W Resources PLC (LON:ARES) said it expects to raise about £2.5mln via a placing and will use most of the proceeds to create a permanent solution to the high water levels at its La Parrilla mine in Spain.
The company is taking steps to lower the water level and regain access to the higher-grade ore at La Parrilla and significantly increase tungsten and tin production there.
READ: W Resources says first quarter production from La Parrilla mine hampered by heavy rain
Until the works are completed, W Resources continues to process mid- and lower-level grade ore. It expects access to high-grade ore to resume in the third quarter.
Tungsten recovery rates continue to improve and were around 50% during April, it said.
Funds from the placing will also provide additional working capital to cover the ramp-up in production at La Parrilla.
The AIM-quoted company raised £2.26mln before expenses through a placement of 28.3mln shares at 8p per share, a 13.5% discount to Friday’s closing price.
Its chairman Michael Masterman also intends to participate and invest £250,000 on the same terms as the placing, once the company has published its accounts for 2020 and is no longer in a closed period, increasing the fundraising to around £2.5mln. W Resources plans to publish its accounts in the coming weeks.
Subscribers under the placing have been offered warrants to subscribe for new shares on the basis of 1 warrant for every 2 ordinary shares. The warrants are exercisable at any time in the two years following admission of the placing shares to AIM at an exercise price of 12p per share.
The placement brings new institutional investors on to the register, strengthening institutional participation in the company.
Oscar Marin Garcia, a former non-executive director, invested around £86,000 in the placing, through a family owned company.
"We are delighted to welcome new institutions to our shareholder register and look forward to increasing production, sales and profitability as we regain access to the higher-grade ore at La Parrilla,” said Masterman.
“The second half of 2021 should see positive operational cashflow and a turnaround in creating shareholder value."