Recent Progress at Hemerdon Tungsten Mine

HARGREAVES SERVICES PLC

(the "Group" or "Hargreaves")

Recent progress at the tungsten mine at Hemerdon

£2.8m disposal of Drakelands Restoration Limited and 10-year Mining Services Contract

Hargreaves Services plc (AIM: HSP), a diversified group delivering key projects and services to the industrial and property sectors, announces recent progress at the tungsten mine at Hemerdon, Devon, which was previously operated by Wolf Minerals (UK) Limited ("Wolf").

Following the announcement by Wolf on 10 October 2018 that it had ceased trading, Hargreaves has been in discussions with the Official Receiver, acting as liquidator of Wolf, and other interested parties including Devon County Council, the Environment Agency and various landowners regarding the future of the tungsten mine.

Earlier this year, Drakelands Restoration Limited ("DRL"), a wholly owned subsidiary of Hargreaves, acquired various freehold and leasehold properties and an assignment of the minerals lease whilst discussions over the site's future progressed. DRL has been reimbursed for the costs of safeguarding and maintaining the site during the period of those discussions.

The Board is pleased to announce that it completed the sale of DRL to a third party, Tungsten West Limited ("TWL"), for £2.8m in cash on 29 November 2019. The sale proceeds will be paid to Hargreaves today. As a result of this transaction, TWL has acquired control of the Hemerdon mine with a view to recommencing tungsten mining operations in due course.

In conjunction with the sale of DRL, Hargreaves has entered into a 10-year Mining Services Contract ("MSC") with TWL to carry out works similar to those previously fulfilled for Wolf. The MSC provides for a minimum £1m per annum fee payable to Hargreaves for a period of eight years commencing no later than two years from 29 November 2019. This annual fee will be additional to any other services which Hargreaves may provide under the MSC.

The MSC also contains advance payment provisions in respect of mining services, which ensure that Hargreaves will not be exposed to any credit risk. Until mining operations commence, Hargreaves will continue to carry out maintenance services at the site on existing terms.

The Board estimates that the net gain on the disposal of DRL after accounting for legal and other expenses, including the acquisition of the minerals lease and freehold properties, will be approximately £2.4m. This transaction will be accounted for as an exceptional item in the financial results for the year ending 31 May 2020.

Gordon Banham, Group Chief Executive of Hargreaves Services, said: "We have worked closely over the last year with the many stakeholders of the former tungsten mine at Hemerdon. We are pleased to have achieved a solution that creates the opportunity for future tungsten production at the mine with associated local employment and provides our shareholders with substantial medium term earnings potential." 

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