WRES – potential upside (amended)

In March 2015 W Resources issued a presentation (see here).

During the six months since the presentation, WRES have carried out further research and  analysis. This work has resulted in WRES being able to potentially significantly improve returns.

For example since March, looking at the figures for the Parrilla mine indicates the following:

  • March presentation talking about 0.09% tungsten oxide, now we are talking about 0.251%. This is a 178% increase.
  • Recovery rates have changed from 63% to 85%+ (35% increase).
  • Operating costs are significantly lower so expect IRR of c40% , revised to 70% in June will have improved again.
  • Schedule of operations is proceeding broadly in line with plan
  • Potential for a 200% upgrade in WO3 content before the final concentration stages, which makes the product from La Parrilla comparable to some of the highest grade tungsten deposits globally.
  • Company evaluating potential to streamline production. This will reduce capex and opex costs even further.

Conclusion

WRES March presentation provided a cautious rather than optimistic view of possible returns. 

Once the wider investing community become aware of the potential for the business this will be another catalyst for the share price. We also still have news to come about the licence and funding, both of these events will also have a positive impact on the share price.

It is also worth noting that with tungsten prices being at a 10 year low any increase in the price paid for tungsten will also have a positive impact on WRES returns. This article indicates it is only a matter of time before movement in tungsten prices happens.

It is not therefore surprising that analyst Northland Capital has WRES as a buy with a target of 1.1p for the share price.

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