Shares in W Resources PLC (AIM:WRES) have been suspended, as the company continues to grapple with what it calls “extraordinarily challenging” operating and commercial conditions.
The company recently started production at the La Parrilla tungsten mine in Spain, but has been hit hard by a huge rise in liquid natural gas prices. These have been running at up to seven times higher than the average price in 2021.
In addition, the situation has been exacerbated by a truckers dispute, which has stopped delivery of critical spare parts to La Parrilla, and impeded the collection of tungsten and tin concentrate shipments.
As a result, operations at La Parrilla have been temporarily suspended.
In the meantime, the company is also investigating the possibility of LNG price support with its offtake partner and customers, and this could enable an earlier resumption of production.
W Resources is not alone, however. Similar shutdowns have been initiated in Spain by many other small and medium-sized businesses, including the major steel plant operators.
During the shutdown period, the company is applying for Spanish government support under the Expediente de Regulación Temporal de Empleo employment retention programme, and is confident this support will be received.
Plans to reduce the dependence on LNG continue to be expedited, and these include options for solar power and also an electricity grid connection upgrade.
Separately, the company has also been informed that the Dirección General de Industria, Energía y Minas of Extremadura has challenged its authorisations to operate. W Resources will be appealing this challenge and has been advised by its lawyers that it can continue to operate pending resolution of the appeal.
The suspension of operations places significant financial pressure on the company's subsidiary in Spain, Iberian Resources Spain, which has very limited cash.
W Resources has drawn US$2.5mln from the expanded US$5.5mln facility provided by funds and accounts managed by BlackRock Financial Management.
The company believes that utilisation of its funding facilities in full and resolution of a payment dispute with a supplier will enable it to continue operating for approximately three to four months in the absence of the re-commencement of mining operations at La Parrilla.
However, resolution of both these issues is required as a matter of urgency given the effect of the suspension of mining operations and associated revenues on W's cash position.
It is in these circumstances that the company has requested a suspension of its shares on AIM pending clarification of its financial position.