TIDMWRES
RNS Number : 7197B
W Resources PLC
15 February 2022
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% WO(3) (Q3 2021: 66.7%)
-- Tungsten ("WO(3) ") 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 WO(3) and tin concentrate production of 104.8t
-- Tungsten WO(3) 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
-------------------------------- -------- -------- -----------
WO(3) 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 ("WO(3) ") 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%
WO(3) feed grade (ppm) 895 934 -4%
WO(3) recovery (%) 31% 58% -47%
WO(3) concentrate (dmt) 89.7 168.3 -47%
WO(3) concentrate grade (%) 64.8 66.7 -3%
WO(3) 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.
La Parrilla 2021 Production Q1 Q2 Q3 Q4
Summary
2021 2021 2021 2021
Actual Actual Actual Actual
----------------------------- -------- -------- -------- --------
No. of working days 45 54 74 89
ROM feed: tonnes mined
(wmt) 196,094 231,613 279,196 240,597
Strip ratio 5.13 2.89 3.53 2.28
Jig plant: tonnes processed
(dmt) 163,866 173,901 207,327 208,223
WO(3) feed grade (ppm) 744 855 934 895
WO(3) recovery (%) 32% 47% 58% 31%
WO(3) concentrate (dmt) 63.5 106.37 168.3 89.7
WO(3) concentrate grade
(%) 61.6 65.0 66.7 64.8
WO(3) contained metal
(mtu) 3,916 6,919 11,229 5,818
Sn feed grade (ppm) 228 259 263 286
Sn recovery (%) 44% 27% 23% 13%
Sn concentrate (dmt) 28.9 23.8 24.1 15.1
Sn concentrate grade
(%) 56.6 51.9 51.9 49.8
Sn contained metal
(dmt) 16.3 12.4 12.5 7.5
Total concentrate (dmt) 92.4 130.2 192.4 104.8
Total contained metal
(dmt) 55.5 81.6 124.8 65.7
----------------------------- -------- -------- -------- --------
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 Grant Thornton UK LLP
Paul Hailes Colin Aaronson / Harrison Clarke
investor@wresources.com / Samuel Littler
www.wresources.com T: +44 (0) 20 7383 5100
Broker Damon Heath
Alternative Resource Capital / T:+44 (0) 207 186 9952
Shard Capital www.shardcapital.com
Alex Wood
T:+44 (0) 207 186 9004
www.altrescap.com
Alma PR
Justine James
M: +44 (0) 7525 324431
wres@almapr.co.uk
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END
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