Tungsten West PLC (AIM:TUN, OTC:TNGWF) said alongside the release of its final results that it is continuing to implement cost reductions, is proactively engaging with loan note holders and is reviewing other sources of funding to address its short-term liquidity needs as it obtains the necessary permits to begin full operations.
The company is developing the Hemerdon tungsten and tin mine in Devon, where an updated JORC compliant ore reserve estimate makes its 101.2 million tonne deposit the second-largest reported tungsten reserve globally, with a 27-year mine life to extract tungsten oxide and tin.
While the project benefits from a pre-built mineral processing facility, a pre-stripped mine and fully permitted mine waste facility, the company paused the project in July 2022 as it waits for other permits and final planning permission for truck movements, with a partial restart a year later.
Chief executive Neil Gawthorpe, who joined in March, said while the company had expected it could seek funding and permits in parallel, “lender feedback has proven this to not be the case”.
“As such, it is now necessary to prioritise the process of obtaining all necessary permits required for funding. The updated timeline is to obtain the necessary permits and close additional funding by December 2023,” he said.
In June 2023, the group raised £7.2 million of new funds via an issue of convertible loan notes and an open offer, with an additional £2.0 million notes that can be issued if required.
The initial funds were drawn down in order to finance the group through the process of obtaining permits and the board considers there is sufficient liquidity to complete short-term strategic objectives before December.
The company plans to release the third tranche of notes to raise the £2 million in November to meet liabilities but said there are not any commitments from existing or new noteholders to purchase them currently.
Chairman David Cather said that while the cost reduction and cash conservation measures triggered some defaults under the terms of the notes, a waiver is in place for these defaults until 31 January 2024, by which time the board plans to have obtained the necessary permits and as a result be able to raise additional finance.
Results for the year to March showed a loss before tax of £10.8 million, down from £13 million. There was £3.4 million cash in the bank at year-end, down from £28.8 million following its IPO in 2021.