JOHANNESBURG (miningweekly.com) – ASX-listed Vital Metals has reduced the forecast preproduction capital expenditure (capex) for its flagship 70%-owned Watershed tungsten project, in North Queensland.

An update to the project’s definitive feasibility study (DFS) showed that the currently “highly conducive” market conditions could be capitalised on through a A$143-million injection, nearly A$30-million lower than the initial estimates of A$172-million, said MD Mark Strizek in an update to shareholders.

The cost of the development of the processing plant had contributed to the bulk of the narrowed costs, with a capex of A$105-million, compared with the initial forecast of A$130.5-million.

The cost of deploying the site infrastructure dropped from A$36.2-million to A$32.8-million, while the mining and working capital estimates remained the same at A$2.2-million and A$3.4-million respectively.

For the first three years, cash costs of $124/mtu were expected, with life-of-mine cash costs registering at an average of $148/mtu.

There was also the potential to further lower preproduction capital as the company continued to review the DFS for further opportunities to enhance the project.

With the falling capital and operating costs, favourable currency movements and a strong long-term outlook for tungsten demand, the environment was ripe for the development of a mid-sized resource project.

“This is a great time to back and build a mining project in Australia,” said Strizek.

The fully-permitted project also “fit nicely” into the financiers’ “sweet spot” – large-scale enough to attract larger project financiers, but not too large to make it unworkable.

The company’s relationship with joint venture partner Japan Oil, Gas and Metals National Corporation (Jogmec) also boosted the attractiveness of the project, he said.

“Our Japanese partner Jogmec, which holds a 30% interest, is arranging to transfer its interest to a Japanese company who will participate in and help fund the project’s development.”

The Watershed project also had resource growth potential, with mineralisation remaining open along strike and at depth, meaning an extension to the current 10-year mine life was also likely.