Convertible Loan Notes Documentation

19 May 2023

Tungsten West Plc

("Tungsten West", the "Company" or the "Group")

Convertible Loan Notes Documentation

Launch of Open Offer

Posting of Circular and Notice of General Meeting

Tungsten West (AIM:TUN), the mining company focussed on restarting production at the Hemerdon tungsten and tin mine ("Hemerdon" or the "Project") in Devon in the UK, is pleased to announce that further to the announcement released on 6 April 2023, it has executed definitive documentation in respect of the convertible loan notes.

Overview of the Convertible Loan Notes

·      The Company has raised a total of up to £6.95 million (before expenses) by way of convertible loan notes ("CLNs"), in two tranches as follows:

(a)   an initial tranche of £3.975 million to be issued at completion and following the satisfaction of the conditions precedent in the Note Purchase Agreement ("Tranche A Notes"). Such amount comprises a maximum commitment of up to £2 million from funds managed by Lansdowne and up to £1.975 million from other note purchasers; and

(b)   an additional tranche ("Tranche B Notes") of £2.975 million (comprising a maximum commitment of £1 million from funds managed by Lansdowne and up to £1.975 million from the other note purchasers) following the satisfaction of certain conditions precedent with the consent of the majority holders of the CLNs (such consent not to be unreasonably withheld or delayed);

·      In addition, the Company may offer up to a further tranche of £2 million aggregate principal CLNs ("Tranche C Notes") to a third party procured by Lansdowne, failing which the CLNs may be offered to the existing Note Purchasers pro rata to their holdings of CLNs at the time of calculation, in each case with the consent of the Purchasers of the CLNs (effectively comprising those Note Purchasers who hold 75 per cent. of the outstanding aggregate principal amount under the CLNs at the time of the calculation and with such consent not be unreasonably withheld or delayed). Should the Tranche C Notes not be taken up by such parties then the Company may, in the alternative, offer the Tranche C Notes to any other third party it may procure by itself or through the Joint Brokers.

·      The CLNs will accrue interest with an effective rate of 20 per cent. per annum compounding every six months with such interest rounded to the end of the relevant six-month period.  All accrued interest will be payable on Conversion or the Final Termination Date.

·      The maturity date of the CLNs is 364 days from the date of the issue of the Tranche A Notes.

·      The Noteholders  may  convert their CLNs into new Ordinary Shares:

o  upon an Equity Raise, at the lesser of 3 pence per share or, where applicable, a 50 per cent. discount to the offer price of an Equity Raise; or

o  at 3 pence per share upon the occurrence of (i) a Change of Control, or (ii) the sale of all or substantially all of the assets of the Group in one or a series of transactions

·      On the Final Termination Date, the CLNs (including any PIK to be paid on such notes) will convert into new Ordinary Shares at the lesser of 3 pence per share or, where applicable, a 50 per cent. discount to the offer price of an Equity Raise

·      The conversion of CLNs held by any Note Purchaser into new Ordinary Shares shall be subject at all times to a cap of 29.9 per cent. (including existing shareholders) of the Company's issued share capital.

·      Upon the occurrence of (i) a Change of Control, or (ii) the sale of all or substantially all of the assets of the Group, each Note Purchaser shall be entitled to require the repayment, redemption or repurchase of all or part of the outstanding CLNs held by them.  Upon redemption, the Company is obliged to pay a sum equal to two times the principal amount of the relevant tranche of the CLNs (excluding PIK).   The Company does not have a right to early redemption.

·      The Tranche A Notes are secured with a First Ranking Debenture over certain assets of the Group.

The above represents an overview of the Convertible Loan Notes. Further information relating to the CLNs can be found in Part II of the Circular to be published on the Company's Website later today.

Related Party Transaction

Baker Steel is a substantial shareholder of the Company (as defined in the AIM Rules) and it has conditionally agreed to purchase an aggregate amount of £1.2 million of the CLNs pursuant to the terms of the Note Purchase Agreement on the same terms as the other Note Purchasers.  Baker Steel's participation comprises the principal amount of £600K for the Tranche A Notes and the principal amount of £600K for the Tranche B Notes.  Accordingly, their participation in the Conditional Placing is a related party transaction pursuant to rule 13 of the AIM Rules.

The Directors consider, having consulted with the Company's nominated adviser, Strand Hanson, that the terms of subscription for Convertible Loan Notes by Baker Steel are fair and reasonable in so far as the Shareholders are concerned.

Launch of Open Offer

Further to the announcement on 6 April 2023, the Company is offering all qualifying shareholders the opportunity to participate in the Open Offer from today. The Open Offer will raise up to £2 million (assuming full take up of the Open Offer) at an issue price of 3 pence per new Ordinary Share. Pursuant to the Open Offer, up to 66,666,666 new Ordinary Shares will be offered to existing shareholders at the Issue Price on the basis of:

1 Open Offer Share for every 2.7 Ordinary Shares held

The Open Offer will not be underwritten, and any demand not taken up by qualifying shareholders may be offered in whole or in part to other interested investors. Any interested party should contact VSA Capital or Hannam & Partners at the contact details set out below.

Posting of Circular and Notice General Meeting

The Company is pleased to confirm that a Circular setting out principal details of the Convertible Loan Notes and Open Offer, will today be posted.

The Circular contains Notice of the General Meeting which is to be held at 10.00 a.m. on 8 June 2023. The purpose of the General Meeting is to grant the Directors sufficient authorities to allot and issue Ordinary Shares in connection with the Fundraising.

Copies of the Circular and Notice of General Meeting are available from the Company's website: https://www.tungstenwest.com/.

The Board considers that the resolutions set out in the Notice of General Meeting are in the best interests of the Company and of its shareholders as a whole and unanimously recommends shareholders to vote in favour of it.

David Cather, Chairman of Tungsten West, commented:

"The £6,950,000 fundraise and beginning of the Open Offer period marks a promising step for the Company in its progress towards restarting the Hemerdon mine. The intended use of the funds is to meet near term contractual liabilities and annual expenditure, as well as financing planning and permitting activities.

"We continue to work with stakeholders, governmental departments and organisations, and the local community to ensure funding, permitting and licensing is in place to develop Hemerdon in sustainable and cost-effective manner. We look forward to updating the market on the General Meeting, the closing of funding, and further updates from Hemerdon in due course."

Notes:

(1)   References to times in this Document are to London time, England (unless otherwise stated). The timing of the events in the above timetable and in the rest of this Document is indicative only and may be subject to change.

(2)   If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement through an RIS.

(3)   The timetable above assumes that all the Resolutions in the Notice of General Meeting are duly passed.

Ends

For further information, please contact:

Enquiries

Follow us on twitter @TungstenWest

APPENDIX

Definitions