Name and Location
Watershed tungsten project, Queensland, Australia.

Client
Vital Metals (70%) and joint venture partner Jogmec (30%).

Project Description
Vital Metals is on track to become an Australian tungsten concentrate producer after delivering a positive definitive feasibility study (DFS) on its flagship Watershed tungsten project, in Queensland, which outlines a robust 2.5-million-tonne-a-year project.

The DFS highlights the technically low-risk and economically robust nature of the project, which is expected to become one of the most significant tungsten mines in the western world.

The project has total measured, indicated and inferred mineral resources of 49.32-million tonnes at 0.14% tungsten trioxide (WO₃), or 70 400 t of contained WO₃, at a cutoff grade of 0.05% WO₃. Based on the measured and indicated components of this mineral resource, the project has a maiden proved and probable ore reserve comprising 21.3-million tonnes, grading 0.15% WO₃ for 31 400 t of contained WO₃ and a strip ratio of 3:1 waste to ore.

The mine will initially be developed as openpit operation, with excavators and trucks used for mining. Based on a mining rate of 2.5-million tonnes a year, it is expected that the project will have a ten-year mine life, with excellent potential to further increase the mine life through future exploration.

Ore will be delivered to a run-of-mine stockpile before being processed through a circuit containing crushing, X-ray transmission ore sorting, rod milling, and gravity separation with spirals, ball milling and flotation.

The average process recovery will be 73.6% WO₃ into a high-grade concentrate containing >65% WO₃ , with very low arsenic (<0.005%) and uranium/thorium (<30 parts per million) levels, making it extremely attractive to (APT) producers located in Japan, the US and Europe.

Net Present Value/Internal Rate of Return
The project has a pretax net present value at a rate of 8% of A$178-million and an internal rate of return of 28%.

Value
The capital cost of the project, including an access road, power, an accommodation village, earthworks, mining and a processing plant, has been estimated at A$172-million, including contingency.

Duration
With all the native title, environmental and mining leases in place, the project is ready to be developed. The critical item in the development schedule is a final investment decision to be taken with Japan Oil, Gas and Metals National Coportion (Jogmec).

Following this decision and the completion of a suitable financing package for the project, it is expected that initial site works could start in early 2015, comprising concurrent construction of the access road, the accommodation camp and the start of site works for the establishment of the process plant, the run-of-mine pad and the waste dump.

Following the site establishment works, the project implementation schedule envisages first ore being delivered to the mill before the end of 2016 and first concentrate production being shipped early in 2017.

Latest Developments
Following completion of the DFS, the next development milestone will be for Jogmec to transfer its 30% interest in the project to a Japanese company with interests in the tungsten industry.

This company will become a long-term offtake and development partner for the Watershed project and is expected to provide assistance in securing project finance.

Discussions with the new project partner are progressing, but, given the advanced state of the project and that all the development approvals are in place, this has the potential to simplify finance negotiations, as most of the normal conditions precedent that would pertain to project approvals would not apply.

Watershed is, therefore, well positioned for the next phase of its development into a mine providing a secure, reliable supply of tungsten concentrate.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Vital Metals, tel +61 8 9388 7742, fax +61 8 9388 0804 or email vital@vitalmetals.com.au.