Final Results and Notice of AGM

4 June 2020

W Resources Plc 

("W" or the "Company")

Final Results for the Year Ended 31 December 2020

Annual Report and Accounts and Notice of Annual General Meeting

The Company is today posting a copy of the report and accounts to shareholders along with a notice of Annual General Meeting ("AGM") which will take place at at 11:00am on Wednesday, 30 June 2021 at 27/28 Eastcastle St, London W1W 8DH.

A copy of the report and accounts, the notice of meeting and proxy form can also be found on the Company's website, www.wresources.com.

The Board continues to closely monitor the coronavirus pandemic and the Company's priority at this time remains the health, safety and wellbeing of all of its stakeholders. As part of its monitoring, the Board has noted, in particular, the gradual easing of public health restrictions across England in line with the government's "COVID-19 Response - Spring 2021" roadmap. Based on that roadmap and associated guidance, it is currently anticipated as at the date of this Notice that attendance in person at the meeting will not be unlawful. It is therefore intended that sufficient of the Directors to form a quorum will be present in person at the AGM, observing relevant social distancing guidelines in place on the date of the meeting. However, given ongoing safety and public health considerations, you are strongly encouraged not to attend the meeting in person.

Instead of attending the meeting in person, Shareholders are strongly encouraged to appoint the Chair of the meeting as their proxy and to give instructions on how they wish the Chair to vote on the proposed resolutions. Any shareholder who nonetheless wishes to attend the AGM in person must register in advance by email to [email protected] and will be expected to adhere to any special arrangements and safety measures which the Company may put in place on the day and, according to safety and public health considerations and meeting venue restrictions it may not be possible for any shareholders to attend the meeting. All proposed resolutions at the AGM will be put to a vote on a poll.

The current situation is evolving and the Company will make any further announcements that may be required by way of a Regulatory News Service and on the Company's website.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Final Results for the Year Ended 31 December 2020

W Resources Plc (AIM:WRES), the tungsten, tin and gold mining company with assets in Spain and Portugal, announces its audited financial results for the year ended 31 December 2020.

HIGHLIGHTS

La Parrilla, Tungsten and Tin, Spain

· The Plant Improvement Plan continues to improve the dynamics at the mine.

· Production in H2 was significantly greater than H1 on an actual and a pro-rata basis.

· Plant availability increased to over 90% as the year progressed.

· Recovery rates improved significantly throughout the year.

· Tungsten feed grade continued to rise quarter on quarter.

· Demand for tungsten and tin concentrate continues to grow with customers committed to acquiring all current production.

· Despite the COVID-19 pandemic, the management team and staff at the mine were able to work safely and with minimum disruption.

· The Company was delighted to receive the continued support from BlackRock with an additional US$7m loan to support the continued development of La Parrilla and increase working capital.

Chairman of W, Michael Masterman commented: "Whilst 2020 was a very challenging year for W, progress was made and there was a clear improvement in H2 with greater plant availability and an increase in recoveries which lead to an increase in production. Benefits of the Plant Improvement Programme are being demonstrated throughout the mine at La Parrilla and are set to continue to improve.

As we look ahead, the management team's clear priority is to increase production at La Parrilla as we move to a 24/7 operation in order to increase production towards the stated target of our T2 production target, whilst safeguarding our staff and contractors.

Commodity prices remain robust with European ammonium paratungstate ("APT") pricing remaining strong at US$270-US$280 / mtu and the tin price continuing to strengthen, reaching US$31,000 per tonne.

"We appreciate the continued support of shareholders and are fully committed to reaching our production targets at La Parrilla, which will then transform the business to a profitable mining company with positive cashflow and deliver a turnaround in shareholder value."

Enquiries:

 W RESOURCES PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 was a turbulent year, presenting W Resources ("W" or "the Company") with many challenges from responding to the global pandemic with a business continuity plan to significant plant challenges at the La Parrilla tungsten and tin mine in Spain. The team has overcome many of these challenges and we are confident that W is now on track to deliver growth for our shareholders in the year ahead.

Notwithstanding the challenges faced in 2020, we are resolute in exploiting the opportunity at the La Parrilla mine, with its large-scale production capacity and low-cost structure which we are now more confident than ever will form the basis of our cash generation and expansion in the year ahead.

There is no denying that building a mine of this scale comes with its challenges and whilst we have hit significant hurdles, the team continues to work tirelessly to achieve the best outcome and deliver on our objective of building a world class tungsten mining company.

The Company's strong safety performance continued in 2020 with a total recordable lost time injury frequency rate ("LTIFR") of 16.1 injuries per million hours worked, which is well below the Spanish mining industry average of 46.7. The health and safety of all our employees, contractors and customers remains an absolute priority and we are working hard to ensure we implement all measures necessary to maintain our safety record in the current COVID-19 pandemic.

TUNGSTEN & TIN

La Parrilla - Spain

Overview

La Parrilla is a large-scale, low-cost, long-life tungsten and tin project, located approximately 310km southwest of Madrid. It has Australasian Joint Ore Reserves Committee ("JORC") compliant resources totalling 49 million tonnes ("mt") at a grade of 0.1% of tungsten trioxide ("WO3") and JORC compliant reserves of 29.8mt (as shown in Appendix 1 of the Consolidated Financial Statements).

The first target of the ramp-up remains to reach the target to mine 2mtpa ("million tonnes per annum") of ROM and produce approximately 2,700 tonnes ("t") of tungsten concentrate and 200t of tin ("Sn") concentrate per annum ("T2").

Operations

Whilst production at La Parrilla started to build in the first half of the year, we faced early-stage plant challenges which were compounded by the restrictive conditions of the COVID-19 State of Emergency. These resulted in mine and plant closure and operational limitations on equipment sourcing as well as an increased focus on the day-to-day management of the health & safety of all personnel, which continues to remain a high priority.

Clearly production levels throughout 2020 were not at the level we or our stakeholders expected them to be. The rigorous plant improvement programme, implemented to mitigate against the challenges the plant was experiencing, took longer than we had originally anticipated, however this was completed in Q1 2021 and the Company now looks forward to reaping the benefits of this detailed process.

In the first nine months, recoveries of tungsten and tin continued to improve following a realignment of the mine plan around the high recovery ore in the main fast track mining area and in the pit in general. In Q4, additional improvements were required to the plant as recovery rates slowed, however this has now been resolved. Additional work is required prior to reaching the T2 target.

2020 La Parrilla Production Summary

* Each quarter was based on the following 24h working days per week:

- Q1 2020 on 7 days per week

- Q2 2020 on 7 days per week

- Q3 2020 on 3 days per week

- Q4 2020 on 4 days per week

Tungsten and Tin sales in a challenging global environment

W shipped 251.3t of tungsten concentrate and 105.0t tin concentrate for the 12 months to December 2020, with offtake partners committed to all of T2 production.

PORTUGUESE PROJECTS

Status of Portuguese Mining and Exploration Licences

Unfortunately, granting of all new licences and extensions has been delayed due to changes that have to be made to Portuguese mining law combined with the challenges Portugal endured in 2020 with the COVID-19 crisis and associated state of emergency. Management is, however, confident that, given the encouraging exploration results, and given that no other company has applied for the permits in these areas, combined with strong support from respective local authorities, these licences will be granted. The Company has received assurances to this effect.

Régua Tungsten Mine

Overview

This high-grade, development-ready tungsten project with low capital cost has a trial mine licence, and an updated JORC compliant mineral resource of 4.47Mt at a grade of 0.27% WO3, including an indicated resource of 3.74mt at a grade of 0.28% WO3, which was completed by Golder Associates Pty Ltd ("Golder") in January 2020.

Régua has significant synergies with La Parrilla as it has materially lower capital costs and will increase La Parrilla's final concentrate production.

Development Strategy

Régua was W's second mine to come on stream. Mining operations commenced in early February 2020, targeting the first of two adits with skarn ore zones intersected in the initial development. Engineering and procurement for the construction of the plant are also at an advanced stage.

Unfortunately, Portuguese COVID-19 related restrictions resulted in the halting of mining activities which we were not able to recommence prior to the expiry of the trial mine licence on 20 September 2020. Management submitted an application to the Portuguese mining authorities for the full mining licence on 16 June 2020. Mining and plant construction will recommence once the full licence has been granted. In the meanwhile, environmental work continues.

Tarouca Exploration

Although this licence expired on 23 March 2019, the Company presented a request for a new exploration licence before it expired, on 5 February 2019, to protect the Company's right to the area. We expect to be able to tie in operations at Tarouca to the Régua mining and processing operations once the updated licence is granted.

CAA Portalegre - Gold

Overview

São Martinho currently has a JORC 2012 gold resource of over 110,000oz. Results from the drilling campaigns in 2017 and 2018 provided a solid base to drive extension drilling with the potential for a materially larger resource.

Development Strategy

We initially advanced São Martinho through a successful drilling programme and we are still waiting for approval of our application for a trial mine and gold production licence submitted in September 2018. We expect the trial mine licence to be granted in due course, however we have no guidance on a timeframe at this point in time.

Once granted, there is an opportunity to pursue a drilling programme to expand the resource and resolve the geological interpretations of a flat lying structure (Golder) and a deeply dipping structure (SRK) which have partially arisen due to the combination of structural complexity and multistage mineralising events.

This is particularly important as a trial mine is a key level of licence tenure and will provide the authority to mine shallow ore and produce gold on a pilot basis.

We continue to explore opportunities to bring in Joint Venture or Farm-In partners parties to monetise the gold discovery.

Finance

During the year the management team has worked diligently to ensure sufficient funds were available to both fund the development of the La Parrilla mine and provide significant working capital. This is evidenced by:

In February 2020, W finalised a €5m facility with the Spanish bank, Banco Santander, S.A ("Santander") which repaid the €3m loan from Caja Rural de Extremadura ("Caja Rural") and provided a net €2m of additional working capital and liquidity. The loan was repaid following receipt of €5.2m proceeds of the Grant Funds in May 2021.

This was followed in March 2020 by a Placing to raise £0.76m to new Spanish investors, to advance Régua and provide additional support for working capital.

In parallel, the Spanish government, as part of the State of Emergency, announced it is set to provide guarantees of up to 90% of funds to back companies affected by the pandemic. Subsequently, in July 2020, W signed a series of new Spanish government guaranteed loan facilities with Spanish banks. Under the COVID-19 state of emergency, the Spanish state-owned bank (attached to the Ministry of Economy and Business), the Instituto de Crédito Oficial ("ICO"), provided loan guarantees of up to 80% of loan value to Spanish banks providing loans to Spanish companies, which are also referred to as ICOs. €1.82m of such facilities at annual interest rates of 2-3% pa was secured with four major banks: CaixaBank, S.A, Bankinter, S.A, Banco Bilbao Vizcaya Argentaria, S.A ("BBVA") and the Caja Rural de Extremadura. These facilities refinance and extend the maturity of some existing lines, providing a net €1.02m of additional working capital

funding. All loan agreements and extensions are to the Company's 100% owned subsidiary, Iberian Resources Spain

In March 2020, W secured a £4.0m convertible bond facility from Atlas Capital Markets ("Atlas") comprising a convertible bond with a coupon of 5% and a term of 3 years. The facility can be drawn in tranches of up to £500,000 at the election of W, with an agreed period between subsequent drawdowns. The facility is unsecured and subordinated to the BlackRock Financial Management Inc. ("BlackRock") loan facility with BlackRock consent required for a draw. Atlas can convert the bond to W shares by issuing a conversion notice with the price set at 95% of the selected 3-day VWAP in the 15 days leading up to issue of a conversion notice by Atlas. Warrants will be issued with each tranche on a pro rata basis, with 5,555,555 Warrants issued at a subscription price of 0.36 pence per Ordinary Share per £100,000 principal amount of Convertible Bonds that are issued. The Warrants have a 3 year expiry term.

In August 2020, W drew down its first £500,000 tranche from the £4m Atlas convertible bond facility and this was the only draw down of its kind for the year. 27,777,775 warrants with a 3 year expiry term were also issued to Atlas as part of the drawdown.

In October 2020, BlackRock Financial Management Inc. agreed to increase W's existing loan facility by an additional US$7 million.

BlackRock continues to show its support for W with regard to agreeing Payment in Kind ("PIK") payments for several quarterly interest payments. The Company had entered into a Credit Facility with one or more funds managed by BlackRock to provide a secured term loan to the Company to fund the La Parrilla mine development (the "Loan Facility"). The Company and BlackRock finalised and executed an amendment agreement to allow payment of interest by PIK for the May, August and the November 2020 interest payments and the Company announced an extension to the facility of US$7 million on 8 October 2020.

Tungsten and Tin

The European APT price traded under pressure for most of 2020 with most end users out of the spot market due to persistently weak demand for tungsten products, while limited volumes of material were being shipped out of China (source: Fastmarkets MB). Tungsten prices during the first half 2021 have been supported by tightening supply and healthy end-user demand and prices currently sit around US$270-278 per mtu, which is in line with budget expectations.

Tin prices on the London Metal Exchange started 2020 trading at US$17,125 per metric ton and following a short lived downturn when COVID-19 took over news headlines the price steadily rose and closed the year at US$20,540 per metric ton. 2021 has seen an extremely tight worldwide supply of tin, resulting in a cash price near 10-year highs, surpassing US$30,000 per metric ton on several occasions (source: Fastmarkets MB).

Board and Management Update

In March 2020, we announced that Dr Byron Pirola retired from the Board after 12 years as a Director, due to increasing business demands on his time.

In November 2020, Pablo Neira was appointed Executive Director, following two years as a Non-Executive Director of the Company.

In addition, as part of the strengthening of the W Resources management team, Paul Hailes was appointed Chief Financial Officer, a non-board appointment, working on a part-time basis. Paul brings extensive capital markets, financial and commercial experience to the team, having previously held the role of Group Finance Director of AIM quoted Immunodiagnostic Systems plc and Non-Executive Director at Utilitywise plc.

Outlook

2020 was a very difficult year for the Company and the world at large with the Covid-19 pandemic, however, as we continue to prioritise our efforts at the La Parrilla mine steps taken last year should begin to feed through in H2 2021 as we:

· Look to permanently solve our water issue and re-access our higher-grade ore bodies

· Produce between 880t and 1,000t of concentrate for the twelve months ending 31 December 2021

· Move production at La Parrilla mine back to a 24/7 basis and get close to a T2 run-rate in Q4 2021

· At our earliest opportunity, re-commence mining activities at our tungsten mine in Régua, Portugal

· Move to an initial breakeven period and then migrate to a profit generating company as we see positive operational cashflow and a turnaround in shareholder value.

The management team with the strong support of the board continue to progress the Company's plan of reaching T2 as well as keeping its staff and contractors safe and well in these troubling times.

_________________

Michael Masterman

Chairman

W Resources Plc

W RESOURCES PLC

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

W RESOURCES PLC (REGISTERED NUMBER: 04782584)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2020

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's profit for the financial year is disclosed in Note 7.

The financial statements were approved by the Board of Directors and authorised for issue on 3 June 2021 and were signed on its behalf by:

..........................................

Mr Michael Masterman

Chairman

W RESOURCES PLC (REGISTERED NUMBER: 04782584)

COMPANY STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2020

The financial statements were approved by the Board of Directors and authorised for issue on 3 June 2021 and were signed on its behalf by:

..........................................

Mr Michael Masterman

Chairman

W RESOURCES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

W RESOURCES PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

W RESOURCES PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

Material non-cash movements

During the year the company settled outstanding creditors of €538,000 (2019: Nil) through the issue of ordinary shares. (note 15)

W RESOURCES PLC

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

Material non-cash movements

During the year the company settled outstanding creditors of €538,000 (2019: Nil) through the issue of ordinary shares. (note 15)

W RESOURCES PLC

NOTES TO THE STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

1. RECONCILIATION OF PROFIT / (LOSS) BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statements of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Reconciliation of Net debt

W RESOURCES PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

1. ACCOUNTING POLICIES

The accounting policies of the Company are set out in full in the Annual Report and Accounts

2. SEGMENTAL REPORTING

3. EMPLOYEES AND DIRECTORS

During the year €2,508,000 (2019: €1,614,000) of staff costs were capitalised in Intangible Assets within the group.

W Resources Plc had no staff during the year and therefore no staff costs.

The average monthly number of employees during the year was as follows:

4. NET FINANCE COSTS

5. PROFIT / (LOSS) BEFORE INCOME TAX

The loss before income tax is stated after charging / (crediting):

A total of €125,000 (2019: €304,000) relating to Michael Masterman's consultancy fees were capitalised in intangible assets in 2020. 

6. INCOME TAX

Analysis of tax expense

No liability to corporation tax arose for the year ended 31 December 2020 nor for the year ended 31 December 2019.

Reconciliation of the tax expense

The weighted average applicable tax rate of 31.6% (2019: 23.4%) is a combination of 19% the standard rate of corporation tax in the UK, 25% the rate of corporation tax in Spain and 21% the rate of corporation tax in Portugal.

No deferred tax asset has been recognised in accordance with IAS 12, for carried forward tax losses, due to uncertainty as to when profits will be recognised against which these losses can be relieved. The Group has approximately €13,624,000 (2019: €15,221,000) of tax losses carried forward for use against future taxable profits. These losses does not include the interest charged from W resources to its subsidiaries, which has been recognised in income in W Recourses but has not yet been recognised in Spain and Portugal, these costs will be recognised and relieved when paid. These total a further €5,284,000 (2019: €3,766,000)

7. PROFIT OF PARENT COMPANY

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's profit for the financial year was €3,902,000 (2019: Loss (€696,000)). Included within these figures are intra-group interest received of €1,518,000 (2019: €1,298,000).

8. EARNINGS PER SHARE

Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. The share options and warrants issued during 2016, 2018, 2019 and 2020 are considered to be anti-dilutive in 2019 in accordance with IAS 33 as on conversion they would decrease loss per share from continuing operations.