W Resources Share Discussion Threads

[rodrod1] 19/2/2018 20:35

1st target T2, produces $20m Ebitda (2500tpa)

2nd Target is T3 is possibly 2020 and is 3500tpa

I do not see WRES having trouble repaying the capital from cashflow. WRES has proven its resource and has delivered top quality grade tungsten to its end users.

Off take agreements have been executed

We have the potential for up to Eu5m grant assisitance - to be announced this week?

Metso crusher will be on site April and that means significant production in 2018.

[2magpies] 19/2/2018 19:03

Thanks JAF .........

I mean marvelman!

Got any other aliases??

[jaf1948] 19/2/2018 16:33

Not totally meaningless, but I take your point.

[pwhite73] 19/2/2018 15:08

The figures and projections are meaningless.It's down to the minerals in situ. If it does become the largest tungsten mine in Europe all figures calculated so far will be blown away.

[marvelman] 19/2/2018 14:56

JAF

There are many companies that can show they are making a profit but are not solvent due to the need to repay legacy loans which are in excess of those profits. I am not saying however that WRES fits into that category as it is too early to assess but there is certainly very little room for those projections to be out including costs and price assumtions. In effect WRES is mortgaged to the hilt. Regards.

[jaf1948] 19/2/2018 14:41

marvelman,

Thanks for your comments. I am no accountant so I just assumed the $35m was a charge against profit (where does it get paid from then ?). I am not clever enough to do a cash flow projection but that is what is needed, especially how sensitive cash flow would be to any delays.

[marvelman] 19/2/2018 14:37

JAF

You appear to be including the capital loan repayment of $35 million as a charge against profit which of course it isn't. I would be more interested in the cash flow projections which are more critical to the survival of this now highly leveraged business. The warrants are a factor in that they will be converted into a hefty chunk of shares which Blackrock, as they have always done with other companies, will sell as and when with the effect of keeping the share price underwater for a somewhat lengthy period of time..

[jaf1948] 19/2/2018 14:24

I have just been looking at the August 2017 presentation on the WRES website, specifically slide 29. The figures there ($m) are:

2018: Interest repayment: -2.3 Net profit after tax: -2.3
2019: Interest repayment: -2.7 Net profit after tax: +8.5
2020: Interest repayment: -2.7 Net profit after tax: +10.2
2021: Interest repayment: -0.5 Net profit after tax: +15.0
2022: Interest repayment: 0.0 Net profit after tax: +28.8

Total interest payments are $8.2m (+ $1.4m transaction fees) and there is no mention of repayment of the loan. Net profit for the 5 years is $60.2m.

From last week's RNS, we know that interest is 12.6% of $35m for 5 years which is just over $22m plus the 'upfront fee' of $1.05m which is a $15m increase over the presentation figures. Ignoring the warrants (which only makes the situation worse) but including the repayment of the $35m loan by the start of 2023, I make Net Profit after tax for the 5 years not the $60.2m quoted, but nearer $10.2m (60.2-15-35).

Before someone mentions that Blackrock were happy with their Due Diligence, of course they were. If WRES succeeds, Blackrock wins. If WRES fails, Blackrock wins since the loan is secured. And, yes, Tungsten prices may improve but there is no certainty of that happening.

Please correct me if I am wrong on any of this.

[pwhite73] 19/2/2018 11:35

It's falling because of MM chicanery and profit taking. So long as it's not falling due to another placing the trend will be up.

[2magpies] 19/2/2018 11:31

well, you would.

You're a dinosaur, after all.

[tyranosaurus] 19/2/2018 10:57

I`m watching this space and all I see is the share price falling.

[rodrod1] 19/2/2018 09:18

Grant being approved will be a major boost .... MM told us to watch this space lol

[pwhite73] 19/2/2018 08:38

The loan money has been secured. What they need to do now is issue regular good operational news. If the not MM will just trash this back down to 0.40p.

[barony] 18/2/2018 16:40

Does anyone know how much we got for the limited quantity of tungsten we did sell prior to stopping production in order to use better plant?

[paddyfool] 18/2/2018 11:16

I would imagine that the loan has covenants which prohibit further equity raising. Or at least make it hard for the company to do so. The amount of capital loaned was increased to provide contingency. So yes there is risk if the engineering exercise fails or takes way too long. The lender will have done the DD and be comfortable that the risk of failure is minimal. The true risk sits in timing. I for one am relaxed about that. I hold 1 million warrants and 1 million shares. So these views are beyond academic!

[pwhite73] 18/2/2018 09:20

Irrespective of how wicked Blackrock are under no circumstances would they be loaning $35m if they had the sligthest inkling they may be not getting their investment back. The live issue here for shareholders is not whether or not tungsten/gold will be produced for I am certain it will be but the risk of further dilution.

The warrants carry a full dilution of 5% which is nothing to worry about. What is of concern is if the company still continues to place billions of discounted shares on top of the loan.

Normally loans of this size negate the need to issue further equity.

[jaf1948] 17/2/2018 20:39

rodrod1,

I totally agree with you - it comes down to how each of us evaluates the risk. If all goes to plan, then WRES is a winner.

[rodrod1] 17/2/2018 17:04

WRES have already been producing very high grade tungsten and tin at La Parrilla. The new equipment will significantly boost production levels in 12 months time.

If there was no risk here then the share price would be 3-4p. Things have never looked better for Wres. MM has a massive personal investment at risk: that suits me lol.

[jaf1948] 17/2/2018 16:51

My other worry is that Masterman has a terrible record for keeping to time-scales, usually ones that he has set himself. This has been a nuisance to shareholders up to now but nothing worse. Missing deadlines from this point on could start to become very expensive, hence my reference earlier to the unpublished penalty clauses.

[marvelman] 17/2/2018 15:17

Too true Jaf. Those of us who have been in the markets a while will have at some time have felt the pain of Blackrock’s “philanthropy”.Like a fine blade going into the body of a company but a jagged edge ripping the guts as they pull out. I could not have imagined a worse scenario than the one Masterman has achieved in his desperation for a deal. Of course the money raised from the many equity fundings are also a distant memory. I do wonder whether their disastrous VAT audit which cost them 140k has been resolved and their VAT status regained. If not it will be a very expensive build with no ability to reclaim input tax.

[ny boy] 17/2/2018 14:42

falia, you might be better off buying GUN next week 😉

[jaf1948] 17/2/2018 14:14

There are also the penalty clauses, which always exist but were not mentioned in the RNS. As we all know, mining projects often hit delays - what will happen if in year 2, there is insufficient free cash. No more dilution ? No more cash calls ? I wouldn't put money on it.

People are saying that it is Blackrock and how good they are and how good it is for WRES to be supported by such a company. Actually, Blackrock are good for Blackrock, they are not there out of any philanthropic desires. Consider their position at Carillion - they both owned Carillion shares and were also shorting them at the same time. Whatever happens, Blackrock will not lose out at WRES - I cannot say the same for WRES at this point until there is some real production and revenue.

[marvelman] 17/2/2018 09:50

Blackrock loans cetainly are. $1 million in "arrangement" fees, £5 million in annual interest and 5% of the company in warrants....and all secured on the company. They had better be earning megga bucks to pay that back let alone the $35 million capital. And there will be a constant line of stock keeping the share price down once they get their hands on those warrants.

[barony] 17/2/2018 09:11

However, I am happy the finance is there and I am sure we will look to pay it off as economically and quickly as possible.