REG - Tungsten West PLC - Results for the year ended 31 March 2022
08/08/2022 09:00
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RNS Number : 2308V Tungsten West PLC 08 August 2022
08 August 2022
Tungsten West Plc
("Tungsten West", the "Company" or the "Group")
Final Results for the year ended 31 March 2022,
Availability of Annual Report and Notice of Annual General Meeting
Tungsten West, the owner and operator of the Hemerdon Mine in South West
England, is pleased to announce its audited results for the year ended 31
March 2022.
Copies of the Company's full Annual Report and Financial Statements for the
financial year to 31 March 2022 will be made available to download from the
Company's website at www.tungstenwest.com and will shortly be posted to
shareholders together with a Notice of Annual General Meeting, which will also
be made available on the Company's website, to be held at Shakespeare
Martineau 60 Gracechurch Street London EC3V 0HR on 14 September 2022 at 0900.
Financial Summary
· Net loss for the year was £13.0 million against the prior year
loss of £8.0 million.
· Net cash position of £28.8 million (2021: £3.5 million) as at
the year end.
Operational Summary
LTI (Lost Time Injury) and MTI (Medical Treatment Injury) free during
reporting period.
Seven Ore Sorters delivered in the UK.
Offtake agreements entered into with Wolfram Bergbaau und Hutten AG and Global
Tungsten and Powders Corp to purchase tungsten concentrate.
Offtake agreement entered into with AfriMet Resources to purchase tin
concentrate.
Average number of employees at 31 March 2022 increased to 58 (2021: 34)
In July 2022, post-year end, the Board gave its approval to proceed with
detailed engineering design and to commence construction of the Hemerdon
Project following a three-month technical and commercial review of the
assumptions that underlaid the BFS.
Corporate Summary
During April 2021, the Company undertook a £3.7 million financing through the
issue of new shares to existing and new investors. The funding enabled the
Company to progress planning and designs for the ore sorters and rebuild of
the front end of the process plant, initiate the refurbishment and redesign of
the existing plant and hire key management and financial and administrative
personnel.
The Company completed a successful admission to the AIM market of the London
Stock Exchange in October 2021, issuing 65,000,000 new ordinary shares of
£0.01 each ("Ordinary Shares") at 60p per share, raising new funds of £39
million gross. Fees incurred on the AIM admission process were, in aggregate,
£3.1 million, resulting in net proceeds of £35.9 million.
As part of the AIM admission process, the 8% Convertible Loan taken out to
acquire the project, comprising £10.0 million of principle and £0.7 million
accrued interest, was converted at 30p per share into 35,935,200 Ordinary
Shares.
There were a number of board changes during the period as the Group
strengthened its executive and non-executive management in advance of the
Company's AIM admission.
In July 2021, Nigel Widdowson was appointed to the Board of Tungsten West (the
"Board") as Chief Financial Officer.
Robert Ashley was appointed Chair of the Board in September 2021. At the same
time, Grace Stevens was appointed to the Board and Chair of the Audit
Committee. David Cather was appointed to the Board and Chair of the Technical
Committee and Chair of the Remuneration Committee.
Stephen Fabian stepped down from the Board in September 2021.
Post year-end, Max Denning stepped down from the Board in July 2022 with
Executive Vice-Chairman Mark Thompson assuming the responsibilities of the
CEO.
The Board would like to thank both Stephen and Max for all their hard work in
the foundation of the Company and its formative years.
Tungsten West's Executive Vice-Chairman, Mark Thompson, commented:
"Despite the financial loss during the year, the results were in line with the
Boards expectations as the Group ramped up headcount and increased its
corporate activities.
Throughout the reporting period and post year-end, everyone involved in the
Hemerdon Project have shown immense commitment in ensuring the Group can
overcome the inflationary pressures that have impacted our plans considerably.
Sometimes a pause in development is necessary, and whilst it was a challenging
task for our Tungsten West team to re-design and re-evaluate the project, I am
certain this was the right course of action to take back in April this year.
We firmly believe the Hemerdon deposit has a deep and strategic value for the
local region and UK. Just last month the Government launched the UK's critical
minerals strategy, stating 'The world in 2040 is expected to need 4 times as
many critical minerals for clean energy technologies as it does today,' and we
remain convinced Tungsten West can contribute hugely in achieving this goal".
Enquiries
Tungsten West Strand Hanson
Mark Thompson (Nominated Adviser and Financial Adviser)
Tel: +44 (0) 203 178 7385 James Spinney / James Dance / Abigail Wennington
Tel: +44 (0) 207 409 3494
Camarco Hannam & Partners
(Financial PR) (Joint Broker)
Gordon Poole / Emily Hall Andrew Chubb / Nilesh Patel
Tel: +44(0) 20 3757 4980 +44 (0)20 7907 8500
Email: tungstenwest@camarco.co.uk (mailto:tungstenwest@camarco.co.uk)
VSA Capital Group plc
(Joint Broker)
Andrew Raca / Andrew Monk
+44 (0)20 3005 5000
Follow us on twitter @TungstenWest
CHAIRMAN'S STATEMENT
I am pleased to report on the Group's audited results for the year ended 31st
March 2022.
The past financial year saw the Group make significant preparations for the
recommencement of mining operations at Hemerdon, as well as completing a
successful admission and capital raise on the London Stock Exchange's AIM
Market. I am pleased to report that the Group met several key corporate and
operational milestones during the year whilst most importantly doing so with
all staff and contractors keeping safe and long-term injury free. The health
and safety and well-being of our employees and contractors remains our number
one priority and to be LTI/MTI free during the year is a testament to the
professional standards of the team. As the Group moves into production this
will become increasingly challenging, however, the Group will adapt and
actively manage its risks to ensure we can promote and adhere to health and
safety standards of the highest quality.
It cannot go unsaid that the Group has been impacted by the inflationary
environment which started in the final quarter of the financial year. The
plant re-build project was due to start in a period of rapidly escalating
materials and energy prices. The operation is particularly sensitive to energy
costs for both the mining and processing operations. In April 2022 the Board
concluded that the proposed project should be paused to evaluate alternative
approaches to restarting mining operations. By making this decision early
before the Group committed to unsustainable capital and operating expenditure
it provided the Group with the opportunity to work up revised plans for a
smarter and lower capital expenditure programme, focusing on minimising opex
and energy consumption, whilst maximising profit contribution rather than
volume. Following this short pause, which allowed all members of the team to
assess alternative strategies for restarting Hemerdon, development was
restarted in July 2022.
The Board is immensely proud of the dedication and commitment that has been
applied by our project and support teams in the last few months. It has been a
difficult period for everyone connected to the Hemerdon Mine, however the
Board has full confidence in the revised project plans being the optimal and
economical way forward to re-launch mining operations, focus on sustainability
and margins, and deliver shareholder value.
CORPORATE MILESTONES
The Group's primary corporate objective for the year was to raise the
necessary funding for the processing plant-rebuild and recommencement of
mining operations at Hemerdon. In October 2021, the Group completed a
successful admission to the AIM market of the London Stock Exchange, issuing
equity to raise £39 million before expenses.
The Company also agreed a financing package with an aggregate value of
approximately US$49m through a Royalty sale and a Senior Loan Facility with
Orion Resource Partners ("Orion"). At the time of the Orion negotiations, the
rebuild plans were to maximise volume and therefore required significant
capital investment to which the Orion funds were primarily intended to
support. This included capital equipment and resources needed for the project
execution. Following the revised plans to reduce project capex and re-optimise
the mineral processing facility, certain conditions precedent to drawing on
the Orion funds were not met and therefore this financing package cannot
currently be drawn down.
The Group is now in discussions with financing partners to provide the
additional capital required to execute the development of the project.
OPERATIONAL MILESTONES
Alongside our long-term financing the Group met major project milestones which
are key to restarting mining operations. Offtake agreements were signed for
our core tungsten product and offtake and distribution agreements for our tin
and aggregates products are also in place. The first aggregates sales were
made through a trial run by the Group which included processing material mined
by the previous operator. This successfully established a presence in the
local and regional aggregates market.
OUR TEAM
Critical to reaching commercial operations will be our workforce. Facing the
dynamic challenges ahead, the Group has at its disposal a world class cohort
of talent across project development and mining operations.
At the executive level, the Group strengthened the Board with the appointment
of Nigel Widdowson as Chief Financial Officer. David Cather was appointed to
the Board and acts as Chair of the Technical Committee and Chair of the
Remuneration Committee whilst at the same time, Grace Stevens was appointed to
the Board and acts as Chair of the Audit Committee.
In July 2022, the Group announced that Max Denning would leave his role as CEO
and the Board with immediate effect. Executive Vice-Chairman Mark Thompson has
assumed the responsibilities of the office of the CEO.
As a co-founder and having held several senior roles within commodity trading
and investment, as well as junior mining and exploration companies, Mark has
valuable strategic experience. The Board look forward to having Mark lead this
project through the construction phase of the Hemerdon Project.
Mark still retains his Vice-Chairmanship and whilst he has assumed the
responsibilities of the CEO office, he will be supported by an executive
committee which has assumed project and site-based responsibilities going
forward.
The Board recognise the need for independence and good corporate governance
and all agree that the current management structure does not compromise our
ability to enforce effective corporate governance.
We recognise that women are underrepresented at all levels within mining
companies and 23% of the Group's current employees are female as at 31 March
2022. Tungsten West are an employer who aspires to enjoy the full spectrum of
diversity, in all respects, across our operations and administration and will
continue to review and improve its employment terms and conditions to ensure
that our policies and procedures are not a barrier to those keen to work for
the organisation.
RESPECTING OUR COMMUNITY
As a Company we recognise our responsibility as a positive actor for change,
particularly in the local communities within which we work. We maintain our
commitment to leading global standards and have set up an ESG framework
together with aligning our policies and procedures with UN Sustainable Goals.
Core to our business plan is our responsibilities to the environment and the
relationships that we build with our wider stakeholders. I am pleased to
report the Group has made important inroads in engaging with the local
community to ensure it can operate not only effectively but also respectfully.
I can also reaffirm the Group continues to work with the local authorities on
our (2022: £13.2 million) site restoration plan and bond which is a critical
assurance needed for us to restart mining operations.
An example of this includes our week-long public consultation carried out in
March 2022 to understand the views of local people prior to submitting our
planning permission on our HGV aggregates sales volumes.
The consultation attracted significant interest from surrounding communities -
approximately 400 people attended the events, resulting in 396 completed
on-line surveys.
In direct response to public views, the Company will no longer be applying for
a maximum of 300 HGV exports per day to support its growing aggregates
business but will reduce numbers to a maximum of 200 exports per day in its
latest planning application to allay public concern.
It is the Company's mission to develop a significant and sustainable secondary
aggregates business but we must listen to people living locally about how we
can do that with the least amount of disruption. We believe our revised
planning application addresses the main issues raised by the community through
the reduction in traffic volumes.
Without the support of the communities in which we live and work, Tungsten
West would not be able to succeed. The success of the Hemerdon project is
largely dependent on maintaining the positive relationships we have built
within our local communities and their continued support of our development
strategy and operations. Part of our community engagement is providing
opportunities to make contact with us and our senior team listening to
concerns. Tungsten West has created a regular forum for open and transparent
communications with local communities. We look forward to working alongside
our local community as we progress towards recommencing commercial operations
and beyond.
RESPONSIBILITY TO THE ENVIRONMENT
Our success is based on what the planet provides to us, so we must treat it
well. Minimising our environmental footprint is at the core of our strategy -
and where we do have an unavoidable impact, we aim to make a positive
contribution elsewhere.
That's why our dedicated environmental team have built a comprehensive
approach to environmental protection at Tungsten West. This consists of
minimising waste, monitoring all emissions and developing plans to invest in
biodiversity and restoration. Please see our ESG report for information on our
monitoring activities during the year.
MARKET OVERVIEW
Tungsten supply remains of strategic importance as China continues to
dominate, controlling 82% of global tungsten mine production, demonstrating
why restarting the Hemerdon mine will provide a critical global supply. The
Group will also look to leverage off the high value in tin as the global use
of tin is expected to increase rapidly through use in electronics and solar
panels.
Demand for aggregates continues to be strong, driven by infrastructure
projects throughout the UK and I can report that the local construction
industry is starting to benefit from our low cost, low carbon footprint
product as approximately 90,000 tonnes of aggregates was delivered to projects
in the Southwest in the year ended 31 March 2022.
In July 2022, it was pleasing to see the UK Government release the UK's first
ever Critical Minerals Strategy which includes tungsten and tin as minerals
with high criticality and recognises the South West as an area of high
importance in meeting commodity security.
OUTLOOK
The inflationary pressures that began in 2021 show no signs of fading.
Construction materials have been subject to significant supply constraints
and increased input costs in their manufacture. The Group is experiencing
price inflation for materials required for the plant and as an energy
intensive business, we are exposed to the recent inflation in power and diesel
costs.
The decision to pause the original development plan, taken in light of current
market conditions, has allowed the Group to re-evaluate the design of the
mineral processing facility, to focus on margin over volume by minimising
capex and power utilisation. The Board has been actively engaged with senior
management in evaluating the options for redesigning the processing plant and
selecting the most viable, sustainable option. The Board have reviewed the
proposed plans and has given its approval to proceed with the detailed
engineering design and to commence construction of the Hemerdon Project with
immediate effect. As discussed earlier in Corporate Milestones, the Group is
in discussions with financing partners to provide the additional capital
required to fully execute the project.
The outlook for tin as the primary beneficiary of the global move to
electrification is compelling and the demand for tungsten concentrate is
strong, driven from the increase in its application in progressive
technologies and use in defence. On the back of the recent UK Government
release of their Critical Minerals Strategy, I feel the Group is strategically
well positioned to deliver on its advances on the mine and plant upgrades
through the remainder of 2022 and we look forward to successfully starting
production in 2023.
Robert Ashley
Chairman
YEAR IN REVIEW
OUR FOCUS
The financial year ending 31 March 2022 has been transformational for Tungsten
West; it began with the publication of our Bankable Feasibility Study for the
Hemerdon Mine, the document that enabled us to sign key offtake agreements on
all three key revenue streams associated with Hemerdon - tungsten, tin and
aggregates.
Tungsten West went onto successfully raise £35.9 million net of expenses
through its listing on AIM, having originally gone out to market to raise £25
million.
Towards the end of the financial year, construction projects globally started
to feel the pressure of the rising cost of raw materials, and Tungsten West
was no exception. The outbreak of COVID-19 and supply chain issues ultimately
increased prices in materials and energy across the board. To complicate
matters further, the Russia and Ukraine conflict has amplified global concerns
over supply chains. Lastly, sustained inflation in energy costs has compounded
this situation, meaning our initial project economics were no longer a viable
option and in April 2022, the Board decided to pause the development plans and
re-optimise the processing plant and mining operations.
After a three-month technical and commercial review of the assumptions that
underlaid the BFS, the Board gave its approval to proceed with the revised
project plans with immediate effect.
Changes include a new ramp-up schedule, new crushing strategy, new operating
parameters for ore sorting, a re-purposing of equipment within the processing
plant, and the production of a different specification of final tungsten
concentrate product.
The result of the plan is a lower cap-ex requirement and a much lower diesel
and power consumption whilst still delivering profitable operating margins.
Tungsten West is in a unique situation where we have a strong balance sheet at
the year end and no debt to service. With the previous operators having spent
more than £170 million on the mine site, the path to production requires
minimal capital expenditure compared to a typical mining project, and the
pause on the feasibility plan provided an opportunity to formulate a revised
re-build and production strategy that will ensure Hemerdon can reach its full
potential as a profitable mine.
I want to thank all our past and current employees who have worked tirelessly
to ensure this project can be a success and whilst 2022 is not going to be
without its challenges, the Group has some of the best individuals in the
business ready to develop this project in unison in the run-up to
commissioning in 2023.
THE MINING OPERATIONS
The mine plan has been re-designed to reflect the reduced throughput planned
for the Mineral Processing Facility in the first two years of operations, and
changes in primary crushing circuit. This will have the following advantages:
· Less waste mined in ramp up period, preserving cash flow
· Higher proportion of material processed and sold as aggregates,
hence reducing cost per tonne
· Lower power requirement for plant
· ROM pad rehandling costs to be reduced through direct tipping
into the primary crushing circuit
THE MINERAL PROCESSING FACILITY
The Tungsten West maintenance team undertook a comprehensive review to
understand and address the issues experienced by the former operator of the
Hemerdon Mine. The areas where issues were identified have been redesigned and
will be enhanced during the re-build programme, not only to rectify the issues
faced by the previous operators, but to improve significantly the overall
operations and reduce downtime.
The recent inflationary environment has presented the opportunity to re-design
significant elements of the processing flow and re-optimise the plant to
maximise margins in a higher energy cost environment. Whilst throughput will
be reduced in the first two years, feasibility study volumes are targeted from
year three onwards. Operating efficiencies are forecast to increase from the
changes set out below.
Process Changes Key benefits
Primary crushing and screening Direct tipping into modular crushing and screening plant, located outside the Reduced capex, faster route to production, lower opex
mineral processing facility
Ore sorters Utilise minimum number of ore sorters, by optimising mass pull Reduce capex, less maintenance, lower power draw, less waste processed in the
plant
Dense Media Separation Streamline to run a smaller DMS circuit - bypass primary DMS and upgrade Scalable at a later date if required, tried and tested equipment, lower capex
secondary DMS and scavenger DMS
Refinery Deploy wet magnetic separation technology (WHIMS) instead of the roasting kiln Lower opex, lower diesel consumption, reduced emissions, higher overall
recovery.
AGGREGATES
In December 2021, the Aggregates Division commissioned a Terex® Agg Wash 60
plant to conduct trial production on a temporary basis whilst the main plant
installation is undertaken. The Group has been shipping aggregates since early
2021, utilising existing stockpiles that the previous operator had deemed as
waste.
During the year to March 2022, the Group sold approximately 90,000 tonnes of
aggregate product at an average of 15 exports per day. The trial project was
loss making, largely as a result of the low quality feed stock producing low
yields and high silt content waste.
The temporary operation has allowed Tungsten West to build market share using
available mined waste on site. Once in full scale operation (up to 200 exports
per day), the feed will be fresh granite and we will be one of the first
mining companies in the world to implement dual production to sell tungsten
and tin, together with aggregate products, which would usually be classified
as waste during base metal mining.
The reduced throughput envisaged for the amended mine plan will generate
sufficient feed stock from ore sorter rejects and spiral tails rejects. The
new plans for the processing facility will not significantly affect the
forecasted volumes of aggregate sales when production recommences.
FUND RAISING
The successful admission to the AIM market in October 2021 raised £35.9
million net of fees. The oversubscribed fund raise signalled exciting momentum
for the UK mining sector to have a project that is in the advanced stages of
development and a UK mine that will be producing strategically important
materials which are critical for the technology, decarbonisation and
construction sectors, locally and globally.
Further to the decision shortly after the year end to re-optimise plant and
reduce the capital expenditure, the conditions precedent for drawdown of the
Orion facilities were not met. The Company is in active discussion with debt
or other non-equity capital financing partners to secure the funding required
for the planned processing plant upgrades.
ESG
The Group continues to undergo environmentally driven modifications and engage
in regular and constructive dialogue with both the local community and
authorities to ensure all previous concerns have been addressed. All necessary
permits required for restart of operations have been reapplied for with the
determination of such permits expected by the end of 2022.
We are proud of the creativity and dedication from our project team and
partners to be able to deliver an upgrade plan that addresses and solves
issues suffered by the previous operators.
We believe in promoting the availability of highly skilled graduate jobs
within the mining sector, in particularly in Devon and to achieve this, we
have begun attending career fairs in schools and universities whilst actively
working with local tertiary education establishments for research projects. We
were pleased to welcome our first graduate placement student from Plymouth
University in April 2022 with further students expected throughout the summer.
Most importantly, we are a mining Group that listens to our neighbours. During
the financial year, the community engagement team remained engaged with our
wider stakeholders and local community hosting regular face-to-face local
consultations.
Part of our community engagement plan is to ensure there are opportunities to
get in touch with us and listen to concerns. Tungsten West has created a
regular forum for open and transparent communications with local communities
and maintains a community presence at Shaugh Prior, Cornwood and Sparkwell
Parish Councils.
OUR TEAM
The next 12 months will be a critical period for the Group as we move towards
transitioning from a mining development business to a fully operational
production business. In preparation for this, the corporate team has expanded
to provide additional support in the areas of finance, communications and
investor and stakeholder relations.
LOOKING FORWARD
In the face of an inflationary environment where costs have materially
increased, I am glad that we were able to pause development of the Hemerdon
Project when we did.
The Tungsten West team have demonstrated immense professionalism and
capability in re-optimising the development plan within just three months. I
remain convinced of the deep and strategic value of the Hemerdon deposit in
light of current geopolitical events where security of supply of critical
minerals becomes ever more relevant.
Our new plan reduces capital expenditure, lowers the ongoing operating costs
by streamlining processes for greater energy efficiency, and maximises the
operating margins. We can do all of this whilst maintaining the optionality to
revert to the original plan should conditions allow in the future.
Mark E Thompson
Executive Vice Chairman
Tungsten West plc
Consolidated Statement of Comprehensive Income
Year Ended 31 March 2022
Note 2022 Restated 2021
£
£
Revenue 673,509 40,170
5
Cost of sales (4,028,123) (3,202,134)
Gross loss (3,354,614) (3,161,964)
Administrative expenses (7,998,774) (3,736,495)
Other operating income 6 4,237 3,612
Other gains/(losses) 7 (846,373) (24,301)
Operating loss 8 (12,195,524) (6,919,148)
Finance income 120,002 112,005
Finance costs (913,466) (1,174,640)
Net finance cost 9 (793,464) (1,062,635)
Loss before tax (12,988,988) (7,981,783)
Income tax credit 13 - -
Loss for the year (12,988,988) (7,981,783)
Total comprehensive loss (12,988,988) (7,981,783)
Profit/(loss) attributable to:
Owners of the Company (12,988,988) (7,981,783)
Pence Pence
Basic and diluted loss per share 14 (0.11) (0.14)
The above results were derived from continuing operations.
Tungsten West plc
Consolidated Statement of Financial Position as at 31 March 2022
Note 31 March 31 March
2022
2021
£
£
Assets
Non-current assets
Property, plant and equipment 15 8,469,610 4,367,271
Right of use assets 16 1,743,736 1,611,788
Intangible assets 17 4,993,254 4,919,853
Deferred tax assets 13 1,397,789 1,067,978
Escrow funds receivable 19 8,370,024 10,058,470
24,974,413 22,025,360
Current assets
Trade and other receivables 20 3,827,509 544,297
Inventories 22 156,944 -
Cash and cash equivalents 21 28,755,388 3,499,580
32,739,841 4,043,877
Total assets 57,714,254 26,069,237
Equity and liabilities 57,387,223
Equity
Share capital 27 1,793,682 6,856
Share premium 51,610,414 12,327,484
Share option reserve 241,861 67,840
Warrant reserve 1,408,730 754,586
Retained earnings (14,187,446) (11,413,116)
Equity attributable to owners of the Company 40,867,241 1,743,650
Non-current liabilities
Loans and borrowings 24 1,440,630 11,728,780
Provisions 25 9,526,485 9,964,824
Deferred tax liabilities 13 1,397,789 1,067,978
12,364,904 22,761,582
Current liabilities
Trade and other payables 23 4,289,623 1,487,721
Loans and borrowings 24 192,486 76,284
4,482,109 1,564,005
Total liabilities 16,847,013 24,325,587
Total equity and liabilities 57,714,254 26,069,237
Tungsten West plc
Consolidated Statement of Changes in Equity
Year Ended 31 March 2022
Share capital Share premium Share option reserve Warrant reserve Retained earnings Total
£
£
£
£
£
£
At 1 April 2021 6,856 12,327,484 67,840 754,586 (11,413,116) 1,743,650
Total comprehensive income - - - - (12,988,988) (12,988,988)
Capital reduction of share premium account - (10,000,000) - - 10,000,000 -
Issue of bonus shares 752,513 (752,513) - - - -
Conversion of convertible debt 359,352 10,421,208 - - - 10,780,560
New share capital subscribed 674,961 40,310,822 - - - 40,985,783
Issue of warrants - (696,587) - 785,144 - 88,557
Exercise of warrants - - - (131,000) 131,000 -
Issue of share options - - 298,878 - - 298,878
Forfeiture of share options - - (41,199) - - (41,199)
Exercise of share options - - (83,658) - 83,658 -
At 31 March 2022 1,793,682 51,610,414 241,861 1,408,730 (14,187,446) 40,867,241
Tungsten West plc
Consolidated Statement of Changes in Equity
Year Ended 31 March 2021
Share capital Share premium Share option reserve Warrant reserve Retained earnings Total
£
£
£
£
£
£
At 1 April 2020 5,139 5,991,124 4,896 61,000 (3,431,333) 2,630,826
Loss for the year - - - - (7,981,783) (7,981,783)
Total comprehensive income - - - - (7,981,783) (7,981,783)
New share capital subscribed 1,717 7,029,946 - - - 7,031,663
Warrant issue - (693,586) - 693,586 - -
Issue of share options - - 62,944 - - 62,944
At 31 March 2021 6,856 12,327,484 67,840 754,586 (11,413,116) 1,743,650
Tungsten West plc
Consolidated Statement of Cash Flows
Year Ended 31 March 2022
Note 2022 2021
£
£
Cash flows from operating activities
Loss for the year (12,988,988) (7,981,783)
Adjustments to cash flows from non-cash items
Depreciation and amortisation 8 209,233 170,506
Impairment of property plant and equipment 8 - 79,478
Fair value losses on Escrow account 1,783,221 -
Fair value gains on restoration (786,849) -
Finance income 9 (120,002) (112,005)
Finance costs 9 913,466 1,174,640
Share based payment transactions 174,021 62,944
Founder incentives (149,999) -
Income tax expense 13 - -
(10,965,897) (6,606,220)
Working capital adjustments
(Increase) in trade and other receivables 20 (3,283,213) (147,786)
Increase/(decrease) in trade and other payables 23 2,952,165 759,352
(Increase)/decrease in inventories (156,944) -
Net cash outflow from operating activities (11,453,889) (5,994,654)
Cash flows from investing activities
Interest received 9 1,134 2,707
Acquisitions of property plant and equipment 15 (4,203,803) (135,437)
Acquisitions of Intangibles (80,000) -
Net cash outflows from investing activities (4,282,669) (132,730)
Cash flows from financing activities
Interest paid 9 (4,955) (66,591)
Proceeds from issue of ordinary shares, net of issue costs 41,021,204 7,031,663
Proceeds from the exercise of warrants 126,577 -
Proceeds from the exercise of share options 3,472 -
Payments to lease liabilities (153,932) (59,987)
Net cash inflows from financing activities 40,992,366 6,905,085
Net increase in cash and cash equivalents 25,255,808 777,701
Cash and cash equivalents at 1 April 3,499,580 2,721,879
Cash and cash equivalents at 31 March 28,755,388 3,499,580
Tungsten West plc
Notes to the Consolidated Financial Statements
Year Ended 31 March 2022
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 office is:
Shakespeare Martineau LLP
6th Floor
60 Gracechurch Street
London
EC3V 0HR
United Kingdom
The principal place of business is:
Hemerdon Mine
Drakelands
Plympton
Devon
PL7 5BS
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 Group previously applied EU adopted
IFRS however there are no adjustments required on transition to 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. In October 2021, the Group raised £36 million by way of an
initial public offering and at the year-end, had £28.8 million in cash
reserves and £22 million at the date of signing.
For the Group to be able to execute its estimated capex spend of £26.0
million to £36.0 million, it still requires additional funding and is in
discussions with financing partners to provide the additional capital.
Until the additional capital is secured, the Group will begin to proceed with
detailed engineering design and will commence construction by utilising cash
reserves. The board will not commit to significant further capital expenditure
until the full finance package is in place to complete the rebuild.
Management has prepared a number of different forecasts to model all
anticipated potential outcomes as follows.
· Model 1 - Capital build basis
This scenario models management's intended plan of the expected future
outflows required to complete the capital build once finance is secured.
Sensitivity analysis has been applied in terms of when the project would
restart, availability of additional capital and the cashflow demands for each
scenario.
As the terms of any finance package have not yet been agreed the model does
not include costs of finance. Management are satisfied there is sufficient
headroom to service the projected cost of debt when this is agreed. As
negotiations with finance providers proceed the model will be updated with the
anticipated finance costs to ensure that a sufficient level of liquidity is
maintained.
Management is confident that the project finance can be secured to complete
the capital build under the updated business plan. Management acknowledge that
the group could fall-back to a more modest business plan in the short term to
maintain cash reserves if the economic environment were to deteriorate.
· Model 2 - Operational readiness basis
This forecast models the scenario where project finance is not agreed in
sufficient time to progress with the intended plan. The Group would continue
in operation and will be able to realise its assets and discharge its
liabilities as they fall due in the normal course of operations, including any
committed expenditure that is required to meet its contractual capital and
financial commitments. No further capital expenditure would be committed but
activity and staffing levels would be maintained so that project restart could
be recommenced as soon as finance is secured. The group retains sufficient
cash at the current time to operate under Model 2 for at least eighteen
months.
· Model 3 - Care and maintenance basis
Whilst management consider this to be the least likely and desired option for
all stakeholders groups, it has prepared a forecast on a care and
maintenance basis to cover this unlikely scenario.
This forecast models the scenario where project finance is not agreed. The
Group would reduce its operations but continue to discharge its liabilities as
they fall due in the normal course of operations, including any committed
expenditure that is required to meet its contractual capital and financial
commitments. No further capital expenditure would be committed but operational
expenditure would be reduced to essential care and maintenance activities
only. Management would continue to develop a plan to recommence development of
the site when finance could be secured. The group remains sufficient cash at
the current time to operate under Model 3 for at least three years.
The directors have reviewed the three models detailed above. As a result,
they consider that the group will be able to operate as a going concern for
the foreseeable future. Consequently, they continue to adopt the going
concern basis in preparing the consolidated financial information.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its subsidiary undertakings drawn up to 31 March 2022.
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 2021 have had a material effect on the financial statements.
Restated Profit and Loss
For comparability with current year recognition, management have reclassified
staff costs from cost of sales to administrative expenses in the year ended
31st March 2021. Amounts reclassified include £1,049,347 of gross wages,,
£116,656 of employers national insurance contributions and £58,681 of
employers pension contributions.
Revenue recognition
In the year revenue has mainly related to the sale of aggregates produced from
the mining waste from previous mining operations. This is recognised upon pick
up by customers at the fair value of consideration receivable at that date.
The Group has not yet commenced commercial sales of tungsten and tin.
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 tax professionals within 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 intends to submit 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 the upgrade the
mineral processing facility and in accordance with IAS16, 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
Plant, machinery and other property 20% 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 IFRS3.
The mining rights are subject to amortisation over the useful life of the mine
which is 23 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 asset
Right-of-use assets consist of a lease for the Hemerdon Mine and three
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 in 24 years' time which assumes 1 year of set up and 23 year 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
The redemption of convertible debt does not give rise to a fixed number of
shares on conversion and so is recognised as a liability with no equity
element initially recorded at the amount of proceeds received. Interest
compounds annually at a rate of 8% but shall not be payable until the maturity
date.
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
IFRS16, 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 fixed contributions
are paid into a separate entity and 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 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, 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.
In particular the Group has recognised a financial liability arising from the
founder share incentives at fair value. Subsequent movements in fair value are
recognised through profit or loss.
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 judgement
Impairment of non-current assets
To consider the impairment of the Group's non-current assets, Management have
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 cash-flow 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. (BFS). The inputs and key assumptions that were used in the
determination of value in use were discount rate, metal prices, metal
recoveries and foreign exchange.
Discounted cashflows are based on future forecasts therefore reflect
uncertainty. Therefore, management have prepared a sensitised discounted
cashflow calculation. The underlying assumptions that were stress tested
include the discount rate, FX and metal prices and recoveries
Management were satisfied in the recoverability of the Group's assets and no
impairment is required.
Capitalisation of Research and development costs
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. Directors have also reviewed Research
and development costs and concluded that these costs fail to meet to criteria
set out in IAS 38 for the capitalisation of development costs as they 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 IAS38. The
group has only capitalised costs associated with the tangible improvement and
installation of property, plant and equipment under IAS16.
Capitalisation of asset under construction costs
Directors have reviewed any costs relating to the upgrade of the mineral
processing facility in accordance with IAS16 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, £3.9m
(2021: £Nil) of costs have been capitalised.
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 less costs. As there was no
consideration received at inception, the value of the options are 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 £1.9m (2021: £1.8m) on the restoration provision. A
5% change in cost on the Group's restoration estimates would result in an
impact of £0.5m (2021: £0.5m) on the provision for restoration.
More information on the restoration provision is disclosed in note 24.
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 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 £1.7m (2021: £1.9m) on the escrow account valuation.
A 1 year change in useful mining life would result in an impact of £0.1m
(2021: £0.1m) on the escrow account valuation.
More information on the escrow account is disclosed in note 18.
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 and the Restoration provision. The discount rate on the
Right-of-use asset is the rate for an equivalent debt instrument. The Escrow
funds are discounted at 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 2.0% (2021: 1.1%).
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 estimate capex spend. The Group's
continued future operations depend on the ability to raise sufficient capital
through the issue of debt. At present is does not have sufficient capital to
fund its estimated capex spend therefore the 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 18 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 USD. 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 current 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 who
consider 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
2022 2021
£
£
Customer A 384,000 -
Customer B 83,000 -
Customer C 144,000 -
5 Revenue from contracts with customers
The analysis of the Group's revenue for the year from continuing operations is
as follows:
2022 2021
£
£
Tungsten 232,940 13,220
Aggregates 440,569 26,950
Sale of goods 673,509 40,170
6 Other income
The analysis of the Group's other operating income for the year is as follows:
2022 2021
£
£
Sale of scrap metal 4,327 -
Sub lease rental income - 3,612
7 Other gains and losses
The analysis of the Group's other gains and losses for the year is as follows:
2022 2021
£
£
Gain on restoration provision due to 786,849 -
change in discount rate
Loss on escrow account due to change in discount (1,783,221) -
rate
Gains/(losses) on founder share 149,999 (24,301)
incentives
Other gains and losses (846,373) (24,301)
See note 18 and note 24 for further details on other gains and losses on
restoration provision and escrow account.
8 Operating profit
Arrived at after charging/(crediting)
2022 2021
£
£
Depreciation of property, plant and equipment 101,464 82,729
Depreciation of right of use assets 101,169 87,777
Impairment of property, plant and equipment - 79,478
Amortisation of intangibles 6,599 -
Staff costs 2,465,924 1,831,050
9 Finance income and costs
2022 2021
£
£
Finance income
Interest income on the escrow funds receivable 94,775 112,005
Other interest income 1,134 -
Foreign exchange gains 24,093 -
120,002 112,005
Finance costs
Interest expense on other financing liabilities (556,558) (830,431)
Interest cost on the restoration provision (348,507) (344,209)
Other interest (1,133) -
Bank charges (3,823) -
Foreign exchange losses (3,445) -
Total finance costs (913,466) (1,174,640)
Net finance costs (793,464) (1,062,635)
10 Staff costs
The aggregate payroll costs (including directors' remuneration) were as
follows:
2022 2021
£
£
Wages and salaries 2,114,626 1,649,726
Social security costs 234,915 118,725
Pension costs, defined contribution scheme 116,383 62,599
2,465,924 1,831,050
The average number of persons employed by the Group (including directors)
during the year, analysed by category was as follows:
2022 2021
No.
No.
Project, maintenance, administration and support 52 29
Directors 6 5
58 34
11 Directors' remuneration
The directors' remuneration for the year was as follows:
2022 2021
£
£
Remuneration 524,125 332,000
Pension contribution 13,974 -
Benefits in kind 7,483 -
Total cash remuneration 545,582 332,000
Share based payment 182,997 -
Total Remuneration 728,579 332,000
Included in the remuneration above was [Nil (2021: £ Nil) paid in shares
rather than cash.
Remuneration by each director is as follows:
2022 2022 2022 2022
£
£
£
£
Salary Pension Benefits Share based payment
Francis Johnstone - - -
24,000
Stephen Fabian - - -
18,000
Richard M Maxey - - -
24,000
Max Denning** 8,500 6,256 163,046
170,000
Mark Thompson - - -
132,500
Nigel Widdowson 4,856 1,227 19,951
97,115
Robert Ashley - - -
23,333
David Cather 73 - -
17,013
Grace Stevens 545 - -
18,164
524,125 13,974 7,483 182,997
** Denotes the highest paid director
Directors' interests in share options and warrants are disclosed in the
Directors' Report
The share based payment is an IFRS2 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.
2021 2021 2021
£
£
£
Salary Pension Benefits
Francis Johnstone
36,000 - -
Stephen Fabian
20,000 - -
Richard M Maxey
6,000 - -
Max Denning
120,000 - -
Mark Thompson**
150,000 - -
Nigel Widdowson -
- -
Robert Ashley -
- -
David Cather -
- -
Grace Stevens -
- -
332,000 - -
** Denotes the highest paid director
Directors' interests in share options and warrants are disclosed in the
Directors' Report
12 Auditors' remuneration
2022 2021
£
£
Audit of these financial statements 54,000 19,700
Other fees to auditors
Audit-related assurance services 85,000 14,300
Auditor's remuneration - Accounts preparation 10,500 6,000
95,500 20,300
All accounts preparation services were provided prior to the group listing on
AIM in October 2021.
13 Income tax
Tax charged/(credited) in the income statement
2022 2021
£
£
Deferred taxation
Arising from origination and reversal of temporary differences - -
The tax on profit before tax for the year is higher (2021 - higher) than the
standard rate of corporation tax in the UK of 19% (2021 - 19%). The
differences are reconciled below:
2022 2021
£
£
Loss before tax (12,988,988) (7,981,783)
Corporation tax at standard rate (2,467,908) (1,516,539)
Increase from effect of expenses not deductible in determining taxable profit 90,608 48,964
(tax loss)
Income not taxable (24,709)
Decrease (increase) from tax losses for which no deferred tax asset was 2,402,009 1,467,575
recognised
Total tax credit - -
Deferred tax
Group
2022
Intangibles Tangibles Losses Other Total
£ £ £ £ £
At 1 April 2021 730,423 337,554 (1,020,857) (47,120) -
Charged to profit and loss 230,660 99,152 (376,932) 47,120 -
At 31 March 2022 961,083 436,706 (1,397,789) - -
The net deferred tax of nil is made up of a liability of £1,397,789 and asset
of £1,397,789. The unrecognised deferred tax asset for carried forward losses
at 2022 was £3,653,030.
The rate used for the deferred tax is 25% (2021: 19%) as the rate has been
substantively enacted in May 2021.
13 Income tax continued
2021
Intangibles Tangibles Losses Other Total
£ £ £ £ £
At 1 April 2020 730,423 343,211 (1,026,514) (47,120) - 343,211 343,211 (1,026,514) (47,120) - (1,026,514) 343,211 (1,026,514) (47,120) - (47,120) 343,211 (1,026,514) (47,120) - - 343,211 (1,026,514) (47,120) -
Charged to profit and loss - (5,657) 5,657 - -
At 31 March 2021 730,423 337,554 (1,020,857) (47,120) -
343,211 343,211 (1,026,514) (47,120) -
(1,026,514) 343,211 (1,026,514) (47,120) -
(47,120) 343,211 (1,026,514) (47,120) -
- 343,211 (1,026,514) (47,120) -
Charged to profit and loss
-
(5,657)
5,657
-
-
At 31 March 2021
730,423
337,554
(1,020,857)
(47,120)
-
The net deferred tax of nil is made up of a liability of £1,067,977 and asset
of £1,067,977. The unrecognised deferred tax asset for carried forward losses
at 2021 was £1,466,154.
14 Basic and diluted loss per share
Basic and diluted loss per share is calculated as follows:
2022 2021
£
£
Loss for the year (12,988,988) (7,981,783)
Weighted average number of shares in issue 119,017,666 55,993,256
Basic and diluted loss per share (0.11) (0.14)
The calculation of the loss per share has been retrospectively restated for
each period presented to reflect the bonus issue of shares and share
consolidation which took place on 22 July 2021 (see note 26).
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 27.
Shares issued subsequent to the end of the year are disclosed in note 35.
15 Property, plant and equipment
Group
Land and buildings Furniture, fittings and equipment Computer equipment £ Motor vehicles Other property, plant and equipment Assets under construction Total
£
£
£
£
£
£
Cost or valuation
At 1 April 2020 4,416,300 - - - - - 4,416,300
Additions - 34,289 - 8,740 92,408 - 135,437
At 31 March 2021 4,416,300 34,289 - 8,740 92,408 - 4,551,737
Additions 30,450 25,279 171,420 - 72,106 3,904,548 4,203,803
Reclassifications - (32,241) - - 32,241 - -
At 31 March 2022 4,446,750 27,327 171,420 8,740 196,755 3,904,548 8,755,540
Depreciation
At 1 April 2020 22,259 - - - - - 22,259
Charge for year 66,776 1,516 - 2,163 12,274 - 82,729
Impairment 79,478 - - - - - 79,478
At 31 March 2021 168,513 1,516 - 2,163 12,274 - 184,466
Charge for the year 67,284 1,271 9,932 2,884 20,093 - 101,464
Reclassifications - (1,209) - - 1,209 - -
At 31 March 2022 235,797 1,578 9,932 5,047 33,576 - 285,930
Carrying amount
At 31 March 2022 4,210,953 25,749 161,488 3,693 163,179 3,904,548 8,469,610
At 31 March 2021 4,247,787 32,773 - 6,577 80,134 - 4,367,271
At 1 April 2020 4,394,041 - - - - - 4,394,041
Included within the net book value of land and buildings above is £4,210,953
(2021 - £4,247,787) in respect of freehold land and buildings.
Impairment
Land and buildings
The amount of impairment loss included in profit and loss is £nil (2021 -
£79,478).
16 Leases
Property Total
£
£
Cost or valuation
At 1 April 2020 1,667,951 1,667,951
Additions 54,116 54,116
At 31 March 2021 1,722,067 1,722,067
At 1 April 2021 1,722,067 1,722,067
Additions 233,117 233,117
At 31 March 2022 1,955,184 1,955,184
Depreciation
At 1 April 2020 22,502 22,502
Charge for year 87,777 87,777
At 31 March 2021 110,279 110,279
At 1 April 2021 110,279 110,279
Charge for the year 101,169 101,169
At 31 March 2022 211,448 211,448
Carrying amount
At 31 March 2022 1,743,736 1,743,736
At 31 March 2021 1,611,788 1,611,788
Depreciation on right-of-use assets charged through the profit and loss totals
£101,169 (2021: £87,777). Interest expense on lease liabilities charged
through the profit and loss totals £87,838 (2021: £86,520).
16 Leases continued
Lease liabilities
2022 Future lease payments Discount Lease liability
£
£
£
Within one year 282,507 (90,021) 192,486
In two to five years 457,214 (313,511) 143,703
In over five years 2,568,335 (1,271,408) 1,296,927
3,308,056 (1,674,940) 1,633,116
2021 Future lease payments Discount Lease liability
£
£
£
Within one year 148,231 (71,947) 76,284
In two to five years 442,680 (321,759) 120,921
In over five years 2,665,907 (1,369,888) 1,296,019
3,256,818 (1,763,594) 1,493,224
The lease liabilities are presented as follows:
31 March 31 March
2022
2021
£
£
Current liabilities 192,486 76,284
Non-current liabilities 1,440,630 1,416,940
1,633,116 1,493,224
17 Intangible assets
Group
Goodwill Mining rights Software Total
£
£
£
£
Cost
At 01 April 2020 1,075,520 3,844,333 - 4,919,853
At 1 April 2021 1,075,520 3,844,333 - 4,919,853
Additions - - 80,000 80,000
At 31 March 2022 1,075,520 3,844,333 80,000 4,999,853
Amortisation
At 01 April 2020 - - - -
At 1 April 2021 - - - -
Amortisation charged to the profit and loss - - 6,599 6,599
At 31 March 2022 - - 6,599 6,599
Carrying amount
At 31 March 2022 1,075,520 3,844,333 73,401 4,993,254
At 31 March 2021 1,075,520 3,844,333 - 4,919,853
At 31 March 2020 1,075,520 3,844,333 - 4,919,853
The carrying amount of intangible assets which is considered as having an - 80,000 80,000
indefinite useful life is £1,075,520. The whole balance is attributable to
goodwill.
The carrying about of the mining rights is £3.844m (2021: £3.844m). The
mining rights will begin to be amortised when mining operations restart.
Software amortisation of £6,599 (2021: £nil) has been charged to the profit
and loss.
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 cash-flow 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. (BFS). The
following inputs and key assumptions were used in the determination of value
in use:
2022 2021
Discount rate 5% 5%
Expected duration of mining activities 23 years 23 years
Tungsten grade 0.19-0.20 0.19-0.20
Tungsten metal price $340 $275-$330
Foreign exchange rate 1.22 1.38
Management have 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, FX and metal price. Management were satisfied in the
recoverability of the Group's assets and no impairment is required.
18 Investments
Group subsidiaries
Details of the Group subsidiaries as at 31 March 2022 are as follows:
Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held 2021
2022
Drakelands Restoration Limited* Mining of tungsten and tin Shakespeare Martineau LLP 100% 100%
6th Floor
60 Gracechurch Street London
United Kingdom
EC3V0HR
England and Wales
Tungsten West Services Limited* Provision of services to Group Shakespeare Martineau LLP 100% 100%
6th Floor
60 Gracechurch Street London
United Kingdom
EC3V0HR
England and Wales
Aggregates West Limited* Sales of aggregates Shakespeare Martineau LLP 100% 100%
6th Floor
60 Gracechurch Street London
United Kingdom
EC3V0HR
England and Wales
* indicates direct investment of Tungsten West plc in the subsidiary
19 Escrow funds
31 March 31 March
2022
2021
£
£
Non-current financial assets
Escrow funds 8,370,024 10,058,470
These are funds being held under escrow with a third party and 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 plus two years start up. During the year, the
discount rate was revised to 2.0% (2021: 1.1%) resulting in a loss of
£1,783,221 (2021: £nil). The actual funds held in the escrow account at year
end were £13,203,139 (2021: £13,201,256).
20 Trade and other receivables
31 March 31 March
2022
2021
£
£
Trade receivables 153,390 34,675
Deposits 2,340,738 -
Prepayments 1,018,274 15,841
Other receivables 315,107 493,781
3,827,509 544,297
The average credit period on sales of goods is 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, bad debt is being considered on customer by customer basis. No
irrecoverable debts were identified as at year end.
21 Cash and cash equivalents
31 March 31 March
2022
2021
£
£
Cash at bank 28,755,388 3,499,580
22 Inventories
31 March 31 March
2022
2021
£
£
Inventories 156,944 -
23 Trade and other payables
31 March 31 March
2022
2021
£
£
Trade payables 694,320 491,871
Accrued expenses 3,383,300 295,020
Social security and other taxes 147,927 58,220
Outstanding defined contribution pension costs 30,960 12,611
Other payables 33,116 629,999
4,289,623 1,487,721
Trade payables and accruals comprise amounts outstanding for trade purchases
and ongoing costs. The average credit period for trade purchases is 45 days
(2021 - 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
2022
2021
£
£
Non-current loans and borrowings
Lease liabilities 1,440,630 1,416,940
Convertible debt - 10,311,840
1,440,630 11,728,780
31 March 31 March
2022
2021
£
£
Current loans and borrowings
Lease liabilities 192,486 76,284
Convertible bonds
The Convertible Loan Notes were converted in full, at the Company's election,
on admission to AIM. The Convertible Loan Notes were converted into Ordinary
Shares as determined by dividing the prevailing principal amount of the
Convertible Loan Notes, which was £10,044,000, together with any accrued (but
unpaid) interest thereon, which at the date of conversion was £736,560, by
the effective conversion price, which is 30p.
Movement in liability
31 March 31 March
2022
2021
£
£
Brought forward 10,311,840 9,548,000
Interest expense 468,720 763,840
Converted to equity shares (10,780,560) -
- 10,311,840
25 Provisions
Group
Restoration provision Total
£
£
At 1 April 2021 9,964,824 9,964,824
Change in inflation and discount rate (786,849) (786,849)
Increase (decrease) due to passage of time or unwinding of discount 348,510 348,510
At 31 March 2022 9,526,485 9,526,485
Non-current liabilities 9,526,485 9,526,485
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 (2021: £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 4% (2021:
3.5%), an inflation rate of 2.5-7% (2021: 2%) and an estimated mining period
of 1 year set up and 23 years mining (2021 - 25 years). At the reporting date
these assumptions represent managements 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 £116,383 (2021 - £62,599).
Contributions totalling £30,960 (2021 - £12,611) 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 31 March
2022
2021
No. £ No. £
Ordinary shares of £0.0001 each - - 68,560,000 6,856
Ordinary shares of £0.01 each 179,368,215 1,793,682 - -
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
2022
2021
£
£
Number of shares brought forward 68,560,000 51,390,000
Issue of shares to 22 July 2021 7,349,832 17,170,000
Capitalisation of share premium account (bonus issue) 7,525,125,729 -
Effect of share consolidation (see above) (7,525,024,190) -
76,011,371 68,560,000
Issue of shares on admission to AIM 65,125,000 -
Conversion of convertible debt 35,935,200 -
Options exercised 197,200 -
Warrants exercised 442,244 -
Founder options exercised 1,657,200 -
179,368,215 68,560,000
During the year ended 31 March 2022, the share capital of the Company was
restructured. The following share transactions took place:
· The Company issued 7,349,832 ordinary shares of £0.0001 each for
considerations ranging from £0.45 per share to £0.60
· On 22 July 2021 a bonus issue of shares from the share premium
account created 7,525,125,729 ordinary shares of £0.0001 each
· On 22 July 2021 a share capital consolidation took place whereby
each one hundred ordinary shares of £0.0001 each were consolidated into one
ordinary share of £0.01 each.
During the year ended 31 March 2021 the Company issued 17,170,000 ordinary
shares of £0.0001 each for considerations ranging from £0.25 per share to
£0.45.
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
2022
2021
Number
Number
Outstanding, start of year 2,310,681 220,000
Granted during the year 2,226,760 2,090,681
Exercised during the year (442,222) -
Outstanding, end of year 4,095,219 2,310,681
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 2022 ranged between
£0.01 and £0.60 and their remaining contractual life was 1 month to 21
months.
The exercise price of warrants outstanding at 31 March 2021 ranged between
£0.25 and £0.56 and their contractual life was 9 months to 24 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
2022
2021
Number
Number
Outstanding, start of year 6,963,000 5,139,000
Granted during the year 671,137 1,824,000
Terminated on admission to AIM (7.634,137) -
Replacement share awards following admission to AIM 19,886,344 -
Exercised during the year (1,657,196) -
Outstanding, end of year 18,229,148 6,963,000
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 £0.01p.
Part of one of the founders option agreement were share options issued in
their capacity as a director and were dependent on their continuing employment
and therefore 243,333 options, have been accounted for under IFRS2. This
resulted in a charge to the income statement of £143,603 and these options
were fully vested in year.
28 Share-based payments
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 4 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
2022
2021
Number
Number
Outstanding, start of year 1,233,333 833,333
Granted during the year 1,097,228 400,000
Exercised/(lapsed) during the year (647,226) -
Outstanding, end of year 1,683,335 1,233,333
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 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 2022 ranged
between £0.01 and £0.45 (2021 - £0.0001 and £0.30) and their remaining
contractual life was 22 months to 39 months (2021: 4 years).
31 March 31 March 31 March 31 March
2022
2022
2021
2021
Average Exercise Price
Options
Average Exercise Price
Options
Outstanding, start of year 0.23 1,233,333 0.30 833,333
Granted during the year 0.43 1,097,228 0.08 400,000
Exercised/(lapsed) during the year (0.21) (647,226) - -
Outstanding, end of year 0.36 1,683,335 0.23 1,233,333
29 Commitments
Capital commitments
As at 31 March 2022 the Group had contracted to purchase plant and machinery
amounting to £7,208,997 (2021 - £815,195). An amount of £123,320 (2021:
£123,320) is contingent on the commencement of mining operations.
Other financial commitments
The total amount of other financial commitments not provided in the financial
statements was £11,329,000 (2021 - £12,329,000) payable 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 £5,000,000 which is considered to be payable between one to
five years after mining operations commence.
30 Reconciliation of liabilities arising from financing activities
Non-cash changes
At 1 April 2021 Financing cash flows New finance leases Other changes Converted to equity At 31 March 2022
£
£
£
£
£
Long term borrowings 10,311,840 - - 468,720 (10,780,560) -
Lease liabilities 1,493,224 (153,932) 205,987 87,837 - 1,633,116
11,805,064 (153,932) 205,987 556,557 (10,780,560) 1,633,116
Non-cash changes
At 1 April 2020 Financing cash flows New finance leases Other changes At 31 March 2021
£
£
£
£
£
Long term borrowings 9,548,000 - - 763,840 10,311,840
Lease liabilities 1,498,876 (59,987) 54,335 - 1,493,224
11,046,876 (59,987) 54,335 763,840 11,805,064
31 Classification of financial and non-financial assets and financial and
non-financial liabilities
The classification of financial assets and financial liabilities by accounting
categorisation for the period ending 31 March 2022 was as follows:
2022 2021 2022 2021
Financial assets at amortised cost Financial assets at amortised cost Financial assets at FVTPL Financial assets at FVTPL
£ £ £ £
Assets
Non-current assets
Escrow funds receivable - - 8,370,024 10,058,470
Current assets
Trade and other receivables 2,809,335 528,456
Cash and cash equivalents 28,755,388 3,499,580
31,564,723 4,028,036 8,370,024 10,058,470
Financial liabilities at amortised cost Financial liabilities at amortised cost
Financial Financial
liabilities at FVTPL liabilities at FVTPL
Liabilities £ £ £ £
Non-current liabilities
Loans and borrowings (1,440,630) (11,729,780) - -
Current liabilities
Trade and other payables (4,289,573) (1,337,722) - (149,999)
Loans and borrowings (192,486) (76,284) `
(5,922,689) (13,143,786) - (149,999)
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.
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
During the year one Director received a commission payment of £52,500 (2021:
£79,000) from a third party in connection with raising additional share
capital for Tungsten West plc. In addition, one Director received a beneficial
interest in 58,333 warrants at 60p (2021: 22,222 warrants at 45p) granted
during the year to a third party in relation to raising additional share
capital for Tungsten West plc.
Convertible bonds
During the year, the convertible bonds and accrued interest that were issued
to family members of two of the directors were converted into 12,751,200
ordinary shares. £166,320 of interest accrued on these bonds during the year
and interest due on these bonds at year end was £Nil (2021 - £359,040).
Key management personnel
Key management personnel are deemed to be the directors. Their remuneration
can be seen in note 10.
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
Narrow scope amendments to IFRS 3, IAS 16 and IAS 37 1 January 2022
Annual improvements to IFRS Standards 2018-2020 1 January 2022
Amendments to IAS 1: Classification of Liabilities as Current or Non-Current 1 January 2023
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting 1 January 2023
Policies
Amendments to IAS 8: Definition of Accounting Estimates 1 January 2023
Amendments to IAS 12: Deferred Tax Related to Assets and Liabilities arising 1 January 2023
from a Single Transaction.
None of the above amendments are anticipated to have a material impact on
future financial statements.
35 Post balance sheet events
On 21st April 2022, the Group decided to pause development to re-optimise the
project.
On 19(th) July 2022, after a three-month technical and commercial review of
the assumptions that underlaid the BFS, the Board gave its approval to proceed
with detailed engineering design and to commence construction of the Hemerdon
Project with immediate effect.
The re-optimisation of the project could result in certain planned equipment
initially ordered under the BFS plans, being no longer required. The most
material being equipment ordered for the ore sorting process. The Group expect
to re-sell any surplus machinery or keep as spare for future operations. The
value of this committed capital expenditure is estimated at £1.6m and is
included within note 29, capital commitment balance of £7.2m.
.
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. END FR KZGGRNRDGZZGRecent news on Tungsten West
See all newsREG - Tungsten West PLC - Convertible Loan Note Update
AnnouncementREG - Tungsten West PLC - Half Year Results
AnnouncementREG - Tungsten West PLC - Appointment of Chairman
AnnouncementREG - Tungsten West PLC - Results of Annual General Meeting
AnnouncementREG - Tungsten West PLC - Amendment to Notice of AGM
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