Proactive Investors - Run By Investors For Investors
Why invest in WRES?

W Resources well on the way to building the largest tungsten mine in Europe

La Parrilla's internal rate of return rings in at a chunky 64%, and that's before commodity upside is taken into account
tungsten periodic table
The tungsten price has strengthened in the past 12 months

W Resources PLC (LON:WRES) has a broad portfolio across the Iberian peninsular. It has three tungsten projects, La Parrilla in Spain, and Régua and Tarouca in Portugal. In addition, the company holds the CAA Portalegre gold-copper project in Portugal and the Monforte-Tinoca copper project, also in Portugal.

W Resources now has a US$35mln loan in place to help fund the development of the La Parrilla tungsten project in Portugal. This loan started out as a US$30mln facility in December 2017, but was extended early in 2018 as due diligence conducted by the US Special Situations fund that will be the lender provided increased confidence.

Meanwhile, in January, a contractor was appointed to undertake the construction of the concentrator at La Parrilla at a cost of €8mln. “All major plant components are now contracted and aligned with the term financing,” said W Resources chairman Michael Masterman at the time.

Large resource base to work off

The project’s established resource amounts to 49mln tonnes of ore grading 998 parts per million (ppm) tungsten trioxide (WO3), with reserves ringing in at 29.8mln tonnes at 931 ppm tungsten.

Plans in place to produce an initial 2,700 tonnes of tungsten concentrate per year 

According to a final investment decision, approved by the board of W Resources in August of 2017, the plan for La Parrilla involves a two-stage development.

The first stage will involve the construction of an operation capable of processing two million tonnes of run of mine ore to produce 2,700 tonnes of tungsten (WO3) concentrate per year.

Second stage ramp up to 4,000 tonnes per year envisaged after two years

The plan is then to recycle some of the new cashflow into the expansion of the project such that processing capability rises to 3.5mln tonnes per year and production hits 4,000 tonnes of tungsten concentrate.

The increase is expected to kick in in the third year of production, with a rise in processing to 3.2mln tonnes, and the full boost to 3.5mln tonnes expected in the fourth year of operations.

Significant margins on offer

When the board of W Resources took its final investment decision to move forward with La Parrilla in the late summer of 2017, it used certain pricing assumptions for the commodities involved, in particular tungsten, at between US$240 and US$325 per metric tonne unit (mtu), and tin, at between US$18,000 and US$20,000 per tonne.

Using those assumptions, the project looks set to generate an after-tax internal rate of return of 64%.

However, over the past 12 months the tungsten price has been on a significant upward trajectory, and cash ask tin is well above US$20,000. So returns could be higher even than envisaged in the final investment decision.

As it stands, the project is expected to have an EBITDA margin of 57%, to offer payback within two years, and to generate nearly US$30mln in EBITDA per year on average over the current six year mine life.

Shares are well supported by interested parties, dilution kept to a minimum

Chairman Michael Masterman speaks for more than 17% of the shares overall, and is the largest shareholder, so his interests are directly aligned with all other shareholders on the register. As a result, investors can be assured that dilution will be kept to a minimum, and the way development at La Parrilla has been financed almost exclusively by loans is a testament to that.






View full WRES profile View Profile

W Resources PLC Timeline

Related Articles

December 06 2017
Tinka has put out plenty of positive newsflow from Peru in recent months..
picture of copper wire
May 09 2017
RMM is continuing to move in the right direction operationally.says Cantor
February 07 2018
The Gunnison Copper Project is slated for commercial production in the second half of this year

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use