Tungsten West plc recorded a loss of £5.1 million and increased spending to £6.4m during the first half of 2022 at its Hemerdon tin-tungsten project near Plymouth in Devon.
EXPECTATIONS
The group’s H1 results for the six months ended 30 September 2022 were marked by the departure of co-founder and chief executive Max Denning and the pause in operations to re-evaluate the project.
In September 2022, Tungsten West agreed a non-binding term sheet for a $30m (£26m) royalty sale after it failed to meet certain conditions precedent to drawing the 2021 funding packages.
The company invested £6.4m on equipment and down payments, mineral processing facility improvements, as well as design and engineering costs for the crushing and ore sorting circuits.
In addition, Tungsten West made £2.3m stage payment deposits for plant and equipment, and £300,000 deposit for contractor services.
Operating cash outflows were £7.7m with “significant” prepayments for services made in the first half.
Tungsten West said that group loss of after taxation of £5,126,282 (H1 2021: £4,990,226) was “within expectations” for the project at its current stage of development.
Staff costs and other opex increased significantly compared with the previous annual period, reflecting the increase in operations.
In April 2022, the company received £284,351 through the exercise of 1,183,400 warrants.
OPERATIONS
Tungsten West’s subsidiary Aggregates West received £117,000 revenue from sales of aggregates.
The group stopped production of aggregates from waste material left by previous operator Wolf Minerals after selling 102,000 tonnes of material.
Aggregates production will restart as Tungsten West completes the increase in mineral processing.
The company has also sold 120 tonnes of low-grade tungsten concentrate for a combined value of £90,000.
Tungsten West said it continued to work with potential buyers to sell the remaining inventory of tungsten and tin concentrate stocks and preconcentrate.
The company strengthened its project, maintenance, administration, and technical teams and as at 30 September employed 61 people (excluding directors) compared with 47 staff for the previous year.
ENVIRONMENT, SOCIAL AND GOVERNANCE
Tungsten West added it had developed an environment, social and governance (ESG) strategy, which aligns with UN Sustainable Development Goals, International Finance Corporation Performance Standards, and the Sustainability Accounting Standards Board.
The company invested more than £2.9m in goods and services from Devon and Cornwall during the six months ended 30 September 2022.
Just over 77% of Tungsten West’s total spend in the six months to 30 September 2022 has been made in the UK.
The company added that the average salary in the company was £53,000 “significantly” above the average for the region.
Tungsten West said it was also pursuing a number of renewable energy projects to reduce Hemerdon’s carbon footprint including solar PV and hydro-energy schemes.
The company is working with RheEnergise which received government funding of £8.25m for a prototype hydro energy scheme at the Hemerdon mine.
To date Tungsten West has supported five local community initiatives with donations of just over £2,850 with more planned before the start of production.
The company added it had initiated its company values of care, integrity, teamwork and excellence.
OUTLOOK
Plant commissioning is due to start during H1 2023 with mining operations scheduled to begin during H2 2023.
Tungsten West said that the feasibility study for the project was nearing completion and summary results were expected before the end of the year.
The company has completed 70% of the existing plant re-build and enhancement works and placed all orders for long-lead items.
A further 15 staff members are expected to join the business before 31 December 2022.