W Resources reports solid progress at La Parrilla

Iberian Peninsula-focussed tungsten, copper and gold exploration and development company W Resources updated the market on the development and financing of its La Parrilla tungsten and tin project in Spain on Tuesday.

The AIM-traded firm said it initiated a process to raise approximately $24m in debt finance to fund the $27m T2 Project of the mine development.

Completion of construction and commissioning of T2 was scheduled for Q2 2018.

The board said “significant” progress had been made on the engineering and procurement of key plant, machinery and services to expand and develop to mine at a rate of two million tpa, resulting in forecast production of 2,500 tpa of tungsten concentrate and 500 tpa of tin concentrate.

Design and engineering of T2 also incorporated steps to allow a timely expansion of La Parrilla to mine at a rate of up to 3.5 million tpa - the T3.5 expansion - which would have the ability to further increase production and lower operating costs.

Mining, engineering and procurement optimisation work had been advanced jointly by the W project team and mining, processing and EPCM engineering firms, the board explained.

Revised capital estimates had been produced by W which were based on firm bids for the major crushing, jig and concentrator plant together with third party quotations for key EPCM and bulk earthworks contracts.

That work allowed W Resources to reduce overall capital costs of the total development cost estimate for the T2 and T3.5 expansions by $7m from its internal definition study as announced in June 2015, to a total of $45m.

W said the optimisation work also enabled the company to reduce the transition timeframe to the expanded operation, by incorporating additional design features into T2.

The updated estimated capital cost of T2 was $27m.

It explained that the main capital components for T2 were a 200 tonne per hour capacity jig and mill, a new 325 tph fixed crusher and screening circuit, and a new 155 tph gravity concentration and tin separation circuit.

Documentation on the company's final investment decision report was underway.

The board said that was a standard board approval decision process, and the company expected to be able to provide a full outline of the “attractive development programme” mid-year.

“La Parrilla has a very robust mine expansion and development plan and we are pleased to have now confirmed the increased JORC resource update and mine plan and be able to provide an update to the market on our development and debt financing programme,” said W Resources chairman Michael Masterman.

“The credit metrics for the debt component of the financing are strong and we are engaged in discussions with multiple debt financiers and the finance team, led by BurnVoir, is highly confident of completion of a debt financing of around $24m.

“La Parrilla's comparatively low capital cost allows us to target the financing of La Parrilla with a sustainable quantum of debt with limited dilution to existing shareholders.”

Masterman added that securing the right debt package had been a longer process than first anticipated, which pushed the timeline to production back some months.

“However, the board [is] confident of the revised timeline in respect of the completion of construction of the T2 phase in Q2 2018, with production restarting in Q3 2018.”