Shares in Tungsten West Plunge as Funding Concerns Arise
Tungsten West, a prominent tungsten mining company, experienced a significant decline in its stock value of up to 53%. The drop comes in response to the company's recent announcement regarding potential difficulties in meeting liabilities and securing funds to complete its Hemerdon mine project.
At 0737 GMT, shares stand at a decrease of 1.25 pence, currently trading at 2.50 pence.
Capital Constraints Delay Production Restart
As Tungsten West revealed on Thursday, it faces limited options in raising the necessary capital to restart production at the Hemerdon mine. Until the company acquires a final operating permit and planning permission, its ability to secure funding is significantly hampered.
Short-Term Strategy Revolves Around Permit Acquisition and Funding
To address these challenges, Tungsten West has diligently focused on securing the required permits and maintaining compliance with existing regulations. Concurrently, efforts are being made to secure funding that will enable the completion of the project and the resumption of mining operations.
Potential Consequences Without Financial Support
Should Tungsten West fail to identify buyers for its tranche c notes and fail to secure alternative funding, it will struggle to meet its liabilities, particularly those due in November.
According to the board's estimates, there remains an expenditure of over £60 million ($74.9 million) before mining operations can recommence.
Improved Financial Performance in H1 2020
In the first half of this year, Tungsten West managed to narrow its pre-tax loss to £10.8 million compared to £13.0 million in the same period last year. However, revenue declined from £673,509 to £626,460.