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A company seeking to revive a former tungsten-tin mine in Devon has warned it could face insolvency unless it secures emergency financing or a critical set of permits by the end of this year.
Tungsten West, which is listed on Aim, is scrambling to secure the final permits required for a planned mineral processing facility at its site, near Plymouth. Unless it receives the permits on time, the company will struggle to mount a fundraising round vital to keep the project going beyond December.
Neil Gawthorpe, chief executive, said it would have “serious implications” for the UK’s critical minerals strategy if the government could not resolve the challenges facing Tungsten West. Tungsten — a metal whose hardness and high melting point makes it vital to a series of industrial applications — is one of 18 minerals listed in the strategy, published last year.
The company wrote in its annual report and accounts for the year to March that its status as a going concern — a company able to continue in business — was “reliant on further funding being secured by the end of December 2023”.
Without such funding the group would be “unable to pay its liabilities” as they fell due beyond that point, it said.
“There is a material uncertainty over the granting of the permits and permissions required, within the necessary timeframes, to allow the group to obtain the finance it requires,” it said.
Emergency funding options were also being explored if the permits failed to materialise, it added.
Both tungsten and tin are on the critical minerals list, part of a strategy to improve the security of the UK’s supply of metals used in advanced technologies that are at risk of supply disruptions.
Tungsten is used in semiconductors, renewable energy and military applications and is also crucial for nuclear fusion power.
Under the strategy, the government vowed to create a “faster, more efficient system” for planning permits on critical mineral projects.
However, the company, which made a £10.8mn pre-tax loss in the year to March, faces a tense wait for the final permits. Lenders and investors have told the company that they will not provide financing to reboot the mine until those permits have been secured.
Gawthorpe said the company was “exploring several avenues of interim funding” including issuing further convertible loan notes if the permits failed to come through this year. The notes would turn into equity in the company under certain circumstances.
“If the government doesn’t help us get over the line, it will have serious implications for critical minerals and mining in the UK,” Gawthorpe said.
Tungsten West aims to revive the Hemerdon mine, which it estimates to be the world’s second largest resource for tungsten. The mine ceased production in 2018 after the previous owner collapsed into administration.
Tungsten West’s market capitalisation has fallen from more than £120mn in April last year to less than £5mn. The shares were down 35 per cent following Thursday’s announcement to 2.44p.
Companies seeking to start mining projects in Europe and North America typically face far greater challenges from local communities and government agencies in securing permits than companies in less developed economies. The issue presents challenges in catching up with China, which in tungsten controls 85 per cent of global supply.
Tungsten West last month applied to the Environment Agency, England’s environment watchdog, for the final permits that it needs for the processing plant. There had been concerns from local residents that the plant would generate nuisance, low-frequency noise. Gawthorpe said he was “confident” of securing the permits.
Provided the permits are secured, Tungsten West would need to raise £25mn of debt and £35mn to £40mn of equity to bring the mine back into production by 2025, according to Gawthorpe.