TIDMWRES

RNS Number : 8126A

W Resources PLC

04 June 2021

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 info@wresources.com 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                  Grant Thornton UK LLP 
  Paul Hailes, CFO                 Colin Aaronson / Harrison Clarke 
  investor@wresources.com          / Lukas Girzadas 
  www.wresources.com               T: +44 (0) 20 7383 5100 
 Joint Broker                     Joint Broker 
  Turner Pope Investments (TPI)    Alternative Resource Capital / 
  Ltd                              Shard Capital 
  Andy Thacker / Zoe Alexander     Alex Wood 
  T: +44 (0) 203 657 0050          T:+44 (0) 207 186 9004 
  www.turnerpope.com               www.altrescap.com 
                                   Damon Heath 
                                   T:+44 (0) 207 186 9952 
                                   www.shardcapital.com 
 Alma PR 
  Justine James 
  M: +44 (0) 7525 324431 
  wres@almapr.co.uk 
 

W RESOURCES PLC

CHAIRMAN'S STATEMENT

FOR THE YEARED 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 ("WO(3) ") 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

 
                                 Q1 2020    Q2 2020      Q3 2020      Q4 2020 
 ROM feed: tonnes mined 
  (wmt)                          273,656    253,256      171,454      261,841 
=============================  =========  =========  ===========  =========== 
 Strip ratio                        1.07       0.58         1.38         1.19 
=============================  =========  =========  ===========  =========== 
 Jig plant: tonnes processed 
  (dmt)                          240,926    228,060      148,417      236,677 
=============================  =========  =========  ===========  =========== 
 
 WO(3) feed grade (ppm)              800        845          857          943 
=============================  =========  =========  ===========  =========== 
 WO(3) recovery (%)                  17%        16%          30%          31% 
=============================  =========  =========  ===========  =========== 
 WO(3) concentrate (dmt)            58.9       47.6         54.7        100.0 
=============================  =========  =========  ===========  =========== 
 WO(3) concentrate grade 
  (%)                               56.1       57.4         69.8         67.0 
=============================  =========  =========  ===========  =========== 
 WO(3) contained metal 
  (mtu)                            3,306      2,756        3,820        6,698 
=============================  =========  =========  ===========  =========== 
 
 Sn feed grade (ppm)                 282        307          181          321 
=============================  =========  =========  ===========  =========== 
 Sn recovery (%)                     22%        25%          37%          26% 
=============================  =========  =========  ===========  =========== 
 Sn concentrate (dmt)               23.3       41.2         22.9         33.4 
=============================  =========  =========  ===========  =========== 
 Sn concentrate grade 
  (%)                               51.9       48.5         42.7         56.3 
=============================  =========  =========  ===========  =========== 
 Sn contained metal (dmt)           12.1       20.0          9.8         18.8 
=============================  =========  =========  ===========  =========== 
 
 Total concentrate (dmt)            82.2       88.8         77.6        133.4 
=============================  =========  =========  ===========  =========== 
 Total contained metal 
  (dmt)                             45.2       47.6         48.0         85.8 
-----------------------------  ---------  ---------  -----------  ----------- 
 

* 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.

 
                         Q1 2020   Q2 2020   Q3 2020   Q4 2020   Q1 2021 
======================  ========  ========  ========  ========  ======== 
 Tungsten concentrate 
  (t)                       30.1      58.9      62.1     100.2      59.2 
 Tin concentrate (t)        20.2      20.6      38.1      26.1      20.0 
======================  ========  ========  ========  ========  ======== 
 

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% WO(3) , including an indicated resource of 3.74mt at a grade of 0.28% WO(3) , 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 EUR5m facility with the Spanish bank, Banco Santander, S.A ("Santander") which repaid the EUR3m loan from Caja Rural de Extremadura ("Caja Rural") and provided a net EUR2m of additional working capital and liquidity. The loan was repaid following receipt of EUR5.2m proceeds of the Grant Funds in May 2021.

This was followed in March 2020 by a Placing to raise GBP0.76m 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. EUR1.82m 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 EUR1.02m 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 GBP4.0m 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 GBP500,000 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 GBP100,000 principal amount of Convertible Bonds that are issued. The Warrants have a 3 year expiry term.

In August 2020, W drew down its first GBP500,000 tranche from the GBP4m 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 YEARED 31 DECEMBER 2020

 
                                                         2020      2019 
 CONTINUING OPERATIONS                       Notes    EUR'000   EUR'000 
 
 Revenue                                         2      2,513       365 
 
 Cost of sales                                        (2,513)     (343) 
 
 GROSS PROFIT                                               -        22 
 
 Operating expenses                                     (845)     (498) 
 Administrative expenses                              (1,604)     (768) 
 Impairment of intangible assets             9        (2,257)         - 
 Impairment of tangible assets               10       (1,276)         - 
 
 OPERATING LOSS                                      ( 5,982)   (1,244) 
 
 Exchange gains / (losses)                              4,267     (498) 
 Finance costs                               4        (1,767)   (1,200) 
                                                    ---------  -------- 
 
 LOSS BEFORE INCOME TAX                      5        (3,482)   (2,942) 
 
 Income tax                                      6          -         - 
                                                    ---------  -------- 
 
 LOSS FOR THE YEAR                                    (3,482)   (2,942) 
 
 
 OTHER COMPREHENSIVE INCOME 
 OTHER COMPREHENSIVE INCOME FOR THE YEAR, 
  NET OF INCOME TAX                                         -         - 
                                                    ---------  -------- 
 
 TOTAL COMPREHENSIVE INCOME FOR THE YEAR              (3,482)   (2,942) 
                                                    =========  ======== 
 
 Loss attributable to: 
 Owners of the parent                                 (3,482)   (2,942) 
                                                    =========  ======== 
 
 Total comprehensive income attributable 
  to: 
 Owners of the parent                                 (3,482)   (2,942) 
                                                    =========  ======== 
 
 Loss per share expressed in pence per 
  share:                                     8 
 Basic                                                  -0.05     -0.05 
 Diluted                                                -0.05     -0.05 
 
 

W RESOURCES PLC (REGISTERED NUMBER: 04782584)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2020

 
 ASSETS                                                2020       2019 
 NON-CURRENT ASSETS                        Notes    EUR'000    EUR'000 
 Owned 
  Intangible assets                        9         41,157     31,882 
  Property, plant and equipment            10        31,877     30,103 
 Investments                               11             -          - 
                                                  ---------  --------- 
                                                     73,034     61,985 
                                                  ---------  --------- 
 
 CURRENT ASSETS 
 Inventories                               12         1,174        415 
 Trade and other receivables               13         7,296      6,580 
 Cash and cash equivalents                 14           956      2,460 
                                                  ---------  --------- 
                                                      9,426      9,455 
                                                  ---------  --------- 
 
 TOTAL ASSETS                                        82,460     71,440 
                                                  =========  ========= 
 
 
 EQUITY 
 SHAREHOLDERS' EQUITY 
 Called up share capital                   15         8,820      7,822 
 Share premium                             16        37,694     36,658 
 Share based payment reserve               16         2,003      1,622 
 Merger reserve                            16         1,014      1,014 
 Retained earnings                         16      (31,394)   (28,027) 
                                                  ---------  --------- 
 
 TOTAL EQUITY                                        18,137     19,089 
                                                  ---------  --------- 
 
 LIABILITIES 
 NON-CURRENT LIABILITIES 
 Financial liabilities - borrowings 
  Interest bearing loans and borrowings    18        51,626     44,312 
                                                  ---------  --------- 
 
 CURRENT LIABILITIES 
 Trade and other payables                  17         6,734      3,978 
 Financial liabilities - borrowings 
  Interest bearing loans and borrowings    18         5,963      4,061 
                                                  ---------  --------- 
                                                     12,697      8,039 
                                                  ---------  --------- 
 
 TOTAL LIABILITIES                                   64,323     52,351 
                                                  ---------  --------- 
 
 TOTAL EQUITY AND LIABILITIES                        82,460     71,440 
                                                  =========  ========= 
 

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

 
 ASSETS                                                2020       2019 
 NON-CURRENT ASSETS                        Notes    EUR'000    EUR'000 
 
 Investments                               11         6,695      6,695 
                                                  ---------  --------- 
                                                      6,695      6,695 
                                                  ---------  --------- 
 
 CURRENT ASSETS 
 Trade and other receivables               13        77,020     63,185 
 Cash and cash equivalents                 14            65      1,670 
                                                  ---------  --------- 
                                                     77,085     64,855 
                                                  ---------  --------- 
 
 TOTAL ASSETS                                        83,780     71,550 
                                                  =========  ========= 
 
 
 EQUITY 
 SHAREHOLDERS' EQUITY 
 Called up share capital                   15         8,820      7,822 
 Share premium                             16        37,694     36,658 
 Share based payment reserve               16         2,003      1,622 
 Merger reserve                            16         1,014      1,014 
 Retained earnings                         16      (16,570)   (20,586) 
                                                  ---------  --------- 
 
 TOTAL EQUITY                                        32,961     26,530 
                                                  ---------  --------- 
 
 LIABILITIES 
 NON-CURRENT LIABILITIES 
 Financial liabilities - borrowings 
  Interest bearing loans and borrowings    18        49,781     44,273 
                                                  ---------  --------- 
 
 CURRENT LIABILITIES 
 Trade and other payables                  17           704        747 
 Financial liabilities - borrowings 
  Interest bearing loans and borrowings    18           334          - 
                                                  ---------  --------- 
                                                      1,038        747 
                                                  ---------  --------- 
 
 
 TOTAL LIABILITIES                                   50,819     45,020 
                                                  ---------  --------- 
 
 TOTAL EQUITY AND LIABILITIES                        83,780     71,550 
                                                  =========  ========= 
 

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 YEARED 31 DECEMBER 2020

 
                                                                 Share 
                                 Called                          Based 
                                     up 
                                  Share   Retained     Share   Payment    Merger   Translation     Total 
                                Capital   Earnings   Premium   Reserve   Reserve       Reserve    Equity 
                                EUR'000    EUR'000   EUR'000   EUR'000   EUR'000       EUR'000   EUR'000 
 
 Balance at 1 January 
  2019                            7,137   (21,294)    34,418     1,622     1,014       (3,791)    19,106 
 
 Changes in equity 
 Total comprehensive income           -    (2,942)         -         -         -             -   (2,942) 
 Issue of share capital             685          -     2,240         -         -             -     2,925 
 Transfer between reserves            -    (3,791)         -         -         -         3,791         - 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 Total transactions with 
  owners recognised directly 
  in equity                         685          -     2,240         -         -             -     2,925 
 
 Balance at 31 December 
  2019                            7,822   (28,027)    36,658     1,622     1,014             -    19,089 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 
 Changes in equity 
 Total comprehensive income           -    (3,482)         -         -         -             -   (3,482) 
 Issue of share capital             998          -     1,036         -         -             -     2,034 
 Issue of share warrants 
  and options                         -          -         -       496         -             -       496 
 Transfer between reserves            -        115         -     (115)         -             -         - 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 Total transactions with 
  owners recognised directly 
  in equity                         998          -     1,036       496         -             -     2,530 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 
 Balance at 31 December 
  2020                            8,820   (31,394)    37,694     2,003     1,014             -    18,137 
                               ========  =========  ========  ========  ========  ============  ======== 
 

W RESOURCES PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEARED 31 DECEMBER 2020

 
                                                                 Share 
                                 Called                          Based 
                                     up 
                                  Share   Retained     Share   Payment    Merger   Translation     Total 
                                Capital   Earnings   Premium   Reserve   Reserve       Reserve    Equity 
                                EUR'000    EUR'000   EUR'000   EUR'000   EUR'000       EUR'000   EUR'000 
 
 Balance at 1 January 
  2019                            7,137   (14,207)    34,418     1,622     1,014       (5,683)    24,301 
 
 Changes in equity 
 Issue of share capital             685          -     2,240         -         -             -     2,925 
 Total comprehensive income           -      (696)         -         -         -             -     (696) 
 Transfer between reserves            -    (5,683)         -         -         -         5,683         - 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 Total transactions with 
  owners recognised directly 
  in equity                         685          -     2,240         -         -             -     2,925 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 
 Balance at 31 December 
  2019                            7,822   (20,586)    36,658     1,622     1,014             -    26,530 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 
 Changes in equity 
 Issue of share capital             998          -     1,036         -         -             -     2,034 
 Total comprehensive income           -      3,092         -         -         -             -     3,092 
 Issue of share warrants 
  and options                         -          -         -       496         -             -       496 
 Transfer between reserves            -        115         -     (115)         -             -         - 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 Total transactions with 
  owners recognised directly 
  in equity                         998          -     1,036       496         -             -     2,530 
                               --------  ---------  --------  --------  --------  ------------  -------- 
 
 Balance at 31 December 
  2020                            8,820   (16,569)    37,694     2,003     1,014             -    32,962 
                               ========  =========  ========  ========  ========  ============  ======== 
 

W RESOURCES PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEARED 31 DECEMBER 2020

 
                                                        2020       2019 
 Cash flows from operating activities        Notes   EUR'000    EUR'000 
 
 Cash generated from operations              1           785    (4,592) 
 Interest paid                                         (377)      (146) 
 Finance costs paid                                  (1,639)      (426) 
 Net cash from operating activities                  (1,231)    (5,164) 
                                                    --------  --------- 
 
 Cash flows from investing activities 
 Purchase of intangible fixed assets                 (7,446)    (7,343) 
 Purchase of tangible fixed assets                   (1,896)    (4,235) 
                                                    --------  --------- 
 Net cash from investing activities                  (9,342)   (11,578) 
                                                    --------  --------- 
 
 Cash flows from financing activities 
 New loans in year                                    10,639      9,050 
 Loan repayments in year                             (3,000)          - 
 New hire purchases in year                                -         58 
 Payment of lease liabilities                           (11)        (8) 
 Amount introduced by directors                            -        390 
 Amount withdrawn by directors                         (390)          - 
 Share issue                                             379        685 
 Share issue premium                                     896      2,329 
 Share issue costs                                         -       (89) 
 New convertible bonds in the year                       556          - 
                                                    --------  --------- 
 Net cash from financing activities                    9,069     12,415 
                                                    --------  --------- 
 
 Decrease in cash and cash equivalents               (1,504)    (4,327) 
 Cash and cash equivalents at beginning 
  of year                                    2         2,460      6,787 
                                                    --------  --------- 
 Cash and cash equivalents at end of year    2           956      2,460 
                                                    ========  ========= 
 

Material non-cash movements

During the year the company settled outstanding creditors of EUR538,000 (2019: Nil) through the issue of ordinary shares. (note 15)

W RESOURCES PLC

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEARED 31 DECEMBER 2020

 
                                                        2020       2019 
 Cash flows from operating activities        Notes   EUR'000    EUR'000 
 
 Cash generated from operations              1       (6,782)   (12,364) 
 Interest paid                                           (1)          - 
 Finance costs paid                                  (1,260)      (426) 
 Net cash from operating activities                  (8,043)   (12,790) 
                                                    --------  --------- 
 
 Cash flows from investing activities 
 Interest received                                     1,518      1,297 
 Net cash from investing activities                    1,518      1,297 
                                                    --------  --------- 
 
 Cash flows from financing activities 
 New loans in year                                     3,479      5,000 
 New convertible bonds in the year                       556          - 
 Amount introduced by directors                            -        390 
 Amount withdrawn by directors                         (390)          - 
 Share issue                                             379        685 
 Share premium                                           896      2,329 
 Share issue costs                                         -       (89) 
                                                    --------  --------- 
 Net cash from financing activities                    4,920      8,315 
                                                    --------  --------- 
 
 Decrease in cash and cash equivalents               (1,605)    (3,178) 
 Cash and cash equivalents at beginning 
  of year                                    2         1,670      4,848 
                                                    --------  --------- 
 Cash and cash equivalents at end of year    2            65      1,670 
                                                    ========  ========= 
 

Material non-cash movements

During the year the company settled outstanding creditors of EUR538,000 (2019: Nil) through the issue of ordinary shares. (note 15)

W RESOURCES PLC

NOTES TO THE STATEMENTS OF CASH FLOWS

FOR THE YEARED 31 DECEMBER 2020

   1.    RECONCILIATION OF PROFIT / (LOSS) BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS 
 
                                                2020       2019 
 Group                                       EUR'000    EUR'000 
 
 Loss before income tax                      (3,482)    (2,942) 
 Depreciation charges                            307        280 
 Impairment of intangible assets               2,257 
 Impairment of tangible assets                 1,276 
 Exchange gains on loans                     (4,305)          - 
 Share based payments                            538          - 
 Share warrants issued                           494          - 
 Share options issued                              2          - 
 Finance costs                                 1,767      1,200 
                                             (1,146)    (1,462) 
 
 Increase in inventories                       (759)      (236) 
 Increase in trade and other receivables       (464)      (628) 
 (Decrease) / increase in trade and other 
  payables                                     3,154    (2,266) 
                                            --------  --------- 
 Cash generated from operations                  785    (4,592) 
                                            ========  ========= 
 
 
                                                2020       2019 
 Company                                     EUR'000    EUR'000 
 
 Profit / (loss) before income tax             3,902      (696) 
 Exchange gains on loans                     (4,304)          - 
 Increase in inter-group loans               (7,448)   (11,383) 
 Share warrants issued                           494          - 
 Share options issued                              2          - 
 Share based payments                            538          - 
 Finance costs                                 1,173        872 
 Finance income                              (1,518)    (1,297) 
                                             (7,161)   (12,504) 
 
 (Increase) / decrease in trade and other 
  receivables                                     13       (10) 
 Increase in trade and other payables            366        150 
                                            --------  --------- 
 Cash generated from operations              (6,782)   (12,364) 
                                            ========  ========= 
 
   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:

 
                                       Group              Company 
 
                              31 December   1 January   31 December   1 January 
                                     2020        2020          2020        2020 
                                  EUR'000     EUR'000       EUR'000     EUR'000 
 Year ended 31 December 
  2020 
 Cash and cash equivalents            956       2,460            65       1,670 
                             ============  ==========  ============  ========== 
 
 
                              31 December   1 January   31 December   1 January 
                                     2019        2019          2019        2019 
                                  EUR'000     EUR'000       EUR'000     EUR'000 
 Year ended 31 December 
  2019 
 Cash and cash equivalents          2,460       6,787         1,670       4,848 
                             ============  ==========  ============  ========== 
 
 

Reconciliation of Net debt

 
 Group                 At Jan 2020   Cash flows                    Non cash changes     At 31 December 2020 
                                               Foreign exchange              Interest   Bonds converted 
                                                       movement           capitalised         to equity 
                           EUR'000   EUR'000            EUR'000               EUR'000           EUR'000    EUR'000 
 Cash and Cash 
 equivalents 
 Cash                        2,460   (1,504)                  -                     -                 -        956 
 
 Borrowings 
 Debt due within one 
  year                       (200)   (5,975)                  1                     -               221    (5,953) 
 Debt due after 1 
  year                    (48,123)   (2,231)              4,304               (5,547)                 -   (51,597) 
 Hire Purchases               (50)        11                                                                  (39) 
                      ------------  --------  -----------------  --------------------  ----------------  --------- 
                          (48,373)   (8,195)              4,305               (5,547)               221   (57,589) 
                      ------------  --------  -----------------  --------------------  ----------------  --------- 
 Total                    (45,913)   (9,699)              4,305               (5,547)               221   (56,633) 
                      ------------  --------  -----------------  --------------------  ----------------  --------- 
 
 
 Company               At Jan 2020                   Cash flows    Non cash changes            At 31 December 2020 
                                               Foreign exchange              Interest   Bonds converted 
                                                       movement           capitalised         to equity 
                           EUR'000   EUR'000            EUR'000               EUR'000           EUR'000    EUR'000 
 Cash and Cash 
 equivalents 
 Cash                        1,670   (1,605)                                                                    65 
 
 Borrowings 
 Debt due within one 
  year                           -     (556)                  1                                     221      (334) 
 Debt due after 1 
  year                    (44,273)   (3,479)              4,304               (6,333)                     (49,781) 
                      ------------  --------  -----------------  --------------------  ----------------  --------- 
                          (44,273)   (4,035)              4,305               (6,333)               221   (50,115) 
                      ------------  --------  -----------------  --------------------  ----------------  --------- 
 Total                    (42,603)   (5,640)              4,305               (6,333)               221   (50,050) 
                      ------------  --------  -----------------  --------------------  ----------------  --------- 
 
 

W RESOURCES PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARED 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 
 
 2019                                                              Mineral 
                                                   Corporate   Exploration          Total 
 By Business Segment:                                EUR'000       EUR'000        EUR'000 
 
 Revenue                                                   -           365            365 
 Gain / (loss) 
  for the year                                       (2,009)         (933)        (2,942) 
                                                  ----------  ------------  ------------- 
 
 Balance Sheet                  - Segment Assets       4,881        66,559         71,440 
    - Segment Liabilities                           (44,959)       (7,392)       (52,351) 
                                                  ----------  ------------  ------------- 
 Net Assets                                         (40,078)        59,167         19,089 
                                                  ==========  ============  ============= 
 
 
 By Geographical                                      Iberia            UK          Total 
  Sector 
                                                     EUR'000       EUR'000        EUR'000 
 
 Revenue                                                 365             -            365 
 Gain / (loss) 
  for the year                                         (933)       (2,009)        (2,942) 
                                                  ----------  ------------  ------------- 
 
 Balance Sheet                  - Segment Assets      66,559         4,881         71,440 
    - Segment Liabilities                            (7,392)      (44,959)       (52,351) 
                                                  ----------  ------------  ------------- 
 Net Assets                                           59,167      (40,078)         19,089 
                                                  ==========  ============  ============= 
 
 
 2020                                                              Mineral 
                                                   Corporate   Exploration          Total 
 By Business Segment:                                EUR'000       EUR'000        EUR'000 
 
 Revenue                                                   -         2,513          2,513 
 Gain / (loss) 
  for the year                                         2,384       (5,866)        (3,482) 
                                                  ----------  ------------  ------------- 
 
 Balance Sheet                  - Segment Assets       3,350        79,110         82,460 
    - Segment Liabilities                           (50,764)      (13,559)       (64,323) 
                                                  ----------  ------------  ------------- 
 Net Assets                                         (47,414)        65,551         18,137 
                                                  ==========  ============  ============= 
 
 
 By Geographical                                      Iberia            UK          Total 
  Sector 
                                                     EUR'000       EUR'000        EUR'000 
 
 Revenue                                               2,513             -          2,513 
 Gain / (loss) 
  for the year                                       (5,866)         2,384        (3,482) 
                                                  ----------  ------------  ------------- 
 
 Balance Sheet                  - Segment Assets      79,110         3,350         82,460 
    - Segment Liabilities                           (13,559)      (50,764)       (64,323) 
                                                  ----------  ------------  ------------- 
 Net Assets                                           65,551      (47,414)         18,137 
                                                  ==========  ============  ============= 
 
   3.   EMPLOYEES AND DIRECTORS 

During the year EUR2,508,000 (2019: EUR1,614,000) 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:

 
                                2020   2019 
 Management & Administration       4      4 
 Technical                        68     44 
                               =====  ===== 
 
 
                                                  2020 
                                      Share                 Directors 
                                    Options   Consultancy        Fees 
                                    EUR'000       EUR'000     EUR'000 
 Michael Masterman                        -           221           - 
 Byron Pirola (resigned 30 March          -             -           - 
  2020) 
 David Garland                            -             -          16 
 Pablo Neira                              -             -         117 
 James Argalas                            -             -          24 
 Oscar Marin Garcia (appointed 
  8 January 2020 / resigned 12 
  February 2021)                          2             -          24 
                                   --------  ------------  ---------- 
 Total                                    2           221         181 
 
 
                                                  2019 
                                      Share                 Directors 
                                    Options   Consultancy        Fees 
                                    EUR'000       EUR'000     EUR'000 
 Michael Masterman                        -           304           - 
 Byron Pirola (resigned 30 March          -             -           - 
  2020) 
 David Garland                            -             -          16 
 Pablo Neira                              -             -          48 
 James Argalas                            -             -          24 
 Oscar Marin Garcia (appointed 
  8 January 2020 / resigned 12 
  February 2021)                          -             -           - 
                                   --------  ------------  ---------- 
 Total                                    -           304          88 
 
   4.   NET FINANCE COSTS 
 
                                  2020      2019 
 Finance costs:                EUR'000   EUR'000 
 Other finance costs               377       146 
 Amortisation of loan costs      1,390     1,054 
                              --------  -------- 
                                 1,767     1,200 
                              ========  ======== 
 
   5.   PROFIT / (LOSS) BEFORE INCOME TAX 

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

 
                                                   2020      2019 
                                                EUR'000   EUR'000 
 Cost of inventories recognised as expense        2,513       343 
 Depreciation - owned assets                        238       218 
 Exploration & evaluation costs amortisation         69        61 
 Auditors' remuneration                              40        33 
 Impairment of intangible assets (note 10)        2,257         - 
 Impairment of tangible assets (note 10)          1,276         - 
 Foreign exchange differences                   (4,267)       495 
                                               ========  ======== 
 

A total of EUR125,000 (2019: EUR304,000) 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

 
                                                            2020      2019 
                                                         EUR'000   EUR'000 
 
 Loss before income tax                                  (3,482)   (2,942) 
                                                        ========  ======== 
 
 Profit / (Loss) multiplied by a rate of corporation 
  tax 
  of 31.6% (2019 - 23.4%)                                (1,099)     (687) 
 
 Effects of:                                                             - 
 Accelerated capital allowances 
 Effect of different tax rates in other jurisdictions      (361)       (8) 
 Intercompany interest not yet recognised 
  in Spain and Portugal                                      479       304 
 Share options and warrants issued                             5         - 
 Depreciation                                                 97        65 
 Impairment of tangible assets                             1,116         - 
 Accelerated capital allowances                                -     (356) 
 
 Adjustment to losses with no recognisable 
  deferred tax asset                                       (238)       682 
 
 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 EUR13,624,000 (2019: EUR15,221,000) 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 EUR5,284,000 (2019: EUR3,766,000)

   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 EUR3,902,000 (2019: Loss (EUR696,000)). Included within these figures are intra-group interest received of EUR1,518,000 (2019: EUR1,298,000).

   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.

 
 Reconciliations are set out                           2020 
  below: 
                                                Weighted Average   Per Share 
                                         Loss   Number of Shares      Amount 
                                      EUR'000         (millions)       Pence 
 Basic earnings per share 
 Earnings attributable to ordinary 
  shareholders                        (3,482)              6,795       -0.05 
 Effect of dilutive securities 
 Options and warrants                       -                  -           - 
 
 Diluted earnings per share 
 Adjusted earnings                    (3,482)              6,795       -0.05 
                                     ========  =================  ========== 
 
 
                                                       2019 
                                                Weighted Average   Per Share 
                                         Loss   Number of Shares      Amount 
                                      EUR'000         (millions)       Pence 
 Basic earnings per share 
 Earnings attributable to ordinary 
  shareholders                        (2,942)              6,018       -0.05 
 Effect of dilutive securities              -                  -           - 
                                     --------  -----------------  ---------- 
 
 Diluted earnings per share 
 Adjusted earnings                    (2,942)              6,018       -0.05 
                                     ========  =================  ========== 
 
   9.   INTANGIBLE ASSETS 
 
                           Exploration 
 Group                    & Evaluation 
                                 Costs 
 COST                          EUR'000 
 
 At 1 January 2020              32,616 
 Additions                      11,601 
 At 31 December 2020            44,217 
                         ------------- 
 
 AMORTISATION 
 At 1 January 2020                 734 
 Amortisation for year              69 
 Impairment                      2,257 
                         ------------- 
 At 31 December 2020             3,060 
                         ------------- 
 
 NET BOOK VALUE 
 At 31 December 2020            41,157 
                         ============= 
 
 
                                 Exploration 
 Group                          & Evaluation 
                                       Costs 
 COST                                EUR'000 
 
 At 1 January 2019                    27,282 
 Additions                            10,567 
 Reclassification / transfer         (5,233) 
                               ------------- 
 At 31 December 2019                  32,616 
                               ------------- 
 
 AMORTISATION 
 At 1 January 2019                       673 
 Amortisation for year                    61 
 At 31 December 2019                     734 
                               ------------- 
 
 NET BOOK VALUE 
 At 31 December 2019                  31,882 
                               ============= 
 

The above represents capitalised testing works and concessions costs acquired.

10. PROPERTY, PLANT AND EQUIPMENT

 
 Group                     Plant & 
                         Machinery 
 COST                      EUR'000 
 At 1 January 2020          31,125 
 Additions                   3,288 
 At 31 December 2020        34,413 
                        ---------- 
 
 DEPRECIATION 
 At 1 January 2020           1,022 
 Charge for year               238 
 Impairment                  1,276 
 At 31 December 2020         2,536 
                        ---------- 
 
 NET BOOK VALUE 
 At 31 December 20209       31,877 
                        ========== 
 
 
 Group                            Plant & 
                                Machinery 
 COST                             EUR'000 
 At 1 January 2019                 19,355 
 Additions                          6,537 
 Reclassification / transfer        5,233 
                               ---------- 
 At 31 December 2019               31,125 
                               ---------- 
 
 DEPRECIATION 
 At 1 January 2019                    804 
 Charge for year                      218 
 At 31 December 2019                1,022 
                               ---------- 
 
 NET BOOK VALUE 
 At 31 December 2019               30,103 
                               ========== 
 

Reclassifications

At 31 December 2019, the following non-current assets, which were additions during the construction phase of La Parrilla mine, during 2018 and its completion in 2019, were reclassified from intangible non-current assets to tangible non-current assets to better reflect their physical nature or direct attribution to the construction cost of the new plants:

 
    Cumulative balance further to reclassification   Reclassification 
                                              2019               2018 
                                        Euro (EUR)         Euro (EUR) 
 Civils & earthworks                     2,422,940          1,159,374 
 Tailings dam walls                        660,859            412,635 
 Transformation centre                   2,566,671          1,618,238 
 Project management fees                 1,498,885          1,200,957 
 Engineering fees                          849,277            841,787 
                                   ---------------  ----------------- 
 Total                                   7,998,632          5,232,990 
                                   ---------------  ----------------- 
 

Impairment

Impairment tests were performed on the fair value of each intangible and tangible asset at 31 December 2020, and the Group concludes that the following impairment adjustments are necessary:

 
 Intangible Assets: 
 Tailing Plant Optimisation costs    EUR2,257,000 
 Tangible Assets: 
 Net book value of the Tailings 
  Plants                             EUR1,276,000 
 Total Impairment                    EUR3,534,000 
 

The Tailings Processing Plants were built between 2014 and 2015. They were operating until 2017 to process the old tailings dumps and produced over 100 tonnes of WO(3) concentrate, however these plants never attained optimum capacity, and although they were used during the testing phase of the new Crusher Plant completed in 2019, they are now no longer utilised and are redundant. They may have a future scrap retail value but as this cannot be determined, we have impaired their net book value of EUR1,276,000 to Nil as at 31 December 2020.

The ramp-up period is defined as the period between plant completion and the attainment of optimum capacity, during which the plants' equipment is subject to testing and adjustment until said optimum capacity is attained. During the period of their operation, operating costs associated with the two plants were incurred and capitalised between 2014 & 2017 totalling EUR2,257,000 - management considers it appropriate to impair the net book value of these plants. Consistent with this an impairment adjustment of EUR2,257,000 has been made at 31 December 2020.

The net book value of intangible assets at 31 December, 2020 EUR 41,156,890, above, includes capitalised exploration & evaluation costs for the Company's three exploration sites in Portugal, with a combined value of EUR 6,324,233 as follows:

Régua Tungsten Deposit

- A trial mining licence awarded on 20 June 2014 for the Re gua tungsten deposit located 400km North of Lisbon and 95km East of Porto in the municipality of the town of Armamar. In October 2015, Golder Associates issued a JORC compliant mineral resource estimate indicating a total resource tonnage of 5.46mt at a grade of 28% a cut off of 0.1% WO(3) . In February 2020 Golder Associates issued a revised JORC compliant mineral estimate confirming 4.47mt at 0.27% WO(3) . The total historic cost of this exploration licence at 31 December 2020 was EUR3,271,712.

- This licence expired on 20 September 2020 and an application for the full mining licence was submitted on 16 June 2020.

Tarouca Tungsten and Tin Project

- A permit for the exploration of the Tarouca tungsten and tin project, located some 70km east of the city of Porto and just 20km from Re gua, was granted on 23 March, 2012. Exploration activities completed here have shown extremely high-grade results with heavy mineralisation. Although no Resource Estimate has issued, as further exploration is necessary, it has the potential to enhance and expand the Re gua development. The total historic cost of this exploration licence at 31 December 2019 was EUR939,125.

- This licence expired on 29 March 2019 and an application for its renewal and the inclusion of an additional area of further to the south where the Company believes mineralisation occurs, was submitted on 5 February 2019.

Sa o Martinho and Crato Assumar Arronches gold prospection

- Two combined exploration licences for gold prospection, Sa o Martinho and Crato Assumar Arronches, near the town of Portalegre (Northern Alentejo), around 200 km East of Lisbon. The total historic cost of these two exploration licences at 31 December 2020 was EUR2,113,397. In June 2016, Golder Associates issued a maiden JORC mineral resource estimate of 3Mt at 1.04 g/t gold, which equates to 111,987oz in contained gold. This maiden JORC compliant mineral resource estimate provides a basis from which the Company will look to upgrade the quality and size of the resource.

- These combined licences expired on 29 September 2018 and an application to convert the Sa o Martinho into a trial mining licence of 5.74km(2) and for a new exploration licence of 268.9 km(2) which encompasses the Sa o Martinho area, and a large part of the old Crato Assumar Arronches area was submitted on 27 September 2018.

All expenditure commitments under the licences were fulfilled and as they have expired there is currently no unfulfilled commitment to future expenditure. Although they have expired as detailed above, applications for their renewal or conversion into trial mining or full mining licences have been submitted to Portuguese authorities. The granting of all new licences and extensions has, however, 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.

The Company is, however, confident that, given the encouraging exploration results, and given that no other company has applied for these areas, combined with strong support from local authorities, these licences will be granted, which has also been assured verbally by them. As a result, the Company considers that their further successful development is likely to proceed and no impairment adjustment is necessary.

11. INVESTMENTS

 
 Company                    Shares in 
                                Group 
                         Undertakings 
 COST                         EUR'000 
 At 1 January 2020 
 and 31 December 2020           6,695 
                        ------------- 
 
 NET BOOK VALUE 
 At 31 December 2020            6,695 
                        ============= 
 
 At 31 December 2019            6,695 
                        ============= 
 
 
 Company                    Shares in 
                                Group 
                         Undertakings 
 COST                         EUR'000 
 At 1 January 2019              1,695 
 Additions                      5,000 
                        ------------- 
 and 31 December 2019           6,695 
                        ------------- 
 
 NET BOOK VALUE 
 At 31 December 2019            6,695 
                        ============= 
 
 At 31 December 2018            1,695 
                        ============= 
 

The group or the company's investments at the Statement of Financial Position date in the share capital of companies include the following:

Direct Subsidiaries

Iberian Resources Spain SL

Registered office: Finca La Parrilla, 10132 Almoharin Caceres, Spain

Nature of business: Tungsten mining, production, exploration

 
                                         % 
 Class of shares:                  Holding 
 Ordinary                           100.00 
                                                 2020      2019 
                                              EUR'000   EUR'000 
 Aggregate capital and reserves              (13,490)   (6,258) 
                                            =========  ======== 
 

Copper Gold Resources Plc (Group)

Registered office: 27/28 Eastcastle Street, London W1W 8DH

Nature of business: Tungsten mining exploration, development

 
                                         % 
 Class of shares:                  Holding 
 Ordinary                           100.00 
                                                2020      2019 
                                             EUR'000   EUR'000 
 Aggregate capital and reserves                (518)     (367) 
                                            ========  ======== 
 

Indirect Subsidiaries

Iberian Resources Portugal LDA

Registered office: Lugar das Mozes, 5110-159 Armamar, Portugal

Nature of business: Mineral Exploration

 
                                         % 
 Class of shares:                  Holding 
 Copper Gold Resources Plc owns     100.00 
                                                2020      2019 
                                             EUR'000   EUR'000 
 Aggregate capital and reserves                (567)     (431) 
                                            ========  ======== 
 

During 2019 the company converted EUR5m of its intercompany loan with Iberian Resources Spain SL, into equity of Iberian Resources Spain SL.

12. INVENTORIES

 
                                   Group 
                               2020      2019 
                            EUR'000   EUR'000 
 Concentrate for re-sale        621       415 
 Spares and Consumables         553         - 
                           --------  -------- 
                              1,174       415 
                           ========  ======== 
 
 

13. TRADE AND OTHER RECEIVABLES

 
                                             Group              Company 
                                          2020      2019      2020      2019 
                                       EUR'000   EUR'000   EUR'000   EUR'000 
 Current: 
 Trade receivables                         389        36         -         - 
 Other receivables                       1,197       905        28        61 
 Other prepayments                       1,768     1,929        56        36 
 Finance cost prepayments                1,883     1,203     1,526     1,009 
 
 >1 year: 
 Amounts owed by group undertakings          -         -    73,737    59,977 
 Finance cost prepayments                2,059     2,507     1,673     2,102 
                                      --------  --------  --------  -------- 
                                         7,296     6,580    77,020    63,185 
                                      ========  ========  ========  ======== 
 
 

14. CASH AND CASH EQUIVALENTS

 
                        Group              Company 
                     2020      2019      2020      2019 
                  EUR'000   EUR'000   EUR'000   EUR'000 
 
 Bank accounts        956     2,460        65     1,670 
                 ========  ========  ========  ======== 
 
 

15. CALLED UP SHARE CAPITAL

 
 Allotted and issued:                 Nominal        2020        2019 
 Number                     Class       Value     EUR'000     EUR'000 
 7,269,220,952 
 (2019: 6,378,417,640)   Ordinary        0.1p       8,820       7,822 
                                     ========    ========    ======== 
 

890,713,312 Ordinary Shares of 0.1p were issued during the year as follows:

- On 17 January 2020, 111,615,139 Ordinary Shares of 0.1p each were issued at a premium of 0.21p to repay directors loans totalling EUR390,000.

- On 10 March 2020, 209,999,998 Ordinary Shares of 0.1p each were issued at a premium of 0.26p raising GBP756,000 (EUR900,000).

- On 24 August 2020, 75,187,969 Ordinary Shares of 0.1p each were issued at a premium of 0.03p being the conversion of EUR100,000 of convertible bonds.

- On 9 October 2020, 397,689,658 Ordinary Shares of 0.1p each were issued at a premium of 0.023p to three creditors in order to settle amounts totalling GBP489,000 (EUR538,025).

- On 4 December 2020, 96,300,548 Ordinary Shares of 0.1p each were issued at a premium of 0.0111p being the conversion of EUR100,000 of convertible bonds and EUR7,000 of capitalised interest.

On 15 December 2020, the initial expiry date of 471,428,568 Share Warrants was extended from 31 December 2020 to 31 December 2021.

At the year-end there were 1,384,201,147 Share Warrants in issue that were yet to be exercised. (2019: 779,033,998).

16. RESERVES

 
                                                Share 
 Group                                          Based 
                         Retained     Share   Payment    Merger 
                         Earnings   Premium   Reserve   Reserve    Totals 
                          EUR'000   EUR'000   EUR'000   EUR'000   EUR'000 
 
 At 1 January 2020       (28,027)    36,658     1,622     1,014    11,267 
 Profit for the 
  year                    (3,482)         -         -         -   (3,482) 
 Cash share issue               -       896         -         -       896 
 Non cash share 
  issue                         -       140         -         -       140 
 Share warrants 
  issued                        -         -       494         -       494 
 Transfer between 
  reserves                    115         -     (115)         -         - 
 Share options issued           -         -         2         -         2 
                        ---------  --------  --------  --------  -------- 
 At 31 December 
  2020                   (31,394)    37,694     2,003     1,014     9,317 
                        =========  ========  ========  ========  ======== 
 
 
                                                Share 
 Company                                        Based 
                         Retained     Share   Payment    Merger 
                         Earnings   Premium   Reserve   Reserve    Totals 
                          EUR'000   EUR'000   EUR'000   EUR'000   EUR'000 
 
 At 1 January 2020       (20,587)    36,658     1,622     1,014    18,707 
 Profit for the 
  year                      3,902         -         -         -     3,902 
 Cash share issue               -       896         -         -       896 
 Non cash share 
  issue                         -       140         -         -       140 
 Share warrants 
  issued                        -         -       494         -       494 
 Transfer between 
  reserves                    115         -     (115)         -         - 
 Share options issued           -         -         2         -         2 
                        ---------  --------  --------  --------  -------- 
 At 31 December 
  2020                   (16,570)    37,694     2,003     1,014    24,141 
                        =========  ========  ========  ========  ======== 
 

17. TRADE AND OTHER PAYABLES

 
                                             Group              Company 
                                          2020      2019      2020      2019 
                                       EUR'000   EUR'000   EUR'000   EUR'000 
 Current: 
 Trade creditors                         6,265     3,500       183       198 
 Amounts owed to group undertakings          -         -        56        75 
 Other creditors                             1         2         1         2 
 Accrued expenses                          468        86       464        82 
 Directors' current accounts                 -       390         -       390 
                                      --------  --------  --------  -------- 
                                         6,734     3,978       704       747 
                                      ========  ========  ========  ======== 
 
 

18. FINANCIAL LIABILITIES - BORROWINGS

 
                                               Group              Company 
                                            2020      2019      2020      2019 
                                         EUR'000   EUR'000   EUR'000   EUR'000 
 Current financial liabilities 
  - borrowings: 
 BBVA reverse factoring agreement            119       200         -         - 
 BankInter advance on VAT receivables        500         -         -         - 
 Santander loan                            5,000         -         -         - 
 Atlas convertible bonds                     334         -       334         - 
 BBVA overdraft facility                       -       300 
 BBVA advance on VAT receivables               -        50 
 Caja Rural de Extremadura 
  loan                                         -     3,000 
 CaixaBank credit facility                     -       500 
 Hire purchase (note 19)                      11        11         -         - 
 
 Non - Current financial liabilities 
  - borrowings: 
 BlackRock loan facility                  49,781    44,273    49,781    44,273 
 BBVA overdraft facility                     296         -         -         - 
 Caja Rural de Extremadura                   500         -         -         - 
  loan 
 CaixaBank credit facility                   500         -         -         - 
 BankInter S.A. Loan                         400         -         -         - 
 BBVA loan                                   120         -         -         - 
 Hire purchase (note 19)                      28        39         -         - 
                                        --------  --------  --------  -------- 
                                          57,589    48,373    50,115    44,273 
                                        ========  ========  ========  ======== 
 
 

All non-current financial liabilities are due between 2-5 years. No financial liabilities are due in more than 5 years.

On 14 February 2018, W Resources signed a Credit and Guaranty Agreement with BlackRock Financial Management Inc. ("BlackRock") to provide a US$35 million secured term loan facility to the Company to fund the La Parrilla mine development. The first US$13.125 million was drawn in February 2018 and the balance of US$21.875 million was funded in May 2018.

The key terms of the Credit and Guaranty Agreement with BlackRock Financial Management Inc. are as follows:

- The Loan is for a scheduled term of five years, with a two year non-call period. The Company has the right to repay the Loan after two years for a premium of 5%, after three years for a premium of 3%, and after four years for no premium; the Loan is secured over the value of the Group's intangible and tangible assets in Spain and in Portugal as well as the stream of future revenues expected from off take agreements.

- Subject to any early repayment permitted or required under the Agreement, repayment will be made by way of a cash flow sweep, utilising free cash to repay the loan; it is not expected that cash will be available within the initial two-year period and therefore the full amount of the loan has been recognised as payable between 2-5 years.

- The Loan is subject to an average 5-year interest rate of 12.6%, being 14% in the first year, 13% in the second year and 12% thereafter.

- First year interest is added to the value of the principal, while 50% of the second-year interest is added to the value of the principal and 50% is payable in cash; from the third year onwards interest will be fully payable in cash on quarterly anniversaries of the loan agreement.

- Lenders received a non-refundable upfront fee of 3% of the face value of each of the respective Loan disbursements.

- Lenders received warrants totalling 5% of W Resources Plc fully diluted equity. These have been valued at 5% of the total loan value EUR1,440,000 (note 21).

On 18 December 2019, BlackRock agreed to increase the existing loan facility provided to W Resources by US$5 million, with no warrants attached.

On 8 October 2020, BlackRock agreed to further increase the existing loan facility provided to W Resources by US$7 million, with no warrants attached. By 31 December 2020 two tranches of this facility, for US$2,750,004 and US$2,250,000, had been drawn down on 4 October 2020 and on 1 December 2020, respectively, for a total of US$5,000,004.

During the year, interest of EUR6,331,396 (2019: EUR5,257,259) was incurred on the Loan. This was added to the loan capital during the year and recharged by W Resources Plc to its subsidiary Iberian Resources Spain SL where it was capitalised in Intangible and in Tangible assets in proportion to the expenditure on each of these categories during the year, and in accordance with the Groups accounting policy for loan interest.

The value of the BlackRock loan included in the statement of financial position at the balance sheet date is US$61,093,027 (EUR49,781,329) (2019: EUR44,273,000).

On 7 May 2019, a loan of EUR3,000,000 was granted by Spanish bank, Caja Rural de Extremadura Sociedad Cooperativa de Cre dito ("Caja Rural de Extremadura") with a term of 15 months and an interest rate of 1.75% p.a. This loan was repaid on 31 January 2020. The value of this loan included in the statement of financial position at the balance sheet date is NIL (2019: EUR3,000,000).

On 18 June 2019, an overdraft facility of EUR300,000 was provided by Banco Bilbao Vizcaya Argentaria, S.A ("BBVA"), with a term of 12 months and an interest rate of 2.65% p.a. A 29% APR will apply if not repaid by 18 June 2020. On 28 May 2020 the BBVA extended the term on this overdraft facility 18 June 2025. The value of this overdraft included in the statement of financial position at the balance sheet date is EUR296,436 (2019: EUR299,700).

On 15 October 2019, the Banco Bilbao Vizcaya provided and advance on VAT receivables of EUR50,000 with a term of 12 months and an Interest rate of 2.3% p.a. This was fully repaid at 31 December 2020.

On 15 October 2019, Iberian Resources Spain S. L. signed a reverse factoring agreement with the BBVA, for up to EUR200,000 with an interest rate 2.75% p.a. This agreement was automatically renewed for a one year period on its first anniversary. The value of this credit facility included in the statement of financial position at the balance sheet date is EUR118,980 (2018: EUR199,833).

On 3 December 2019, Iberian Resources Spain S. L. signed a revolving credit facility of EUR500,000 with CaixaBank, S.A ("CaixaBank") with a term 6 months and an interest rate of 2.5% p.a. This facility was extended on 28 June 2020 for a 5-year period. The value of this credit facility included in the statement of financial position at the balance sheet date is EUR500,000 (2019: EUR500,000).

On 31 January 2020, Iberian Resources Spain S. L. signed a loan agreement for EUR5,000,000 with Banco Santander, S.A ("Santander") which repaid the EUR3,000,000 loan from the Caja Rural de Extremadura. The facility interest rate is 3% per annum, payable quarterly, with no amortisation and is secured by a pledge over the rights to the Grant funds. The term of the loan is the earlier of 12 months or the receipt of the proceeds of the Grant funds. On 15 January 2021, the Company finalised a six month extension to this loan facility with an interest rate is 3.5% per annum. Subsequently, on 7 May 2021 the EUR5.2m Grant was paid by the Junta de Extremadura Government and this loan was repaid in full.

The value of this loan included in the statement of financial position at the balance sheet date is EUR5,000,000 (2019: NIL).

Under the COVID-19 state of emergency, the Spanish state-owned bank (attached to the Ministry of Economy and Business), the Instituto de Cre dito Oficial ("ICO"), provided loan guarantees of up to 80% of loan value to Spanish banks providing loans to Spanish companies. EUR1.82m of such facilities at annual interest rates of 2-3% pa was secured with four major banks as detailed below. These facilities refinance and extend the maturity of some existing lines, the details of which are listed below and provide a net EUR1.02m of additional working capital funding. All loan agreements and extensions are to the Company's 100% owned subsidiary, Iberian Resources Spain:

The specific new facilities were:

   -    On 1 June 2020, Bankinter S.A. granted IRS a loan for EUR400,000 with a term of 5 years. 
   -    On 28 May 2020, the BBVA granted IRS a loan for EUR120,000 from with a term of 5 years. 

- On 9 July 2020, the Caja Rural de Extremadura granted IRS a loan for EUR500,000 with a term of 5 years.

The extensions to existing loan facilities are as follows:

- On 28 June 2020, CaixaBank extended the term of the EUR500,000 revolving credit facility granted to IRS on 3 December 2019, from 30 May 2020 to 4 June 2025, guaranteed by W Resources Plc and also by ICO.

- On 28 May 2020, the BBVA extended the term on IRS' existing EUR300,000 overdraft facility granted on 18 June 2019, from 18 June 2020 to 18 June 2025 which is now guaranteed as an ICO loan.

In March 2020, W secured a GBP4.0m 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 GBP500,000 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. At the balance sheet date one tranche of GBP500,000 had been drawn down and two tranches of GBP100,000 converted into shares leaving a balance of GBP300,000 (EUR334,000) (2019: NIL). 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 GBP100,000 principal amount of Convertible Bonds that are issued. The Warrants have a 3 year expiry term. During the year 27,777,775 warrants were issued. The Black Scholes valuation was immaterial and therefore has not been recognised in the financial statements. (see note 22)

On 15 January 2021, the Company drew down the third and final tranche of US$1,999,996 of the BlackRock incremental loan facility of US$7 million granted on 8 October 2020.

19. HIRE PURCHASE

 
 Group 
 Hire purchase liabilities                         2020      2019 
 Minimum lease payments fall due as follows:    EUR'000   EUR'000 
 Gross obligations repayable: 
 Within one year                                     11        11 
 Between one and five years                          28        39 
                                               --------  -------- 
                                                     39        50 
                                               --------  -------- 
 
 
 Finance charges repayable:                           -         - 
                                               --------  -------- 
 
 Net obligations repayable:                          11        11 
 Within one year                                     28        39 
                                               --------  -------- 
 Between one and five years                          39        50 
                                               ========  ======== 
 

20. RELATED PARTY DISCLOSURES

During the year the Directors acquired the following Ordinary 0.1p Shares:

 
 Michael Masterman                                           65,146,580 
 David Garland                                               - 
 Byron Pirola (resigned 30 March 2020)                       32,573,290 
 Pablo Neira                                                 - 
 James Argalas                                               13,895,269 
 Oscar Marin Garcia (appointed 8 January 2020 / resigned     - 
  12 February 2021) 
 

Between the year end and the date of signing of this report the Directors have acquired the following Ordinary 0.1p Shares:

 
 Michael Masterman     150,000,000   (Purchased on 
                                      market) 
 David Garland         - 
 Pablo Neira           40,074,602 
 James Argalas         - 
 

On 2 December 2016, Share Options were granted to the directors as follows:

 
Director           Number of Options  Exercise Price  Expiry Date 
Michael Masterman         20,000,000        GBP0.007   31/12/2020 
                          10,000,000        GBP0.008   31/12/2020 
                          10,000,000         GBP0.01   31/12/2020 
 
Byron Pirola              20,000,000        GBP0.007   31/12/2020 
                          10,000,000        GBP0.008   31/12/2020 
                          10,000,000         GBP0.01   31/12/2020 
 
David Garland             20,000,000        GBP0.007   31/12/2020 
                          10,000,000        GBP0.008   31/12/2020 
                          10,000,000         GBP0.01   31/12/2020 
 

These expired on 31 December 2020 and none were exercised.

Further on 20 November 2018, Share Options were granted to directors as follows:

 
Director       Number of Options  Exercise Price  Expiry Date 
Pablo Neira           30,000,000       GBP0.0055   30/11/2021 
 
James Argalas         30,000,000       GBP0.0055   30/11/2021 
 

These remained unexercised at the balance sheet date.

Further on 15 November 2019, Share Options were granted to a related party of a Director as follows:

 
Director                  Number of Options  Exercise Price  Expiry Date 
Related party of Oscar           21,900,000       GBP0.0040   30/11/2020 
 Garcia (appointed 08 
 January 2020 / resigned 
 12 February 2021) 
 

These options expired on 30 November 2020 and none were exercised.

During 2019, the Directors made loans to the company as follows:

 
 Michael Masterman    EUR229,000 
 Byron Pirola         EUR111,000 
 James Argalas         EUR50,000 
                     ----------- 
 Total                EUR390,000 
 

These loans were converted into Share Capital on 17 January 2020.

Included in other creditors is the sum of EUR414,000 (2019: EUR358,000) for unpaid consultancy fees due to FeX Limited a company, based in Hong Kong, wholly-owned by Michael Masterman a Director and significant shareholder. During 2020 consultancy fees of EUR179,000 were charged to the Group by FeX Limited.

Included in trade creditors is the sum of EUR42,000 (2019: Nil) for unpaid consultancy fees due to Michael Masterman a Director and significant shareholder. During the year consultancy fees of EUR42,000 were charged to the Company by Michael Masterman.

Also included in other creditors is the sum of EUR120,000 (2019: EUR43,000) for accrued directors fees due to the Directors as follows: EUR69,000 Pablo Neira, EUR3,300 (GBP3,000) David Garland, EUR24,000 James Argalas, EUR24,000 Oscar Marin Garcia.

21. EVENTS AFTER THE REPORTING PERIOD

On 11 January 2021, the Group drew down a further GBP500,000 tranche from the GBP4.0 million Atlas Capital Markets ("Atlas") convertible bond facility. This is the second draw down made from the facility which was secured on 30 March 2020. This convertible bond tranche has a 5% coupon and 3-year term. As part of the agreement, 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 the issue of a conversion notice by Atlas.

On 11 January 2021, the Company converted GBP100,000 of Atlas Convertible Bonds into 96,525,097 ordinary shares of 0.1p per share ("Ordinary Shares") at a price of 0.1036p per Ordinary Share.

On 15 January 2021, the Company finalised a six month extension to the EUR5m loan facility with the Spanish bank, Santander. As the initial term of the loan was the earlier of 18 February 2021 or the receipt of the proceeds of the Grant funds. The facility interest rate is 3.5% per annum, payable quarterly, with no amortisation and is secured by a pledge over the rights to the Grant funds.

On 26 January 2021, the Company issued 247,290,458 ordinary shares of 0.1p per share ("Ordinary Shares") at a price of 0.1113p per Ordinary Share. GBP44,603 (EUR50,000) forms part of Director, Pablo Neira's 2020 remuneration package while GBP230,631 was issued to technical and professional creditors.

On 28 January 2021, the Company converted GBP100,000 of Atlas Convertible Bonds into 96,899,224 ordinary shares of 0.1p per share ("Ordinary Shares") at a price of 0.1032p per Ordinary Share.

On 12 February 2021, Oscar Marin Garcia stepped down from the Board to focus on increased commitments in his business.

On 8 March 2021, the Group announced a proposed reorganisation of the Company's share capital. The proposed Capital Reorganisation consisted of the following steps:

- the amendment of the Company's Articles of Association to set out the rights and restrictions attaching to a new class of Deferred Shares;

- each Existing Ordinary Share of GBP0.001 nominal value each will be subdivided into two new shares, a Redenominated Ordinary Share and a Deferred Share;

- the nominal value of each new Redenominated Ordinary Share will be one per cent. of an Existing Ordinary Share, being GBP0.00001;

- the nominal value of each new Deferred Share will be ninety-nine per cent. of an Existing Ordinary Share, being GBP0.00099; and

- every 100 Redenominated Ordinary Shares will then be consolidated into one New Ordinary Share with a nominal value of GBP0.001 (being 100 * GBP0.00001).

This reorganisation was approved at a General meeting held on 31 March 2021.

On 22 March 2021, the Company converted GBP100,000 of Atlas Convertible Bonds into 100,000,000 ordinary shares of 0.1p per share ("Ordinary Shares") at a price of 0.1000p per Ordinary Share. The Company will pay GBP20,200 to Atlas as compensation for Atlas being unable to convert at price lower than the nominal value of an Ordinary Share.

On 8 April 2021, the Company converted GBP250,000 of Atlas Convertible Bonds into 2,724,469 ordinary shares of 0.1p per share ("Ordinary Shares") at a price of 9.1761p per Ordinary Share.

On 7 May 2021, Iberian Resources Spain received the EUR5.2m Grant from the Junta de Extremadura Government in Spain, which was initially awarded in March 2018. In February 2020, W received a EUR5m loan from the Spanish bank, Santander in order to monetise the Grant and this has now been repaid in full.

On 17 May 2021, the Company completed a placement of 28,278,610 ordinary shares of 0.1p per share at 8p per Ordinary Share to raise GBP2.26 million. Under the Placing, subscribers were offered warrants to subscribe for new ordinary shares in conjunction with the Placing Shares on the basis of 1 Warrant for every 2 Ordinary Shares subscribed for. The Warrants are exercisable at any time in the two years following admission of the Placing Shares to trading on AIM at an exercise price of 12p per share.

22. SHARE WARRANTS / SHARE BASED PAYMENTS

 
2020 
                                          Weighted      Outstanding 
                                  average exercise   at 31 December                   2020 
                 Number issued               price             2020  Expiry Date   EUR'000 
Share Options 
2 December 
 2016              120,000,000                                    -   31/12/2020         - 
20 November 
 2018              150,000,000                           90,000,000   30/11/2021        69 
15 November 
 2019               43,800,000                                    -   30/11/2020         - 
                                ------------------  ---------------               -------- 
                                         GBP0.0055       90,000,000                     69 
                                ------------------  ---------------               -------- 
 
Share Warrants 
 
14 May 2018        307,605,430                          307,605,430   14/05/2023     1,440 
18 April 2019      400,000,000                          400,000,000   31/12/2021         - 
22 May 2019         71,428,568                           71,428,568   31/12/2021         - 
4 August 2020       27,777,775                           27,777,775   04/08/2023         - 
27 October 
 2020               96,000,000                           96,000,000   27/10/2025        17 
3 November 
 2020              481,389,374                          481,389,374   03/11/2025       477 
                                ------------------  ---------------               -------- 
                                         GBP0.0029    1,384,201,147                  1,934 
                                ------------------  ---------------               -------- 
2019 
                                          Weighted      Outstanding 
                                  average exercise   at 31 December                   2019 
                 Number issued               price             2019  Expiry Date   EUR'000 
Share Options 
2 December 
 2016              120,000,000                          120,000,000   31/12/2020        67 
20 November 
 2018              150,000,000                          150,000,000   30/11/2021       115 
15 November 
 2019               43,800,000                           43,800,000   30/11/2020         - 
                                ------------------  ---------------               -------- 
                                         GBP0.0062      313,800,000                    182 
                                ------------------  ---------------               -------- 
 
Share Warrants 
 
14 May 2018        307,605,430                          307,605,430   14/05/2023     1,440 
18 April 2019      400,000,000                          400,000,000   31/12/2021         - 
22 May 2019         71,428,568                           71,428,568   31/12/2021         - 
                                         GBP0.0040      779,033,998                  1,440 
                                ------------------  ---------------               -------- 
 

On 2 December 2016, Share Options were granted to the directors as follows:

 
Director           Number of Options  Exercise Price  Expiry Date 
Michael Masterman         20,000,000        GBP0.007   31/12/2020 
                          10,000,000        GBP0.008   31/12/2020 
                          10,000,000         GBP0.01   31/12/2020 
 
Byron Pirola              20,000,000        GBP0.007   31/12/2020 
                          10,000,000        GBP0.008   31/12/2020 
                          10,000,000         GBP0.01   31/12/2020 
 
David Garland             20,000,000        GBP0.007   31/12/2020 
                          10,000,000        GBP0.008   31/12/2020 
                          10,000,000         GBP0.01   31/12/2020 
 

The share options issued during 2016 have been valued at fair value at 31 December 2016 using the Black Scholes method and GBP60,000 (EUR67,000) has been recognised in administrative expenses in 2016 and a share based payments reserve of GBP60,000 (EUR67,000) created and included in the Statement of Other Comprehensive Income. The inputs used in calculating this include: 29.33% Volatility, 5% Risk-free interest rate, 0% Dividend Yield, 0.4770p Share price at the grant date.

These options expired on the 31 December 2020, none were exercised and therefore a transfer of EUR67,000 has been made from the share based payment reserve into retained earnings.

Further on 20 November 2018, Share Options were granted to Directors and Key Management Personnel as follows:

 
Director                  Number of Options  Exercise Price  Expiry Date 
Pablo Neira                      30,000,000       GBP0.0055   30/11/2021 
James Argalas                    30,000,000       GBP0.0055   30/11/2021 
Key Management Personnel         90,000,000       GBP0.0055   30/11/2021 
 

The share options issued during 2018 have been valued at fair value at 30 November 2018 using the Black Scholes method and GBP103,000 (EUR115,000) has been recognised in administrative expenses in 2018, included in the share based payments reserve and included in the Statement of Other Comprehensive Income. The inputs used in calculating this include: 20.79% Volatility, 3% Risk-free interest rate, 0% Dividend Yield, 0.5260p Share price at the grant date.

Two members of Key Management Personnel holding 60,000,000 Options left during 2020 and as such their options expired. Therefore a transfer of EUR46,000 has been made from the share based payment reserve into retained earnings.

Further on 15 November 2019, Share Options were granted to a related party of a Director as follows:

 
Director                  Number of Options  Exercise Price  Expiry Date 
Related party of Oscar           21,900,000       GBP0.0040   30/11/2020 
 Garcia (appointed 08 
 January 2020 / resigned 
 12 February 2021) 
 

The share options issued during 2019 have been valued at fair value at 15 November 2019 using the Black Scholes method and GBP1,400 (EUR2,000) has been recognised in administrative expenses in 2020, at the date Oscar Marin Garcia was appointed a Director, included in the share based payments reserve and included in the Statement of Other Comprehensive Income. The inputs used in calculating this include: 15.16% Volatility, 2.9% Risk-free interest rate, 0% Dividend Yield, 0.3450p Share price at the grant date.

These options expired on 30 November 2020, none were exercised and therefore a transfer of EUR2,000 has been made from the share based payment reserve into retained earnings.

No options have been exercised and the reserve balance is EUR69,000 (2019: EUR182,000) at 31 December 2020.

On 14 May 2018, 307,605,430 Share Warrants were issued to BlackRock as part of the consideration for the loan. These had an exercise price of 0.1p per share and expire on 14 May 2023.

These have been valued at 5% of the total loan value, $1,750,000 at an exchange rate of 1.355 on 14 May 2018 equalling GBP1,292,000 (EUR1,440,000) which were included within the value of the total loan costs that have been prepaid in 2018 and will be expensed across the term of the loan, currently 2 years remain.

On 4 August 2020, 27,777,775 Share Warrants were issued to Atlas Special Opportunities LLC as part of the consideration for the initial draw down of the convertible bond facility. The warrants have a 3 year expiry.

These have been valued at fair value at 4 August 2020 using the Black Scholes method and GBP1,000 (EUR2,000) this is considered to be immaterial and no adjustment has been made to the income statement. The inputs used in calculating this include: 33.12% Volatility, 5% Risk-free interest rate, 0% Dividend Yield, 0.15p Share price at the grant date.

On 27 October 2020, 96,000,000 Share Warrants were issued to BlackRock as part of the consideration for amending the agreement to allow the capitalisation (payment in kind) of interest due on 15 May 2020. The warrants have a 5 year expiry.

These have been valued at fair value at 27 October 2020 using the Black Scholes method and GBP15,000 (EUR17,000) has been recognised in administrative expenses in 2020, included in the share based payments reserve and included in the Statement of Other Comprehensive Income. The inputs used in calculating this include: 42.08% Volatility, 5% Risk-free interest rate, 0% Dividend Yield, 0.13p Share price at the grant date.

On 3 November 2020, 171,101,564 Share Warrants were issued to BlackRock as consideration for GBP150,000 (EUR166,000) the amendment fee to allow the capitalisation (payment in kind) of interest due on 15 August 2020. Further on 3 November 2020, 310,287,810 Share Warrants were issued to BlackRock as consideration for GBP280,000 (EUR311,000) the second incremental amendment fee. The warrants have a 5 year expiry.

These have been valued at GBP430,000 (EUR477,000) the total of the liability covered by the issue of the warrants. Which has been included within the value of the total loan costs that have been prepaid in 2020 and will be expensed across the term of the loan, currently 2 years remain.

23. FINANCIAL INSTRUMENTS

Financial risk management

Overview

The Group has exposure to the following risks arising from financial instruments:

   --      Market 
   --      Interest rate 
   --      Foreign currency 
   --      Credit 
   --      Liquidity 

This note presents information about the Group's exposure to each of these risks, the group's objectives, policies and processes for measuring and managing risk.

The Board of Directors determine, as required, the degree to which it is appropriate to use financial instruments to mitigate risk. Currently the Company's principal financial instruments comprise cash, borrowings and equity capital. The Company does not enter into complex derivatives to manage risk.

There is no material difference between the book value and fair value of the Group cash balances, trade and other receivables, trade and other payables or borrowings.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the return.

Due to the nature of the Group's operations, it will be mainly exposed to fluctuations in the price of tungsten, changes in foreign exchange rates and interest rates.

Interest rate risk

Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in interest rates. Management ensure fixed interest rates with good terms are agreed with all finance providers to mitigate this risk. The risk of significant fluctuation is therefore considered to be immaterial.

Foreign currency risk

The Group operates internationally and is exposed to foreign currency risk arising on cash and cash equivalents and receivables denominated in a currency other than the respective functional currencies of group entities. Primarily these transactions are denominated in GBP and US dollars.

The Group also has significant loans outstanding in US dollars. This exposes the group to currency risk as repayments of the loan are to be made in s currency different to the functional currency the Group is operating.

The following balances held in foreign currency at the reporting date are:

 
 Net foreign currency               Group                Company 
  financial (liabilities) 
  / assets 
                                 2020       2019       2020       2019 
                              EUR'000    EUR'000    EUR'000    EUR'000 
 GBP assets                        62        114         62        114 
 USD assets                         3      1,567          3      1,567 
 GBP liabilities                (688)      (381)      (434)      (130) 
 USD liabilities             (49,798)   (44,273)   (49,798)   (44,273) 
 AUD liabilities                  (3)       (17)        (3)        (4) 
                            ---------  ---------  ---------  --------- 
 Total net exposure          (50,424)   (42,990)   (50,170)   (42,726) 
                            ---------  ---------  ---------  --------- 
 

Sensitivity analysis

A 10 percent strengthening of the euro against the respective currencies at 31 December 2020 would have increased / (decreased) equity and profit and loss by the amounts shown below:

 
                          Profit and Loss            Equity 
 Group                       2020       2019       2020       2019 
                          EUR'000    EUR'000    EUR'000    EUR'000 
 GBP                           63         27         63         27 
 USD                        4,980      4,271      4,980      4,271 
 AUD                            -          2          -          2 
                      -----------  ---------  ---------  --------- 
 Total net exposure         5,043      4,300      5,043      4,300 
                      -----------  ---------  ---------  --------- 
 
                          Profit and Loss            Equity 
 Company                     2020       2019       2020       2019 
                          EUR'000    EUR'000    EUR'000    EUR'000 
 GBP                           37          2         37          2 
 USD                        4,980      4,271      4,980      4,271 
 AUD                            -          -          -          - 
                      -----------  ---------  ---------  --------- 
 Total net exposure         5,017      4,273      5,017      4,273 
                      -----------  ---------  ---------  --------- 
 

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counter party to a financial instrument fails to meet its contractual obligations.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

 
 Group                            Carrying Amount 
                                   2020      2019 
                                EUR'000   EUR'000 
 Trade and other receivables      1,586       941 
 Cash and cash equivalents          956     2,461 
                               --------  -------- 
                                  2,542     3,402 
                               --------  -------- 
 Company 
 
 Trade and other receivables         28        61 
 Cash and cash equivalents           65     1,671 
                               --------  -------- 
                                     93     1,732 
                               --------  -------- 
 

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The following are contractual maturities of financial liabilities at the balance sheet date:

 
 Group - 31         Carrying amount   Two months   Two - Twelve   More than 
  December 2020                          or less         months    one year 
                            EUR'000      EUR'000        EUR'000     EUR'000 
 Trade and other 
  payables                    6,266        6,266              -           - 
 Borrowings                  57,589        5,002            962      51,625 
                   ----------------  -----------  -------------  ---------- 
                             63,855       11,268            962      51,625 
                   ----------------  -----------  -------------  ---------- 
 Group - 31 
  December 2019 
 
 Trade and other 
  payables                    3,502        3,502              -           - 
 Borrowings                  48,373            2          4,059      44,312 
                   ----------------  -----------  -------------  ---------- 
                             51,875        3,502          4,059      44,312 
                   ----------------  -----------  -------------  ---------- 
 
 
 
 Company - 31       Carrying amount   Two months   Two - Twelve   More than 
  December 2020                          or less         months    one year 
                            EUR'000      EUR'000        EUR'000     EUR'000 
 Trade and other 
  payables                      184          184              -           - 
 Borrowings                  50.115            -            334      49,781 
                   ----------------  -----------  -------------  ---------- 
                             50,299          184            334      49,781 
                   ----------------  -----------  -------------  ---------- 
 Company - 31 
  December 2019 
 
 Trade and other 
  payables                      200          200              -           - 
 Borrowings                  44,273           --              -      44,273 
                   ----------------  -----------  -------------  ---------- 
                             44,473          200              -      44,273 
                   ----------------  -----------  -------------  ---------- 
 

APPIX 1 - JORC COMPLIANT MINERAL RESOURCE ESTIMATES

La Parrilla Proven and Probable Mineral Reserves - JORC 2012

 
            Tonnes         Grade   Metal Content     Grade   Metal Content 
              '000   WO(3) (ppm) 
            ------  ------------ 
                                       WO(3) (t)  Sn (ppm)            Sn (t) 
----------  ------  ------------  --------------  --------  ---------------- 
Proven       1,177           995           1,171       251               295 
Probable    28,577           928          26,511       111             3,156 
----------  ------  ------------  --------------  --------  ---------------- 
Total       29,754           931          27,683       116             3,451 
 

Note: The La Parrilla mine reserves are set out in the following table based on the optimal LOM Pit. Estimate for La Parrilla Deposit using a 330 ppm WO(3) Cut-Off Grade and 5% dilution. All tonnes quoted are dry tonnes. Differences in the addition of tonnes to the total displayed is due to rounding.

The La Parrilla JORC-compliant mineral reserves update was fully disclosed, with JORC Table 1 in a Company news release on 14 June 2017. Mr Adén Muñoz of AYMA Mining Solutions SL, a Spanish Mining Engineering company based in Seville was the Competent Person responsible for the La Parrilla Proven and Probable Mineral Reserves. The mineral reserves are based on indicated and measured resources prepared by Golder Associated in March 2017 (RNS, 11 May 2017).

Mineral Resources for La Parrilla Deposit Using a 400 ppm WO(3) Cut-Off Grade within Mineralised Domains - JORC 2012

 
Classification    Tonnage (Mt)  WO(3) (ppm)  Sn (ppm) 
---------------   ------------  -----------  -------- 
Measured                     1        1,115       278 
Indicated                   35        1,004       110 
Inferred                    13          974        97 
----------------  ------------  -----------  -------- 
                            49          998       110 
 

The La Parrilla JORC-compliant mineral resource update was fully disclosed, with JORC Table 1 in a Company news release on 11 May 2017. Mr Andrew Weeks (Golder Associates Pty Ltd) was the Competent Person responsible for the Mineral Resource Estimate for the La Parrilla deposit.

Régua JORC Compliant Mineral Resource Estimate reported at a 0.1% WO(3) cut-off grade

 
Category      Tonnes  WO(3) %  WO(3) metal 
                                      (ky) 
----------   -------  -------  ----------- 
Indicated     3.74mt     0.28         10.6 
Inferred      0.72mt     0.21          1.5 
-----------   ------  -------  ----------- 
Total         4.47mt     0.27         12.1 
 

The Régua JORC compliant mineral resource update was fully disclosed, with JORC Table 1 in a Company news release on 5 February 2020. Mr Andrew Weeks (Golder Associates Pty Ltd) was the Competent Person responsible for the Mineral Resource Estimate for the Régua deposit.

São Martinho Maiden JORC Compliant Mineral Resource Estimate

 
Category       Tonnes  Au (g/t)  Au Content  Cut-off 
                                       (Oz) 
----------   --------  --------  ----------  ------- 
                                             0.5 g/t 
Indicated     0.48 mt      1.03      17,363       Au 
                                             0.5 g/t 
Inferred      2.56 mt      1.05      94,624       Au 
-----------   -------  --------  ----------  ------- 
                                             0.5 g/t 
Total         3.04 mt      1.04     111,987       Au 
 

The São Martinho maiden JORC-compliant mineral resource update was fully disclosed, with JORC Table 1 in a W Resources Plc RNS announcement on 8 June 2016. Mr Jorge Peres (Golder Associates Pty Ltd) was the Competent Person responsible for the Mineral Resource Estimate for the São Martinho deposit.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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END

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June 04, 2021 02:00 ET (06:00 GMT)

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