King Island Scheelite (ASX: KIS) has boosted its cash reserves further after a $200,000 placement to independent process engineering company Gekko Systems Pty Ltd.
The placement involved King Island issuing the engineering company more than 2.4 million shares at $0.082 each.
According to King Island executive chairman Johann Jacobs, Gekko has played a key role in the company’s activities at its flagship Dolphin tungsten project on Tasmania’s King Island, with Gekko handling all the project’s engineering activities to-date.
“This placement aligns the interest of King Island shareholders and one of our key contractors,” Mr Jacobs said.
“This is a direct reflection of the belief that those associated with the project have in our goal of recommencing production at Dolphin,” he added.
Gekko has been associated with the Dolphin project for the past two years and was recently engaged to design the project’s processing plant based on ALS Laboratories’ flowsheet.
The engineering company is currently completing the plant’s design and costings, including estimates of operating and manpower costs.
King Island said Gekko will continue to refine the plant’s layout and procurement details to underpin a fast-tracked construction and commissioning timeline.
Today’s placement news follows executive director Chris Ellis backing the company last week with a $2 million loan.
It is expected the loan, which attracts an 8% per annum interest rate, will be repaid through future capital raisings. However, it includes a mechanism to be converted into King Island shares.
Mr Jacobs said the funds provided the company with the necessary working capital for day-to-day activities, while it advances development financing discussions.
A feasibility study released in June revealed capital expenditure of $65 million was required to recommission the project and create a 400,000tpa open cut mine capable of producing 3,500tpa of tungsten oxide concentrate.
The study estimated the project’s base net present value was $146 million with an internal rate of return of 47%.
“The impressive indicative economics reiterate that we have chosen to develop the right project with the right commodity in the right place and time,” Mr Jacobs said.