W Resources the case for investment?

The investment risks associated with investing in W Resources (WRES) changed significantly with the granting of the environmental approval for the La Parrilla tungsten mine.

The market after this was announced in July failed to react to the news.

The share price did not rise significantly until Charles Scott took an interest in the business and purchased 3.15% of the shares.

This it would appear brought WRES to the attention of many investors and the share price has been rising ever since.

I at the time of the original Charles Scott RNS decided not to invest as I knew nothing about the man. I have since met Charles Scott and this larger than life jovial, charismatic character convinced me to look at the business. As a result I invested in the business.

He is also a man of his word. He stated he would continue to buy the stock. This has been confirmed with the release of the RNS today highlighting he has 4%+ of the shares (9th September).

These are the reason I decided to invest in WRES:

Upward pressure on share price

  • Charles Scott since the release of the original RNS announcement has continued to increase his holding.
  • I know of another individual who is building up a significant holding.
  • Private investors buying shares

Environmental approval obtained for La Parrilla mine

  • Increases the likelihood of the development licence being issued this month. Share price will in all probability in the short term therefore rise.
  • Removes concerns of investors and will be seen as a major plus by any funder or JV partner.

La Parrilla mine

  • Largest of its kind in western world.
  • Good tungsten grade with the West area of the mine not yet tested but this area is believed to have a higher grade of tungsten than areas already tested.
  • Finance costs for stage 1 estimated at $16m+ compared with $100m for comparable operations. Low operating costs as phase 1 will be a shallow pit open mine.
  • 1st stage expects to deliver 1200 tonnes+ of 66% tungsten and 400 tonnes of tin.
  • Very conservative figures indicate first year turnover will be £18m rising too £63m in 2018 when stage 2 online.

Michael Masterman (Chairman)

  • Proven track record of bringing this type of scheme on stream.
  • Has 20%+ of shares. Committed to the business.
  • Significant returns within his grasp. MM would not want to see his holding diluted.

The barriers to the La Parrilla mine being a success seem to be minimal.

Based on the above the risks associated with this mining operation compared with other mining operations seems to be very low. This therefore seems to be a good investment opportunity.

We also have the added opportunity associated with the Tarouca and Regua operations in Portugal.

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