Executive director Chris Ellis backs King Island with $2m loan to advance Dolphin tungsten project
King Island Scheelite executive chairman Johan Jacobs said the $2 million loan was a “great result” for shareholders.
King Island Scheelite’s (ASX: KIS) executive director Chris Ellis has backed the company with a $2 million loan, enabling King Island to continue advancing its wholly-owned Dolphin tungsten project in Tasmania, while development financing discussions proceed.
The loan attracts an interest rate of 8% per annum and will be repaid through future capital raisings. However, it also includes a mechanism for conversion of the loan into shares in King Island.
Speaking with Small Caps, King Island executive chairman Johan Jacobs said the loan was a “great result” for shareholders.
“It provides the necessary working capital for day-to-day activities while we continue to progress our ongoing financing discussions as we move towards the redevelopment of the Dolphin tungsten project,” he added.
Shareholders will be given the chance to vote at King Island’s next annual general meeting to approve securing the loan against freehold land held by King Island’s wholly-owned subsidiary.
Dolphin tungsten project
In early June, King Island revealed the results of an updated feasibility study into re-starting operations at Dolphin, which located on Tasmania’s King Island.
The study indicated the project has a best net present value of $146 million with an internal rate of return of 47%.
To redevelop the historical Dolphin operation, capital costs are estimated at $65 million with a payback period of 2.75 years.
The initial eight-year operation would comprise an open cut mine and processing of 400,000 tonnes per annum of ore to produce about 3,500tpa of tungsten oxide concentrate.
Mr Jacobs referred to study’s economics as “impressive” and said the company had chosen to develop the right project with the right commodity in the right place and time.
Underpinning the study was a revised reserve estimate of 3Mt at 0.73% tungsten.
King Island hopes to lock-in financing to begin developing Dolphin before the end of the year and is targeting first shipment of its tungsten material for the March quarter of 2021.
In addition to ongoing negotiations with potential financiers, King Island noted it was also exploring possible joint venture partnerships.