REG - Tungsten West PLC - Financial Results & Lifting of Trading Suspension
02/10/2024 12:00
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RNS Number : 6764G Tungsten West PLC 02 October 2024
2 October 2024
Tungsten West Plc
("Tungsten West", the "Company" or the "Group")
Financial Results for the Year Ended 31 March 2024, Availability of Annual
Report,
and Lifting of Trading Suspension
Tungsten West (LON:TUN), the mining company focused on restarting production
at the Hemerdon tungsten and tin mine ("Hemerdon" or the "Project") in Devon,
UK, is pleased to announce its audited results for the year ended 31 March
2024.
Copies of the Company's full Annual Report and Financial Statements for the
financial year to 31 March 2024 are available to download from the Company's
website at www.tungstenwest.com and will shortly be posted to shareholders.
As a result of the publication of these results, trading in the Company's
ordinary shares on AIM will be restored with effect from 12:00pm today.
Highlights for the Period
· Production of legacy tungsten pre-concentrate and tin concentrate
totalling 50 tonnes.
· The Company entered into a strategic collaboration with the
fusion energy company, Oxford Sigma.
· Approval of the Section 73 application (variation of a condition
of existing permission) to vary the tonnage cap on truck movements from site.
· Strengthening the board with the appointment of new Non-Executive
Directors, Mr Guy Edwards, Mr Adrian Bougourd, and Mr Kevin Ross.
· Mr. Alistair Stobie appointed as Chief Financial Officer.
· £10.35 million convertible loan notes issued over four tranches.
Post Period Highlights
· The Environment Agency granted the Company a permit to operate its
Mineral Processing Facility, the last of the key permits required to further
progress the Project.
· £2.9 million convertible loan notes issued by way of adding an
additional tranche.
· Appointment of Mr Jeffery Court as Chief Executive Officer.
At the year-end, the Group had £1.6 million in cash reserves and £0.04
million at the end of September 2024. The Group is in the process of
finalising the documentation in respect of a £2.0 million Tranche F funding
round with its existing CLN holders. The Group has received letters of
commitment from the CLN holders that they will provide the Tranche F funding
and also extend the waiver that expired in June 2024. The Group has very
limited cash reserves and is reliant upon this Tranche F funding being
received. If the Group did not receive the Tranche F funding or it was
delayed, these limited cash reserves are forecast to be exhausted in October
2024. Following the expected Tranche F CLN issue, going concern is also
reliant on further funding being secured by the end of December 2024, without
which the Group would be unable to pay its liabilities as they fall due beyond
this point.
This announcement contains inside information for the purposes of Article 7 of
Regulation 596/2014 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019.
Ends
For further information, please contact:
Enquiries
Tungsten West Strand Hanson
Alistair Stobie (Nominated Adviser and Financial Adviser)
Tel: +44 (0) 1752 278500 James Spinney / James Dance / Abigail Wennington
Tel: +44 (0) 207 409 3494
BlytheRay
(Financial PR)
Tim Blythe / Megan Ray
Tel: +44(0) 20 7138 3204
Email: tungstenwest@blytheray.com
Hannam & Partners
(Broker)
Andrew Chubb / Matt Hasson / Jay Ashfield
Tel: +44 (0)20 7907 8500
Follow us on X @TungstenWest
Chairman's Statement
Overview of FY2024
I am pleased to report on the Group's audited results for the year ended 31
March 2024.
The year has been one of reset. As I write this it is clear that the Company
is once again moving towards reopening the Hemerdon tungsten and tin mine;
providing a secure tungsten supply chain to the UK and its allies. We expect
to restart mining and processing operations in 2026.
During the period James Macfarlane (Managing Director), Mark Thompson
(Vice-Chairman), Neil Gawthorpe (CEO) and Nigel Widdowson (CFO) have all
resigned from positions of significant management responsibility from the
board, where applicable. Jeff Court has been appointed CEO and will join the
board as soon as he has completed his duties at Capital where he was Chief
Executive Officer - Mining & Chief Development Officer - Mining of
Capital's drilling and mining services business. This will allow Alistair
Stobie, who joined as CFO in November 2023, to focus on the capital raise
needed to bring Hemerdon back in to production. I would like to thank everyone
who has had the vision and enthusiasm to get Tungsten West to this point in
its development.
The most significant achievement in the period was the granting of a draft
permit for the Mineral Processing Facility (MPF) by the Environment Agency
(EA) in January 2024. The full permit followed in June 2024 following a third
public consultation. Testing and demonstrating that the Company could resolve
the historical low frequency noise (LFN) issues took considerable input from
experts from both the Company and the EA. Few metallurgical plant permits are
issued in the UK, I would like to thank the EA for working with the Company
and its consultants to deliver a workable MPF permit.
Until the MPF EA permit was issued, it became that clear the Company would not
be able to close on the funding needed to reconfigure the MPF and recommence
mining and processing. Accordingly, and painfully, costs were cut back so that
only vital services were kept. The Company lost some very good people with
significant deep knowledge of the project. I am delighted that some of those
who left have subsequently rejoined. I am hopeful that we may yet entice a few
more back along with global mining talent. Together, once funding has been
secured, we are confident that we will see the restart of mining at Hemerdon.
None of this was possible without the support of a small group of investors
who have kept funding the Company through five separate tranches of the
Convertible Loan Note (CLN). There is an absence of risk capital in the City
of London which particularly hurts companies at Tungsten West's stage of
development.
On receipt of the EA's MPF draft permit the Company kicked off an optioneering
study (Optioneering Study). The most significant outcome of the Optioneering
Study was to remove the two phase approach to restarting operations. This has
informed all our subsequent engineering decisions. On its completion and after
the end of the period, the Company appointed ADP Marine and Modular (ADP), an
engineering consultancy, to review options to reconfigure the MPF. These
changes will be included in the updated feasibility study and will lead to
front end engineering and design (FEED) and ultimately an EPC contract. This
work coincided with the appointment of Mining Plus to write the Company's
third feasibility study. Currently, we expect that the feasibility study will
be completed by the end of 2024.
The engineering studies that ADP are undertaking are focused on three main
areas; a reconfigured crushing and ore sorting front-end, the engineering and
implementation of the LFN enclosure solutions agreed as part of the EA MPF
Permit and a refurbishment of the main MPF which has not been in operation
since it was restarted briefly in early 2023.
The new front-end crushing and ore sorting circuit addresses one of the main
points of failure for Wolf Minerals. The installed rolls crushers were not
sufficiently robust to deal with granite and were a constant point of failure.
Tungsten West expects to install up to five Tomra ore sorters. After ore
sorting, approximately 700,000 tonnes of highly mineralized ore will pass
through the MPF per annum. We expect that the lower throughput will reduce
unplanned downtime as well as reducing the uranium and thorium content in the
final product. ADP, in conjunction with the Tungsten West team, are studying
various options which we believe will reduce upfront capex and provide more
space for run of mine (ROM) storage.
The work to install the LFN enclosures over the screens in the MPF focusses
principally on ensuring that the screens can be easily maintained and serviced
whilst ensuring that LFN is below the limits set at the measurement points
around the mine. Adding up to eighteen enclosures to the MPF will require a
considerable amount of strengthening to the building.
Whilst the updated feasibility study is underway, the Company is starting the
process of capital raising to modify the MPF and restart mining operations.
The initial focus has been opening discussions with Export Credit Agencies in
the UK, US and individual states within the EU in addition to more traditional
sources of mining finance. Tungsten is a mineral critical to the transition
economy, in addition there is significant and growing defence-related demand.
Hemerdon mine is a significant resource of tungsten available to the UK, EU,
US and their allies and partners. Notwithstanding these factors, because the
People's Republic of China (PRC) controls the mining and processing of
approximately 85% of global tungsten supply, pricing continues to be set by
the PRC. There have been numerous examples of PRC government-controlled
companies selling critical minerals below their cost of production. Both the
US and EU have started discussions around minimum pricing levels as better
levers than either ESG taxes or the very blunt tool of imposing tariffs. The
Company is seeking to have a voice in these discussions.
With the core of a strong management team in place, the engineering for a
rebuild of the MPF and the work for a new feasibility study well underway, we
expect to be in a position to formally kick-off our fund-raising efforts in
the New Year. The project and development team will work on FEED whilst the
capital raising process continues so that we will be in a position to commence
work on rebuild as soon as possible after it is completed.
Finally, I would like to thank the team at Tungsten West who have stayed with,
or returned to the Company, during this difficult time. It is your dedication
that will enable us to recommence mining of this critical mineral in the south
west of England.
David Cather
Chairman
Consolidated Statement of Comprehensive Income
Year ended 31 March 2024
Note 2024 2023
£
£
Revenue 5 722,036 626,460
Cost of sales (2,099,895) (1,984,983)
Gross loss (1.377,859) (1,358,523)
Administrative expenses (8,966,124) (10,160,088)
Other operating income 6 14,424 18,947
Other gains/(losses) 7 3,079,384 710,710
Operating loss 8 (7,250,175) (10,788,954)
Finance income 200,175 454,196
Finance costs (2,844,319) (495,279)
Net finance cost 9 (2,644,144) (41,083)
Loss before tax (9,894,319) (10,830,037)
Income tax credit 13 194,403 544,602
Loss for the year (9,699,916) (10,285,435)
Total comprehensive loss (9,699,916) (10,285,435)
Profit/(loss) attributable to:
Owners of the Company (9,699,916) (10,285,435)
£ £
Basic and diluted loss per share 14 (0.05) (0.06)
The above results were derived from continuing operations.
Consolidated Statement of Financial Position
Year ended 31 March 2024
Note 31 March 31 March
2024
2023
£
£
Assets
Non-current assets
Property, plant and equipment 15 19,266,279 19,054,864
Right-of-use assets 16 1,895,584 2,022,672
Intangible assets 17 5,058,686 5,090,016
Deferred tax assets 13 1,382,901 1,390,346
Escrow funds receivable 19 11,059,151 5,146,986
38,662,601 32,704,884
Current assets
Inventories 22 29,850 114,173
Trade and other receivables 20 2,809,893 6,163,593
Cash and cash equivalents 21 1,581,535 3,438,018
4,421,278 9,715,784
Total assets 43,083,879 42,420,668
Equity and liabilities
Equity
Share capital 27 1,870,741 1,805,516
Share premium 51,949,078 51,882,761
Share option reserve 256,278 357,366
Warrant reserve - 740,867
Retained earnings (32,764,067) (23,805,018)
Equity attributable to owners of the Company 21,312,030 30,981,492
Non-current liabilities
Loans and borrowings 24 1,803,533 1,901,583
Provisions 25 5,137,646 5,701,771
Deferred tax liabilities 13 1,382,901 1,390,346
8,324,080 8,993,700
Current liabilities
Trade and other payables 23 1,754,903 2,330,603
Loans and borrowings 24 11,692,866 114,873
13,447,769 2,445,476
Total liabilities 21,771,849 11,439,176
Total equity and liabilities 43,083,879 42,420,668
The financial statements were approved by the Board on 1 October and signed on
its behalf by:
Alistair Stobie
Director
Company Registration Number: 11310159
Consolidated Statement of Changes in Equity
Year ended 31 March 2024
Share capital Share premium Share option reserve Warrant reserve Retained earnings Total
£
£
£
£
£
£
At 31 March 2023 1,805,516 51,882,761 357,366 740,867 (23,805,018) 30,981,492
Loss for the year - - - - (9,699,916) (9,699,916)
Total comprehensive income - - - - (9,699,916) (9,699,916)
New share capital subscribed 65,225 66,317 - - - 131,542
Expired warrants - - - (740,867) 740,867 -
Share options charge - - 85,138 - - 85,138
Forfeiture of share options - - (186,226) - - (186,226)
At 31 March 2024 1,870,741 51,949,078 256,278 - (32,764,067) 21,312,030
At 31 March 2022 1,793,682 51,610,414 241,861 1,408,730 (14,187,446) 40,867,241
Loss for the year - - - - (10,285,435) (10,285,435)
Total comprehensive income - - - - (10,285,435) (10,285,435)
New share capital subscribed 11,834 272,347 - - - 284,181
Exercise of warrants - - - (334,378) 334,378 -
Expired warrants - - - (333,485) 333,485 -
Share options charge - - 134,610 - - 134,610
Forfeiture of share options - - (19,105) - - (19,105)
At 31 March 2023 1,805,516 51,882,761 357,366 740,867 (23,805,018) 30,981,492
Consolidated Statement of Cash Flows
Year ended 31 March 2024
Note 2024 2023
£
£
Cash flows from operating activities
Loss for the year (9,699,916) (10,285,435)
Adjustments to cash flows from non-cash items
Depreciation and amortization 8 522,898 514,394
Loss on disposal of right to use asset 8 6,807 124,528
Loss on disposal of tangible fixed assets 8 3,137 -
Loss on disposal of intangible asset 8 - 73,401
Impairment of asset under construction 7 2,157,923 108,947
Fair value (gains)/losses on escrow account 7 (5,721,727) 3,495,064
Fair value gains on restoration provision 7 (889,126) (4,205,774)
Finance income 9 (200,175) (454,196)
Finance costs 9 2,844,319 495,279
Share-based payment transactions 10 (101,088) 115,505
Impact of foreign exchange 9 (49,551) 74,724
Income tax credit 13 (194,403) (544,602)
(11,320,902) (10,488,165)
Working capital adjustments
Income tax received 458,975 544,602
Decrease/(Increase) in trade and other receivables 20 3,353,698 (2,336,084)
Decrease in trade and other payables 23 (840,270) (1,959,020)
Decrease in inventories 22 84,323 42,771
Net cash outflow from operating activities (8,264,176) (14,195,896)
Cash flows from investing activities
Interest received 9 9,713 99,082
Acquisitions of property, plant and equipment 15 (2,703,810) (10,892,254)
Proceeds from sale of vehicle - 4,167
Acquisitions of intangibles 17 (39,952) (191,523)
Net cash outflows from investing activities (2,734,049) (10,980,528)
Cash flows from financing activities
Interest paid 9 (9,793) (4,084)
Proceeds from issue of Ordinary Shares, net of issue costs 131,542 -
Proceeds from the exercise of warrants - 284,181
Proceeds from the issue of convertible loan notes, net of issue costs 24 9,241,830 -
Payments to hire purchase (20,302) (63,294)
Payments to lease liabilities (201,535) (357,749)
Net cash inflows/(outflows) from financing activities 9,141,742 (140,946)
Net decrease in cash and cash equivalents (1,856,483) (25,317,370)
Cash and cash equivalents at 1 April 3,438,018 28,755,388
Cash and cash equivalents at 31 March 1,581,535 3,438,018
Notes to the Consolidated Financial Statements
Year ended 31 March 2024
1 General information
Tungsten West plc ('the Company') is a public limited company, incorporated in
England and Wales and domiciled in the United Kingdom.
The address of its registered The principal place of
office is:
business is:
Shakespeare Martineau LLP Hemerdon Mine
6th Floor Drakelands
60 Gracechurch Street Plympton
London Devon
EC3V 0HR PL7 5BS
United Kingdom United Kingdom
2 Accounting policies
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Basis of preparation
The Group financial statements have been prepared in accordance with
International Accounting Standards as adopted in the United Kingdom ('UK
adopted IAS') and those parts of the Companies Act 2006 that are applicable to
companies which apply UK adopted IAS.
The financial statements are presented in Sterling, which is the functional
currency of the Group and Company.
Going concern
The Group is still in the pre-production phase of operations and meets its day
to day working capital requirements by utilising cash reserves from investment
made in the Group. Over the last year this has been dependent on raising funds
via issues of CLN. There is no signed commitment from investors to provide
further funds under the existing CLN agreement. The Group previously notified
CLN holders of multiple defaults of on the terms of the CLN agreement. A
waiver was subsequently agreed but expired in June 2024. In the absence of a
waiver the notes can be called in for immediate redemption. For the Group to
remain a going concern it is reliant on the continued support of the
Noteholders by not exercising their rights under the Defaults. . The CLN
holders have provisionally agreed to reinstate the waiver as part of the
expected imminent Tranche F funding as set out below.
At the year-end, the Group had £1.6 million in cash reserves and £0.04
million at the end of September 2024. The Group is in the process of
finalising the documentation in respect of a £2.0 million Tranche F funding
round with its existing CLN holders. The Group has received letters of
commitment from the CLN holders that they will provide the Tranche F funding
and also extend the waiver that expired in June 2024. The Group has very
limited cash reserves and is reliant upon this Tranche F funding being
received. If the Group did not receive the Tranche F funding or it was
delayed, these limited cash reserves are forecast to be exhausted in October
2024.
Following the expected Tranche F CLN issue, going concern is also reliant on
further funding being secured by the end of December 2024, without which the
group would be unable to pay its liabilities as they fall due beyond this
point.
In addition to short-term financing via the CLN, the Group still requires
additional funding to complete the MPF rebuild and is in discussions with
financing partners to provide the additional capital. The quantum of financing
will be determined at the completion of FEED.
These conditions indicate that a material uncertainty exists that may cast
significant doubt on the Group's and company's ability to continue as a going
concern.
Until the additional capital is secured, the Group will continue to proceed by
utilising existing cash reserves and drawing on the 2023 CLN facility. The
board will not commit to significant further capital expenditure until the
full finance package is in place to complete the rebuild.
Model 1 - Funding to Complete Feasibility Study and Obtain Financing
This scenario models management's expectation of cash required to complete the
ongoing feasibility study and general and administrative expenses, including
maintaining the existing mine permits. This does not include any expenses
related to FEED, or capital expenditures to restart operations. The Company is
in discussion with a number of parties regarding financing of operations to
complete FEED and capital raising operations.
As a result, they intend that the group to be able to operate as a going
concern for the foreseeable future. Consequently, they continue to adopt the
going concern basis in preparing these financial information despite the
material uncertainty referred to above.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its subsidiary undertakings drawn up to 31 March 2024.
A subsidiary is an entity controlled by the Company. Control is achieved where
the Company has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
The purchase method of accounting is used to account for business combinations
that result in the acquisition of subsidiaries of the Group. The cost of a
business combination is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed as at the date of
exchange. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, including deferred tax if required. Any
excess of the cost of the business combination over the acquirer's interest in
the net fair value of the identifiable assets, liabilities and contingent
liabilities is recognised as goodwill.
Changes in accounting policy
None of the standards, interpretations and amendments effective for the first
time from 1 April 2023 have had a material effect on the financial statements.
Revenue recognition
In the year revenue has mainly related to the sale of low grade concentrate
which was left behind by the previous mining operator. This is recognised upon
pick up by customers at the fair value of consideration receivable at that
date.
Tax
Income tax expense consists of the sum of current tax and deferred tax.
Current tax is based on taxable profit for the year. Taxable profit differs
from profit as reported for accounting purposes because of items of income or
expense that are taxable or deductible in other years and items that are never
taxable or deductible.
Current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period. A provision is
recognised for tax matters that are uncertain if it is considered probable
that there will be a future outflow of funds to a tax authority. The provision
is measured at the best estimate of the amount expected to become payable. The
assessment is based on the judgement of management supported by the advice of
tax professionals contracted by the company.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is realised
based on tax laws and rates that have been enacted or substantively enacted at
the reporting date.
The Group has submitted research and development tax credit claims. The Group
accounts for a claim at the point it considers the claim to be unchallenged by
HMRC.
Property, plant and equipment
Land and buildings are stated at the cost less any depreciation or impairment
losses subsequently accumulated (cost model). Land and buildings have been
uplifted to fair value on consolidation.
Plant and equipment is stated in the statement of financial position at cost,
less any subsequent accumulated depreciation and subsequent accumulated
impairment losses.
The asset under construction relates to costs incurred to upgrade the mineral
processing facility and in accordance with IAS 16, have capitalised costs if
it is probable that future economic benefits associated with the item will
flow to the entity and the cost can be measured reliably.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land
and assets under construction over their estimated useful lives, as follows:
Asset class Depreciation method and rate
Land None
Building 2% Straight Line
Furniture, fittings and equipment 5% - 20% Straight Line
Other property, plant and equipment 5%- 33% Straight Line
Motor vehicles 33% Straight Line
Computer equipment 33% Straight Line
Goodwill
Goodwill is recognised at cost and reviewed for impairment annually.
Intangible assets
Contractual mining rights as set out in the mining lease are recognised as a
separate intangible asset on consolidation under IFRS 3.
The mining rights are subject to amortisation over the useful life of the mine
which is 27 years (2023: 27 years). Amortisation will be charged from the date
the mine is brought into use.
Software is amortised on a straight-line basis using a rate of 33%.
Right-of-use assets
Right-of-use assets consist of a lease for the Hemerdon Mine and other
property leases under IFRS 16. These assets are depreciated over the shorter
of the lease term and the useful life of the underlying asset. Depreciation
starts at the commencement date of the lease.
Research and development activities
All research costs are expensed. Costs related to the development of products
are capitalised when they meet the following conditions:
(i) It is technically feasible to complete the
development so that the product will be available for use or sale.
(ii) It is intended to use or sell the product being
developed.
(iii) The Group is able to use or sell the product being
developed.
(iv) It can be demonstrated that the product will generate
probable future economic benefits.
(v) Adequate technical, financial and other resources
exist so that product development can be completed and the product
subsequently used or sold.
(vi) Expenditure attributable to the development can be
reliably measured.
All other development expenditure is recognised as an expense in the period in
which it is incurred.
Capitalised development costs are stated at cost less accumulated amortisation
and accumulated impairment losses (cost model). Amortisation is recognised
using the straight-line basis and results in the carrying amount being
expensed in profit or loss over the estimated useful lives which range from 5
to 15 years.
Exploration for and evaluation of mineral resources
Costs relating to the exploration for and evaluation on mineral resources are
expensed.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Trade receivables
Trade and other receivables where payment is due within one year do not
constitute a financing transaction and are recorded at the undiscounted amount
expected to be received, less attributable transaction costs. Any subsequent
impairment is recognised as an expense in profit or loss.
All trade and other receivables are subsequently measured at amortised cost,
net of impairment.
Escrow funds
These funds are held with a third party to be released to the Group as it
settles its obligation to restore the mining site once operations cease. The
debtor has been discounted to present value assuming the funds will be
receivable useful life of mining operations.
Trade payables
Trade and other payables are initially recognised at fair value less
attributable transaction costs. They are subsequently measured at amortised
cost.
Convertible debt
Convertible loan notes issued by the group have been assessed as a host
liability contract with the conversion option meeting the recognition criteria
for an embedded derivative financial liability. The group has taken the option
available under IFRS to designate the entire instrument at fair value through
profit and loss. The instrument is initially recognised at transaction price
net of directly attributable costs incurred. The instrument is remeasured to
fair value at each reporting point with the resulting gain or loss recognised
in profit and loss.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation.
Provisions are measured at the Directors' best estimate of the expenditure
required to settle the obligation at the reporting date and are discounted to
present value where the effect is material.
This includes a provision for the obligation to restore the mining site once
mining ceases.
Leases
At inception of the contract, the Group assesses whether a contract is, or
contains, a lease. It recognises a right-of-use asset and a corresponding
lease liability with respect to all material lease arrangements in which it is
the lessee. The right-of-use assets and the lease liabilities are presented as
separate line items in the statement of financial position.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate. It is subsequently measured by
increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to
reflect the lease payments made.
Short-term or low-value leases, in accordance with the available exemption in
IFRS 16, are not capitalised on the statement of financial position and
instead recognised as an expense, on a straight-line or other systematic
basis.
Share capital
Ordinary Shares are classified as equity. Equity instruments are measured at
the fair value of the cash or other resources received or receivable, net of
the direct costs of issuing the equity instruments. If payment is deferred and
the time value of money is material, the initial measurement is on a present
value basis.
Share options
Share options granted to shareholders classified as equity instruments are
accounted for at the fair value of cash received or receivable. Share options
granted to shareholders which represent a future obligation for the Company
outside of its control are recognised as a financial liability at fair value
through profit and loss.
Share options granted to employees are fair valued at the date of grant with
the cost recognised over the vesting period. If the employee is employed in a
subsidiary company, the cost is added to the investment value, in the
financial statements of the parent, and the expense recognised in staff costs
in the statements of the subsidiary.
Warrants issued in return for a service are classified as equity instruments
and measured at the fair value of the service received. Where the service
received relates to the issue of shares the cost is debited against the
proceeds received in share premium.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which pension
contributions are paid into a separate entity and the group has no legal or
constructive obligations to pay further contributions if the fund does not
hold sufficient assets to pay all employees the benefits relating to employee
service in the current and prior periods.
For defined contribution plans contributions are paid into publicly or
privately administered pension insurance plans on a mandatory or contractual
basis. The contributions are recognised as employee benefit expense when they
are due. If contribution payments exceed the contribution due for service, the
excess is recognised as an asset.
Financial instruments
Initial recognition
Financial assets and financial liabilities comprise all assets and liabilities
reflected in the statement of financial position, although excluding property,
plant and equipment, intangible assets, right of use assets, inventories,
deferred tax assets, prepayments, deferred tax liabilities and the mining
restoration provision. The Group recognises financial assets and financial
liabilities in the statement of financial position when, and only when, the
Group becomes party to the contractual provisions of the financial instrument.
Financial assets are initially recognised at fair value. Financial liabilities
are initially recognised at fair value, representing the proceeds received net
of premiums, discounts and transaction costs that are directly attributable to
the financial liability.
All regular way purchases and sales of financial assets and financial
liabilities classified as fair value through profit or loss ('FVTPL') are
recognised on the trade date, i.e., the date on which the Group commits to
purchase or sell the financial assets or financial liabilities. All regular
way purchases and sales of other financial assets and financial liabilities
are recognised on the settlement date, i.e., the date on which the asset or
liability is received from or delivered to the counterparty. Regular way
purchases or sales are purchases or sales of financial assets that require
delivery within the time frame generally established by regulation or
convention in the marketplace.
Subsequent to initial measurement, financial assets and financial liabilities
are measured at either amortised cost or fair value.
Derecognition
Financial assets
The Group derecognises a financial asset when:
• the contractual rights to the cash flows from
the financial asset expire;
• it transfers the right to receive the
contractual cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are transferred; or
• the Group neither transfers nor retains
substantially all of the risks and rewards of ownership and it does not retain
control of the financial asset.
On derecognition of a financial asset, the difference between the carrying
amount of the asset and the sum of the consideration received is recognised
as a gain or loss in the profit or loss.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations
are discharged, cancelled, or expire.
Significant accounting estimates and judgements
The preparation of the financial statements requires management to make
estimates and judgements that affect the reported amounts of certain financial
assets, liabilities, income and expenses.
The use of estimates and judgements is principally limited to the
determination of provisions for impairment and the valuation of
financial instruments as explained in more detail below:
Significant accounting judgements
Impairment of non-current assets
To consider the impairment of the Group's non-current assets, management has
calculated a value in use of the Group's cash-generating unit which comprises
the Hemerdon Mine. This was determined using a discounted cashflow approach,
supported by project cashflow forecasts prepared by management. The value of
assets impacted is £24.3 million (2023: £24.1 million).
The previous model under the Bankable Feasibility Study ('BFS') has been
adapted to reflect the changes in inputs and assumptions as a result of the
project re-evaluation. The inputs and key assumptions that were used in the
determination of value in use were discount rate, metal prices, metal
recoveries, probability of financing, probability of permit award and foreign
exchange.
Discounted cashflows are based on future forecasts which reflect uncertainty.
Therefore, management has prepared a sensitised discounted cashflow
calculation. The underlying assumptions that were stress tested include the
discount rate, foreign exchange rates and metal prices and recoveries.
Management were satisfied in the recoverability of the Group's assets and no
impairment was required.
Management did separately recognise an impairment of £2.2m (2023: £0.1m) in
relation to specific costs capitalised to an area of the Mineral Process
Facility which has since been eliminated from the process.
Capitalisation of research and development costs
The Directors have reviewed any costs relating to evaluating the technical
feasibility of processing the extracted tungsten ore and have expensed these
costs in line with the current policy. The Directors have also reviewed
research and development costs and concluded that these costs fail to meet the
criteria set out in IAS 38 for the capitalisation of development costs as the
Directors still consider that they are in the research phase. The Group will
commence capitalisation of development costs at the point when available
finance has been secured to complete the project in accordance with IAS 38.
Development costs that are capitalised in accordance with the requirements of
IFRS are not treated, for dividend purposes, as a realised loss. The Group has
currently capitalised no research and development costs in accordance with IAS
38. The Group has only capitalised costs associated with the tangible
improvement and installation of property, plant and equipment under IAS 16.
Capitalisation of asset under construction costs
The Directors have reviewed any costs relating to the upgrade of the mineral
processing facility in accordance with IAS 16 and have capitalised costs if it
is probable that future economic benefits associated with the item will flow
to the entity and the cost can be measured reliably. At the year end, £14.1
million (2023: £13.6 million) of costs at carrying value have been
capitalised. The company acquired the pre-existing machinery in the mineral
processing facility for nil cost. Due to the significant period of inactivity,
refurbishment of the existing machinery has commenced to bring the machinery
back into use. The direct costs of restoring or improving the functionality of
the plant and machinery have been capitalised on the basis these costs will
increase the future cashflows to be generated by the asset. In situations
where parts have been replaced no matched disposal has been required in
instances where the original asset is carried at nil value.
Founder options
The Directors consider the non-EMI portion of the founder options meet the
definition of equity in the financial statements of the Group on the basis
that the 'fixed for fixed' condition is met and that they were awarded to
shareholders relating to investing in the share capital of the Group. The
accounting treatment has been applied in accordance with IAS 32, which
requires initial recognition at fair value of consideration paid less costs.
As there was no consideration received at inception, the value of the options
is £Nil. When exercised the shares are recognised at option price.
Key sources of estimation uncertainty
Restoration provision
The restoration provision is the contractual obligation to restore the mining
site back to its original state once mining ceases. The provision is equal to
the expected outflows that will be incurred at the end of the mine's useful
life discounted to present value. As the restoration work will predominantly
be completed at the end of the mine's useful life, these calculations are
subject to a high degree of estimation uncertainty. The key assumptions that
would lead to significant changes in the provision are the discount rate,
useful life of the mine and the estimate of the restoration costs.
A 1% change in the discount rate on the Group's restoration estimates would
result in an impact of £1.1 million to £1.6 million (2023: £1.2 million to
£1.6 million) on the restoration provision. A 5% change in cost on the
Group's restoration estimates would result in an impact of £0.3 million
(2023: £0.3 million) on the provision for restoration. More information on
the restoration provision is disclosed in note 25.
Escrow account
These are funds being held under escrow with a third party and will be
released back to the Company on the cessation of mining once restoration works
have been completed. The key assumptions that would lead to significant
changes in the escrow account fair value are the discount rate, the future
interest rate and the useful life of the mine.
A 1% change in the discount rate on the Group's escrow account estimate would
result in an impact of £2.4 million to £3.1 million (2023: £1.1 million to
£1.5 million) on the escrow account valuation. A one-year change in useful
mining life would result in an impact of £0.1 million (2023: £0.2 million)
on the escrow account valuation. More information on the escrow account is
disclosed in note 19.
Convertible loan notes
The convertible loan notes are measured at fair value at each reporting point.
Due to the fact that the instrument will be settled at a future point in time
either by the conversion into equity shares, conversion into an equivalent
debt instrument or repayment in cash the valuation is subject to inherent
estimation uncertainty. Management commissioned an external expert to
calculate the fair value at the year end. The fair value has been calculated
using a scenario pricing model and the key underlying assumptions are the
probabilities assessed for each underlying scenario, the discount rate
selected and the dates of conversion or redemption.
A two month earlier date of conversion or redemption assumption would result
in a £2.1m increase to the fair value of the year end liability.
Discount rates
The Group has had to assess reasonable discount rates based on market factors
to use under IFRS. These discount rates have been used on the right-of-use
assets, escrow funds, the restoration provision and share based payments. The
discount rate on the right-of-use asset is the rate for an equivalent debt
instrument. The escrow funds are discounted at the risk free rate which is the
yield on an equivalent long-term UK government bond. The restoration provision
is discounted at the risk-free rate plus a premium based on the specific risk
associated with this liability. The UK risk-free rate increased over the
financial year to 4.4% (2023: 3.7%).
3 Financial risk management
Group
This note presents information about the Group's exposure to financial risks
and the Group's management of capital.
Credit risk
In order to minimise credit risk, the Group has adopted a policy of
only dealing with creditworthy counterparties (banks and debtors) and it
obtains sufficient collateral, where appropriate, to mitigate the risk of
financial loss from defaults. The most significant credit risk relates to
customers that may default in making payments for goods they have purchased.
To date the Group has only made a small number of sales and therefore the
credit risk exposure has been low.
Liquidity risk
The Directors regularly monitor forecast and actual cash flows and to match
the maturity profiles of financial assets and liabilities to ensure proper
liquidity risk management for the day-to-day working capital requirements.
In the view of the Directors, the key risk to liquidity is raising the
additional capital required to meet its estimated Capex spend. The Group's
continued future operations depend on the ability to raise sufficient capital
through the issue of debt. At present the Group does not have sufficient
capital to fund its estimated Capex spend therefore there is a liquidity risk
which would result in the Group having to pause its future operations were it
to not raise the necessary capital. At present, the Group is in discussions
with financing partners to provide this additional capital.
Market risk
Interest rate risk
The Group is exposed to interest rate risk through the impact of rate changes
on interest-bearing borrowings. The interest rates and terms of repayment are
disclosed in note 24 to the financial statements. The Company's policy is to
obtain the most favourable interest rates available for all liabilities.
Except as outlined above, the Group has no significant interest-bearing assets
and liabilities.
Foreign exchange risk
The Group in the future will also be exposed to exchange rate risk on the
basis that tungsten prices are principally denominated in US Dollar.
The Group will seek to manage this risk through the supply contracts
it agrees with future customers.
The Group does not use any derivative instruments to reduce its economic
exposure to changes in interest rates or foreign currency exchange rates at
the current time.
Price risk
The Group is exposed to the price fluctuation of its primary products being
tungsten and tin. Given the Group is currently in the development phase and is
not yet producing any revenue, the costs of managing exposure to commodity
price risk exceed any potential benefits. The Directors monitor this risk on
an ongoing basis and will review this as the Group moves towards production.
Inflation Risk
The Group is exposed to inflationary pressures that impact the core materials
required for the operations, mainly being reagents, power and diesel costs.
The Directors monitor this risk on an ongoing basis and will review this as
the group moves towards production.
4 Operating segments
The Chief Economic Decision Maker of the Group is the Board of Directors which
considers that the Group is comprised of one operating segment representing
the Group's mining activities at the Hemerdon Mine. All operations and assets
are located in the United Kingdom and all revenues are originated in the
United Kingdom.
Revenue from customers accounting for 10% or more of Group revenue was as
follows:
2024 2023
£
£
Customer A - 118,276
Customer B 435,072 -
Customer C 286,964 508,184
5 Revenue from contracts with customers
The analysis of the Group's revenue for the year from continuing operations is
as follows:
2024 2023
£
£
Tungsten 497,388 508,184
Tin 224,648 -
Aggregates - 118,276
Sale of goods 722,036 626,460
6 Other income
The analysis of the Group's other operating income for the year is
as follows:
2024 2023
£
£
Sale of scrap metal 14,424 13,962
Sublease rental income - 4,985
14,424 18,947
7 Other gains and losses
The analysis of the Group's other gains and losses for the year is
as follows:
2024 2023
£
£
Gain on restoration provision due to change in discount rate 889,126 4,205,774
Gain/(loss) on escrow account due to change in discount and interest rate 5,721,727 (3,495,064)
Impairment on assets under construction deposits (1,373,546) -
Impairment on assets under construction assets (2,157,923) -
Other gains and losses 3,079,384 710,710
See note 19 and note 25 for further details on other gains and losses on the
escrow accounts and the restoration provision.
8 Operating loss
Arrived at after charging/(crediting):
2024 2023
£
£
Depreciation of property, plant and equipment 331,335 276,995
Depreciation of right-of-use assets 120,281 216,039
Loss on disposal of right to use asset 6,807 124,528
Loss on disposal of tangible fixed assets 3,137 -
Impairment of asset under construction assets and deposits 3,531,469 108,947
Amortisation of intangibles 71,282 21,360
Staff costs 3,352,821 5,562,095
9 Finance income and costs
2024 2023
£
£
Finance income
Notional interest income on the escrow funds receivable 190,438 272,026
Other interest income 9,713 99,082
Foreign exchange gains 24 83,088
200,175 454,196
Finance costs
Interest expense on other financing liabilities (118,985) (101,772)
Notional cost on the restoration provision (325,001) (381,060)
Fair value movement in convertible loan notes designated fair value through (2,345,391) -
profit and loss
Bank charges (5,367) (4,083)
Foreign exchange losses (49,575) (8,364)
Total finance costs (2,844,319) (495,279)
Net finance costs (2,644,144) (41,083)
10 Staff costs
The aggregate payroll costs (including Directors' remuneration) were
as follows:
2024 2023
£
£
Wages and salaries 2,724,119 3,888,672
Social security costs 331,690 427,748
Pension costs, defined contribution scheme 164,738 161,908
Share based payment (101,088) 115,505
Amounts capitalised to asset under construction 233,362 968,262
3,352,821 5,562,095
The average number of persons employed by the Group (including Directors)
during the year, analysed by category, was as follows:
2024 2023
No.
No.
Project, maintenance, administration and support 44 74
Directors 5 7
49 81
11 Directors' remuneration
The Directors' remuneration for the year was as follows:
2024 2023
£
£
Remuneration 487,035 873,029
Pension contribution 19,130 21,019
Benefits in kind 1,884 2,340
Total cash remuneration 508,049 896,388
Share-based payment 4,025 66,993
Total remuneration 512,074 963,381
Included in the remuneration above was £nil (2023: £nil) paid in shares
rather than cash.
Remuneration by each Director is as follows:
2024 2024 2024 2024 2024 2024
Salary
Pension
Loss of office
Benefits
Share-based payment
£
£
£
£
£ Total
£
Richard M Maxey 28,000 - - - - 28,000
Mark Thompson 28,077 - - - - 28,077
Nigel Widdowson 64,625 8,130 - 1,884 4,025 78,664
David Cather 52,500 - - - - 52,500
Martin Wood 33,833 - - - - 33,833
Guy Edwards 2,000 - - - - 2,000
Kevin Ross 14,000 - - - - 14,000
Neil Gawthorpe** 264,000 11,000 - - - 275,000
Adrian Bougourd - - - - - -
487,035 19,130 - 1,884 4,025 512,074
** Denotes the highest paid Director.
Directors' interests in share options and warrants are disclosed in the
Directors' Report.
The share-based payment is an IFRS 2 cost charged for options issued. No cash
benefit is received by the Directors. No Director exercised any options during
the year. Please see note 28 for more information.
2023 2023 2023 2023 2023 2023
Salary
Pension
Loss of office
Benefits
Share-based payment
£
£
£
£
£ Total
£
Francis Johnstone 20,000 - - - - 20,000
Richard M Maxey 20,000 - - - - 20,000
Max Denning** 124,246 9,613 158,411 - 38,781 331,051
Mark Thompson 200,000 - 100,000 - 3,134 303,134
Nigel Widdowson 156,275 10,754 - 2,340 25,078 194,447
Robert Ashley 26,667 - - - - 26,667
David Cather 33,462 - - - - 33,462
Martin Wood 4,833 - - - - 4,833
Neil Gawthorpe 4,968 - - - - 4,968
Grace Stevens 24,167 652 - - - 24,819
614,618 21,019 258,411 2,340 66,993 963,381
** Denotes the highest paid Director.
Directors' interests in share options and warrants are disclosed in the
Directors' Report.
12 Auditors' remuneration
2024 2023
£
£
Audit of these financial statements 50,000 50,000
Other fees to auditors
Audit-related assurance services 83,500 89,000
133,500 139,000
13 Income tax
Tax charged/(credited) in the income statement:
2024 2023
£
£
Current taxation
Adjustments in respect of prior periods (194,403) (544,602)
The tax on profit for the year is higher (2023: higher) than the standard rate
of corporation tax in the UK of 25% (2023: 19%). The differences are
reconciled below:
2024 2023
£
£
Loss before tax (9,894,319) (10,830,037)
Corporation tax at standard rate (2,473,580) (2,057,707)
Fixed asset differences 587,065 12,498
Increase from effect of expenses not deductible in determining taxable profit 370,996 300,510
(tax loss)
Other differences 37 512
Surrender of tax losses for R&D tax credit refund (194,403) (544,602)
Remeasurement of deferred tax for changes in tax rates - (550,799)
Income not taxable - -
Decrease/(increase) from tax losses for which no deferred tax asset was 1,515,482 2,294,986
recognised
Total tax credit (194,403) (544,602)
Deferred tax
Group
2024 2024 2024 2024 2024
Intangibles
Tangibles
Losses
Other
Total
£
£
£
£
£
At 1 April 2023 961,084 429,262 (1,390,346) - -
Charged to profit and loss - (7,445) 7,445 - -
At 31 March 2024 961,084 421,817 (1,382,901) - -
The net deferred tax of £nil is made up of a liability of £1,382,901 and
asset of £1,382,901. The unrecognised deferred tax asset for carried forward
losses at 31 March 2024 was £8,970,420.
The rate used for the deferred tax is 25% (2023: 25%).
2023 2023 2023 2023 2023
Intangibles
Tangibles
Losses
Other
Total
£
£
£
£
£
At 1 April 2022 961,083 436,706 (1,397,789) - -
Charged to profit and loss 1 (7,444) 7,443 - -
At 31 March 2023 961,084 429,262 (1,390,346) - -
The net deferred tax of £nil is made up of a liability of £1,390,346 and
asset of £1,390,346. The unrecognised deferred tax asset for carried forward
losses at 31 March 2023 was £7,730,527.
14 Basic and diluted loss per share
Basic and diluted loss per share is calculated as follows:
2024 2023
£
£
Loss for the year (9,699,916) (10,285,435)
Weighted average number of shares in issue 185,755,355 180,511,110
Basic and diluted loss per share (0.05) (0.06)
The diluted loss per share calculations exclude the effects of share options,
warrants and convertible debt on the basis that such future potential share
transactions are anti-dilutive. Information on share options and warrants is
disclosed in note 28.
15 Property, plant and equipment
Group Land and Furniture, fittings and equipment Computer equipment Motor Other property, plant and equipment Asset under construction Total
buildings
£
£
vehicles
£
£
£
£
£
Cost or valuation
At 1 April 2022 4,446,750 27,327 171,420 8,740 196,755 3,904,548 8,755,540
Additions 228,570 87,382 141,980 141,500 46,700 10,326,594 10,972,726
Reclassifications 514,041 - - - - (514,041) -
Disposal - - - (8,740) - - (8,740)
At 31 March 2023 5,189,361 114,709 313,400 141,500 243,455 13,717,101 19,719,526
Additions - 53 2,100 - 7,726 2,693,931 2,703,810
Disposal - - (3,137) - - - (3,137)
At 31 March 2024 5,189,361 114,762 312,363 141,500 251,181 16,411,032 22,420,199
Depreciation
At 1 April 2022 235,797 1,578 9,932 5,047 33,576 - 285,930
Charge for the year 103,891 12,916 72,397 37,598 50,193 - 276,995
Disposals - - - (7,210) - - (7,210)
Impairment - - - - - 108,947 108,947
At 31 March 2023 339,688 14,494 82,329 35,435 83,769 108,947 664,662
Charge for the year 105,429 20,804 101,245 46,695 57,162 - 331,335
Impairment - - - - - 2,157,923 2,157,923
At 31 March 2024 445,117 35,298 183,574 82,130 140,931 2,266,870 3,153,920
Carrying amount
At 31 March 2024 4,744,244 79,464 128,789 59,370 110,250 14,144,162 19,266,279
At 31 March 2023 4,849,673 100,215 231,071 106,065 159,686 13,608,154 19,054,864
At 31 March 2022 4,210,953 25,749 161,488 3,693 163,179 3,904,548 8,469,610
Included within the net book value of land and buildings above is £4,047,460
(2023: £4,142,662) in respect of freehold land and buildings.
Impairment - Asset under construction
The amount of impairment loss included in profit and loss is £2,157,923
(2023: £108,947). The impairment relates to costs capitalised to an area of
the MPF which has since been eliminated from the process.
16 Right-of-use assets
Property Total
£
£
Cost or valuation
At 1 April 2022 1,955,184 1,955,184
Additions 619,503 619,503
Disposals (233,117) (233,117)
At 31 March 2023 2,341,570 2,341,570
Write off (6,807) (6,807)
At 31 March 2024 2,334,763 2,334,763
Depreciation
At 1 April 2022 211,448 211,448
Charge for the year 216,039 216,039
Disposals (108,589) (108,589)
At 31 March 2023 318,898 318,898
Charge for the year 120,281 120,281
At 31 March 2024 439,179 439,179
Carrying amount
At 31 March 2024 1,895,584 1,895,584
At 31 March 2023 2,022,672 2,022,672
Depreciation on right-of-use assets charged through the profit and loss totals
£120,281 (2023: £216,039). Interest expense on lease liabilities charged
through the profit and loss totals £118,985 (2023: £101,722).
Lease liabilities
2024 2024 2024
Future lease payments
Discount
Lease liability
£
£
£
Within one year 213,175 (107,530) 105,645
In two to five years 662,214 (377,706) 284,508
In over five years 2,784,622 (1,265,597) 1,519,025
3,660,011 (1,750,833) 1,909,178
2023 2023 2023
Future lease payments
Discount
Lease liability
£
£
£
Within one year 227,332 (112,459) 114,873
In two to five years 760,712 (417,285) 343,427
In over five years 3,091,696 (1,533,540) 1,558,156
4,079,740 (2,063,284) 2,016,456
The lease liabilities are presented as follows:
31 March 31 March
2024 2023
£
£
Current liabilities 105,645 114,873
Non-current liabilities 1,803,533 1,901,583
1,909,178 2,016,456
17 Intangible assets
Group
Goodwill Mining rights Software Total
£
£
£
£
Cost
At 1 April 2022 1,075,520 3,844,333 80,000 4,999,853
Additions - - 191,523 191,523
Disposals - - (80,000) (80,000)
At 31 March 2023 1,075,520 3,844,333 191,523 5,111,376
Additions - - 39,952 39,952
At 31 March 2024 1,075,520 3,844,333 231,475 5,151,328
Amortisation
At 1 April 2022 - - 6,599 6,599
Amortisation charged to the profit and loss - - 21,360 21,360
Disposals - - (6,599) (6,599)
At 31 March 2023 - - 21,360 21,360
Amortisation charged to the profit and loss - - 71,282 71,282
At 31 March 2024 - - 92,642 92,642
Carrying amount
At 31 March 2024 1,075,520 3,844,333 138,833 5,058,686
At 31 March 2023 1,075,520 3,844,333 170,163 5,090,016
At 31 March 2022 1,075,520 3,844,333 73,401 4,993,254
The carrying amount of intangible assets which is considered as having an
indefinite useful life is £1,075,520. The whole balance is attributable to
goodwill.
The carrying amount of the mining rights is £3,844,333 (2023: £3,844,333).
The mining rights will begin to be amortised when mining operations restart.
Software amortisation of £71,282 (2023: £21,360) has been charged to the
profit and loss presented in administrative expenses.
Impairment
The value in use of the Group's cash-generating unit which comprises the
Hemerdon Mine was determined using a discounted cash flow approach, supported
by project cashflow forecasts prepared by management. The previous model under
the Bankable Feasibility Study has been adapted to reflect the changes in
inputs and assumptions as a result of the project re-evaluation. The following
inputs and key assumptions were used in the determination of value in use:
2024 2023
Discount rate 8% 5%
Expected duration of mining activities 27 years 27 years
Tungsten grade >0.45 0.55
Tungsten metal price $350 $340
Foreign exchange rate 1.28 1.20
Management has prepared a sensitised NPV calculation which under the updated
project plans, calculated a value in excess of the carrying amount of the
Group's assets. The underlying assumptions that were stress tested include the
discount rate, foreign exchange rate and metal price. Management were
satisfied in the recoverability of the Group's assets and no impairment was
required.
18 Investments
Group subsidiaries
Details of the Group subsidiaries as at 31 March 2024 are as follows:
Proportion of ownership
interest and voting rights held
Name of subsidiary Principal activity Registered office 2024 2023
Drakelands Restoration Limited* Mining of tungsten and tin Shakespeare Martineau LLP, 100% 100%
6th Floor,
60 Gracechurch Street, London,
United Kingdom
Company number 11854467
EC3V 0HR
England and Wales
Tungsten West Services Limited** Provision Shakespeare Martineau LLP, 100% 100%
of services to the Group
6th Floor,
60 Gracechurch Street, London,
United Kingdom
Company number 12430582
EC3V 0HR
England and Wales
Aggregates West Limited* Sales of aggregates Shakespeare Martineau LLP, 100% 100%
6th Floor,
60 Gracechurch Street, London,
United Kingdom
Company number 12575686
EC3V 0HR
England and Wales
* Indicates direct investment of Tungsten West plc
in the subsidiary.
** Tungsten West Services Limited are exempt from the Companies Act 2006
requirements relating to the audit of their individual accounts by virtue of
Section 479A of the Act as Tungsten West plc has guaranteed the subsidiary
company under Section 479C of the Act.
19 Escrow funds
31 March 31 March
2024
2023
£
£
Non-current financial assets
Escrow funds 11,059,151 5,146,986
These are funds being held under escrow with a third party which will be
released back to the Group on the cessation of mining once restoration works
have been completed. The funds have been discounted to present value over the
expected useful life of the mine. During the year, the discount rate was
revised to 4.4% (2023: 3.7%) and the expected future interest yield to 3.7%
(2023: 0.0%) resulting in a gain of £5,721,727 (2023: loss of £3,495,064).
The actual funds held in the escrow account at year end were £13,740,012
(2023: £13,230,653).
20 Trade and other receivables
31 March 31 March
2024
2023
£
£
Trade receivables 56,373 297,800
Deposits 2,631,435 4,458,031
Prepayments 37,431 816,723
Other receivables 84,654 591,039
2,809,893 6,163,593
The average credit period on sales of goods is 30 days (2023: 30 days). No
interest is charged on outstanding trade receivables. The carrying amount of
trade and other receivables approximates the fair value.
As the Group is in the early phases of operations and making a few minor
sales, expected credit losses are being considered on a customer-by-customer
basis. At the year-end, trade receivables include a provision of £68,262
(2023: £69,873).
21 Cash and cash equivalents
31 March 31 March
2024
2023
£
£
Cash at bank 1,581,535 3,438,018
22 Inventories
31 March 31 March
2024
2023
£
£
Inventories 29,850 114,173
23 Trade and other payables
31 March 31 March
2024
2023
£
£
Trade payables 434,515 544,064
Accrued expenses 950,512 1,578,986
Social security and other taxes 94,304 156,978
Outstanding defined contribution pension costs 11,000 33,233
Corporation tax liability 264,572 -
Other payables - 17,342
1,754,903 2,330,603
Trade payables and accruals comprise amounts outstanding for trade purchases
and ongoing costs. The average credit period for trade purchases is 45 days
(2023: 45 days). No interest is charged on overdue amounts.
The carrying amount of trade and other payables approximates the fair value.
24 Loans and borrowings
31 March 31 March
2024
2023
£
£
Non-current loans and borrowings
Lease liabilities 1,771,527 1,843,016
Hire purchase 32,006 58,567
1,803,533 1,901,583
31 March 31 March
2024
2023
£
£
Current loans and borrowings
Lease liabilities 80,557 91,617
Hire purchase 25,088 23,256
Convertible loan notes 11,587,221 -
11,692,866 114,873
Convertible loan notes
Throughout the year the company issued 4 tranches of Convertible Loan Notes
with a nominal value of £10,356,043. The bonds were initially due for
conversion into ordinary shares 365 days from the first issue date, being June
2024. The holders have the option to exchange the convertible loan notes for
an equivalent instrument prior to conversion. The notes bear interest at 20%
per annum.
The instrument contains a host liability contract and an embedded derivative
option and has been designated as a single instrument at fair value through
profit and loss.
During July 2023 the group notified Lansdowne Partners, the majority holder of
multiple breaches of the terms of the loan. The breaches resulted from
management implementing measures to conserve the cash flow of the group to
match the sources of finance available from the facility.
Under the terms of the Note Purchase Agreement dated 19 May 2023 the Note
Purchasers, if directed by the holders of at least 75% of the Notes
outstanding may by notice to the Group:
· Terminate the agreement and cancel the Notes
· Demand the notes be repurchased immediately at the redemption
price, plus any interest is repaid. The redemption price is a sum equal to two
times the principal amount of the notes.
· Exercise its rights to enforce security under the terms of the
note purchase agreement and security deed.
On 16 August 2023 the note holders agreed a waiver of the breaches which would
have expired on 31 January 2024. On 15 December 2023 the note holders agreed a
waiver of the breaches until 30 June 2024. The waiver was not extended after
30 June 2024 and therefore the agreement reverted to in breach post year end.
On 25 March 2024 an amendment was agreed to the original terms of the note
purchase agreement to extend the conversion date to 598 days from the first
issue date, being January 2025.
Movement in liability
31 March 31 March
2024
2023
£
£
Brought forward - -
Cash received 10,356,043 -
Directly attributable costs incurred (1,114,213) -
Fair value movement in year 2,345,391 -
Carried forward 11,587,221 -
25 Provisions
Group
Restoration provision Total
£
£
At 1 April 2023 5,701,771 5,701,771
Change in inflation and discount rate (889,126) (889,126)
Increase due to passage of time or unwinding of discount 325,001 325,001
At 31 March 2024 5,137,646 5,137,646
Non-current liabilities 5,137,646 5,137,646
This provision is for the obligation to restore the mine to its original state
once mining operations cease, discounted back to present value based on the
estimated life of the mine. Prior to discounting the Directors estimate the
provision at current costs to be £13,201,256 (2023: £13,201,256).
The provision has been discounted using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset. The ultimate costs to restore the mine are uncertain, and cost
estimates can vary in response to many factors, including estimates of the
extent and costs of rehabilitation activities, technological changes,
regulatory changes, cost increases as compared to the inflation rates and
changes in discount rates.
Management has considered these risks and used a discount rate of 6.4% (2023:
5.7%), an inflation rate of 2% - 7.5% (2023: 2.5% - 9%) and an estimated
mining period of 27 years (2023: 27 years). At the reporting date these
assumptions represent management's best estimate of the present value of the
future restoration costs.
26 Pension and other schemes
Defined contribution pension scheme
The Group operates a defined contribution pension scheme. The pension cost
charge for the year represents contributions payable by the Group to the
scheme and amounted to £164,738 (2023: £161,908).
Contributions totaling £11,000 (2023: £33,233) were payable to the scheme at
the end of the year and are included in creditors.
27 Share capital
Allotted, called up and fully paid shares
31 March 2024 31 March 2023
No. £ No. £
Ordinary Shares of £0.01 each 187,074,111 1,870,741 180,551,615 1,805,516
The holders of Ordinary Shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All Ordinary Shares rank equally with regard to the Company's
residual assets.
A reconciliation of the number of shares outstanding at the end of each year
is presented as follows:
31 March 31 March
2024
2023
£
£
Number of shares brought forward 180,551,615 179,368,215
Issue of shares on 13 June 2023 at £0.03 per share 6,522,496 -
187,074,111 179,368,215
Warrants exercised - 1,183,400
187,074,111 180,551,615
28 Share-based payments
Warrants
Details and movements
Warrants have been issued to certain shareholders and intermediaries as
commission for introducing capital to the Company.
Warrants can be exercised at any point before the expiry date for a fixed
number of shares.
The movements in the number of warrants during the year were as follows:
31 March 31 March
2024
2023
No.
No.
Outstanding, start of year 2,170,740 4,095,219
Granted during the year - -
Exercised during the year - (1,183,400)
Expired during the year (2,170,740) (741,079)
Outstanding, end of year - 2,170,740
The warrants have been valued using the Black Scholes model as management have
judged it not possible to reliably estimate the fair value of service
received. Inputs to the pricing model were as follows:
Date of grant 2022
Share price at date of grant £0.45 - £0.60
Exercise price £0.01 - £0.60
Risk-free interest rate 1.5%
Expected life of warrants 2 years
Volatility 33%
The exercise price of warrants outstanding at 31 March 2024 is £Nil and their
remaining contractual life was nil months.
The exercise price of warrants outstanding at 31 March 2023 ranged between
£0.01 and £0.60 and their remaining contractual life was 3 months to 9
months.
Founder share incentives
Details and movements
The founder shareholders have a right to receive shares at a nominal value
once certain milestones are hit.
The movements in the number of share options during the year were as follows:
31 March 31 March
2024
2023
No.
No.
Outstanding, start of year 18,229,148 18,229,148
Granted during the year - -
Exercised during the year - -
Outstanding, end of year 18,229,148 18,229,148
Upon admission to AIM, the original founder agreement was terminated and the
Company granted replacement founder options to the founder shareholders with
effect from admission.
The founder options meet the definition of equity in the financial statements
of the Company on the basis that the 'fixed for fixed' condition is met. No
consideration was received for the founder options at grant date, therefore no
accounting for the issue of the equity instruments is required under IFRS. On
exercise, the shares are recognised at the fair value of consideration
received, being the option price of £0.01.
EMI share options
Details and movements
Share options have been issued to key employees as an incentive to stay with
the Company. These options can be exercised within four years following the
grant date once the option has vested.
The movements in the number of share options during the year were as follows:
31 March 31 March
2024
2023
No.
No.
Outstanding, start of year 1,533,335 1,683,335
Granted during the year - -
Forfeited during the year (1,133,333) -
Exercised/(lapsed) during the year - (150,000)
Outstanding, end of year 400,002 1,533,335
Share options have been valued using the Black Scholes model. Inputs to the
pricing model were as follows:
Date of grant 2022
Share price at date of grant £0.45 - £0.60
Exercise price £0.01 - £0.45
Risk-free interest rate 1.5%
Expected life of options 1-4 years
Volatility 33%
Volatility has been estimated based upon observable market volatilities of
similar entities.
The exercise price of share options outstanding at 31 March is £0.45 (2023:
£0.30 and £0.45) and their remaining contractual life was 21 months (2023:
10 months to 30 months).
31 March 2024 31 March 2023
Average Exercise Price £ Options Average Exercise Price £ Options
Outstanding, start of year 0.37 1,533,335 0.36 1,683,335
Granted during the year - - - -
Exercised/(lapsed) during the year (0.34) (1,133,333) (0.35) (150,000)
Outstanding, end of year 0.45 400,002 0.37 1,533,335
CSOP share options
Details and movements
Share options have been issued to key employees as an incentive to stay with
the Company. These options can be exercised within three years following the
grant date once the option has vested.
31 March 31 March
2024
2023
No.
No.
Outstanding, start of year 2,583,316 -
Granted during the year - 2,799,982
Exercised/(lapsed) during the year (2,249,986) (216,666)
Outstanding, end of year 333,330 2,583,316
Share options have been valued using the Black Scholes model. Inputs to the
pricing model were as follows:
Date of grant 2023
Share price at date of grant £0.275
Exercise price £0.275
Risk-free interest rate 3.5%
Expected life of options 3 years
Volatility 62%
Volatility has been estimated based upon observable market volatility of
Tungsten West PLC.
The exercise price of share options outstanding at 31 March 2024 was £0.275
(2023: £0.275) and their remaining contractual life was 1 year and 6 months
(2023: 2 years and 6 months).
31 March 2024 31 March 2023
Average Exercise Price £ Options Average Exercise Price £ Options
Outstanding, start of year 0.275 2,538,316 - -
Granted during the year - - 0.275 2,799,982
Exercised/(lapsed) during the year (0.275) (2,249,986) (0.275) (216,666)
Outstanding, end of year 0.275 333,330 0.275 2,583,316
29 Commitments
Capital commitments
As at 31 March 2024 the Group had contracted to purchase plant and machinery
amounting to £1,746,455 (2023: £3,754,738). An amount of £Nil (2023:
£123,320) is dependent on the commencement of mining operations.
Other financial commitments
The total amount of other financial commitments not provided in the financial
statements was £9,329,000 (2023: £10,329,000) committed at present or on the
commencement of mining operations and represented contractual amounts due to
the mining contractor and further committed payments to the funds held in the
escrow account under the escrow agreement. Included within other financial
commitments is £4,000,000 which is considered to be payable between one to
five years after mining operations commence.
Contingent liabilities
As at 31 March 2024 the Group is liable for payment of any withholding tax
arising on the convertible loan notes. On the basis that it considers the
likelihood of a withholding tax liability arising as unlikely no provision has
been made in the financial statements. Based on interest accrued to the year
end were the liability to arise the Group's estimate of the contingent
liability is £200,000 (2023: £Nil).
30 Reconciliation of liabilities arising from financing activities
Non-cash changes
At 1 April Financing New finance Other Converted At 31 March
2023
cash flows
£
changes
to equity
2024
£
£
£
£
£
Lease liabilities 2,016,456 (226,263) - 118,985 - 1,909,178
Convertible loan notes - - 9,241,830 2,345,391 - 11,587,221
2,016,456 (226,263) 9,241,830 2,464,376 - 13,496,399
Non-cash changes
At 1 April Financing New finance leases Other Converted At 31 March
2022
cash flows
£
changes
to equity
2023
£
£
£
£
£
Lease liabilities 1,633,116 (266,094) 719,846 (70,412) - 2,016,456
1,633,116 (266,094) 719,846 (70,412) - 2,016,456
31 Classification of financial and non-financial assets and liabilities
The classification of financial assets and liabilities by accounting
categorisation for the year ending 31 March 2024 was as follows:
2024 2023 2024 2023
Financial assets
Financial assets
Financial assets
Financial assets
at amortised cost
at amortised cost
at FVTPL
at FVTPL
£
£
£
£
Assets
Non-current assets
Escrow funds receivable - - 11,059,151 5,146,986
Current assets
Trade and other receivables 2,772,462 5,346,870 - -
Cash and cash equivalents 1,581,535 3,438,018 - -
4,353,997 8,784,888 11,059,151 5,146,986
2024 2023 2024 2023
Financial liabilities at amortised cost
Financial liabilities at amortised cost
Financial liabilities at FVTPL
Financial liabilities
£
£
£
at FVTPL
£
Liabilities
Non-current liabilities
Loans and borrowings (1,803,533) (1,901,583) - -
Current liabilities
Trade and other payables (1,754,903) (2,330,603) - -
Loans and borrowings (105,645) (114,873) (11,587,221) -
(3,664,081) (4,347,059) (11,587,221) -
Fair value of financial assets and financial liabilities that are measured at
fair value on a recurring basis
IFRS 13 requires the provision of information about how the company
establishes the fair values of financial instruments. Valuation techniques are
divided into three levels based on the quality of inputs:
• Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities.
• Level 2 inputs are inputs other than quoted prices included in level 1
that are observable, directly or indirectly.
• Level 3 inputs are unobservable.
The group's Escrow funds receivable is measured at fair value of £11,059,151
(2023: £5,146,986). These are classified as level 3. They are valued based on
discounted cash-flows. A number of inputs such as the risk free rate are
observable inputs but there are also significant unobservable inputs such as
the expected interest yield.
The group's convertible loan notes are measured at fair value of £11,587,221
(2023: Nil). These are classified as level 3. They are valued based on a
scenario pricing model. A number of inputs such as the market value of shares
are observable inputs but there are also significant unobservable inputs such
as the discount rate and the probabilities assessed for each scenario.
32 Financial risk review
Group
This note presents information about the Group's exposure to financial risks
and the Group's management of capital.
Credit risk
In order to minimise credit risk, the Group has adopted a policy of only
dealing with creditworthy counterparties (banks and debtors) and it obtains
sufficient collateral, where appropriate, to mitigate the risk of financial
loss from defaults. The most significant credit risk relates to customers that
may default in making payments for goods they have purchased.
To date the Group has only made a small number of sales and therefore the
credit risk exposure has been low.
Liquidity risk
The Directors regularly monitor forecast and actual cash flows and match the
maturity profiles of financial assets and liabilities to ensure proper
liquidity risk management and to maintain adequate reserves, and borrowing
facilities. In the view of the Directors, the key risk to liquidity is in
meeting short-term cash flow needs. All amounts repayable on demand or within
three months are covered by the Company's cash and accounts receivable
balances, which gives the Directors confidence that funds will be available to
settle liabilities as they fall due. See further discussion of short term
liquidity risk in the going concern section of note 2.
Market risk
The Group has no significant interest-bearing assets and liabilities. The
Group in the future will also be exposed to exchange rate risk on the basis
that tungsten prices are principally denominated in USD. The Company will seek
to manage this risk through the supply contracts it agrees with future
customers.
The Group does not use any derivative instruments to reduce its economic
exposure to changes in interest rates or foreign currency exchange rates at
the current time.
The Group may require future borrowings to support its mineral processing
facility upgrades and therefore has an exposure to future interest rate rises.
33 Related party transactions
Convertible loan notes
During the year convertible loan notes of £6,593,763 were issued to parties
connected to various Directors of the group (2023: £Nil). The convertible
loan notes accrued interest of £665,645 (2023: £Nil) during the year.
Key management personnel
Key management personnel are deemed to be the Directors. Their remuneration
can be seen in note 11.
34 Application of new and revised UK adopted International Financial Reporting
Standards (UK-adopted IFRS)
New and amended Standards and Interpretations applied
None of the new or amended IFRS Standards had an effect on the financial
statements.
New and revised Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the Company has
not early adopted the following amendments to Standards and Interpretations
that have been issued but are not yet effective:
Standard or Interpretation Effective for annual periods commencing on or after
Lease Liability in a Sale and Leaseback Amendments to IFRS 16 1 January 2024
Non-current Liabilities with Covenants (IAS 1) 1 January 2024
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) 1 January 2024
IFRS S1 General Requirements for Disclosure of Sustainability-related 1 January 2024
Financial Information and IFRS S2 Climate-related Disclosures
Lack of Exchangeability (Amendments to IAS 21) 1 January 2025
IFRS 18 Presentation and Disclosure in Financial Statements-Basis for 1 January 2027
Conclusions
IFRS 18 Presentation and Disclosure in Financial Statements-Illustrative 1 January 2027
Examples
None of the above amendments are anticipated to have a material impact on
future financial statements.
35 Post balance sheet events
On 23 July 2024, the Company announced that it had raised £2.9 million by way
of a further tranche of the CLN.
On 5 June 2024 it was announced that Neil Gawthorpe had resigned as CEO and
that Alistair Stobie had been appointed as Interim CEO. He was appointed to
the board in July 2024
On 12 June 2024 the Company announced that the Environment Agency had issued
its permit for the operation of the MPF.
On 15 August 2024, the Company announced that Jeff Court had been appointed as
CEO to take up his post no later than 1 November 2024.
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