Emerging tungsten developer King Island Scheelite (ASX: KIS) has announced the completion of an updated feasibility study and revised mineral reserve estimate for its planned Dolphin open cut tungsten project on Tasmania’s King Island.
The outcomes were based on studies conducted by independent consultants including Xenith Mining and Gekko Systems, which indicated the historical Dolphin mine could be redeveloped as an open cut operation to mine and process around 400,000 tonnes per annum of ore for eight years to produce about 3,500tpa of tungsten oxide concentrate.
In today’s announcement, revised economics have revealed the project has a base net present value of $146 million and internal rate of return of 47%.
Operating costs are expected to be $129 per metric tonne unit of tungsten produced, making King Island’s operating costs among the lowest of global tungsten miners.
Estimated capital costs are estimated at $65 million with a projected payback of 2.75 years. According to King Island, its initial capital costs are considered “highly competitive” with its comparable peers.
“The impressive indicative economics reiterate that we have chosen to develop the right project with the right commodity in the right place and time,” King Island chairman Johann Jacobs said.
King Island also announced a revised mineral reserve estimate of 3 million tonnes of probable reserves at a grade of 0.73% tungsten oxide (at a 0.2% cut-off).
This is new estimate is a reduction from the company’s 2015 estimate of 3.14Mt at 0.73% tungsten oxide, which represented a considerable upgrade from previously reported reserves of 1.9Mt at 0.55% tungsten oxide.
The Dolphin processing plant has been substantially modified since the 2015 reserve estimation with processing to now be primarily conducted through a gravity circuit, followed by a small flotation circuit.
King Island is anticipating the Dolphin mine and processing plant to take about 15 months to be constructed and commissioned after project funding is secured.
According to the company, this timeline is based on the relatively advanced engineering studies and the proposed methodology being based on a modular design.
It also factors in a lead time of about six to nine months for most of the important mobile equipment.
“If financial close can be achieved in the second half of 2019 then first shipment of product can be achieved in the first quarter of 2021,” King Island stated.
The company said it was currently engaged in discussions with suppliers and financial institutions for project funding and was also exploring possible joint venture partnerships.
In April, the company announced it had locked in leading European tungsten powder supplier Wolfram Bergbau und Hutten AG as its first offtake customer for the planned redevelopment of the Dolphin mine.
Under the deal, King Island will deliver 140,000 metric tonne units or 1,400t of tungsten oxide to Wolfram over a four-year period.
The company said it was also in talks with various additional offtake partners.
“Having recently secured the first of a number of multi-year offtake agreements, together with the flexibility in the operating site and supportive local community, we now look forward to achieving frequent operational milestones as we proceed to tungsten production, anticipated in 2021,” Mr Jacobs said.