04 September 2025

Tungsten West Plc

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

Financial Results for the Year Ended 31 March 2025

Release of Annual Report

Tungsten West (LON:TUN), the mining company focused on restarting production at the Hemerdon tungsten and tin mine ("Hemerdon" or the "Project") in Devon, UK, is pleased to announce its audited results for the year ended 31 March 2025.

Copies of Tungsten West's Annual Report and Financial Statements for the Financial Year to 31 March 2025 are available to download from the Company's website at www.tungstenwest.com and will shortly be posted to shareholders.

Highlights 

·      Release of the Development and Economic Plan and completion of the Feasibility Study for Hemerdon, outlining a clear and manageable approach to bring the Project back into production, showcasing:

o  Positive project restart economics at a market price of $400/metric tonne unit ("mtu") of ammonium paratungstate ("APT") the key market index for traded tungsten trioxide ("WO₃"):

§ Internal Rate of Return of 29%

§ Net Present Value at a 7.5% discount rate of US$190 million

§ Life of mine post-tax cash flow of US$456 million

§ Base case 11-year life of mine, 4 years of subsequent stockpile reclaim and an additional 12 years of on-going premium aggregate sales

o  Capacity to process 3.5 million tonnes per annum of primary ore feed at fully permitted production, to produce, on average 3,320 tonnes of WO₃, and 462 tonnes of tin in concentrate per annum.

·      Externally, following China's implementation of significant tungsten export restrictions in February 2025 (China accounting for over 80% of the world's global production of tungsten), market supply has remained extremely tight. As a result of this, market prices for APT have risen to above $500/mtu, further enhancing the economics of Hemerdon.

·      Hemerdon selected by the European Commission as a Strategic Project under the European Union's Critical Raw Materials Act.

·      Receipt of a non-binding Letter of Interest from the Export-Import Bank of the United States, the official export credit agency of the U.S., outlining its capacity to provide financial support to a consideration of up to US$95 million for the Company and the Project.

·      Raised a further £12.0 million through the issue of Tranches E, F, G and H of the Convertible Loan Note of which £6.7 million was raised in the period and £5.3 million post-period end.

·      The Environment Agency granted the Company a permit to operate its Mineral Processing Facility, the last of the key permits required to further progress the Project.

·      Mr Jeffery Court appointed as Chief Executive Officer and to the Board of Directors.

·      Mr Alistair Stobie, Chief Financial Officer, appointed to the Board of Directors.

·      Further strengthened the Board with the appointment of Mr Stephen Harrison as Non-Executive Chairman.

Ends

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Chairman's Statement

Overview of FY2025

Having joined Tungsten West as Chairman of the Board in December, I am pleased to report on the Group's audited results for the year ended 31 March 2025.

The year has been one of progress. The Company has made decisive and meaningful steps towards reopening the Hemerdon tungsten and tin mine, which will provide a secure tungsten supply chain to the UK and its allies. As announced previously, and as written in previous Annual Reports, we expect to restart mining and processing operations in late 2026.

Jeff Court was appointed as Chief Executive Officer of the Company in August, subsequently joining the board in October. Under Jeff's leadership, utilising his considerable experience, the Company has undertaken a full review of planned mining and processing operations. Much of this work was completed in the period leading to the publication of our Development and Economic Plan for Hemerdon in May 2025. This was followed by the completion and publication of a new Feasibility Study which was announced in August 2025. We have been fortunate to work with excellent consultants and suppliers to refresh and improve our plans to restart mining operations at Hemerdon.

The revised plans include a new crushing, screening and ore sorting front-end, the engineering and addition of Low Frequency Noise ("LFN") enclosures, additional processing equipment modules to enhance performance, cost and recovery, and a full refurbishment of the existing mineral processing facility components. The roll crushers installed by previous operator, Wolf Minerals, were not sufficiently robust to process high volumes of granite and proved a constant point of failure. Working with a highly reputable supplier to the quarrying industry, we have designed a new crushing facility which utilises proven crushing solutions.

Due to export restrictions imposed by China, there remains an extremely limited supply of tungsten currently being exported from China. As a result, there is a significant and increasing gap between Western world demand and supply of tungsten. The export restrictions imposed by China further highlight the supply chain dependence of the Western world for critical metals, such as tungsten, that find application in key industries such as automotive manufacturing, defence and energy generation.  This growing imbalance of supply and demand has further improved our project economics.

During the period, the Company raised a further £6.7 million through the further issue of Convertible Loan Notes, and post-period end raised a further £5.3 million in July 2025. The Board remains grateful to the small group of investors who continue to actively support the project. 

With a fully permitted site, independently verified revised plans published and growing demand for tungsten, we are confident that our project will be attractive to further investors. The Company is actively working to raise the US$93 million, not including any amounts for debts service or capital raising, required to fund the restarting of mining operations. Hannam & Partners, as broker, have been retained to advise the Company.

Having stepped down as Chairman in December, I am grateful that David Cather has remained on the Board of the Company sharing his knowledge and insight.

Finally, I would like to thank the team at Tungsten West who have supported both management and the Board through this period of progression. It is their dedication that will enable us to recommence mining of critical minerals in the south west of England.

Stephen Harrison

Non-Executive Chairman

CEO's Report

I am pleased to be able to make my first report since joining the Company in October 2024 on our highly significant progress over the last year.

The primary objective in this first period was to finalise a robust re-start plan for the Hemerdon mine that incorporates all the learnings from the prior operations under Wolf Mineral's operation, in addition to drawing upon latest technologies, best practice, further test work programs and input from a range of experts.

A significant amount, but not all, of this work has focused on addressing the shortcomings in the processing plant under prior operations, and I am pleased to say that our updated processing flow sheet and processing plant design incorporates a range of improvements that addresses these shortcomings.

Some of the key improvements to the updated process plant include a new, fit for purpose front-end crushing and screening circuit, a crushed ore stockpile providing buffer from the front-end to the down-stream processing, ore sorters to select higher value material for down-stream processing, installation of new gravity separation process modules and a full plant refurbishment and enhancement for prior areas that remain in the process flow sheet going forward. Further to this, we have also assessed, reviewed and improved many other aspects of the operation, ranging from mine scheduling, ore blending and feed and mitigating our environmental impact. All of this work is incorporated in our extensive Feasibility Study that was completed earlier in 2025 with the summary published in August 2025.

In order to de-risk the project delivery, we have been working in partnership with a leading supplier of engineering, procurement and construction (EPC) services in the UK for the new build components of the project, in addition to undertaking pre-commissioning work on various areas of the pre-existing processing plant.

Further to this, we have also continued to focus on our engagement with our key stakeholders, in particular the Environment Agency, council and the local community groups. We plan to be a long-term part of the region, providing over 300 direct jobs, in addition to over 1,000 indirect jobs. To do this successfully, we must continue to work closely with all our valued stakeholders.

Our next important stage of progressing the project is securing the right funding package for us to make the re-start plan a reality, and undertaking targeted work packages to ensure a streamlined transition to construction as soon as practicable after funding becomes available.

As a philosophy, our approach has always been to focus on the controllables and make the business as robust as possible. Our feasibility study shows Hemerdon will be in the lowest end of the cash cost of production for tungsten. In parallel to this internal work, we have also seen significant improvements in the global tungsten market. As Stephen has noted above, there has been and will continue to be significant changes in the tungsten market. China being a producer of over 80% of the world's tungsten, introduced significant export restrictions in February 2025, and exports have effectively ceased since this time. This has placed unprecedented stress on the global supply chain for tungsten, making the re-start of Hemerdon vital for our down-stream off-takers. We are in close dialogue with all our down-stream partners and appreciate their continued support to assist the Company in progressing its funding discussions to enable us to come on-line as quickly as possible to meet their needs.

In recognition of Hemerdon's key strategic position in the global tungsten supply chain, we were designated by the European Commission in June 2025 as being a Strategic Project under the European Union's (EU) Critical Raw Materials Act, being one of only 13 projects receiving this designation outside the EU. Further to this, in August 2025 the Company also received a non-binding Letter of Interest from Export-Import Bank of the United States ("EXIM"), the official export credit agency of the U.S. Under the new Supply Chain Resilience Initiative, EXIM can consider financing up to US$95 million for a maximum repayment term of 15 years, with anticipated financing not tied to specific equipment purchases, rather being predicated upon the our offtake agreement with U.S. buyers. Both these recent milestones further cement Hemerdon's position as being key part in the global critical metals supply chain to both Europe and the U.S.

We could not have done all of this work in the timelines without the dedicated hard work from our direct employees, consultants and business partners. I extend my sincere appreciation to all of you for continuing to believe in the incredibly robust business we have in re-starting the Hemerdon mine. In addition, we as a business team, also extend our appreciation to our funding providers who have supported us financially to get to this point where we now have a clear and targeted pathway forward.

Jeff Court

CEO

Consolidated Statement of Comprehensive Income

Year ended 31 March 2025

The above results were derived from continuing operations.

Consolidated Statement of Financial Position

Year ended 31 March 2025

The financial statements were approved by the Board on 04 September 2025 and signed on its behalf by:

Alistair Stobie

Director

Company Registration Number: 11310159

Consolidated Statement of Changes in Equity

Year ended 31 March 2025

Consolidated Statement of Cash Flows

Year ended 31 March 2025

Notes to the Consolidated Financial Statements

Year ended 31 March 2025

1 General information

Tungsten West plc ('the Company') is a public limited company, incorporated in England and Wales and domiciled in the United Kingdom.

2 Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The Group financial statements have been prepared in accordance with International Accounting Standards as adopted in the United Kingdom ('UK adopted IAS') and those parts of the Companies Act 2006 that are applicable to companies which apply UK adopted IAS.

The financial statements are presented in Sterling, which is the functional currency of the Group and Company.

Going Concern

The Group is still in the pre-production phase of operations and meets its day to day working capital requirements by utilising cash reserves from investment made in the Group. Over the last year this has been dependent on raising funds via issues of convertible loan notes (CLN). There is no signed commitment from investors to provide further funds under the existing CLN agreement. The Group previously notified CLN holders of multiple defaults of the terms of the CLN agreement. A waiver was subsequently agreed and is in place until 31 December 2025. If further defaults were to arise, or the terms of the waiver be breached or expire before conversion, the notes can be called in for immediate redemption.

At the year-end, the Group had £0.02 million in cash reserves and £2.1 million in late August 2025. The Group expects to supplement its cash reserves through product sales and recovery of amounts previously paid to an equipment supplier for a cancelled order (of £0.7m). The recovery of the amount from the equipment supplier is still subject to negotiation however, the Board believes that this amount will be recoverable during 2025. If these inflows do not arise as expected cash reserves will be depleted sooner than forecast below. If the Group has not completed a major fundraising in late 2025 then it will be need to raise additional short-term funding.

If these fund raises do not occur in 2025 the Group will have insufficient cash to meet its liabilities as they fall due. These conditions indicate that a material uncertainty exists that may cast significant doubt on the Group's and company's ability to continue as a going concern.

In addition to short-term financing, the Group still requires additional funding to complete the MPF rebuild and is in discussions with financing partners to provide the additional capital. The capital amount of the financing, not including financing costs and any financing reserves, if any, is US$93 million.

Until the additional capital is secured, the Group will continue to proceed by utilising existing cash reserves from previous drawings on the 2023 CLN facility. The board will not commit to significant further capital expenditure until the full finance package is in place to complete the rebuild.

Model 1 - Funding for Operating Costs and Obtain Financing

This scenario models management's expectation of cash required to raise finance and general and administrative expenses, including maintaining the existing mine permits. This does not include any expenses related to FEED, or capital expenditures to restart operations. The Company is in discussion with a number of parties regarding financing of operations to complete FEED and capital raising operations.

As a result, the Board intends that the Group to be able to operate as a going concern for the foreseeable future. Consequently, the Board continue to adopt the going concern basis in preparing these financial information despite the material uncertainty referred to above.

Basis of consolidation

The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings drawn up to 31 March 2025.

A subsidiary is an entity controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries of the Group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed as at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, including deferred tax if required. Any excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill.

Changes in accounting policy

None of the standards, interpretations and amendments effective for the first time from 1 April 2024 have had a material effect on the financial statements.

Revenue recognition

To date revenue has mainly related to the sale of low grade concentrate which was left behind by the previous mining operator. This is recognised upon pick up by customers at the fair value of consideration receivable at that date.

Tax

Income tax expense consists of the sum of current tax and deferred tax.

Current tax is based on taxable profit for the year. Taxable profit differs from profit as reported for accounting purposes because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible.

Current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. A provision is recognised for tax matters that are uncertain if it is considered probable that there will be a future outflow of funds to a tax authority. The provision is measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of management supported by the advice of tax professionals contracted by the company.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date.

The Group has submitted research and development tax credit claims. The Group accounts for a claim at the point it considers the claim to be unchallenged by HMRC.

Property, plant and equipment

Land and buildings are stated at cost less any depreciation or impairment losses subsequently accumulated (cost model). Land and buildings have been uplifted to fair value on consolidation.

Plant and equipment is stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The asset under construction relates to costs incurred to upgrade the mineral processing facility and in accordance with IAS 16, have capitalised costs if it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and assets under construction over their estimated useful lives, as follows:

Goodwill

Goodwill is recognised at cost and reviewed for impairment annually.

Intangible assets

Contractual mining rights as set out in the mining lease are recognised as a separate intangible asset on consolidation under IFRS 3.

The mining rights are subject to amortisation over the useful life of the mine which is 27 years (2024: 27 years). Amortisation will be charged from the date the mine is brought into use. Software is amortised on a straight-line basis using a rate of 33%.

Right-of-use assets

Right-of-use assets consist of a lease for the Hemerdon Mine and other property leases under IFRS 16. These assets are depreciated over the shorter of the lease term and the useful life of the underlying asset. Depreciation starts at the commencement date of the lease.

Research and development activities

All research costs are expensed. Costs related to the development of products are capitalised when they meet the following conditions:

(i)            It is technically feasible to complete the development so that the product will be available for use or sale.

(ii)           It is intended to use or sell the product being developed.

(iii)          The Group is able to use or sell the product being developed.

(iv)          It can be demonstrated that the product will generate probable future economic benefits.

(v)           Adequate technical, financial and other resources exist so that product development can be completed and the product subsequently used or sold.

(vi)          Expenditure attributable to the development can be reliably measured.

All other development expenditure is recognised as an expense in the period in which it is incurred.

Capitalised development costs are stated at cost less accumulated amortisation and accumulated impairment losses (cost model). Amortisation is recognised using the straight-line basis and results in the carrying amount being expensed in profit or loss over the estimated useful lives which range from 5 to 15 years.

Exploration for and evaluation of mineral resources

Costs relating to the exploration for and evaluation on mineral resources are expensed.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Trade receivables

Trade and other receivables where payment is due within one year do not constitute a financing transaction and are recorded at the undiscounted amount expected to be received, less attributable transaction costs. Any subsequent impairment is recognised as an expense in profit or loss.

All trade and other receivables are subsequently measured at amortised cost, net of impairment.

Escrow funds

These funds are held with a third party to be released to the Group as it settles its obligation to restore the mining site once operations cease. The debtor has been discounted to present value assuming the funds will be receivable after the useful life of mining operations.

Trade payables

Trade and other payables are initially recognised at fair value less attributable transaction costs. They are subsequently measured at amortised cost.

Convertible debt

Convertible loan notes issued by the group have been assessed as a host liability contract with the conversion option meeting the recognition criteria for an embedded derivative financial liability. The group has taken the option available under IFRS to designate the entire instrument at fair value through profit and loss. The instrument is initially recognised at transaction price net of directly attributable costs incurred. The instrument is remeasured to fair value at each reporting point with the resulting gain or loss recognised in profit and loss.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material.

This includes a provision for the obligation to restore the mining site once mining ceases.

Leases

At inception of the contract, the Group assesses whether a contract is, or contains, a lease. It recognises a right-of-use asset and a corresponding lease liability with respect to all material lease arrangements in which it is the lessee. The right-of-use assets and the lease liabilities are presented as separate line items in the statement of financial position.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. It is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

Short-term or low-value leases, in accordance with the available exemption in IFRS 16, are not capitalised on the statement of financial position and instead recognised as an expense, on a straight-line or other systematic basis.

Share capital

Ordinary Shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Share options

Share options granted to shareholders classified as equity instruments are accounted for at the fair value of cash received or receivable. Share options granted to shareholders which represent a future obligation for the Company outside of its control are recognised as a financial liability at fair value through profit and loss.

Share options granted to employees are fair valued at the date of grant with the cost recognised over the vesting period. If the employee is employed in a subsidiary company, the cost is added to the investment value, in the financial statements of the parent, and the expense recognised in staff costs in the statements of the subsidiary.

Warrants issued in return for a service are classified as equity instruments and measured at the fair value of the service received. Where the service received relates to the issue of shares the cost is debited against the proceeds received in share premium.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which pension contributions are paid into a separate entity and the group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

For defined contribution plans contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as an asset.

Financial instruments

Initial recognition

Financial assets and financial liabilities comprise all assets and liabilities reflected in the statement of financial position, although excluding property, plant and equipment, intangible assets, right of use assets, inventories, deferred tax assets, prepayments, deferred tax liabilities and the mining restoration provision. The Group recognises financial assets and financial liabilities in the statement of financial position when, and only when, the Group becomes party to the contractual provisions of the financial instrument.

Financial assets are initially recognised at fair value. Financial liabilities are initially recognised at fair value, representing the proceeds received net of premiums, discounts and transaction costs that are directly attributable to the financial liability.

Subsequent to initial measurement, financial assets and financial liabilities are measured at either amortised cost or fair value.

Derecognition

Financial assets

The Group derecognises a financial asset when:

•              the contractual rights to the cash flows from the financial asset expire;

•              it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred; or

•              the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of the consideration received is recognised as a gain or loss in the profit or loss.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.

Significant accounting estimates and judgements

The preparation of the financial statements requires management to make estimates and judgements that affect the reported amounts of certain financial assets, liabilities, income and expenses.

The use of estimates and judgements is principally limited to the determination of provisions for impairment and the valuation of financial instruments as explained in more detail below:

Significant accounting judgements

Impairment of non-current assets

To consider the impairment of the Group's non-current assets, management has calculated a value in use of the Group's cash-generating unit which comprises the Hemerdon Mine. This was determined using a discounted cashflow approach, supported by project cashflow forecasts prepared by management. The value of assets impacted is £14.4 million (2024: £24.3 million).

The previous model under the Bankable Feasibility Study ('BFS') has been adapted to reflect the changes in inputs and assumptions as a result of the project re-evaluation. The inputs and key assumptions that were used in the determination of value in use were discount rate, metal prices, metal recoveries, probability of financing, probability of permit award and foreign exchange.

Discounted cashflows are based on future forecasts which reflect uncertainty. Therefore, management has prepared a sensitised discounted cashflow calculation. The underlying assumptions that were stress tested include the discount rate, foreign exchange rates and metal prices and recoveries.

Management were satisfied in the recoverability of the Group's assets and no impairment was required.

Management did separately recognise an impairment of £9.5m (2024: £2.2m) in relation to specific costs capitalised to an area of the Mineral Process Facility which has since been eliminated from the process.

Capitalisation of research and development costs

The Directors have reviewed any costs relating to evaluating the technical feasibility of processing the extracted tungsten ore and have expensed these costs in line with the current policy. The Directors have also reviewed research and development costs and concluded that these costs fail to meet the criteria set out in IAS 38 for the capitalisation of development costs as the Directors still consider that they are in the research phase. The Group will commence capitalisation of development costs at the point when available finance has been secured to complete the project in accordance with IAS 38. Development costs that are capitalised in accordance with the requirements of IFRS are not treated, for dividend purposes, as a realised loss. The Group has currently capitalised no research and development costs in accordance with IAS 38. The Group has only capitalised costs associated with the tangible improvement and installation of property, plant and equipment under IAS 16.

Capitalisation of asset under construction costs

The Directors have reviewed any costs relating to the upgrade of the mineral processing facility in accordance with IAS 16 and have capitalised costs if it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably. At the year end, £4.7 million (2024: £14.1 million) of costs at carrying value have been capitalised. The company acquired the pre-existing machinery in the mineral processing facility for nil cost. Due to the significant period of inactivity, refurbishment of the existing machinery has previously commenced to bring the machinery back into use. The direct costs of restoring or improving the functionality of the plant and machinery have been capitalised on the basis these costs will increase the future cashflows to be generated by the asset. In situations where parts have been replaced no matched disposal has been required in instances where the original asset is carried at nil value.

Founder options

The Directors consider the non-EMI portion of the founder options meet the definition of equity in the financial statements of the Group on the basis that the 'fixed for fixed' condition is met and that they were awarded to shareholders relating to investing in the share capital of the Group. The accounting treatment has been applied in accordance with IAS 32, which requires initial recognition at fair value of consideration paid less costs. As there was no consideration received at inception, the value of the options is £Nil. When exercised the shares are recognised at option price.

Key sources of estimation uncertainty

Restoration provision

The restoration provision is the contractual obligation to restore the mining site back to its original state once mining ceases. The provision is equal to the expected outflows that will be incurred at the end of the mine's useful life discounted to present value. As the restoration work will predominantly be completed at the end of the mine's useful life, these calculations are subject to a high degree of estimation uncertainty. The key assumptions that would lead to significant changes in the provision are the discount rate, useful life of the mine and the estimate of the restoration costs.

A 1% change in the discount rate on the Group's restoration estimates would result in an impact of £0.9 million to £1.2 million (2024: £1.1 million to £1.6 million) on the restoration provision. A 5% change in cost on the Group's restoration estimates would result in an impact of £0.2 million (2024: £0.3 million) on the provision for restoration. More information on the restoration provision is disclosed in note 25.

Escrow account

These are funds being held under escrow with a third party and will be released back to the Company on the cessation of mining once restoration works have been completed. The key assumptions that would lead to significant changes in the escrow account fair value are the discount rate, the future interest rate and the useful life of the mine.

A 1% change in the discount rate on the Group's escrow account estimate would result in an impact of £1.5 million to £3.2 million (2024: £2.4 million to £3.1 million) on the escrow account valuation. A one-year change in useful mining life would result in an impact of £0.0 million (2024: £0.1 million) on the escrow account valuation. More information on the escrow account is disclosed in note 19.

Convertible loan notes

The convertible loan notes are measured at fair value at each reporting point. Due to the fact that the instrument will be settled at a future point in time either by the conversion into equity shares, conversion into an equivalent debt instrument or repayment in cash the valuation is subject to inherent estimation uncertainty. Management commissioned an external expert to calculate the fair value at the year end. The fair value has been calculated using a scenario pricing model and the key underlying assumptions are the probabilities assessed for each underlying scenario, the discount rate selected and the dates of conversion or redemption.

A two month earlier date of conversion or redemption assumption would result in a £0.8m (2024: £2.1m) increase to the fair value of the year end liability.

Discount rates

The Group has had to assess reasonable discount rates based on market factors to use under IFRS. These discount rates have been used on the right-of-use assets, escrow funds, the restoration provision and share based payments. The discount rate on the right-of-use asset is the rate for an equivalent debt instrument. The escrow funds are discounted at the risk free rate which is the yield on an equivalent long-term UK government bond. The restoration provision is discounted at the risk-free rate plus a premium based on the specific risk associated with this liability. The UK risk-free rate increased over the financial year to 5.2% (2024: 4.4%).

3 Financial risk management

Group

This note presents information about the Group's exposure to financial risks and the Group's management of capital.

Credit risk

In order to minimise credit risk, the Group has adopted a policy of only dealing with creditworthy counterparties (banks and debtors) and it obtains sufficient collateral, where appropriate, to mitigate the risk of financial loss from defaults. The most significant credit risk relates to customers that may default in making payments for goods they have purchased.

To date the Group has only made a small number of sales and therefore the credit risk exposure has been low.

Liquidity risk

The Directors regularly monitor forecast and actual cash flows and to match the maturity profiles of financial assets and liabilities to ensure proper liquidity risk management for the day-to-day working capital requirements.

In the view of the Directors, the key risk to liquidity, in the medium term, is raising the additional capital required to meet its estimated Capex spend. The Group's continued future operations depend on the ability to raise sufficient capital through the issue of debt. At present the Group does not have sufficient capital to fund its estimated Capex spend therefore there is a liquidity risk which would result in the Group having to pause its future operations were it to not raise the necessary capital. At present, the Group is in discussions with financing partners to provide this additional capital.

In the short term the key risk is raising sufficient finance to fund the operational costs of the business.

Market risk

Interest rate risk

The Group is exposed to interest rate risk through the impact of rate changes on interest-bearing borrowings. The interest rates and terms of repayment are disclosed in note 24 to the financial statements. The Company's policy is to obtain the most favourable interest rates available for all liabilities. Except as outlined above, the Group has no significant interest-bearing assets and liabilities.

Foreign exchange risk

The Group in the future will also be exposed to exchange rate risk on the basis that tungsten prices are principally denominated in US Dollar. The Group will seek to manage this risk through the supply contracts it agrees with future customers.

The Group does not use any derivative instruments to reduce its economic exposure to changes in interest rates or foreign currency exchange rates at the current time.

Price risk

The Group is exposed to the price fluctuation of its primary products being tungsten and tin. Given the Group is currently in the development phase and is not yet producing any revenue, the costs of managing exposure to commodity price risk exceed any potential benefits. The Directors monitor this risk on an ongoing basis and will review this as the Group moves towards production.

Inflation risk

The Group is exposed to inflationary pressures that impact the core materials required for the operations, mainly being reagents, power and diesel costs. The Directors monitor this risk on an ongoing basis and will review this as the group moves towards production.