King Island Scheelite (ASX: KIS) has signed a multi-year tungsten offtake agreement with Kalon Resources, part of the giant Hong Kong-based trading conglomerate Noble Group.
The deal involves 50% of the company’s planned production — the supply of 1,500 tonnes per year of tungsten concentrate for an initial three-year period from the historic Dolphin tungsten mine located on Tasmania’s King Island.
Kalon Resources specialises in trading industrial metals including tin, tantalite, columbite, chrome and manganese, as well as tungsten.
The new customer for the King Island tungsten works in partnership with mining companies, mineral processing facilities and industrial end-users with teams in Singapore, Hong Kong, China, Africa and Brazil, the release noted.
At current pricing, King Island would earn sales revenue of about $69 million over the three-year period.
This comes on top of the offtake agreement signed in April 2019 with Austria-based tungsten powder supplier Wolfram Bergbau und Hutten ,which involved about 20% of the planned annual production at Dolphin.
King Island said its offtake deals now equal about 70% of projected annual supply from the mine.
“This [latest] contract materially advances the capacity to attract funding for production,” the company added.
Dolphin mine expected to resume operations next year
At full production, Dolphin is expected to produce 3,100tpa of tungsten trioxide concentrate.
King Island executive chairman Johann Jacobs said the company is looking forward to resuming production next year.
“Tungsten is increasingly recognised as a mineral of national and strategic significance,” he added.
Mr Jacobs said reliable supply lines of tungsten are becoming increasingly valuable.
In the June quarter, King Island continued metallurgical test work at ALS Geochemistry’s laboratories in Burnie, Tasmania.
King Island describes Dolphin as “one of the world’s richest tungsten deposits”. It has a resource of 9.6 million tonnes at 0.9% tungsten trioxide.
The current feasibility study is based on an eight-year mine life, but King Island is investigating the viability of underground mining below and east of the proposed open pit after the open pit resources have been depleted.
Tungsten discovered at Dolphin more than a century ago
It was in 1911 when a prospector, searching for tin, discovered what is now the Dolphin deposit.
Mining began in 1917 but was short-lived, closing down in the mid-1920s.
It was later revived, and then production boomed during World War II as the federal government provided equipment to extract the strategic metal.
Prices soared again during the Korean War, by which time, the mine was operated by a listed company, King Island Scheelite (1947) Ltd, which was taken over by the former Peko-Wallsend in 1969.
The mine, along with many other Western tungsten producers, was hit in the 1908s by large tungsten quantities being dumped by China into the market and closed in 1990.