W Resources Temporarily Suspends La Parrilla Operations

W Resources PLC (WRES)'s shares have been suspended as the company continues to grapple with what it calls "extraordinarily challenging" operational and commercial conditions, and its La Parrilla business has also been temporarily suspended.

W Resources recently started production at its La Parrilla tungsten mine in Spain but was hit hard by a sharp increase in the price of liquid natural gas. Its price is seven times higher than the average price in 2021.

In addition, the situation has been exacerbated by a truck driver dispute that has halted shipments of critical spare parts to La Parrilla and impeded shipments of tungsten and tin concentrates, and as a result, operations at La Parrilla have been temporarily suspended.

At the same time, the company is investigating with offtake partners and customers the possibility of LNG price support, which could allow production to resume earlier. In Spain, many other small and medium-sized companies, including major steel mill operators, have begun similar shutdowns.

During the shutdown, the company is applying for and believes it will receive, support from the Spanish government under the Expediente de Regulación Temporal de Empleo employment retention program. Plans to reduce dependence on LNG will continue at an accelerated pace, and these include options for solar power generation, as well as upgrades to grid connections.

In addition, the company has been informed that the Dirección General de Industria, Energía y Minas of Extremadura has challenged its authorization to operate. W Resources will appeal this challenge and its lawyers have advised that it can continue to operate until the appeal is resolved. The suspension of operations has put significant financial pressure on the company's subsidiary in Spain, Iberia Resources, which has very limited cash.

W Resources has drawn down $2.5 million from an expanded $5.5 million facility provided by funds and accounts managed by BlackRock Financial Management. The company believes that full access to its financing facility and resolution of payment disputes with suppliers will allow it to continue operations for approximately three to four months without the restart of mining operations at La Parrilla.

In view of the impact of the suspension of mining operations and related income on W's cash position, the company requested that its shares on the London Stock Exchange be suspended pending clarification of its financial position.

W Resources’ strategy is to build a European mining company focused on delivering long-term production of tungsten, a key strategic metal with strong market fundamentals.

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