w resources · market-based valuation in the range of 0.88p/sh to 1.46p/sh. under a higher under a...

FOR QUALIFIED AND PROFESSIONAL INVESTORS ONLY. *Disclaimer: Attention of readers is drawn to important disclaimers printed at the end of this document. This document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities, or related financial instruments. It does not constitute a personal recommendation as defined by the Financial Conduct Authority, nor does it take account of the particular investment

objectives, financial situations or needs of individual investors.

Contacts Analysts:

Phil Swinfen

[email protected]

+44 (0) 20 7186 9008

Nick Chalmers

[email protected]

+44 (0) 20 7186 9003

Broking:

Alex Wood

[email protected]

+44 (0) 20 7186 9004

Damon Heath

+44 (0) 20 7186 9952

[email protected]

W Resources*

La Parrilla gets to the “point”

WRES is at a pivotal point with its 100%-owned La Parrilla tungsten mine in Spain going through final commissioning. Production is underway with ramp-up over the next 6 months. Capital spend for the first phase is virtually complete and the project spend is tracking below budget. WRES will now focus on completing commissioning of the new concentrator and starting commercial production in 2020. At this critical time, execution risk is diminishing week by week and WRES is on the cusp of delivering one of the world’s lowest-cost tungsten projects. Post ramp-up, attention will turn to T3.5 expansion and the development of Régua in Portugal.

► Down to the short strokes. There are 3 main cogs to La Parrilla’s plant: the crushing/screening circuit has been fully commissioned at full capacity, the jig & mill plant is undergoing final commissioning at near capacity; and finally, the concentrator plant is due to start commissioning in mid-July. Tungsten concentrate is already being produced at a rate of c.20tpm with the jig & mill plant pre-concentrate being processed through the existing concentrator plant. Once the new concentrator is fully commissioned, the product will be redirected to the new plant and production ramp up will commence throughout Q4 2019 and Q1 2020.

► Low risk approach. Commissioning is always a critical phase, but we believe that WRES may have a smoother path than most. Small-scale processing was undertaken in 2014-2015 and WRES is familiar with La Parrilla ore and how it behaves throughout the flowsheet, including optimising the flow of different size fractions and recovery through to a final saleable tungsten concentrate. The new concentrator plant is similar to the existing concentrator plant so it's more a matter of scaling up the process. We visited La Parrilla in June 2019. We were impressed by construction and commissioning progress to date and the quality and experience of the operating team on site. It’s clear that substantial thought and future-proof planning has been employed in the site layout and plant design. La Parrilla also benefits from a stable jurisdiction and first-class infrastructure.

► Phased Expansion. Production kicks off with the $27m (capex sunk) T2 phase: 2Mtpa ROM producing 2,700tpa WO3 concentrate or 180,000mtu contained WO3. After two years at T2, the project will be expanded to the $20m T3.5 phase: 3.5Mtpa ROM producing 4,000tpa WO3 concentrate or 255,000mtu. For T2 at our base-case $260/mtu we forecast project-level revenue of c.$40m pa, and EBITDA of $20m pa. Post T3.5, revenue increases to c.$57m and EBITDA of $29m p.a. La Parrilla capital intensity is the lowest in the industry bar none.

► Off-take & funding. Two off-take agreements are in place with major tungsten suppliers, covering 80% of T2 production. We see La Parrilla as an important source of tungsten ex-China and expect T3.5 off-take to be well covered. The T2 phase was funded with a $35m loan from Blackrock. Once La Parrilla is in commercial production and de-risked we see opportunities to refinance this debt at more competitive rates, perhaps in conjunction with extra funding to accelerate T3.5, which otherwise could be funded from internal cashflow. In a demonstration of regional government support, WRES has been granted a €5.3m grant from the Junta de Extremadura Government, payable upon La Parrilla plant completion.

► High margin project. At a forecast $94/mtu opex after tin credits, La Parrilla will be one of the lowest cost tungsten producers globally. Despite a low grade relative to other deposits, the simple mineralogy and processing drives efficient liberation and low processing costs.

► Tungsten. The European APT price has recently dipped to $230/mtu but longer term we see it as being supported at higher levels. Tungsten supply growth looks limited with a lack of quality, funded projects in the pipeline and a crackdown on unregulated small-scale production in China. Future demand appears robust, tied to GDP growth and continued industrialisation with most tungsten used to make tungsten carbides.

► Valuation. We see fair value at 0.75p/sh based on 0.8x our NPV8% US$115m for La Parrilla using a conservative flat $260/mtu price (5-year average) and SotP adjustments, an unchallenging P/NAV of 0.56. At 1x NPV and at $300/mtu, this increases to 1.40p/sh (0.39x P/NAV). We include only nominal value for Régua at this stage which has potential to boost our valuation considerably. Given that WRES will soon be a fully-ledged producer we also explore a market-based exit multiple; using steady-state EBITDA, multiples of 3x-5x point to 0.87-1.46p/sh at base-case $260/mtu or 1.27-2.12p/sh at a more bullish $325/mtu price assumption.

WRES has made considerable progress in funding and executing what should become one of the world’s lowest-cost new tungsten mines. As commissioning and ramp-up risk diminishes, we expect the company’s shares to be subject to an overdue re-rating as a producer.

31st July 2019

Mining & Metals

Market data

Ticker WRES

Price (p/sh) 0.42

12m High (p/sh) 0.62

12m Low (p/sh) 0.40

Shares (bn) 6.03

Mkt Cap (£m) 25.3

Market AIM

Source: LSE

Description

W Resources is a European mining company

with tungsten, tin and gold assets in Spain

and Portugal. The main focus is the La Parrilla

tungsten and tin mine in Spain which is

currently undergoing final commissioning. La

Parrilla will be one of the lowest cost

tungsten producers globally.

www.wresources.com

Board & key management

Chairman Michael Masterman

Non-Exec Byron Pirola

Non-Exec David Garland

Non-Exec James Argalas

Non-Exec Pablo Neira

David Garland

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W Resources*

31st July 2019 2 FOR QUALIFIED AND PROFESSIONAL INVESTORS ONLY

Contents

Investment summary............................................................................................. 3

Expansion strategy .............................................................................................. 7

Timeline - commissioning nearing completion ................................................... 8

Valuation discussion ............................................................................................ 12

Sum of the parts valuation ................................................................................... 12

Sensitivity analysis ................................................................................................ 14

Forward looking market valuation .................................................................... 15

Key assumptions ............................................................................................... 15

Project level metrics ......................................................................................... 16

La Parrilla - peer context ...................................................................................... 19

Tungsten ............................................................................................................. 25

La Parrilla overview ............................................................................................. 29

Recap of the Financial Investment Decision report .......................................... 29

Location and infrastructure .............................................................................. 31

Brief project history. ......................................................................................... 32

Geology and mineralisation. ............................................................................. 32

Resources .......................................................................................................... 33

Reserves ............................................................................................................ 33

Mining ............................................................................................................... 33

Processing ......................................................................................................... 34

Permitting and regulatory framework. ............................................................. 35

Régua – organic tungsten growth ........................................................................ 36

Other assets: ........................................................................................................ 37

São Martinho .................................................................................................... 37

Tarouca - tungsten in Portugal. ........................................................................ 37

Board ................................................................................................................... 38

Senior Management ......................................................................................... 39

Disclaimer ........................................................................................................... 40

W Resources*


Investment summary

La Parrilla’s inherent advantage ► Low capital intensity. La Parrilla has the lowest capital intensity in the sector -

$110/mtu for the T2 phase and $208/mtu for the total ramped up development at T3.5, an order of magnitude lower than the $461/mtu sector average. The low cost of T2 ($28m) enabled WRES to secure debt financing to cover the entire phase. The low capex is driven by location, infrastructure, favourable metallurgy and phased development. La Parrilla was previously an operating mine, a brownfields site where primary infrastructure was already in place including site offices, access roads (7km to main highway), water supply and connection to grid power. Mining does not require a large pre-strip for T2 and the simple metallurgy facilitates early liberation at a coarse size fraction, meaning that a simple, low-cost gravity flow sheet can be employed.

► Low opex. Opex is forecast at $94/mtu after tin credits which positions La Parrilla in the lower quartile of the cost curve. The coarse-grained scheelite mineralogy hosted by quartz veins lends itself to efficient liberation of tungsten at a coarse particle size, with the light shale host rock readily rejected. The ROM grade is easily upgraded 2.5x to a typical concentrate feed grade with only minimal processing. This ease of liberation means that approximately 80% of the tungsten is liberated in the -8mm to 1mm size range, i.e. the size range of the pre-concentrate produced after passing through the secondary crushing plant. There is no requirement for power intensive fine grinding.

► High margins. Low opex translates to high margins. At our European APT price assumption of $260/mtu La Parrilla has a cash margin of $114/mtu higher than the majority of high-grade operations (average $77/mtu).

Figure 1 - Opex vs capital intensity

Source: Shard Capital, Company Reports

WRES owns 100%. ► WRES has managed to retain a 100% interest in La Parrilla even after financing

the T2 phase into production. This gives investors leverage and pure-play exposure to tungsten and exposure to the economics of the whole project.

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W Resources*


Value ► We see fair value at 0.75p/sh based on 0.8x our La Parrilla NPV8% $115m (11-

year LOM) using a flat forward European APT tungsten price of $260/mtu in-line with the 5-year average APT price. We add to this nominal value for WRES’s other assets, along with corporate adjustments. We view this as a conservative valuation. Our fair value risked SotP implies that WRES is currently trading at an unchallenging P/NAV of 0.56. Incorporating La Parrilla at full 1x NAV increases our SotP to £74m or 1.00p/sh.

Future market-based exit value. ► We see scope for the company to be rated more in line with market metrics. At

our base-case European APT price assumption of $260/mtu we forecast average steady-state EBITDA of £20m at the corporate level. Based on an EBITDA sector multiples (single asset miners) of 3x to 5x this points to a market-based valuation in the range of 0.88p/sh to 1.46p/sh. Under a higher tungsten price outlook ($325/mtu), 3x to 5x EBITDA generates an indicative range of 1.27p/sh to 2.12p/sh.

Price & expansion leverage ► For T2 at our base-case flat $260/mtu we forecast project-level annual

Revenue of c. $40m, and EBITDA of $20m. Post T3.5 expansion, this increases to revenue of c.$57m, EBITDA of $30m and FCF of $21m p.a. This is more than sufficient to service debt whilst building cash resources.

► Under a much higher tungsten price scenario ($325/mtu) these forecasts increase to T2 level annual Revenue of c. $47m, and EBITDA of $30m. Post T3.5 expansion, this increases to revenue of c.$66m, EBITDA of $42m and FCF of $31m p.a.

Tungsten has scope for further price increases ► We see the tungsten price as well supported at current levels with

considerable upside given supply issues from China, the major producer (environmental legislation), limited availability of stocks, growing downstream demand and the limited number of quality new projects in the pipeline. We see further restrictions on tungsten exports out of China and limited sources of major supply ex-China. This is likely to exacerbate the scramble from end-users for security of supply outside of China. Tungsten is on the EU critical supply list. Long term, GDP growth and continued industrialisation are likely to remain positive drivers for tungsten demand. We see recent price weakness as a temporary reaction to increased inflow of APT stocks within China.

Positive site visit. ► We visited the La Parrilla site in June 2019. We were impressed by construction

and commissioning progress to date plus the quality and experience of the operating team on site. It’s clear that substantial thought and future-proof planning has been employed in the site layout and plant design. We explored commissioning challenges with the team, and we left reassured that plans are in place to tackle a range of potential commissioning/ramp-up teething issues. A key takeaway is that the plant has been designed with significant flexibility, especially regarding the planned T3.5 expansion.

W Resources*


La Parrilla is on the cusp of commercial production. ► The La Parrilla plant is undergoing final commissioning, with ramp-up from Q3

2019. We expect La Parrilla to reach T2 production rate by the end of Q2 2020.

Execution risk is diminishing. ► Commissioning and ramp-up is clearly a critical phase. However, there are a

few points that lead us to believe that WRES may have a smoother path than most. WRES is familiar with the La Parrilla ore having operated a processing operation in 2014 and 2015. Therefore, the team has direct experience of how the ore behaves throughout the flowsheet, including optimising the mass split into different size fractions and recovery through to a final tungsten concentrate. The new concentrator plant is similar to the existing concentrator plant so it’s more a matter of scaling up the process. Delays and issues are still possible, but we see considerably less risk than a Wolf Minerals / Hemerdon type start-up.

Within budget and virtually on time. ► La Parrilla has been progressed to the commissioning stage within the stated

T2 budget of $28m. The project is running almost to schedule but there have been a few delays along the way. The crusher plant is operating at design capacity, but completion of jig plant construction was delayed at the end of 2018 due to delays in receipt of fabricated steel. On the concentrator front, final commissioning has been slightly delayed by the MCC (Motor Control Centre), which was due to be delivered on site in mid-July. The original timeline was completion of jig and mill plant construction in Q4 2018, which ended up being completed in late March. The original plan for the concentrator plant was Q1 2019 but this will now be completed in July 2019. In the context of the mining industry, the delays have been minor, in our view.

Learning from the demise of Wolf. ► WRES has had the opportunity to learn from the Wolf Minerals failure. WRES

purchased the lab and the spirals from Hemerdon and took on some key staff. The geology is different, thus the key issues faced by Wolf are not likely to be issues at La Parrilla. The WRES team is prepared to avoid the problems faced by Wolf: Crusher availability, ore variability, excess wear and excessive fines.

Focus will soon turn to expansion ► Once the T2 phase (ROM 2Mtpa, 2,700tpa tungsten concentrate, 180,000mtu

WO3 contained tungsten) is ramped up, attention will turn towards execution of the T3.5 expansion at 3.5Mtpa ROM. This will increase production to >4,000tpa of tungsten concentrate (255,000mtu WO3).

Producer re-rating pending. ► WRES’s market value has not yet been subject to the re-rating that we typically

observe as a company moves from development into production. Post successful commissioning, we believe that the company will have a higher profile and the shares potentially re-rate to reflect the producer status and onset of cash flow.

Future dividend payer? ► Ultimately if the company’s plans unfurl as projected, we see WRES as having

potential to join the select few dividend-paying junior mining/resource companies on the LSE. We do not see the company adopting a dividend policy until the T3.5 expansion has been completed and subject to debt service obligations but post T3.5, the ongoing capex requirement is minimal, and we see cash building at a level able to sustain dividend payments thereafter.

W Resources*


Régua provides near-term organic growth ► WRES also has a 100% interest in Régua, a tungsten deposit in Portugal. Régua

hosts a high-grade resource (3x the grade of La Parrilla) and WRES is planning to start up an underground mining operation using adits. The plan and key numbers have not been finalised yet but WRES expects capex of €4-6m, first ore in Q1 2020 and a 20-year LOM. The plan is to dismantle the existing concentrator plant at La Parrilla and transport it to Régua. WRES has signed a contract for ore haulage and crushing. Régua has the potential to substantially increase WRES’s tungsten output and boost our valuation; we currently assign only a nominal value to the project in our valuation but recognise that it represents an important part of the company’s growth strategy.

W Resources*


Expansion strategy

WRES is pursuing a staged expansion strategy at La Parrilla, starting off with a low capital, scalable plant

► T2 (Status: commissioning) - the first phase, currently commissioning, comprises ramping up production to 2Mtpa ROM. T2 has involved the construction of a new processing plant, including the new crushing circuit, jig and mill plant, and new concentrator plant. T2 results in the production of c.2,700tpa of tungsten concentrate (180,000mtu WO3), and c.400tpa of tin concentrate. The total capex is $28m, of which only about 5% remains to be spent as of early July.

► T3.5 (status: future expansion). T3.5 expansion is based on ramping up ROM throughput to 3.5Mtpa. This will be facilitated by an upgrade which essentially doubles crushing and screening circuit capacity. T3.5 also requires the addition of an X-ray ore sorter, upgrades to power and water and raising of the tailings dam walls. The T3.5 plan will increase production to >4,000tpa of tungsten concentrate (255,000mtu WO3), and c.300tpa of tin in concentrate. Capex is estimated at $20m by WRES.

► The plant has been designed for expansion. The crushing and screening circuit footprint has been designed for T3.5 expansion. The addition of an ore sorter will result in substantial mass rejection. Consequently, the jig/mill plant and the concentrator plant do not require expansion for the T3.5 stage. However, there are extra slots available for more spirals if needed.

Figure 2 - Comparison of T2 and T3.5 phases

Source: Shard Capital estimates, WRES

W Resources*


Timeline - commissioning nearing completion Commissioning is well advanced at La Parrilla and is now on the cusp of ramping up production. The current status is as follows:

► Crushing and screening. First ore was fed to the crusher plant in December 2018 and circuit can run to capacity.

► Jig and Mill plant - mechanical completion in April 2019 and first ore feed to the plant commenced in late May 2019. Commissioning is in the final stages.

► Mining. First T2 blast completed on the 30th April.

► New concentrator plant. Construction completion of the La Parrilla concentrator plant is imminent with the commencement of commissioning on track for mid-July 2019. The concentrator plant is comprised of three buildings:

● Spirals and shaking tables building. Primary construction is complete.

● Floatation Magnetic and Electrostatic Separation building (FME). Completion scheduled for early July.

● Motor Control Centre (MCC). Commissioning in mid-July.

► Existing concentrator plant. Currently, concentrate from the new jig and mill plant is being trucked to the existing La Parrilla concentrator plant which has now moved to 24-hour operation. Once the new concentrator plant is commissioned and operating to performance, WRES plans to decommission the existing concentrator plant and transport it to Régua.

► Production build-up. Production for July remains in line with previous company guidance of 20t of WO3 concentrate. WRES expects first production from the new concentrator in September 2019 with production ramping up steadily through the December quarter. We expect design capacity and full steady state production from Q2 2020, with only fine tuning and optimisation required after this period.

Figure 3 - Commissioning and ramp up timeline

Source: WRES

W Resources*


Figure 4 - The site visit reinforced view that final commissioning proceeding according to plan

Source: Shard Capital, WRES

W Resources*


Off-take secured for 80% of production ► Two off-take agreements: 80% of T2 production. After the finalisation of the

$35m debt facility in February 2017, WRES announced that it had signed two major long-term off-take agreements. The first off-take agreement is with Wolfram Bergbau und Hütten AG, (“WBH”), the largest tungsten processing company in Europe, and the second is directly with a leading supplier to the USA tungsten markets. The offtake agreements cover the initial T2 development of La Parrilla, covering approximately 80% of the planned product tonnage from this phase. Assuming 2,700tpa of tungsten concentrate, this implies that c.2,160tpa of concentrate is covered by off-take.

► WBH. WBH is one of the world’s leading suppliers of high-quality tungsten-based powders. WBH sources raw tungsten material (scheelite concentrate) from its own mine at Mittersill in Austria. WBH operates a refinery operation in St. Martin im Sulmtal, Austria, where the scheelite concentrate from its own mine and 3rd party tungsten concentrates are refined into a pure intermediate product, ammonium para tungstate (APT). The APT is then used to produce a variety of high-end tungsten oxide, tungsten metal and tungsten carbide powders for the powder metallurgical industry. St. Martin im Sulmtal is the only integrated tungsten smelting plant outside Asia and Russia.

► T3.5 off-take should be well covered. We see La Parrilla as an important source of tungsten concentrate for companies such as WBH, given that a considerable component of WBH’s purchased concentrates are sourced from cooperative or small-scale mines in Africa and South America. La Parrilla has the advantage that the traceability throughout the supply chain is very clear, being based in a European country.

Regional Government Grant demonstrates support ► €5.3m grant. In May 2017, WRES’s wholly-owned subsidiary in Spain, Iberian

Resources Spain S.L applied for grants from the Extremadura Regional Government for a percentage of the plant and facilities package (i.e. crusher, jig & mill, and concentrator), which at the time was defined at €19.5m. In March 2018, the company announced that it had been formally awarded €5.3m of grant funds.

► Endorsement. The grant is testament to the company’s strong local community and government relationships, and the extra funding will be advantageous during the ramp up phase.

► Extra funding at a critical time. The grant will be paid by the Junta de Extremadura Government to Iberian Resources Spain S.L upon the fulfilment of various conditions including the completion of the plant and facilities and meeting the target employment levels, as outlined in the application. WRES has already met the employment criteria and plant completion is imminent. WRES expects the grant to be received in Q4 2019.

► Advance. In May 2019, WRES secured a €3m loan facility with a local bank that provides an advance against the €5.3m grant. The €3m loan has an interest rate of 1.75% p.a for a term of 15 months and WRES views it as a cost-effective way to gain advanced access to the grant at a pivotal point in the company’s development.

W Resources*


Blackrock US$35m debt In February 2018, WRES finalised a US$35m loan to fund T2 development of La Parrilla with funds managed by BlackRock Financial Management Inc.

Terms: The loan has a 5-year term and WRES has the right to repay the loan after two years (5% premium), three years (3% premium) or four years (no premium). Repayment will be made by a free cash-flow sweep and the loan is subject to an average 5-year interest rate of 12.4%. First year interest is Payable in Kind ("PIK") and added to the principal, while 50% of the second-year interest is PIK and 50% is payable in cash. Lenders fees amounted to 3% upfront, and warrants totalling 5% of W’s fully diluted equity at the time. Outstanding Blackrock warrants amount to 307.6m at 0.001 exercise price and expiry 14/5/2023.

Drawdown. The loan is now fully drawn; the first tranche ($13.125m) was drawn in February 2018 and the second tranche ($21.875m) was drawn down in May 2018.

Refinancing. Given the fairly punitive interest rate on the loan, we expect WRES to explore refinancing options once La Parrilla is ramped up and de-risked. We would then expect more competitive debt terms to be available. This could also be an opportunity to refinance and provide a portion of the funds required to develop T3.5 ($20m) or Régua.

W Resources*


Valuation discussion

Sum of the parts valuation

Given that WRES is currently at the advanced commissioned stage and prior to full ramp up, our preferred valuation approach is a sum of the parts “SotP” based primarily on NPV analysis of La Parrilla. We base our analysis on the FID report covering the first 6 years of LOM, in conjunction with recent company updates/guidance and our own assumptions for La Parrilla’s full 11-year LOM.

► Risked NAV. We see fair value at 0.75p/sh based on 0.8x our La Parrilla NPV8% $115m (11-year LOM) using a flat forward APT tungsten price of $260/mtu based on the 5-year average APT price. We add to this nominal value for WRES’s other assets, along with corporate adjustments. Our fair value risked SotP implies that WRES is currently trading at an unchallenging P/NAV of 0.56. We view this risked valuation as conservative.

► Unrisked NAV. On the same basis, but incorporating La Parrilla at full 1x NPV ($115m), produces an unrisked SotP of £70m (US$91m) or 1.00p/sh.

Figure 5 - Sum of the parts valuation

*forecast cash at end June 2019 Source: Shard Capital estimates

► Summary of upside drivers. Our valuation is conservative given that:

● We risk La Parrilla’s NPV at 0.8x

● We use a conservative $260/mtu European APT price which until recently was below June spot price at $280/mtu. The current July 2019 price has moderated to $230/mtu which we see a short-term dip relating to an inflow of stocks into the market. Furthermore, we assume flat-forward pricing and do not incorporate any escalation in the APT price. This is approximately $100/mtu below the APT price of $350/mtu 12 months ago.

● We include only nominal value for Régua at this stage, based on a resource multiple. Due to a few moving parts (opex, capex) and pending finalisation of the development plan, we do not currently use DCF methodology. However, WRES indicates first ore could be as soon as Q1 2020. Given the high grade of the deposit, we expect that incorporation of a Régua NPV would boost our valuation considerably.

NAV Valuation

Unrisked Risked

Disc Rate US$m £m p/sh Multiple US$m £m p/sh

La Parril la 8% 115 88 1.26 0.80x 92 71 1.01

Other projects:

Régua nominal 10 8 0.11 10 8 0.11

Gold & non-core nominal 2.4 1.8 0.03 2.4 1.8 0.03

Sub-total 128 98 1.40 105 80 1.15

Corp Adjustments £m p/sh £m p/sh

Cash* 3.2 2.4 0.03 3.2 2.4 0.03

Cash in from options/warrants 5.9 4.6 0.06 5.9 4.6 0.06

Debt (39.0) (30) (0.43) (39.0) (30.0) (0.43)

Forward Corporate G&A / Other (6.4) (5) (0.07) (6.4) (4.9) (0.07)

NAV $91m £70m 1.00 $68m £53m 0.75

Shares on issue (basic) 6,030.7m

Shares on issue (diluted) 7,011.1m

Unrisked NPV - upside to share price 200%

Unrisked P/NAV 0.42

Risked P/NAV 0.56

W Resources*


► NPV multiple. We generally value advanced exploration, developers and new producers anywhere in the range of 0.1-1.0x NAV, in line with industry averages and reflecting the hurdles to achieving commercial production and funding risk. We risk our La Parrilla NPV at 0.8x. Although the T2 phase is in the commissioning stage and WRES is effectively a producer, this multiple reflects the remaining ramp up phase, the execution of the T3.5 expansion and the fact that we have made additional assumptions to model the full 11-year LOM at La Parrilla. The current Ore Reserve supports an 11-year LOM, but the 2017 FID covered only the first 6-years in order to present a low-risk scenario to secure debt funding. The transition to an 11-year LOM requires a limited drill programme to convert Inferred Resources to a higher category. Whilst we have confidence in the resource conversion, we retain a lower multiple at this stage to reflect our conservative stance.

► SotP adjustments. We include a nominal value for Régua based on a £5/mtu resource multiple equivalent to 75% of the average market value per mtu derived from WRES and Ormonde Mining’s current market value. We will move to a DCF-based approach when more clarity on development metrics emerge. We assign a nominal value for the São Martinho gold project using a low $20/oz resource multiple and the 2016 JORC resource. We further adjust for our estimate of balance sheet cash at the end of June 2019, cash in from options/warrants and the company’s current £30m debt position. The debt reflects the $35m Blackrock loan and interest added to the principal. We adjust for our NPV8% estimate of future corporate G&A costs. We use fully-diluted share capital including warrants and options.

► Discount to unload. Whilst WRES is effectively a producer now, the company is still going through final commissioning and will start to ramp up production over the next 6 months. As such, we believe that the developer to producer re-rating for WRES is still pending. Although La Parrilla is a relatively simple operation and the company has prior experience of processing La Parrilla ore, commissioning remains a key risk phase. La Parrilla does not have any of the same issues but investors will be still be cognizant of the Wolf Minerals failure at Hemerdon. By the end of 2019 WRES should be processing at a run-rate equating to full T2 capacity and project execution risk should have diminished considerably. At this point, we would expect the market discount to NPV to reduce and the company to be suitably re-rated.

► Longer mine life. The current La Parrilla reserve supports an 11-year LOM. We see scope for further resource to reserve conversion and a considerably longer mine life. Our NPV8% increases to $154m with an addition of 5 years to the LOM.

► Two production assets? WRES plans to put Régua into production in 2020, by starting small-scale underground mining and relocating the existing concentrator plant at La Parrilla to Régua. This would increase the company’s production profile and contribute to economics not currently captured by our valuation.

► Accelerated timeline. Potential exists, subject to funding and permits, to accelerate T3.5 development. Our timeline remains conservative. We assume T3.5 is at full capacity by 2023 but given that only limited expansion work is required, this could come through earlier, e.g. 2022.

► Refinancing. Once La Parrilla is running at T2 capacity and the project is de-risked, there could be an opportunity for WRES to investigate refinancing the Blackrock debt, which carries a 12.5% average interest rate. We believe the company will be able to secure a cheaper financing package on the back of a lower risk, producing asset.

W Resources*


Sensitivity analysis

Figure 6 - Sensitivity analysis – Unrisked NPV basis

Source: Shard Capital estimates

Figure 7 - Sensitivity analysis – Risked NPV basis – La Parrilla at 0.8x NPV


La Parrilla unrisked NPV (US$m) WRES Unrisked SotP (p/sh) *

11502% 5% 8% 10% 12% 100% 5% 8% 10% 12%

200 72 60 54 48 200 0.53 0.40 0.33 0.27

225 99 83 74 67 225 0.82 0.65 0.56 0.47

250 125 106 95 86 250 1.11 0.90 0.78 0.68

260 136 115 103 93 260 1.23 1.00 0.88 0.77

275 152 129 116 105 275 1.40 1.15 1.01 0.89

300 178 151 137 124 300 1.69 1.40 1.24 1.10

325 205 174 157 143 325 1.98 1.65 1.47 1.30

350 231 197 178 161 350 2.27 1.90 1.69 1.51

375 257 220 199 180 375 2.56 2.15 1.92 1.72

400 284 242 219 199 400 2.85 2.40 2.15 1.93

Discount rate (%) Discount rate (%)Tu

ngs

ten

AP

T p

rice

$/m

tu

6083

106 115129

151174

197220

242

0

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m)

Long-term tungstgen APT assumption ($/mtu)

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WR

ES S

otP

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h)


La Parrilla Risked NPV (US$m) WRES Risked SotP (p/sh)

9201% 5% 8% 10% 12% 75% 5% 8% 10% 12%

200 58 48 43 38 200 0.37 0.27 0.21 0.16

225 79 66 60 54 225 0.61 0.47 0.39 0.33

250 100 85 76 69 250 0.84 0.67 0.58 0.49

260 109 92 83 75 260 0.93 0.75 0.65 0.56

275 121 103 93 84 275 1.07 0.87 0.76 0.66

300 143 121 109 99 300 1.30 1.07 0.94 0.83

325 164 139 126 114 325 1.54 1.27 1.12 0.99

350 185 157 142 129 350 1.77 1.47 1.30 1.16

375 206 176 159 144 375 2.00 1.67 1.48 1.32

400 227 194 175 159 400 2.23 1.87 1.66 1.49

Discount rate (%)Discount rate (%)

Tun

gste

n A

PT

pri

ce $

/mtu

4866

85 92103

121139

157176

194

0

50

100

150

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250

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La P

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illa

NP

V (

$m

)


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WR

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otP

(p/s

h)


W Resources*


Forward looking market valuation NPV remains our primary valuation tool but as WRES becomes an established producer, we see scope for the company to be rated more in line with market metrics. In this regard we look to average steady-state EBITDA as a reference metric.

► Current APT price assumption. Based on our base-case European APT price input of $260/mtu we forecast average steady-state EBITDA of £20m at the corporate level. Using EBITDA multiples of between 3x and 5x this points to an implied valuation in the range of 0.88p/sh to 1.46p/sh. See table below.

► At higher prices. We have been conservative in our commodity price inputs. Assuming the long-run average European APT price settles at $325/mtu, our average steady-state EBITDA forecast increases to £30m, with an implied valuation at 3x to 5x EBITDA in the range of 1.27p/sh to 2.12p/sh.

Figure 8 - Forward looking market “EBITDA” valuation – in pence per share


Key assumptions La Parrilla parameters. Our assumptions for the first 6 years of LOM follow the company’s FID report closely, updated to fit the current development timeline.

► Production. We assume the remainder of 2019 is a ramp up year, with ROM tonnage at 300kt for H2 2019. This equates to 350t of concentrate. We see 2021 as the first full year at 2Mtpa ROM and c.2,700tpa concentrate. We assume the T3.5 expansion to 3.5Mtpa ROM kicks in with 2022 with full 3.5Mtpa from 2023. We assume ore tonnes, strip ratios, grade profiles and recoveries as per the FID. We assume a transition to the 11-year mine plan with a LOM strip ratio of 1.78.

► Costs. Total capex of US$48m phased, $27.2m for T2 (already sunk) and $20.8m for T3.5. We assume average steady-state sustaining capital of c.$1.3m pa. Opex assumptions in line with the FID - total opex at $94/mtu post royalties and tin credits.

► Price deck. We assume a European APT (ammonium para tungstate) price of $260/mtu flat long-term based on the 5-year average price. We view this as conservative given that the European APT price has running at $280/mtu recently and was at highs of $355/mtu last year. We model La Parrilla WO3 concentrate achieving 80% of the prevailing European APT price.

APT Price EBITDA multiple

$/MTU 3x 4x 5x

200 12 0.52 0.69 0.86

225 16 0.67 0.89 1.11

250 19 0.82 1.09 1.36

260 20 0.88 1.17 1.46

275 23 0.97 1.29 1.61

300 26 1.12 1.49 1.86

325 30 1.27 1.69 2.12

350 33 1.42 1.89 2.37

375 37 1.57 2.09 2.62

400 40 1.72 2.30 2.87

Avg steady-state

EBITDA (£m)

W Resources*


Project level metrics

Figure 9 - DCF, project-level metrics


Figure 10 - DCF, project level outputs


Production 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

ROM tonnes (kt) 0 0 300 1,750 2,000 2,750 3,500 3,500 3,500 3,500 3,500 3,500 3,500

Tungsten (MTU) 0 0 23,122 153,068 180,000 217,800 274,428 258,300 252,000 252,000 252,000 252,000 252,000

Concentrate (tonnes) 0 0 350 2,319 2,727 3,300 4,158 3,914 3,818 3,818 3,818 3,818 3,818

Financials (US$m) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Total Revenue (US$m) 0 0 5 34 41 49 61 57 57 57 57 57 57

EBITDA (US$m) 0.0 0.0 2.5 16.6 20.9 24.4 32.3 30.2 28.5 28.5 28.5 28.5 29.9

FCF (US$m) 0 -26 1 6 3 17 24 23 21 21 21 21 22

Total opex (US$m) 0 0 -3 -17 -20 -24 -29 -27 -29 -29 -29 -29 -27

Capex (Expand+ Sus) US$m 0 -25 -2 -7 -14 -3 -1 -1 -1 -1 -1 -1 -1

-40

-20

0

20

40

60

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

US$

m

Total Revenue (US$m) EBITDA (US$m) FCF (US$m) Capex (Expand+ Sus) US$m Total opex (US$m)

0

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2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

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300,000

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Tun

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mtu

)

Tungsten (MTU)

W Resources*


Figure 11 - Project EBITDA and FCF – leverage to prices in excess of our $260/mtu base case assumption


0

10

20

30

40

50

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

EBITDA ($m)

$260 /mtu $275 /mtu $300 /mtu $325 /mtu $350 /mtu

-30

-20

-10

0

10

20

30

40

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

FCF ($m)

$260 /mtu $275 /mtu $300 /mtu $325 /mtu $350 /mtu

W Resources*


Figure 12 – Forecast financials


Note: Prior to commercial production we assume commissioning revenue and costs continue to be capitalised in FY19. Commercial production is likely to be declared from 2020 onwards.

W Resources Ticker WRES Market Capitalisation £25.3m Financial Year End Dec

Share Price 0.42p Enterprise Value (EV) £52.9m Reporting Currency GBP

£0.75 Implied Return 78% Net Debt (Cash) £28m Shares in Issue 6,031m

NAV Valuation Key Metrics 2017A 2018A 2019F 2020F 2021F 2022F 2023F

Unrisked Risked EPS (p/sh) (0.02) (0.07) (0.06) 0.09 0.16 0.15 0.22

Disc Rate US$m £m p/sh Multiple US$m £m p/sh P/E n.m n.m n.m 4.7x 2.7x 2.7x 1.9x

La Parril la 8% 115 88 1.26 0.80x 92 71 1.01 CFPS (p/sh) (0.02) 0.01 (0.02) 0.18 0.15 0.18 0.26

Other projects: P/CFPS n.m 50.9x n.m 2.3x 2.8x 2.3x 1.6x

Régua nominal 10 8 0.11 10 8 0.11 FCFPS ($/sh) (0.02) (0.23) (0.05) 0.09 (0.03) 0.15 0.24

Gold & non-core nominal 2.4 1.8 0.03 2.4 1.8 0.03 P/FCFPS n.m n.m n.m 4.7x n.m 2.8x 1.7x

Sub-total 128 98 1.40 105 80 1.15 FCF Yield -5% -54% -12% 21% -8% 36% 57%

EV/EBITDA n.m n.m n.m 4.5x 3.3x 2.9x 2.1x

Corp Adjustments £m p/sh £m p/sh EBITDA Margin n.m n.m n.m 45% 50% 50% 52%

Cash* 3.2 2.4 0.03 3.2 2.4 0.03 Dividend Per Share ($/sh) 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Cash in from options/warrants 5.9 4.6 0.06 5.9 4.6 0.06 Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Debt (39.0) (30) (0.43) (39.0) (30.0) (0.43) Return on Assets (ROA) n.m n.m n.m 10% 15% 13% 16%

Forward Corporate G&A / Other (6.4) (5) (0.07) (6.4) (4.9) (0.07) Return on Equity (ROE) n.m n.m n.m 29% 33% 25% 26%

Return on Capita l Employed (ROCE) n.m n.m n.m 18% 22% 22% 26%

NAV $91m £70m 1.00 $68m £53m 0.75 Net Debt/EBITDA 0.2x -36.7x -20.8x 2.2x 1.8x 1.0x 0.2x

Gearing (Debt/Equity) 0.1 2.1 2.8 2.0 1.2 0.9 0.6

Interest Cover n.m n.m n.m 2.4x 3.5x 4.1x 5.6x

Shares on issue (basic) 6,030.7m Shares Outstanding (m) 4,763 5,478 6,031 6,031 6,031 6,031 6,031

Shares on issue (diluted) 7,011.1m

Unrisked NPV - upside to share price 200% Income Statement (£m) 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Unrisked P/NAV 0.42 Revenue 0 0 0 26 31 37 47

Risked P/NAV 0.56 Cost of Sa les 0 0 0 13 13 15 18

G&A 1 1 2 2 1 1 1

EBITDA (1) (1) (2) 12 16 19 25

DD&A 0 0 0 2 3 3 4

Reserves & Resources Tonnage Grade Metal EBIT (1) (1) (2) 9 13 15 20

La Parrilla Mt WO3 ppm t WO3 Net Interest Expense (0) (3) (2) (4) (4) (4) (4)

Reserves (Proven) 1.2 995 1,171 PBT (1) (4) (3) 5 9 12 17

Reserves (Probable) 28.6 928 26,511 Non-Recurring Items/Other 0 0 0 0 0 0 0

Total Reserves 29.8 931 27,683 Taxes/Recovery (0) 0 0 0 0 (2) (3)

Resources (Measured) Moz 1 1,115 1,115 Net Profit (Loss) - attributable (1) (4) (3) 5 9 9 14

Resources (Indicated) 35 1,004 35,140 Minori ty Interest 0 0 0 0 0 0 0

Resources (Inferred) 13 974 12,662 Cashflow (£m) 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Total Resource 49 998 48,917 PBT (1) (4) (2) 9 13 15 20

DD&A 0 0 0 2 3 3 4

Régua Other (0) 0 (0) 0 (4) (7) (8)

Resources (Indicated) 3.76 3,040 11,430 Working Cap. Changes (0) 4 0 (1) (2) (1) (1)

Resources (Inferred) 1.7 2,270 3,859 Cash Flow From Operations (1) 0 (1) 11 9 11 16

Total Resource 5.46 2,800 15,289 Capita l Expenditure (0) (13) (2) (5) (11) (2) (1)

Purchases / intangibles (2) (9) (4) 0 0 0 0

Cash Flow From Investing (2) (22) (6) (5) (11) (2) (1)

Equity Issues (Net of Costs ) 1 1 0 0 0 0 0

Production 2019 2020 2021 2022 2023 2024 2025 Net Borrowings/repayments 0 24 3 (4) (0) 0 (4)

ROM throughput (Mt) 0.30 1.75 2.00 2.75 3.50 3.50 3.50 Other 2 2 0 0 0 0 0

Concentrate prodcued (kt) 0.35 2.32 2.73 3.30 4.16 3.91 3.82 Cash Flow From Financing 3 27 3 (4) (0) 0 (4)

WO3 production (mtu) 23,122 153,068 180,000 217,800 274,428 258,300 252,000 Net Change in Cash 0 6 (4) 1 (2) 9 11

Sn production 19 120 227 217 272 242 326 Free Cash Flow (1) (12) (3) 5 (2) 9 14

Balance Sheet (£m) 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Cash & Equivalents 0 6 2 3 1 10 21

Tota l Current Assets 2 12 8 9 8 19 32

PP&E & Mining Interests 2 17 18 21 30 28 25

Deferred taxation 0 0 0 0 0 0 0

Other 14 24 26 26 26 26 26

Total Assets 17 53 52 57 64 73 83

Short Term Debt 0 0 3 0 0 0 0

Current Liabi l i ties 1 5 8 4 3 4 5

Long Term Debt 0 30 30 29 29 29 25

Other Long Term Liabi l i ties 0 0 0 4 4 3 2

Total Liabilities 1 36 38 38 36 35 32

Shareholder Equity 16 17 14 19 28 38 51

Total Liab. & S/Holder Equity 17 53 52 57 64 73 83

Working Capita l 0 7 (0) 5 5 15 27

Net Debt (Cash) (0) 24 31 26 28 19 4

0

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2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Tun

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)

Tungsten (MTU)

W Resources*


La Parrilla - peer context ► Superior in many ways. La Parrilla compares well to other tungsten projects on

virtually every metric. La Parrilla is a long-life, low cost asset with sector-leading capital intensity and a production scale that should position WRES as one of the larger tungsten producers globally ex-China.

► A fully-funded fledgling producer. La Parrilla is one of the most advanced new tungsten projects. The T2 mine development phase is fully funded (Blackrock $35m debt) and the mine is currently undergoing final commissioning. La Parrilla’s development timeline and the path to production has been relatively steady which reflects the fact that there have been no major “red flags” to hamper development, in our view. Permitting has kept pace with development timelines but primarily La Parrilla’s low opex (1st quartile) and low capital intensity means that WRES has been able to progress development and financing through the tungsten cycle. Furthermore, La Parrilla benefits from proximity to quality infrastructure and a sensible, staged development plan. Within the peer group, only La Parrilla and Ormonde Mining’s Barruecopardo are currently at the advanced construction / commissioning stage.

► A significant producer. The La Parrilla mine plan for the Fast Track Mine area (6-year LOM) indicates LOM-average production of 231,000 mtu WO3. Production for the T2 phase (2 years) is estimated c.182,800 mtu, increasing to c.255,000mtu for the remaining 4 years of the T3.5 phase. This will position WRES as a major producer in the tungsten space. The company’s overall tungsten production could increase further if Régua is put into production.

► WRES owns 100%. WRES has managed to retain a 100% interest in La Parrilla even after financing the T2 phase into production. This gives investors leverage and pure-play exposure to tungsten and exposure to the economics of the whole project. Ormonde for example retains only a 30% interest in Barruecopardo as a result of a $99.7m funding package received from Oaktree Capital Management in April 2015 where Oaktree gained a 70% interest.

Figure 13 - Tungsten peers – average annual production (mtu WO3)

Source: Shard Capital

Production

ScopingProduction

PEA FeasScoping

Commissioning

Feas/funding

Feas/funding

Commissioning

ExpansionFeas Feas

Administration

Production

Feas/funding

0

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Wol

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bin

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erd

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Nui

Pha

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Almonty ThorMining

Almonty ColtResources

ThorMining

TungstenMining

WResources

King IslandScheelite

Almonty OrmondeMining

WResources

TungstenMining NL

SpecialityMetals

WolfMinerals

Masan NorthcliffResources

WO

3 p

rod

uct

ion

(m

tu/y

r)

W Resources*


► La Parrilla has the lowest capital intensity in the sector. The total development capital cost of La Parrilla is $48m, $27.8m for T2 and a further $20.2m for T3.5m. Our analysis indicates that this is sector-leading on a capital intensity basis. We calculate capital intensity on an mtu tungsten (WO3) basis (not concentrate tonnes) to capture a like-for-like comparison and strip out concentrate grade variability. We calculate that La Parrilla has a capital intensity of $110/mtu for the T2 phase and $208/mtu for the total ramped up development at T3.5. This is an order of magnitude lower than the $461/mtu average we calculate for development projects and new mine starts and pegs WRES at the very bottom of the capital intensity curve.

Figure 14 - Capital intensity, LOM average annual production basis ($/mtu)


► Low capex in absolute terms. In addition to intensity, La Parrilla’s capex is lower than peer projects (Barruecopardo $60m) and significantly lower than other projects such as Hemerdon (est.$250m spent prior to administration). WRES was able to secure debt financing to cover the entire capex of the T2 stage with a manageable payback period (3.2 years).

Figure 15 - Pre-production capital cost (US$m)


La P

arr

illa

T2

Mt.

Ca

rbin

e

La P

arr

illa

T3

.5

Do

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co

0

200

400

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1,200

Ca

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al i

nte

nsi

ty ($

/mtu

)

Wt. Avg capital intensity$461/mtu of annual prod

La Parrillaat T2 $108/mtu

at T3.5 $208/mtu

20 35 41 43 46 48 48 61 66

129 144

250

450 455

645

La P

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T2

Pil

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Mt.

Ca

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+T3

.5

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Avg capex $185m

W Resources*


► Why La Parrilla’s capex is low. La Parrilla's low capex is driven by location, infrastructure, favourable metallurgy and phased development. The site previously hosted an operating mine and thus La Parrilla is a brownfield site where primary infrastructure was already in place including site offices, access roads (7km to main highway), a quality water supply and connection to grid power. On the mining side, the La Parrilla open pit does not require a large pre-strip for the T2 phase. On the processing side, the simple coarse-grained scheelite mineralogy has excellent metallurgical characteristics translating to early liberation at a coarse size fraction, and a simple, low-cost gravity flow sheet.

► 1st quartile opex. The August 2017 FID indicates that LOM (1st 6 years) average unit operating costs for La Parrilla are estimated to be $94/mtu after royalties and by-product credits. This puts La Parrilla in a 1st quartile position on the cost curve where we calculate average opex of $142/mtu for peer projects. La Parrilla’s opex is in the same ball-park as the Nui Phao mine, the world’s largest tungsten mine, and one of the industry’s lowest cost producers.

Figure 16 - Peers forecast operating costs (US$/mtu)


Note: Hemerdon’s opex during ramp-up was >$400/mtu, much higher than the forecast $155/mtu due to operational challenges

► La Parrilla’s low opex is driven by:

● Low input costs - Spanish costs and labour rates are highly competitive.

● Geology and metallurgy. La Parrilla’s mineralisation is scheelite (CaWO4) contained within quartz veins. Tungsten and tin-bearing quartz has a marked density contrast to the surrounding shale and greywacke host rock. This translates to high metal recoveries with the waste rock efficiently ejected early in the flow-sheet. The majority of high-grade deposits which are typically skarn-type and require significant grinding to achieve adequate liberation. Overall, the flow sheet is a simple gravity-driven affair.

85 90 90 94

116 119 120130 132

155 159167

199206

242

Nu

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cost

s ($

/mtu

)

La Parrilla

$94/mtu

Wt. Avg opex

$142/mtu

W Resources*


● Upgrading and liberation. La Parrilla's crushing and pre-concentrate steps upgrade the ROM grade by 2.5x prior to final concentration (56% mass rejection at the pre-concentration stage) to c.0.28% at the T3.5 expansion stage. Extensive power-intensive milling is not required at La Parrilla and the grade of c.0.3% WO3 to the concentrator is higher than most operating tungsten mines globally. Simply put, the tungsten bearing ore from La Parrilla does not need a great deal of processing to liberate the scheelite – i.e. the ore is only crushed to -10mm and around 80% of the tungsten is liberated in the -8mm to 1mm size range. This also means that fine, power-intensive grinding is not required.

● By-products. La Parrilla ore contains 110ppm Sn, which adds a significant by-product credit, reducing unit operating costs by approximately $16/mtu on average.

► Industry Cost Curve: La Parrilla has robust margins:

Figure 17 - Tungsten industry cost curve – Chinese state-owned the marginal producer, La Parrilla 1st quartile

Source: Argus, WRES, adapted by Shard Capital

W Resources*


► Resource and grade. La Parrilla’s resource grade is 0.099% (998ppm) which is relatively low compared to peer deposits which typically grade 0.15%-0.30% (1,500-3,000ppm). However, recent drilling by WRES in the T2 South area has delineated a thick, high-grade zone which is expected to boost the grade to around c.1,300ppm during the first 2 years of mine life and 1,140ppm over the initial 6-year LOM. Grades must be put into context as head grade is not always a good gauge – for example, La Parrilla’s feed grade to the concentrator in T3.5 is 3,000ppm (2.5x upgrade) due to simple upgrading in the pre-concentration stages.

► Régua. The resource grade at WRES’s Régua project in Portugal is three times higher than La Parrilla.

Figure 18 - Contained tungsten and resource grade

Source: Argus, WRES, Shard Capital

► It’s the margins that count. Despite La Parrilla’s grade, it has the potential to generate industry-leading margins. Tungsten resource grade is not a very reliable predictor of margins. At our European APT price assumption of $260/mtu and assuming 80% payability, La Parrilla (grade 0.09%) has a cash margin of $114/mtu compared to higher grade deposits; Dolphin (0.9%, margin $118/mtu), Sisson (0.61%, margin $88/mtu) and Sangdong (0.44%, margin $76/mtu). Project comparison thus requires a closer look at geology, metallurgy, operating costs and margins, over and above grade.

Figure 19 - Mismatch between grade and margins


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W Resources*


► Comparison to Ormonde’s Barruecopardo project. A comparator to La Parrilla is Ormonde Mining’s Barruecopardo tungsten project, also in Spain. We detail the metrics of each project below. Ormonde has a 30% interest in Barruecopardo which is currently undergoing final commissioning. The two projects are relatively similar on most metrics; Barruecopardo has a higher resource grade, but La Parrilla’s capex and opex is lower.

Figure 20 - Comparison between WRES/ORM and La Parrilla / Barruecopardo


Parameter Unit La Parrilla Barruecopardo

Company - W Resources Ormonde Mining

Exchange - AIM :WRES AIM : ORM

Mkt Cap £m 27.4 17.2

Project interest % 100% 30%

Location - Spain Spain

Stage -Commissioning Commissioning

Primary funding -$35m Blackrock debt at Topco, avg 5-year

interest rarte 12.5%

$99m funding $55.5m Oaktree Capital debt at

project level, avg 5-year interest rate 12% pa,

$44m equity, +annual management fee $1m

Mineralogy - Scheelite Scheelite

Resource - 49Mt at 0.098% WO3, 4.85m Mtu cont 27.39Mt at 0.26% WO3, 7.12m Mtu cont.

Reserves - 29.7Mt at 0.093% WO3, 2.77m Mtu cont 8.69Mt at 0.30% WO3, 2.61m Mtu cont

Opex US$/mtu 94 119

Capex $m 47.8 60

Mining Open pit Open pit

LOM years 11 9

LOM Strip ratio x:1 1.35 6.3

ROM throughput Mtpa 2 - 3.5 1.1

Max crush size mm 10mm 5mm

Recovery % 72% 78%

LOM avg production mtu 231,000 227,000

W Resources*


Tungsten

Tungsten and its applications ► Unique properties. (symbol ‘W’) is a hard metal with its primary ores include

Scheelite (CaWO4) and Wolframite (FeMnWO4). Tungsten has several unique properties which means that it cannot be easily substituted in most applications. Tungsten has the highest melting point of all metals (3,410°C), the lowest coefficient of expansion of any pure metals, and is the hardest pure metal as well as being an excellent conductor.

► Primary uses: Tungsten’s main end-use application is in cemented tungsten carbides (64%), metal (17%) and alloys (11%) for the steel sector which means that the automotive and industrial engineering sectors are the main end-use industries. Tungsten carbide has stayed unchanged at 60-65% of the market for many years. Carbide is used in drill bits and machine tools in the mining, oil and construction industries amongst others. As a function of its hardness and density, it also has military applications, particularly for projectiles. New applications are also emerging such as in smart glass, batteries and LED lamps.

Figure 21 - Tungsten first-use and end-use split

Source: ITIA (2018)

Supply and Demand themes ► Current global tungsten mine production is approximately 95,000tpa with

production dominated by China (82%).

Figure 22 - Tungsten production by country

Source: Tungsten Investing News

Tungsten carbides,

64%Tungsten

Metal , 17%

Steels / Super alloys,

11%

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Transport,

32%

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23%

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other, 11%

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Vietnam,

7,200

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Bol ivia, 1,100

UK, 1,100 Portugal, 680 Rwanda, 650

Spain , 570Other, 1,960

Tungsten mine production by country (2017)

W Resources*


► Demand drivers. Growth in primary tungsten demand is highly correlated to GDP growth. The continued story of industrialisation and urbanisation remains relevant as tungsten, a high-priced commodity is only used in products where the performance justifies the cost of the raw material according to CRU. According to the International Tungsten Industry Association, demand for tungsten has grown 4% p.a. for the past 10 years. China is the world’s largest consumer of tungsten and consumed 60% of world production in 2016, up from 30% in 1996 according to Roskill. Almonty Industries see tungsten demand continuing to grow at 2.5% per year.

► Market balance. Since 2013, the world (ex-China) refined tungsten market balance has been negative and relatively static at roughly 13ktpa t/y according to CRU.

Figure 23 - Tungsten market balance (CRU)

Source: CRU (2019)

► Oversupply fears subside. Previously, oversupply was created during the era of US and later ex-Soviet stockpiles, along with a raft of erratic production from small-scale mines in China. Those stockpiles are now depleted and on the production front, many small Chinese mines have been forced to close due to tightening environmental legislation, coupled with rising costs and lower grades at existing operations. Many of the Chinese closures have been driven by tightening legislation to crack down on illegal production and polluters. Ongoing inspections continue to hamper domestic Chinese output. We believe that inspections in the Jiangxi hub will disrupt production and continue to prices. In particular, APT smelters are facing increasing restrictions on where slag can be deposited.

► Sources outside China. Since the 2000s, China has been restricting the export of tungsten products with the aim of driving value-add downstream industry. The result is that there is less tungsten concentrate available to non-Chinese end users, creating security of supply issues for non-Chinese tungsten processors and consumers.

► Key drivers turning positive. The global rig count continues to rebound from its 2015 lows and global automotive sales are also showing continued growth.

► Supply uncertain. The tungsten supply pipeline is relatively scarce. There is a lack of new high-grade / simple metallurgy projects and the lead time from exploration/development to production remains very long. CRU notes that many projects that the consultancy tracked in 2009 and were due to come on stream in 2011-2013, have still not made it into production.

W Resources*


► New projects. New projects coming on stream in 2019 will add to supply but the cumulative affect of La Parrilla, Barruecopardo and Sandong (South Korea) only amounts to a net change of +4,500tpa when fully ramped up (CRU).

► The US dynamic. The US, the largest consumer after China will continue to seek to reduce its reliance on Chinese production. China accounts for about 30% of tungsten imports into the US according to CRU. One outcome of the ongoing US-China trade tensions had been the US initially placing a number of tungsten products on its import tax list. APT is not currently on the tariff list according to Argus (May 2019) but the trade war continues to affect the commodity dynamic. Further tariffs or supply tightness could readily translate to higher prices, in our view.

► Prices should stabilise higher. The current European APT price is approximately $230/mtu having weakened in early July from $280/mtu. The strong rise in prices in 2017 up to $350/mtu was due to strong global growth coupled with decreased supply from China (environmental APT closures). Recent price weakness is reported to be a result of weaker trading demand and a temporary increase in stocks coming out of Vietnam. We see the current price dip as likely to be short-term as APT prices have been recently put under pressure by surplus supply. According to Argus, two months of higher APT supply (May-June) in conjunction with surplus APT in the market as a result of the collapse of the Fanya Metal Exchange in China has weighed on prices. Given that average Chinese production costs are equivalent to about $280/mtu, we see prices as well supported at this level.

Figure 24 - Tungsten and tin price charts

Source: Bloomberg, Shard Capital

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W Resources*


Figure 25 - Tungsten is on the European Commission critical supply list with high economic importance

Source: European Commission (Study on the review of the list of Critical Raw Materials. 2017)

W Resources*


La Parrilla overview The 100%-owned La Parrilla tungsten project is located in the Extremadura region of Spain approximately 310km southwest of Madrid, and 257km north of Seville.

Recap of the Financial Investment Decision report ► The Final Investment Decision (“FID”) report for La Parrilla was released by

WRES in August 2017. The FID outlines La Parrilla’s development and mine plan for an initial 6-year period, split into two stages - T2 development at 2Mtpa ROM and then expansion to T3.5 (3.5Mta ROM) two years later. T2 equates to 2,700tpa of WO3 concentrate, and T3.5 stage equates to 4,000tpa WO3 concentrate.

► Capex. The total capex is US$48m, split into $27.8m for T2 and $20m for T3.5. As of June 2019, the T2 spend is virtually complete and WRES reports that the project is running to budget. Opex. Total operating costs over the initial 6-year LOM are estimated at US$94/mtu (C3, at the mine-gate). NPV. The FID indicates a post-tax NPV10% of US$54M, and an IRR of 64% based on a $300/mtu long term price.

Figure 26 - FID Capex schedule

Source: W Resources, Aug 2017 FID

Figure 27 - FID opex and financial evaluation


Capital costs ($m) 2018 2019 2020 2021 2022

Mining 0.2 - - - -

Pre-strip - - - 1.82 0.81

Crushing and screening 3.5 - 0.85 0.74 0.00

X-ray ore Sorting - - 3.03 6.42 -

Pre-Con plant 3.0 1.33 1.33 - -

Concentrator 8.6 - - - -

Lab 0.2 - - - -

Tailings 1.8 0.60 - 1.33 -

Services 2.2 - 0.28 - -

Subtotal 19.5 1.93 5.50 10.31 0.81

Owners cost + EPCM (20%) 3.0 - - 0.874 -

Contingency (20%) 3.0 - 0.617 1.747 -

Grand Total 25.5 1.93 6.12 12.93 0.81

T2+T3.5 T2 $27.8m T3.5 $20m

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Mining 23.0 Project NPV10% (After-tax) US$m 54

Drill & blast 13.0 IRR (After-tax) % 64

Grade Control 5.0 Revenue US$m 311

Crushing & Screening 18.0 Opex US$m -133

Pre-concentration (jigging) 14.0 EBITDA US$m 178

Concentration 7.0 EBITDA US$m p.a 30

Waste haulage 6.0 EBITDA Margin % 57

Lab costs 4.0 Payback years 2

Mine admin 5.0

C1 total 94.0

Royalties 4.0

Contingency 12.0

Tin credits -16.0

Total Opex (C3) 94.0

W Resources*


Mine plan. The ROM feed rate commences at 2Mtpa for two years before ramping up to 3.5Mtpa in the third year of operation. The mine plan ensures that the processing plant runs at full capacity in line with the staged expansion of processing facilities. The La Parrilla Main open pit is optimized with a series of two pushbacks allowing for three phases developing the pit. The design minimises waste in the early years and targets higher grades early on. The Main La Parrilla pit will provide the bulk of the feed to the mill, accounting for approximately 98% of mill feed in the initial mining years, with initial mining primarily focused on a previously unmined area (T2 area) adjacent to the southwestern boundary of the current La Parrilla open pit.

FID only based on 1st 6-years LOM. In order to define a low capex, low cost start-up operation and secure debt financing, the FID focussed on an initial 6-year LOM but, WRES expects to transition the operation into the longer 11-year plan.

Figure 28 - FID Mining schedule and key financials


Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

RoM Feed Rate kt 2,004 2,004 3,200 3,477 3,500 3,489

WO3 production Mtu 184,265 181,496 236,051 279,409 252,073 253,274

Sn production t 125 138 363 274 272 241

Tungs ten price APT (US$/mtu) 245 263 288 313 313 313

Tin Price US$/t 18,500 19,500 20,000 20,000 20,000 20,000

Net revenue $m 34.0 36.1 53.8 66.5 60.3 60.2

Opex $m -19 -17 -30 -24 -21 -21

EBITDA $m 15 19 23 42 40 39

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W Resources*


Location and infrastructure ► Location. The 100%-owned La Parrilla tungsten project is located in the

Extremadura region of Spain approximately 310km southwest of Madrid, and 257km north of Seville.

► Spain - increasingly attractive jurisdiction. Along with Spain’s inherent geological perspectivity, excellent infrastructure and low labour/input costs, the permitting regime appears to be improving. Mining legislation whilst complex is actually very clear with mining companies having to deal with autonomous regional governments. Mining leases are typically very long, i.e. La Parrilla’s runs until 2068. Having a Spanish/local operating team and in country subsidiary is a clear advantage in this regard. WRES enjoys excellent support from the regional Junta de Extremadura, including the provision of a €5.3m grant. The Fraser Institute ranks Spain 7th within Europe (and 44th out of 83 countries globally) on the 2018 Investment Attractiveness Index. The Mining Journal Investment Risk index gives Spain a score of 66 in the range of 29 (high risk) to 84 (low risk).

► Recent examples. There have now been several recent examples of permitting success (e.g. WRES/La Parrilla, Ormonde Mining/Barruecopardo, Atalaya Mining/Proyecto Riotinto, Black Dragon/Salave and Trafigura/Aguas Teñidas. In addition, there is a well-developed local service industry to support mining activities.

► A brownfield site. WRES has a considerable competitive advantage over many projects as the majority of major infrastructure was already in place at La Parrilla. It is a brownfields site accessed directly from the main Madrid-Seville highway by a 7km asphalt road, with access to water and grid power.

Figure 29 - La Parrilla location map

Source: W Resources

W Resources*


► Established infrastructure. Power. The La Parrilla site is connected to grid power. The T2 Stage development utilises existing power infrastructure and will be supplemented with gen-set power if required. A new power line is being constructed to provide enough power from the grid for future operations and negate the need for gas generators.

► Water. Sufficient water exists for the first three years of operations and the open pit will need to be dewatered in year 2 of operations, with water pumped to a repurposed existing dam, used a fresh water facility. Water supply in the future will come from a combination of surge in the pit and federal irrigation.

► Tailings. A tailings facility already exists and is sufficient for T2 and expandable for T3.5 by raising the dam walls. The project benefits from significant supporting infrastructure including offices, laboratories and workshop facilities.

Brief project history.

Figure 30 - La Parrilla – potted project history

Source: W Resources

Geology and mineralisation. ► Geological Setting. La Parrilla is situated on the western part of the Central

Iberian Zone, part of the Hercynian orogeny extending from northwest Spain and Portugal into central and southern Spain.

► Mineralisation style. Tungsten mineralisation in the deposit typically occurs as coarse-grained scheelite (CaWO4), hosted by a series of quartz veins, and is interpreted to be related to the Hercynian granites with discrete higher-grade tungsten mineralisation associated with greisen development. Mineralisation is associated with a later generation of brittle, undeformed scheelite bearing veins and vein sets. Individual veins average 10cm in thickness, but the largest veins are in excess of 3m thick.

► Advantages. For mining purposes, the veins form wide 10-45m zones, which dip 30° to the east and show good continuity over 300m down-dip and up to 100m along strike. Mining and grade control are relatively straightforward.

1950s 1960s 1970s 1980s 1990s 2000s 2010 2014 2015 2016 2017 2018 2019

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WRES ownership

W Resources*


Resources ► The La Parrilla resource was last updated in May 2017, following on from the

2016 in-fill drill programme. The estimate completed by Golder Associates at a cut-off grade of 0.04% WO3 equates to total contained WO3 of 4.87m mtu. 74% of the total resource (on a contained WO3 basis) is contained within the M&I categories. Current mining optimisations have been undertaken with Measured and Indicated resources.

► Higher grades. The highlight of the 2016 in-fill drilling was is the delineation of new thick high-grade zones within the FTM mine area which increased the year-1 ROM feed grade by 42% (1,350ppm) and the year-2 grade by 16% (1,260ppm) in the revised mine plan.

Figure 31 - La Parrilla Mineral Resource estimate (JORC 2012)

Source: W Resources

Reserves ► Maiden Reserve. In June 2017, WRES reported a maiden reserve estimate for

La Parrilla: 29.8Mt at 931ppm WO3 for 2.76m mtu contained. Key modifying factors applied in the reserve calculation: long-term tungsten price of $300/mtu, 5% dilution, 95% ore recovery, 72% WO3 metallurgical recovery, 60% tin recovery, and a cut-off grade of 0.033% WO3.

► 11-year LOM. The reserve supports a total LOM of 11 years based on the expansion to 3.5Mtpa ROM feed rate. The FID was based on a 6-year LOM in order to define a lower risk, low capex, low cost start-up operation and secure debt financing. The transition to the 11-year LOM will require further drilling in order to convert some of the waste tonnes in the cut-back currently classified as Inferred to ore and reduce the strip ratio.

Figure 32 - La Parrilla Proven and Probable Mineral Reserves (Diluted) - JORC 2012

Source: W Resources

Mining ► Open pit. Mining at La Parrilla is straightforward, utilising conventional open

pit, drill and blast, truck and shovel techniques. Selective mining will be employed with grade control guided by the visual nature of the orebody, in conjunction with blast hole drilling and sampling.

► Low strip. The strip ratio is exceptionally low, a mere 1.35 to 1 over the initial six-year LOM which drives the low operating costs. No large pre-strip is required, reducing upfront capital costs. Rock movement costs are low due to the low-density of the shale waste rock. Initially, mining will focus on the previously unmined area adjacent to the southwestern boundary of the historic La Parrilla open pit.

Classification Tonnage (Mt) WO3 (ppm) Contained Contained WO3 Sn (ppm) Contained Sn (t)Measured 1 1,115 1,115 111,500 278 278Indicated 35 1,004 35,140 3,514,000 110 3,850Inferred 13 974 12,662 1,266,200 97 1,261Total 49 998 48,917 4,891,700 110 5,389

Classification Tonnage (Mt) WO3 (ppm) Contained Contained WO3 Sn (ppm) Contained Sn (t)Proven 1.18 995 1,171 117,100 251 295Probable 28.6 928 26,511 2,651,100 111 3,156Total 29.8 931 27,683 2,768,300 116 3,451

W Resources*


Processing ► Simple, gravity driven flowsheet. WRES will produce tungsten and tin

concentrates (at a ratio of 8:1 W:Sn) via conventional, tried and tested gravity separation techniques. We view the flowsheet as relatively low risk as WRES already has considerable experience operating the existing concentrator plant, which is fed from La Parrilla ore. Therefore, the company has direct experience of the ore and its behaviour throughout the flowsheet. Expertise is a required to fully optimise and refine the process with adequate recoveries, but the actual plant is very simple and can be split into three main areas:

► Crushing & screening & sorting. Three stage crushing comprising a 350tph jaw crusher followed by primary and secondary jaw crushers, along with various screens. The ore is reduced from the maximum size of 1,200mm (oversize addressed with rock-breaker). The secondary cone crusher reduces the ore to 200mm with the -200+50mm ore fed directly to the tertiary cone crusher. The ore at c. -12mm/-10mm is removed from the circuit and conveyed to a fine ore bin which feeds the jig and mill plant. An ore sorter will be installed as part of the T3.5 expansion.

► Jig & mill plant. A screen removes the -2mm material to the concentrator plant, while the -10 +2mm feed is fed to the jigs. The jig concentrate is reduced to -2mm in the roller mills and then fed to the concentrator plant.

► Concentrator. The jig feed is fed to the 155tph gravity concentrator where the -2mm feed is split into three size fractions and concentrated via a simple rougher-cleaner spiral circuit. The concentrate collected from each spiral circuit is conditioned and passed across flotation shaking tables. The flotation step removes sulphide impurities and the shaking tables further concentrate the Sn and W. The concentrate is separated into final tungsten and tin concentrate via electrostatic separation and polished via a high intensity dry drum magnetic separator.

► Quality concentrate. La Parrilla will produce a high-quality tungsten concentrate, which the company expects to grade 66-67% WO3, and tin product of >60% Sn. Typically, a 66% WO3 concentrate receives approximately 80% of the prevailing APT price. The concentrate does not contain high levels of deleterious elements, the existing product produced by WRES in late 2016 was well received by customers. Two major long-term off-take agreements accounting for approximately 80% of La Parrilla’s production are in place.

Figure 33 - La Parrilla flowsheet

Source: W Resources

W Resources*


Figure 34 - Processing – 350tph throughput from crushing reduced to 0.5tph at last electrostatic separation stage

Source: W Resources

Permitting and regulatory framework. ► Fully permitted for T2. La Parrilla has received all permits necessary for the

full mining and operation of the T2 stage. In Q4 2015, WRES secured the Mining Approval (granted by the Regional Government) with the Mining Lease valid until 2068.

► T3.5 applications submitted. The approvals to allow the expansion to T3.5 have been drafted and submitted by the WRES team. The permitting process is streamlined, and all required approvals fall under a single lease application.

Figure 35 - La Parrilla – fully permitted for T2, T3.5 applications submitted

Source: W Resources

► Spanish regulatory points. The main authority at the national level is the Ministry of Energy, Tourism and Digital Agenda, which is led by the Directorate General on Energy Policy and Mines. However, most of the process is dealt with by the Department of Industry and Mines in the relevant autonomous regional government. Corporation tax is 25% and there are minimal royalties.

Current Mining Lease

Fully granted – expires 2068 ✓

Provides access to tailings facilities for T2 ✓

T2 Mining Approvals

Mining plans submitted to the Department of Mines (DM) in Q1 2015 ✓

Environmental Impact Assessment submitted in Q1 2015 ✓

First initial review stage completed Q2 2105 by the DM ✓

Environmental team has provided written feed back to queries ✓

Environmental Impact Assessment (EIA) approval received in Q3 2015 ✓

Full mining approval granted for the T2 stage development ✓

T3.5 Mining Approvals

Following discussions with the Environmental and Mining Authorities the

LP team has submitted an initial application for the T3.5 ✓

W Resources*


Régua – organic tungsten growth Régua, located in the Viseu region of North East Portugal, is a high-grade tungsten deposit in which WRES owns a 100% interest. WRES plans to commence a low capex underground mining operation using adits in 2020.

Figure 36 - Régua – JORC resource (October 2015.

Source: W Resources

► Resource. In October 2015, Golder Associates confirmed a mineral resource estimate of 5.46Mt at 0.28% WO3, based on a cut-off grade of 0.1% WO3. The resource remains open at depth and in all directions.

► Permitting. In February 2018, the company secured land access and all approvals for the first stage of the Régua mine development. Under the land-use plan, the Régua project area is classified as a mining area and the Régua trial mine project has obtained all required approvals from the central Mines Department and Regional Authorities, demonstrating clear support from local municipality of Armamar. Final environmental permits have been submitted to move from trial to full-scale operations.

► Development plan. WRES plans to develop an underground mining operation with two near horizontal adits bored directly from outcropping sections of the orebody to access high grade ore. The ROM feed grade for the first two years is estimated in the mine plan to average 0.43% - high by global standards and three times that at La Parrilla.

► WRES has signed a contract with FPMI, a local company for haulage and crushing services. Once mining has commenced, ore from Régua will be hauled 27km to the existing FPMI crushing plant and crushed to a range of 510mm. FPMI will use the waste ore for rehabilitation of their existing quarry providing local environmental benefits. The estimated crushing and haulage cost is US$40-45/mtu and WRES will pay €50,000 to expand access roads for haulage.

► Utilising La Parrilla’s old plant. The Régua process will comprise:

1. Near horizontal adit mining using contract mining and a combination of open stoping and room and pillar

2. Haulage of ore from mine face to FPMI crushing plant

3. Crushing of ore to 5-10 mm using the existing FPMI crusher

4. Processing the crushed ore through to tungsten concentrate using the existing La Parrilla Concentrator Plant which will be moved to Régua and upgraded later in 2019 once La Parrilla is in commercial operation.

► Metrics & Timeline. WRES plans to commence ore mining in Q1 2020. The company is currently undertaking a trade-off study between capex and opex sensitivity, hence final numbers are pending. WRES’s initial estimate is c.€4-6m capex, LOM up to 20 years and producing c. 1,000 tpa of tungsten concentrate. We expect that WRES will start with a trial mining phase to understand the costs and metallurgy, before moving to a full-scale operation.

Classification Tonnage (Mt) WO3 (ppm) Contained WO3 (t) Contained WO3 (mtu)

Measured

Indicated 3.76 3,040 11,430 1,143,040

Inferred 1.7 2,270 3,859 385,900

Total 5.46 2,800 15,289 1,528,940

W Resources*


Figure 37 - Régua cross-section

Source: W Resources

Other assets:

São Martinho ► Gold deposit. WRES owns 100% of the 289.75km² CAA / Portalegre licence,

including the São Martinho gold deposit located in Portugal. In June 2016, Golder Associates completed a JORC resource on São Martinho which confirmed a resource estimate of 3Mt at 1.04g/t Au for 111,987oz contained gold. Results of the 2017 drilling campaign included some exceptional intersections from near-surface including 55.6m at 2.34g/t from 2.5m. The assets are not currently receiving any value by the market and thus represent significant optionality for WRES if development is progressed.

► Permitting. The trial mine application submitted in September 2018 is progressing through the regulatory process.

► Resource update due. In Q2 2018, the Portuguese technical team commenced a 15 hole, 2,000m RC drilling programme with a view to materially increase the JORC resource. SRK Consulting (UK) Ltd continues to evaluate the project with a view to finalising the increased resource estimate which the WRES expects to be completed in July. In initial estimates, there is a large increase in the modelled volumes, but differences exist in geological opinion as to whether the deposit is flat lying as in the Golder Associates Pty Ltd and WRES assessment or deeply dipping as in the current SRK interpretation. These differences are partly due to the combination of structural complexity and multistage mineralising events. The final resource update is due imminently.

Tarouca - tungsten in Portugal. ► Synergies with Régua. The Tarouca tungsten and tin exploration licence is

owned 100% by W and is located in the Viseu region of North East Portugal. The licence is a former scheelite mine covering 5.7km². Tarouca is located only 40km from Régua offering the potential for synergistic development.

► Exploration continues. In March 2018, WRES completed a 29 hole, 1,515m RC drill programme at Tarouca. Drill lengths were between 50m and 70m, with intersections of mineralisation expected between surface and a maximum of 50m depth.

W Resources*


Board

Michael Masterman - Chairman ► Mr Masterman has a track record in establishing and financing new resources

companies. He completed the US$1.15bn sale of a 31% interest in the Fortescue Metals Group’s majority-owned FMG Iron Bridge iron ore company to Formosa Plastics Group. Following 9 years at McKinsey, and 8 years as an Executive Director of Anaconda Nickel, he has been a founding shareholder at Fortescue Metals Group, Po Valley Energy and Atacama Metals.

Byron Pirola - Non-Executive Director ► Director of Port Jackson Partners Limited, a Sydney based strategy

management consulting firm. Prior to joining Port Jackson Partners in 1992, Byron spent six years with McKinsey working out of the Sydney, New York and London offices and across the Asian region. He has extensive experience in advising CEOs and boards of both large public and small developing companies across a wide range of industries and geographies. Byron is a Non-Executive Director of Po Valley Energy Limited.

David Garland - Non-Executive Director ► David is the former General Counsel, Secretary and Chief Compliance Officer of

Dominion Petroleum Limited (an oil and gas exploration company then listed on the LSE). Before joining Dominion, he had practiced as a barrister for 18 years from Brick Court Chambers, a leading commercial barristers’ chambers in London. David provides flexible legal counsel services to various private and listed companies.

James Argalas - Non-Executive Director ► James Argalas has extensive experience in the financial and investment

sectors. In 2006, he founded Presidio Union, LLC, a company that specialises in providing financial analysis and corporate advisory services to early stage growth companies and their investors. Prior to this, James was a Principal at Watershed Asset Management and NM Rothschild, where he was responsible for investments in distressed credit, liquidations, real estate, special situations, and debt and equity investments in Asia-Pacific. He also had tenures with McKinsey & Company and Goldman Sachs.

Pablo Neira - Non-Executive Director

► Pablo Neira brings 30+ years of international experience specialising in managing listed industrial manufacturing companies and family office direct investments. He currently works with Casa Grande de Cartagena, family office of several members of Del Pino family, involved with direct investments. Pablo is former CEO of Urbar, a listed industrial group that manufactures equipment for multiple sectors, including raw materials, minerals and quarries; as well as turn-key waste treatment plants. Prior to Urbar, Pablo was Corporate Services General Manager at Valdepesa Textil, a global retail textile company PE backed, and Finance Director at Global Steel Wire Group, a Madrid listed steel wire rod manufacturer. Prior to joining Global Steel Wire Group, he was Manager at A.T. Kearney in New York and at the Swedish group Mölnlycke as Controller for southern Europe. Pablo has broad-based experience managing operations across international and cultural boundaries and brings in depth finance experience under listed companies. He holds a BS in Economics and a Harvard MBA. He is professor at IE Business School.

W Resources*


Senior Management

Fernando de La Fuente - General Manager ► Geologist with more than 43 years’ experience in the exploration and mining

geology industry in Europe, Africa and North America and Latin America. He was the Regional Manager for Anglo American Corporation of South Africa in West Africa and has also worked for Rio Algom and Phelps Dodge. Fernando is a ‘qualified technical person’ in respect of the AIM Rules for Companies.

Aaron Szumilak - Metallurgist & Process Engineer ► Mechanical and process engineer with 10 years’ experience in mineral

processing and resource development. He carries field experience in operational and technical services roles presenting a broad range of process skills. Aaron has worked for Fortescue Metals Group, Syncrude and Composites Innovation Centre.

Juan Garcia Valledor - La Parrilla Operations Manager ► Juan is a Mining Engineer with 25 years of experience in management of

industrial processing plants and design, planning, management and rehabilitation of open pit mines. Juan was Operations Manager for the Rio Tinto and Imerys groups talc ore mining and processing operations in Spain, and Mining & Safety Manager in the development of the reopening project of Alquife iron ore open pit in Granada, Spain.

Tomás Bragado - La Parrilla Plant Manager ► Tomás is a Mining Engineer who graduated from the University of Oviedo in

Spain. He has 20 years’ experience in engineering, construction and mining companies. He worked as a metallurgist in the gold, copper and silver operation “El Valle” in the north of Spain, and more recently as Plant Manager in the nickel and copper “Aguablanca” operation with Lundin Mining.

W Resources*

31st July 2019 40

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*W Resources is a broking client of Alternative Resource Capital and Shard Capital Partners LLP.

Alternative Resource Capital is a trading name of Shard Capital Partners LLP which is authorised and regulated by the Financial Conduct Authority.

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