W Resources Plc (LON: WRES), the tungsten, copper and gold exploration and development company with assets in Spain and Portugal, announces its audited financial results for the year ended 31 December 2018.
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2018
2018 was a pivotal year for W Resources, a year in which the Company made great headway towards achieving its mission to build a large-scale Tungsten, Tin and Gold production Company.
W Resources started the year negotiating a US$35 million term loan facility from BlackRock Financial Management Inc. (“BlackRock”) and received exceptionally strong local Government support with a €5.3 million grant from the Junta de Extremadura in Spain for W’s flagship tungsten project, La Parrilla in South-western Spain.
With the commencement of production at La Parrilla in November and the first sale of tungsten concentrate in December 2018 and significant progress in development work to scale up the project, the Company is well positioned to deliver on its tungsten and tin production growth plans as it builds towards transitioning to a mid-tier mining Company.
Development work at the La Parrilla tungsten and tin mine, is the final phase with construction and commissioning of the mine and processing plant nearing completion.
Development work is also advancing at W’s core Régua tungsten mine and São Martinho Gold discovery in Portugal.
HIGHLIGHTS
La Parrilla, Tungsten and Tin, Spain
· Completed the US$35m debt funding from BlackRock Financial Management Inc. in February 2018.
· Awarded a grant of €5.3m for the La Parrilla Mine project by the Junta de Extremadura Government in Spain to W’s 100% owned subsidiary, Iberian Resources Spain SL.
· Completed Engineering, Design and Procurement for the La Parrilla mine and plant and installed power, water, road, warehouse and office facilities.
· Completed construction and commissioning to design capacity of the Metso 350 tonne per hour Crusher Plant.
· Completed construction of the Jig and Mill Plant and commenced commissioning in April 2019.
· Awarded the Concentrator Plant contract to allmineral Aufbereitungstechnik GmbH & Co. KG of Germany and near construction completion.
· Commenced tungsten production and shipments.
· Secured offtake agreements with Wolfram Bergbau und Hütten AG and directly with a leading supplier to the USA tungsten markets for approximately 80% of planned production tonnage from the T2 phase.
· Strengthened the W key Executive Team in September with the appointment of Juan Garcia Valledor as La Parrilla Operations Manager and Tomás Bragado as La Parrilla Plant Manager.
Regua and Tarouca, Tungsten, Portugal
· Secured land access and approvals including purchase 20.3 hectares of land covering the main area of the Régua mine.
· Extended the Régua Trial Mine Licence for a further year to 19 June 2020.
· Completed a 1,515 metre Reverse Circulation (“RC”) drilling campaign at the Tarouca tungsten and tin exploration licence which identified very high tungsten grade intersections.
Sao Martinho, Gold, Portugal
· Completed a 2,000m RC drilling campaign at the São Martinho gold project during July which delivered very encouraging grades.
· SRK Consulting (UK) Ltd completing an upgraded Australasian Joint Ore Reserves Committee compliant resource estimate.
· Applied for a trial mine licence to advance São Martinho to trial mining and production.
Chairman of W, Michael Masterman commented: “La Parrilla is funded and near project completion. The project is on budget with tungsten and tin production and sales. The project is set to move to large scale production levels at low cost in the third quarter following construction completion of the new Concentrator Plant this quarter. This will allow W Resources to deliver a progressive increase in production in the third and fourth quarters of 2019.
“Régua in Portugal is approved and advanced and will follow closely behind the development of La Parrilla. The grade control and extension drilling has identified significant thick high-grade intersection which will be incorporated in resource estimates and mine plans. Exploration success at Tarouca will feed into and further enhance Régua hub development economics.
“We have advanced exploration progress at our São Martinho gold discovery and will move to the next phase of extension drilling and trial mine production.
“The Executive team with the strong support of the Board is executing development well and this is a credit to the calibre of the management team.”
Financial Statements for the Year Ended 31 December 2018
A full copy of the W Resources Consolidated Financial Statements for the year ended 31 December 2018 is available on the Company’s website at www.wresources.com
TUNGSTEN & TIN
La Parrilla – Spain
La Parrilla is a large-scale, low-cost, long-life tungsten and tin project, located approximately 310km southwest of Madrid. It has Australasian Joint Ore Reserves Committee (“JORC”) compliant resources totalling 49 million tonnes (“mt”) at a grade of 998 parts per million (“ppm”) of tungsten trioxide (“WO3”) and JORC compliant reserves of 29.8mt at a diluted grade of 931ppm WO3.
The project is on target to mine 2 million tonnes per annum (“mtpa”) of Run of Mine (“ROM”) and produce approximately 2,500 tonnes (“t”) of tungsten concentrate and 200t of tin (“Sn”) concentrate per annum (“T2”). With completion of development work imminent, the timing coincides well with continued strengthening in the European Ammonium paratungstate (“APT”) price.
Project Funding
In February, W secured a US$35 million term loan facility from BlackRock to fund the La Parrilla mine development.
The funds were drawn in two tranches, with the second drawdown completing the US$35 million facility in May. As part of the completion of the funding W issued a total of 307,605,430 warrants on a pro-rata basis to the BlackRock funds that participated in the funding, representing 5% of W’s fully diluted equity at the time.
In March, the Company was delighted to receive confirmation from the Junta de Extremadura Government in Spain who awarded a grant of €5,322,970 to W’s 100% owned subsidiary, Iberian Resources Spain SL. The success of the application is testament to the skills and hard work from the team, who have built great on-the-ground relationships and appreciate the Government support.
Offtake Agreements
Two major long-term offtake agreements were signed in February. The first with Wolfram Bergbau und Hütten AG, (“WBH”), the largest tungsten processing company in Europe and the second is directly with a leading supplier to the USA tungsten markets.
With production commencing in November 2018, ahead of the ramp-up phase, W is pleased to have completed the first shipments of tungsten to date. The process is straightforward in that the offtaker arranges collection and the Company is then paid within three days.
Going forward, W will supply both with approximately 66% tungsten concentrate on competitive pricing terms. The offtake agreements cover the initial T2 development of the La Parrilla Mine and will account for approximately 80% of the planned production tonnage from this phase. There is significant demand for the balance of production which W plans to secure offtake following initial production start-up.
Contracts
In January, the third core design and construction contract for the Concentrator Plant was awarded to allmineral Aufbereitungstechnik GmbH & Co. KG of Germany (“allmineral”) at a contract price of c€8 million. allmineral was also awarded the contract for the Jig & Mill Plant which provides important integration benefits for the project delivery and by September all contracts had been placed.
The Crusher Plant, the first of the three key contracts, was awarded in 2017 to Metso Minerals Portugal, Lda (“Metso”), a subsidiary of Metso Corporation for €1.2 million.
Development
With funding completed in May 2018, W Resources moved quickly to commence construction of the mine, Crusher, Jig and Mill, and large-scale Concentrator Plants together with critical water, power and other services.
The Crusher Plant concrete and civil works were completed during the summer and Metso and Ditecsa (steelwork contractor) structural steel delivered at the La Parrilla site. The Metso Crusher Plant equipment was fabricated in their plant in Mâcon, France and was delivered to site as steelwork which was erected on a just in time basis. The fully automated Crusher Plant is complete and fully commissioned to design capacity of 350t/hour.
The earthworks and foundations for the Jig & Mill Plant were completed in Q3 with mechanical completion of the Jig and Mill Plant in April 2019. Commissioning of the Jig & Mill Plant is now underway.
Construction of the large-scale Concentrator Plant is being built under a fixed price schedule contract with allmineral and is scheduled for completion and commencement of commissioning in Q2 2019.
Production and Shipments
Concentrate production commenced in October 2018, with first concentrate shipments in late November 2018. Initial production was from Tailings fed to the existing Concentrator Plant and a series of production runs on mined ore have been successfully completed.
Following the completion and commissioning of the Jig and Mill Plant, W Resources will be able to increase production rates using the new large-scale Crusher Plant, the Jig and Mill Plant and the existing Concentrator Plant. Production will move to a larger-scale of operation with the start-up of the new Concentrator Plant.
PORTUGUESE PROJECTS
Régua Tungsten Project
Progress at Régua continues apace. The high-grade, development-ready tungsten project with low capital cost has a Trial Mine Licence, with a current JORC compliant mineral resource of 5.46mt at a grade of 0.28% WO3, including an indicated resource of 3.76mt at a grade of 0.304% WO3. In July 2018, the Portuguese Secretary of State for Energy under the Ministry for the Economy granted a further one-year extension to the Régua Trial Mine Licence to 19 June 2020.
The Company has now secured all approvals, and in February 2018 W cleared the last hurdle for development when the purchase of 20.3 hectares of land covering the main area of the Régua mine, for a consideration of €300,000, was concluded. This land covers the outcropping resource of the deposit along with the trial mine facilities including the portals and the underground projected stopes.
Régua’s high ROM grade (at greater than 0.3% WO3) and proximity to a crushing facility are likely to prove beneficial to the project economics.
The Régua deposit remains open at depth and on all sides, with significant potential to boost the resource growth to the northeast including a 10m thick tungsten intersection.
Preparatory mine grade control drilling commenced in Q2 2018, with nearly 2,000m of RC drilling completed during July. Further evaluation concluded that additional drilling programme would be beneficial in order to complete an updated Resource estimate.
The Company completed a further 2.73 km of drilling which comprised of 916 metres of diamond core drilling plus 1,809 metres of reverse circulation (“RC”) drilling in Q1 2019. The results confirmed exceptionally good grades with thick higher-grade zones closer to the planned two mine portals chosen for initial mining indicating the potential for higher ROM feed grades and lower unit costs.
The next phase will be to complete the updated Resource estimates and early indications bode well for increases in mine feed grades and overall resource tonnages. Once the updated Resource estimate has been received, planning for the preparatory mine works will commence.
Development planning for Régua is based on low-cost underground mining using adits (horizontal tunnels), trucking ore to a nearby existing Crusher Plant, and mobilisation of the existing La Parrilla Concentrator Plant to Régua, following new large scale La Parrilla Concentrator Plant start up.
Tarouca Tungsten Project
In 2015, trench sampling at the Tarouca project showed high grade tungsten results with 15 out of the 126 samples exceeding 0.5% WO3, including 0.8m at 11.4% WO3 (TTR063). Together with the 15 holes drilled in 2014, this confirms an outstanding exploration target in the north-eastern area of the licence.
In April 2018, the technical team carried out a month-long RC drilling programme including 29 holes with 1,515 metres of total drilling, completed in depths of 5 to 70 metres. As announced on 7 June 2018, this identified very high tungsten grade intersections, including 1 metre at 2.851% WO3 (TARC011) and 3 metres at 1.165% WO3 (TARCO14). Over 11 assays reported over 1% WO3. The RC holes were drilled at an angle to the primary strike and the drilling programme has enabled the team to model the tungsten resource. The next step will be resource modelling with a view to prepare a trial mine application in 2019.
Initial results have reported some very high-grade tungsten zones have been intersected which provides greater reassurance that this project can provide additional high-grade feed to the Régua mine development, just 20km to the north. The results also provide greater clarity on the geological structure and the potential to follow grade extensions.
CAA Portalegre – Gold
São Martinho currently has a JORC gold resource of over 110,000oz. Results from the drilling campaign in 2017 provided very promising results with a thick intersection of over 55m of gold at 2.34g/t. These results provide a solid base to drive extension drilling with the potential for a materially larger resource.
In May 2018, the Portuguese technical team commenced a 15-hole, 2,000 metre RC drilling programme with a view to materially increase the JORC resource. Initial results were received in July 2018, which highlighted continued strong gold intersections, enabling the team to further delineate the deposit. The evaluation work on this programme remains ongoing.
The overall results of the RC drilling campaign will form part of the update for the upgrade to the JORC compliant mineral resource estimate.
In November, the Company appointed SRK Consulting (UK) Ltd to complete the upgraded São Martinho gold deposit resource estimate which is now scheduled for completion in Q2 2019.
Monforte-Tinoca – Copper
The Monforte-Tinoca Copper exploration licence, which contains the Tinoca and Azeiteiros former copper mines, was granted to W in July 2016. Geophysics surveys were carried out in 2018 using both Induced Polarisation / Electric Resistivity and Transient Electromagnetics methods across the target Copper zones. The RC drilling (1,500m in total) completed mid-year yielded limited results and as a result W has decided to discontinue this exploration licence and focus its resources on the higher value Gold and Tungsten opportunities in Portugal.
Finance
In April 2018, the Company completed a placing to raise £1.5 million through the placement of 300,000,000 ordinary shares of 0.1p per share (“Ordinary Shares”) at 0.5p per Ordinary Share.
In November 2018, the Company completed a placing to raise £1.5m through the placement of 306,122,449 ordinary shares of 0.1p per share (“Ordinary Shares”) at 0.49p per Ordinary Share. This brought the well-known institutional fund manager Miton Group on to the register and significantly strengthened institutional participation in the register.
Executive Appointments
Mr Pablo Neira and Mr James Argalas were appointed as Non-Executive Directors of the Company in September. As W transitions to a significant tungsten producer, the appointment of Pablo and James to the Board comes at a time when their significant industrial and financial experience is already providing valuable counsel, insight and support. Both are based in Madrid and bring real time Spain based networks and financial and operational capability to the W Resources team.
In the same month, the Company appointed Juan Garcia Valledor as La Parrilla Operations Manager and Tomás Bragado as La Parrilla Plant Manager. Both executives have extensive operational experience in the Spanish mining and metals industry and join W’s executive team in the lead up to the start of mining and completion of construction of the Crusher Plant and Jig & Mill Plant prior to the end of the year and the Concentrator Plant in the new year.
Outlook
La Parrilla is fully funded and under full project development. The project is on budget and with all major plant and non-plant infrastructure complete with the exception of the large-scale Concentrator Plant which is on track for construction completion mid-year. Tungsten and tin production and sales have commenced and are set to rise to larger scale production levels at low cost in 2019. Achievement of this objective will transform W Resources.
Régua in Portugal is approved and has advanced and will follow closely behind the development of La Parrilla. Exploration success at Tarouca will feed into and further enhance Régua hub development economics.
Steady advanced exploration and trial mine progress at our São Martinho gold project will further enhance investor returns.
The team with the strong support of the Board is executing development well and this is a credit to the calibre of the management team.
