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soUtHeRn stAtes

Kiss of life for Tassie tungsten

ne of Tasmania’s oldest mines is set to at just $73 million, with operating costs of KIS recently signed an offtake agree-
Obe revived nearly three decades after it $130/mtu. ment with industrial minerals specialists
was shuttered due to low tungsten prices. While the feasibility study was well re- Kalon Resources – a wholly-owned sub-
King Island Scheelite Ltd (KIS) executive ceived by the company’s closest support- sidiary of Noble Group Holdings Ltd – for
chairman Johann Jacobs told Paydirt the ers, what triggered the initial spike in the 98,000 mtupa, representing about 50% of
company was poised to declare financial KIS share price was the award of a $10 mil- the proposed annual production from Dol-
close for its proposed restart of the Dol- lion loan from the Tasmanian Government phin, which is set to yield $69 million over
phin tungsten mine this month. First con- in early February. the initial three-year term.
centrate production is expected within 15 Jacobs said the 10-year government It was the company’s second offtake
months of the start of construction. loan represented more than just financial agreement, having previously entered into
Dolphin – near the historic mining town support for the project. a four-year contract with Sandvik Group
of Grassy on the south- subsidiary and leading
east coast of King Is- tungsten powder sup-
land, the most western plier Wolfram Bergbau
island in the Bass Strait un Hutten AG for 35,000
between Victoria and mtupa, or about 20% of
Tasmania – last oper- the proposed annual
ated in 1992 when pro- production, yielding es-
longed low tungsten timated revenue of $33
prices forced the mine’s million.
closure with more than KIS enjoyed a second
half of the known re- share price spike after
source still in the ground. raising $5.6 million via a
KIS has owned the placement which includ-
project for the past 16 ed a cornerstone invest-
years, with Jacobs and ment of $4 million from
fellow director Chris El- Swiss-based D.A.CH.S.
lis coming into the fold in Capital AG. Those funds
late 2013. Yet it has only have since been used to
been in the last year that wipe the company’s out-
the fruits of their hard standing debt ahead of
labour have become ap- financial close.
parent. Jacobs said many
“The project is now investors were drawn
shovel ready,” Jacobs King Island Scheelite could restart operations at the Dolphin tungsten mine within 15 to the Dolphin project
said. “It’s got EPA ap- months of achieving financial close, which is expected this month because of its high re-
proval, it’s got a mining source grade of 0.9%
lease, we’ve appointed a debt arranger and “The Tasmanian Government can see tungsten.
the information memorandum has gone we are looking to provide significant em- “When we completed the underground
out to them. ployment opportunities not only on the is- feasibility study, we used a cut-off grade of
“We are in discussions with two top-tier land but within Tasmania as well,” he said. 0.7%,” he said. “There isn’t another tung-
brokers to do the equity component, so our “During construction we’ll be employing sten project in the western world that has a
timeline is that we are aiming for financial about 85 people and then at steady-state grade anywhere approaching 0.7%, so the
close sometime between the beginning production we’ll have around 65 full-time Dolphin project in itself is head and shoul-
and end of June 2021. From there, the pro- employees. ders above any other project in the world
curement construction phase is about 15 “All of that is linked in with the Federal with regard to grade.
months, culminating in first concentrate in Government’s critical minerals initiative; “Grade is very, very important in the suc-
the last quarter of next year.” they’ve established the Critical Minerals cess of a tungsten project and certainly that
KIS shares traded at a 13-year high of Facilitation Office (CMFO) in Canberra and was one of the factors the Swiss investor
35.5c in late March on the back of the com- we’ve been in dialogue with them. I know advised me is what attracted them to come
pany reporting a string of key milestones, the Tasmanian Government is working on. And obviously being within Australia…
beginning with the results of a final feasibil- very closely with the CMFO as well with it’s a relatively safe jurisdiction in terms of
ity study outlining plans for both open-cut regard to our project. stability and security of tenure for miners.”
and underground mining operations at Dol- “The CMFO in itself doesn’t have any Jacobs said the only technical work left
phin. money, but they are encouraging compa- to be completed on the project before offi-
Based on eight years of open-cut produc- nies to participate in the local manufactur- cial construction work could begin was test
tion at 400,000 tpa and a further six years ing initiative which is about the value-add- work to finalise the throughput capacity of
of underground production at 300,000 tpa, ing to resource materials before they are the gravity circuit which has long been ear-
the project is expected to generate a pre- exported. We are busy looking at poten- marked as the most cost-effective method
tax NPV of $241 million, IRR of 43% and tially exporting sodium tungstate rather just for maximum recovery.
payback in 2.25 years. Capex is estimated the export of concentrate.” – Michael Washbourne

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