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King Island Scheelite Ltd: DEEP DIVE
OVERVIEW

King Island Scheelite lands first customer as it focuses on 'critical mineral' tungsten

The company today unveiled a production offtake agreement with a Sandvik-owned tungsten supplier.
King Island off the state of Tasmania hosts the old Dolphin tungsten mine
OVERVIEW: KIS The Big Picture
King Island off the state of Tasmania hosts the old Dolphin tungsten mine
  • Wolfram Bergbau und Hutten will take up to 20% of annual production
  • The production offtake equates to about 2,200 tonnes of concentrate produced over four years
  • Tungsten is considered a critical mineral in the US, Britain and the EU
  • The market has stabilised in recent years, with the APT price sitting at US$265-285 an mtu on the old London Metal Bulletin

What does King Island Scheelite do?

King Island Scheelite Limited (ASX:KIS) specialises in tungsten project development in Tasmania. It is run by Johann Jacobs, an executive chairman who has more than 35 years of experience in the resources industry in Australia, South Africa and Indonesia.

Jacobs is the founder and CEO of FinMin Pty Ltd and is an experienced board member who also serves as a non-executive director of Magnis Energy Technologies Ltd (ASX:MNS) (FRA:U1P).

He was previously the chairman of Indiana Resources Ltd (ASX:IDA) (FRA:GDM) and managing director of a coal producer, the Yancoal Australia Limited (ASX:YAL) buy-up Gloucester Coal Ltd (ASX:GCL).

What does King Island Scheelite own?

The key asset is the Dolphin Tungsten Project at the old Dolphin mine on King Island that King Island group is seeking to reopen given a stabilisation in the world tungsten price.

Dolphin project is on the southeast coast of King Island, the most western large island in the Bass Strait and one of the three islands known as the New Year Group.

Dolphin’s resource is about 9 million tonnes at 0.73% tungsten, with the grading increasing to about 1.1 % as the ore body dips underground.

The company has been developing a proposal for Dolphin mine’s redevelopment for about five years and has determined the first eight years of operation should be open cut before mining moves underground for a further eight years.

Today the company announced an agreement with wholly-owned Sandvik AB (STO:SAND) (FRA:SVKB) (OTCMKTS:SDVKY) (OTCMKTS:SDVKF) tungsten supplier Wolfram Bergbau und Hutten AG that would see the engineering group’s subsidiary take up to 20% of annual production from the site.

The offtake milestone is known as the Wolfram Agreement and is for the delivery of 140,000 metric tonne units (mtus), or 1,400 tonnes of WO3, over a four-year period.

The production offtake equates to about 2,200 tonnes of concentrate produced by a redeveloped Dolphin mine over the four years.

Wolfram produces high-quality powders based on tungsten which are used in componentry for high-tech manufacturing in the tooling, automotive, aerospace, energy, infrastructure, electronics and mining industries.

Tungsten is a critical raw material in Britain, the US and the European Union.

The current ammonium paratungstate (APT) price range for intermediate tungsten concentrate containing 88.5% WO3 is US$265 to $285 an mtu.

Wolfram’s take of Dolphin mine output would be referenced to the Fastmarkets MB APT price. Fastmarkets is the old London Metal Bulletin.

King Island has noted concentrate producers generally receive between 75% and 80% of the quoted APT price per mtu of WO3 delivered.

The company had A$1.6 million cash at the end of 2018 and expected A$513,000 of expenses in the March quarter of 2019.

Its budget for exploration and evaluation was A$292,000, with the company expected to file its next quarterly reports by the end of April 2019.

Inflection points

  • Further production offtake agreements for the Dolphin mine restart project

  • Financing and feasibility study milestones

  • Redevelopment commencement, opening and ramp-up

  • Production milestones including break even

  • Tungsten market sentiment and stability

Chairman Johann Jacobs pleased to attract quality partner for tungsten output

“It is extremely pleasing to have attracted the internationally-renowned Wolfram group as our first customer, in what is a highly competitive market,” executive chairman Johann Jacobs told the market this morning.

“The price of ammonium paratungstate has stabilised over the last few months and is starting to firm following the implementation of environmental policies in China and the continued growth of world economies.”

Jacobs told Proactive Investors in an interview published this week, “We’ve been spending the last five years trying to establish the optimal way of restarting the mine.

“We’ve got to a point now where the first eight years of operation will be open cut and that will be followed by eight years of underground.”

 

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