Vital improves Watershed economics

PERTH (miningweekly.com) – The share price of tungsten developer Vital Metals jumped by nearly 15% on Tuesday after the company announced that optimisation studies at its Watershed project, in far north Queensland, had boosted the project value.

Metallurgical testwork optimisation at Watershed has improved tungsten recoveries from 74% to 77%, as the company focused on optimising the feed size to the dense media separation (DMS) plant to increase efficiencies and recoveries.

MD Mark Strizek told shareholders that the results from the DMS testwork had shown that simple changes to the flow sheet should improve tungsten recoveries, resulting in an uplift to the project value.

“Our focus on continuous improvement of the shovel-ready Watershed tungsten project has the potential to be the best development ready project in a tier-one mining jurisdiction,” he added.

The company has also identified a number of opportunities to save on capital and operating costs.

The Watershed project now has a post-tax net present value (NPV) of A$150-million and an internal rate of return (IRR) of 32%, compared with a NPV of A$112-million and an IRR of 22%, as estimated in a 2014 definitive feasibility study (DFS).

The initial DFS estimated that the project would require a capital injection of A$172-million to deliver a 2.5-million-tonne-a-year operation with a mine life of ten years. Vital is estimating a capital cost of A$100-million.

Operating expenditure has been estimated at nearly 20% lower than the 2014 DFS, with life-of-mine total costs estimated at A$204/t.

Vital shares traded at a high of 0.8c a share on Tuesday, up from a low of 0.7c a share.