You’d be forgiven for thinking – judging by the numbers – that this was a graph of the ever-depleting recoverable sand and gravel resource at Straitgate Farm: the one that started at 20 million tonnes in the 60s, and is now less than 5% of that number.
But it’s not. It’s a graph showing the economic wellbeing of a mining operation in Devon that was given the go-ahead by DCC a few years ago, specifically Wolf Minerals and its Drakelands open-cast tungsten mine just outside Plymouth, near Sparkwell and Hemerdon. We posted about this in July:
…as the share price of Wolf Minerals LSE:WLFE sank ever closer to zero, and the scar blighting Dartmoor looms ever larger, reality caught up with the company as it announced "a trading halt in its shares [on ASX] pending an announcement on its financing arrangements." In 2017, the company incurred a net loss after tax of A$74,536,641, or about £42m.
Earlier this month, Wolf had announced that fresh funds were required "to ensure that the company has sufficient working capital to meet its short-term requirements to continue as a going concern."
Residents, who have had to endure the "horrendous invasive unacceptable" impact of blasting and low frequency noise will no doubt be watching events closely – to see how much more money will be poured into this very big hole.
Wolf’s financial position is still precarious, with their shares down more than 25% at the time of writing, after this news:
As announced on 30 July 2018, the Company has been working with its key financial stakeholders to develop longer term funding solutions required to provide the Company with capital prior to the expiry of the standstill period on 28 October 2018, to progress further production improvements.
The Company's discussions with those stakeholders are ongoing and the Company expects to conclude those discussions this week, following which a further announcement will be made. However, should the Company not be able to satisfactorily conclude its discussions with those stakeholders within the next two days, it will not be in a position to meet its short term working capital requirements after that point in time.
There are ramifications for other companies, particularly Hargreaves Services who has warned:
... the Board estimates that the Group has a current net exposure of approximately £5m to Wolf comprising trade debt and WIP balances, some or all of which may prove to be irrecoverable were Wolf to be unable to continue trading. Redundancy and other associated costs may also result in a further non-recurring charge of up to £3m against Group profits in the current financial year. Additionally, if Wolf ceases to trade, this could reduce the Group's revenue in the balance of the current financial year by approximately £15m and its profit before tax by a further £1m.
