.
The Company's plans to reduce the dependence on LNG continue to be expedited including options for solar power and also an electricity grid connection upgrade.
Separately, the Company has also been informed that the Dirección General de Industria, Energía y Minas of Extremadura has challenged the W group's authorisations to operate. The Company will be appealing this challenge and has been advised by its lawyers that it can continue to operate pending resolution of the appeal. The Company is confident of a successful outcome.
Financing and Financial Position Update
The suspension of operations places significant financial pressure on the Company's subsidiary in Spain, Iberian Resources Spain ("IRS") which has very limited cash. W Resources has drawn US$2.5m from the expanded US$5.5m facility provided by one or more funds and accounts managed by BlackRock Financial Management, Inc. and/or its affiliates ("BlackRock") as announced on 2 March 2022. In light of the above mentioned events, the Company is in discussions with BlackRock regarding the timing of incremental drawdowns.
In addition, the Company is currently in discussion with a supplier who has an outstanding balance of approximately €1m and is proposing a payment plan with this supplier. If this is agreed then IRS will be in a position to undertake certain operational activities which are expected to generate a similar amount for IRS.
The Company believes that utilisation of its funding facilities in full and resolution of the supplier dispute will enable the Company to continue operating for approximately three to four months in the absence of the re-commencement of mining operations at La Parrilla. However, resolution of both these is required as a matter of urgency given the effect of the suspension of mining operations and associated revenues on W's cash position.
In light of the considerable uncertainty over the timing of cashflows from its borrowing facilities and elsewhere, the Company has requested a suspension of its shares on AIM pending clarification of its financial position.
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 |
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 |