TIDMWRES
RNS Number : 7086C
W Resources PLC
21 October 2020
21 October 2020
W Resources Plc
("W" or the "Company")
Q3 Production Report
W Resources Plc (AIM:WRES), the tungsten, tin and gold mining
company with assets in Spain and Portugal, announces its Q3 2020
quarterly production report for the La Parrilla mine in Spain.
As referenced in previous updates, W identified a number of
plant improvements which needed to be addressed to increase plant
efficiencies. In order to implement the requisite programme of
improvements, production in Q3 was impacted as the working week was
truncated from seven to three days to enable the works to be
carried out.
The works are proving effective with a notable improvement in
recoveries with record tungsten concentrate production achieved in
September 2020 of 2,163mtu and a significant increase in grade from
805ppm in August to 1,059ppm in September.
The three day working week allowed for an increase in plant
operator supervision and this resulted in increased productivity
and improvement in plant performance, both in terms of production
and tungsten concentrate recovery ratios. To give comparative
transparency on the production for the period the update includes
both actual (like for like) variances and pro rata variances to
take account of the shorter working week.
-- A total of 171,454 tonnes ("t") of Run of Mine ("ROM") ore
fed to the La Parrilla plant in Q3 2020, down 32% on a like for
like basis but up 58% on a pro rata basis.
-- Total tungsten and tin concentrate production of 77.6t during
the quarter, down 13% on a like for like basis and up 104% on a pro
rata basis.
-- Tungsten ("WO(3) ") concentrate production of 54.7t during
the quarter, up 15% on a like for like basis and up 168% on a pro
rata basis.
-- Tin ("Sn") concentrate production of 22.9 dry metric tonnes
("dmt"), down 44% on a like for like basis but up 30% on a pro rata
basis.
-- The plant improvements have resulted in the highest tungsten
metal production and recovery achieved to date.
-- Combined shipments of tungsten concentrate and tin
concentrate of 100.2t in Q3, taking total shipments to offtake
partners to 230t concentrate for the nine months to date.
La Parrilla Production Summary
Q1 and Q2 figures are based on a seven day working week whilst
Q3 is based on working a three day week. As of 1 October the La
Parrilla mine is working a four day per week shift.
Q1 2020 Q2 2020 Q3 2020 Variance Variance
======== ======== ======== =========== =========
Actual Actual Actual Comparison Pro rata
======================= ======== ======== ======== =========== =========
WO(3) contained metal
(mtu) 3,306 2,756 3,820 39% 223%
======================= ======== ======== ======== =========== =========
Sn contained metal
(dmt) 12.1 20.0 9.8 -51% 14%
======================= ======== ======== ======== =========== =========
Total contained metal
(dmt) 45.2 47.6 48.0 1% 135%
======================= ======== ======== ======== =========== =========
('dmt' - dry metric tonnes, 'mtu' - metric tonne unit (1 mtu =
10kg of metal)
In Q3 2020, the team implemented a shift pattern of three days a
week which created sufficient time to complete the important plant
works and this has paid dividends as the resulting improvements in
production and the stability achieved at the plant improved
substantially in September 2020. The team at La Parrilla moved to a
four day working week in October and will move to five days a week
later in Q4.
Michael Masterman, Chairman of W Resources, commented : " Noting
the plant improvements achieved in Q3, we are extremely encouraged
by the September performance, which is a strong indicator for plant
performance and production in Q4. The works are proving successful,
production is increasing and the superior quality of tungsten has
been commended by one of our largest customers.
"With the improvements achieved in the quarter and the great
support BlackRock continues to provide the Company, following the
recently increased debt facility, we remain focussed on increasing
production month on month, in order to start 2021 in a stronger
position as we work towards achieving our T2 target
production."
Q3 2020 Overview
In Q3, the plant improvement programme included modifications to
the cyclones and hydroclassifier to improve feed distribution in
spirals and shaking tables, repairs to improve jig efficiency,
modifications to the shaking tables, and installation of cleaning
scrapers in conveyor belts to reduce cleaning time and improve
efficiency.
From July 2020, the Company has been able to access Spanish
Government initiatives to support the reduction of labour costs. La
Parrilla has been working to a 24 hour / three day per week
continuous production schedule, to provide the operational and
maintenance teams the much needed access to plant and machinery to
implement the plant improvements on existing equipment. Importantly
this has provided the opportunity for additional Geometallurgical
and Process studies to better understand and to resolve the low
tungsten metal recovery.
Plant production and metal recovery have been increasing since
the implementation of the plant improvements and importantly during
this period there have been no major specific changes to equipment
or the process. The work carried out to date has delivered a
tangible improvement in the amount of tungsten and tin produced.
These improvements have been particularly evident from September
onwards, achieving the highest tungsten recovery since production
commenced. It is important to note that this was also achieved when
operating on just three days per week.
La Parrilla Production Summary
Q1 2020 Q2 2020 Q3 2020 Variance Variance
============================= ======== ======== ======== =========== ==========
Actual Actual Actual Comparison Pro rata*
ROM feed: tonnes mined
(wmt) 273,656 253,256 171,454 -32% 58%
Strip ratio 1.07 0.58 1.38 138%
Jig plant: tonnes processed
(dmt) 240,926 228,060 148,417 -35% 52%
WO(3) feed grade (ppm) 800 845 857 1%
WO(3) recovery (%) 17% 16% 30% 88%
WO(3) concentrate (dmt) 58.9 47.6 54.7 15% 168%
WO(3) concentrate grade
(%) 56.1 57.4 69.8 22%
WO(3) contained metal
(mtu) 3,306 2,756 3,820 39% 223%
Sn feed grade (ppm) 282 307 181 -41%
Sn recovery (%) 22% 25% 37% 48%
Sn concentrate (dmt) 23.3 41.2 22.9 -44% 30%
Sn concentrate grade
(%) 51.9 48.5 42.7 -12%
Sn contained metal
(dmt) 12.1 20 9.8 -51% 14%
Total concentrate (dmt) 82.2 88.8 77.6 -13% 104%
Total contained metal
(dmt) 45.2 47.6 48.0 1% 135%
----------------------------- -------- -------- -------- ----------- ----------
* Q3 2020 production was based on working 3 days a week.
The enhanced process control and maintenance improvements
increased plant production and metal recovery in the quarter. The
team also fed fresh unoxidized ore into the plants, which is known
to generate less fines and achieve better recoveries. This had a
positive effect on production in parallel with the process
improvements and increased metallurgical recovery.
With recoveries now improving, there remains further fine tuning
and small adjustments to mitigate potential issues and as this is
progressed the shift patterns will increase. With effect from 1
October, the team are working on a 24 hour / four day per week
shift pattern, which will increase to five days per week in Q4 2020
with a target to increase to seven days per week by late Q1 2021,
factoring in the normal planned shutdowns once this is
achieved.
Noting the reduced shift patterns, operating costs were
carefully managed throughout the quarter and further cost
reductions have been implemented with the support from governmental
initiatives. One such initiative adopted by the company is the
Spanish Government's ERTE initiative which allows companies to
temporarily lay off staff or reduce their hours, and the Government
provides financial support until their role is reinstated.
COVID-19
The challenges and threat of COVID-19 remains in Spain as it
does in so many parts of the world. With stringent processes in
place, no cases of COVID-19 have been reported by employees or
contractors in Q3. We would once again like to thank and
acknowledge the hard-work and dedication of all our employees
during the pandemic for their continued diligence and adherence to
governmental and self-imposed preventive rules.
Access to Spanish Government initiatives to support the
reduction of labour costs has been welcome at such a challenging
time.
Operations
-- Safety performance continues to be a top priority for the
Company. However, there were two minor lost time injuries at La
Parrilla during the quarter.
-- Mining operations continue to perform well and deliver the
required ore feed to the plant at a low waste / ore strip ratio
(1.38 in the quarter), while maintaining the required grades to
feed ore to the plant. Blasting has reached the more competent ore
reducing fines in the processing operations.
-- The success of the plant improvements has increased the
effective utilisation of the plants from 56% in July to over 90%
from September.
Shipments and Marketing
Shipped 62.1t of tungsten concentrate and 38.1t of tin
concentrate in Q3 2020, taking total shipments to offtake partners
to 151.1t of tungsten concentrate and 78.9t of tin concentrate for
the nine months to September.
Q1 2020 Q2 2020 Q3 2020 YTD
to 31 March 30 June 30 Sept Actual
---------------------- ------------ -------- -------- -------
Tungsten Concentrate 30.1 58.9 62.1 151.1
Tin Concentrate 20.2 20.6 38.1 78.9
---------------------- ------------ -------- -------- -------
Following the most recent shipment, a major customer commended
the improved quality of Tungsten from previous shipments.
Tungsten, Tin and Gold Projects
The projects at Régua and São Martinho continue to proceed as
described in our recently issued Interim accounts statement and we
look forward to updating the market as and when we are able to do
so.
Corporate
W's relationship with BlackRock Financial Management Inc.
remains strong, evidenced by the recent US$7m increase in the loan
facility which will in part be utilised to implement a
comprehensive production programme to boost production at the La
Parrilla Tungsten and Tin project in Spain and provide a
significantly increased buffer for working capital requirements to
support the company through the uncertain times we find ourselves
in during the COVID-19 pandemic.
The Company continues to investigate additional sources of
funding (both loans and grants) provided by the Spanish government
in response to COVID-19.
The Atlas Capital Markets convertible bond facility of GBP4m
remains in place and the Company drew down a GBP500,000 tranche in
early August. The convertible bond tranche has a 5% coupon and
3-year term. As part of the agreement, Atlas can convert the bond
to W shares by issuing a conversion notice with the price set at
95% of the selected 3-day VWAP in the 15 days leading up to the
issue of a conversion notice by Atlas.
As announced on 26 August, Atlas issued a Conversion Notice for
GBP100,000 of Convertible Bonds, a small portion of the first
GBP500k tranche, equal to 75,187,969 ordinary shares of 0.1p per
share ("Ordinary Shares") at a conversion price of 0.1330p per
Ordinary Share.
Information communicated within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. 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
Michael Masterman Colin Aaronson / Jen Clarke /
c/o Alma PR Seamus Fricker
www.wresources.com T: +44 (0) 20 7383 5100
Joint Broker Joint Broker
Turner Pope Investments (TPI) Alternative Resource Capital /
Ltd Shard Capital
Andy Thacker / Zoe Alexander Alex Wood
T: +44 (0) 203 657 0050 T:+44 (0) 20 7186 9004
www.turnerpope.com www.altrescap.com
Damon Heath
T:+44 (0) 20 7186 9952
www.shardcapital.com
Alma PR
Justine James
T: +44 (0) 20 3405 0205
M: +44 (0) 7525 324431
wres@almapr.co.uk
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END
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