Breakaway Research quoted in the December issue of the Australian Mining Review, in the article featuring King Island Scheelite, ‘Historic Mine Forges New Future’.
To view the article, visit the Australian Mining Review website: http://australianminingreview.com.au/
As written by Breakaway Research on King Island Scheelite (April 2014):
- The King Island Scheelite Mine is a high grade historic tungsten producer, having produced in the order of 9.7Mt @ 0.64% WO3
- The Company is currently scoping a low capex staged open cut and underground operation over the historic operations, to produce approximately 36,000t of WO3 from a LOM mill feed of 400,000tpa, grading at an average of ~0.83% WO3
- The current proposal combines elements of two past fully permitted development plans - a proposed 2006 open cut and 2012 underground operation
- Development and environmental approvals are still in place – only minor changes will be required to permit the current option
- Our high level economic analysis indicates a robust project largely by virtue of the grade
- Indicative unfunded NPV8 project valuation (not discounted for project stage or risk) of ~$111 million, with an IRR of 35%
- Potential annual after tax free cash flows of $22-$29 million
King Island Scheelite is looking to fast track their King Island Scheelite project, with an aim to commence production possibly as soon as early 2016. This historical high grade producer still has significant open cut and underground resources, at grades significantly higher than ASX-listed peers.
The key to the King Island project is its grade – an average LOM feed grade of ~0.83% WO3 contributes to a potentially robust operation. There is also good exploration potential on the flanks of the mineralising intrusives.
The register is dominated by key stakeholders in the project (including the directors), and hence we see significant motivation to generate value in the Company, which will benefit all shareholders.
We see good value in King Island Scheelite, with our high level economic analysis indicating a robust project with a potential value well above current price levels. Key price drivers will include securing an offtake deal, and, down the track, successful project funding and then execution.
King Island Scheelite (ASX: KIS, “King Island” or “the Company”) has completed a DFS and supplementary studies for re-opening the historic King Island Scheelite Mine located on King Island, in Bass Strait, Australia.
Current open cut and underground hard rock resources are in the order of 6.4Mt @ 1.20% WO3 (10.6Mt @ 0.93% WO3 using a lower cut-off), with additional low grade resources in the tailings dam.
The Company is considering a staged open cut and underground development, and is looking to fast track development of the project. Little needs to be done with regards to permitting by virtue of approvals being in place from previous work, with this development not proceeding due to circumstances largely out of the Company’s control.
King Island Scheelite (“King Island” or “the Company”) is currently scoping a combined open cut, limited tailings retreatment and underground operation at its 100% held King Island Scheelite Project (“the Project”), with the potential to produce up to 36,000t of WO3 over a 13 year mine life. This is in effect a hybrid of two previous studies – a 2006 DFS that was based on a large open cut at the historic Dolphin Mine, and a 2012 study based on tailings retreatment followed by underground mining at Dolphin and Bold Head.
The historic King Island operations operated at various times between 1917 and 1990,when they closed due to very depressed tungsten prices…
…Tungsten is unique, having the highest melting point and lowest coefficient of expansion of any metal. It is also environmentally benign, being corrosion resistant and thus neither breaking down nor decomposing. In the form of tungsten carbide, it is extremely hard, being 2nd only in hardness to diamond in the more common materials.
The major use for tungsten is in the form of tungsten carbide, where it is used for applications that require extreme abrasion resistance. These applications include mining drilling bits and cutting tips, and make up approximately 55% of tungsten demand. It is also an important alloying component for making hardened steels, which comprise around 20% of demand.
There are also a number of other uses, including in lighting, electronic components, armaments and sporting goods.
Tungsten is primarily found in the minerals scheelite and wolframite, and first stage processing involves beneficiate on to a concentrate – either a premium +65% WO3 or a lesser value +50% WO3 product. The concentrates are generally then converted to an intermediate ammonium paratungstate (“APT”) product, before being converted to elemental powder and WC.
Click here to be taken to report: http://www.breakawayresearch.com/research-portfolio/king-island-scheelite-limited-april-2014-report
About King Island Scheelite Limited:
King Island Scheelite Limited "KIS" is an Australian Securities Exchange (ASX) listed company focussed on the exploration, development and production of tungsten deposits.
The Dolphin Project is focussed on redeveloping the original scheelite mine on King Island. The resource comprises remnant ore bodies at Dolphin, Bold Head and Tailings of 9,109,000 tonnes containing 81,720 tonnes of WO3. The initial viable redevelopment plan involves reopening the former underground mine at Dolphin and constructing a processing facility to produce approximately 3,500 tonnes of WO3 concentrate per annum. Once funding is confirmed, production is expected to recommence within 24 months. The potential to reopen the nearby Bold Head mine and incorporate additional down-plunge tonnes at Dolphin will further improve returns. (Source King Island Scheelite Limited website; http://www.kingislandscheelite.com.au).
About Breakaway Research:
Breakaway Research is part of the Breakaway Investment Group, and has been providing thematic and company research on the resources sector for over 8 years. A particular strength of the Breakaway research team is that it combines technical experience with financial expertise. This leads to research reports that are supported by a technical assessment of resource projects along with financial metrics for the company.
An important function of these independent research reports is to provide investors and company shareholders with the identification and quantification of the perceived value drivers within a company, which the company may otherwise find difficult to present. Indeed shareholders are an often overlooked but important target in the distribution of these research reports – with well informed retail investors often creating a stable share register.
Our high research quality stems from the extensive experience of our analysts, combined with a process of extensive interviews with company management and industry specialists, as well as site visits if appropriate.