W Resources announced this week that they have finance to start production of their La Parrilla mine. The long awaited deal means the company is well on the way to having the largest tungsten mine in Europe.
I was a longterm shareholder but decided this week to significantly reduce my holding for the following reasons:
1. Are the BOD looking after shareholders interests?
- How many investors bought WRES stock once the finance news RNS issued only to find out later in the week about the placing?
Those investors you could argue made their investment decision based on limited knowledge of the current situation.
Why didn’t WRES issue both pieces of information at the same time?
- Several HNWI invested in WRES not offered the chance to take part in the discounted placing, whilst two members of the BOD you could argue who took part in the placing did so at their expense.
- The placing took place prior to the finance news being announced. It would have shown more integrity if placing happened after the fund raise to take into account any higher share price.
- Metal Tiger this week announced the award of share options at twice the prevailing share price. What does this say about how the two businesses treat their shareholders when WRES offering shares at a discount?
2. Have we been misinformed when finance announced?
The RNS stated finance discussions continuing with ICD Alloys. I took this to mean WRES looking at debt, JV etc rather than a placing.
3. Are the NED looking after the interests of shareholders?
WRES BOD comprises of one Director (MM) and two non exec Directors. Two of three BOD members took part in the placing. The non exec Directors in this case you could argue not the impartial voice you would expect.
4. Production starting this year.
MM has consistently maintained that production would commence in 2016.
It now transpires that what he means is they will be using the same plant and recommencing what they stopped doing in February when the low tungsten price made the process unviable. New plant is not being installed until next year.
5. Communication and PR with shareholders
One word – dreadful.
I believe WRES has great potential and longterm holders will do well as opex costs compared with the competition very low.
Will delays happen in the future as they have in the past? Past performance would indicate they will and shareholders will be the last to know what’s going on.
This share therefore is not one for my portfolio.
Michael Masterman is presenting at the Miningmaven event on the 22nd September. It will be interesting to see what he has to say.