Vital Metals (VML) - Emerging tungsten miner

[Huang Chung]

This is the second of my three 'x-club' picks.

VML is an emerging tungsten producer. Their main project is known as the Watershed Project, and is located about 100km NW of Cairns.

VML's market cap is $50m (give or take). VML's share price stumbled yesterday after the company released its interim resource statement, no doubt because of concerns from some quarters about the grade reported.

Extract from MiningNews.net. published yesterday:

QUEENSLAND-focused explorer Vital Metals has unveiled what it believes is one of the largest tungsten resources outside of China at its Watershed project.

Vital this morning said it had received a global resource for Watershed of 21.79 million tonnes grading 0.26% tungsten oxide for 56,300t contained metal, using a cut-off of 0.1%.

Vital managing director Bill Ryan told MiningNews.net that investors should not be perturbed by the grade of the global resource.

Ryan said the resource did not take into account the positive impact selective mining would have on the grade of the deposit.

"Some people will probably be disappointed in the grade, but this is not how it will be mined," Ryan said.

Vital will begin a program of drilling on an unusually tight spacing of around 10m within selected areas of the deposit in order to calculate a grade more likely to reflect the likely mining head grade.

Ryan said the company expected that program to generate a grade of 0.35-0.45% tungsten oxide.

Ryan said the resource put Vital well on track to reach its objective of a operation producing 4000t of tungsten oxide per annum over at least 10 years.

"This confirms [Watershed] as a seriously big deposit, it puts it in the top four tungsten deposits outside of China," Ryan said.

Using current Australian dollar tungsten prices, Ryan said the contained metal within the deposit was worth around $1.4 billion.

Details on their current drilling program were released today. It's well worth a look, as there seems to be plenty of scope to increase the size of the current resource.

Not everyones' cup of tea for sure, but VML does seem to offer plenty of value at these levels, for those happy to take on a higher level of risk.

Disc: Holding.

[Huang Chung]

Another release to the market today confirming the presence of scheelite both north and south of the current resource.....a quick look at the map indicates that scheelite is present in outcrops over an area close to twice the existing resource.

$1.4 billion worth of contained metal at current prices...and that's without factoring in any extensions.

According to my back of the envelope calculations, if VML was in production now, it would be trading on a P/E of about 1.

[Huang Chung]

Vital yesterday announced that a second series of trials on the use of conventional ore sorting technology had produced encouraging results, which strongly support the company's low cost processing strategy.

VML Executive Chairman Bill Ryan said that 'the essence of these results, which confirm preliminary tests last year, is that overall feed tonnage to the downstream gravity and floatation circuits can be reduced by 50 percent in a low cost, pre-concentration step, while retaining a very high metallurgical recovery rate'.

Ore sorting can be used as a low cost method of pre-concentrating course crushed ore in situations where pieces of mineralised ore are able to be distinguished by a characteristic, and thereby physically separated from the surrounding barren or low-grade waste.

In the case of scheelite, the mineral has the unique characteristic of displaying a strong fluorescent reaction when illuminated with short wavelength ultraviolet light or conventional x-rays, in a similar manner to bones in conventional x-rays.

The crushed material is fed in a thin layer on a fast moving conveyor belt and exposed to x-ray or UV light.

The response is then sensed by a computer controlling high pressure air-blast jets, which are programmed to blast and separate the mineralised ore away from the background low grade material or waste.

...an interesting technical solution to managing the problem of low grade ore.

[Huang Chung]

Excellent presentation released today by VML. Some interesting points to note:

- Global consumption of tungsten is increasing at about 4% per annum, with China rising above 20% per annum.

- Chinese reserves and average grades are declining (China is the worlds major tungsten producer).

- Russian and American strategic stockpiles effectively exhausted.

- Chinese moving further downstream and increasingly starving other processors of raw material.

- Annual supply gap of approximately 4,000 tonnes per annum developing over the next five years.

- Development study for Watershed is based on an output of 4000 tpa of contained tungsten in concentate (6.5% of world market).


Tungsten is fetching around $25,000 a tonne these days, and, all things being equal, the above points suggest that the price of tungsten will remain healthy.

[FarmerGeorge]

HC - I have a naive farmers question: what is an 'MTU'. It seems to equate to 1/100 of a tonne looking at the presentation and your own words above but I'm just wondering if you have a definition of it?
VML certainly look interesting: don't have too many shares and a good proportion of them are tightly held. The structure is much like PDZ = good leverage. Plenty of $ in the ground at current prices. I see some risk in the evironmental and native land things they have not worked through yet. I dont see any mention of projected production costs either which would be helpful in valuation.

[Huang Chung]

Hi again Farmer G,

An MTU is a 'metric tonne unit', which is 10kg (i.e. 1% of a tonne).

Tungsten is often priced in MTU's, and is currently fetching around $250 per MTU.....i.e., $25,000 a tonne.

Yes, Environmental and Native Title issues need to be worked through, which is not unexpected of course.

Costs vs income will depend on the level of success they have in upgrading the resource (which VML have indicated they expect to come in at 0.35 to 0.45% tungsten oxide), the extent that they selectively mine the deposit, and the success of pre-concentrating the ore (mentioned in a previous post). I might have some figures at work that may help. I'll see if I can dig them up tommorrow.

One problem VML might have is a lack of investor knowledge of tungsten mining, grades etc.....not quite as well understood as zinc, copper and nickel unfortunately.

[FarmerGeorge]

Thanks for that, was just a little outside my 'circle of competence', so to speak. I agree with the lack of investor knowledge issue, for me that make this a more attractive opportunity. I made a pleasing gain on LYC and I 'm increasingly looking at less obvious natural resources.

[FarmerGeorge]

Into a trading halt Huang Chung. Any thoughts on that? Capital raising perhaps?

[Huang Chung]

Yeah FG, a capital raising is more than likely at this stage of the game. If it is, I hope the current holders will get a look in.

FG - 'I agree with the lack of investor knowledge issue, for me that make this a more attractive opportunity'.. No arguments here FG. I guess the trick is to do your homework and get set before more punters gain an understanding of the metal, its markets, and can compare grades, tonnage etc of different deposits....a bit like how everyone had to go back to school to do 'uranium 101', or as can be seen in by the likes of ADY, 'lithium 101'....not saying tungsten is going to 'do a uranium' in terms of price or level of investor / speculator interest, but just in terms of more people gaining familiarity with the product.

[Scuffer]

Isn't this the stuff they make the ceramic tips for machine tools out of?

[Huang Chung]

From Wikipedia....

Tungsten is a metal with a wide range of uses, the largest of which is as tungsten carbide (W2C, WC) in cemented carbides. Cemented carbides (also called hardmetals) are wear-resistant materials used by the metalworking, mining, petroleum and construction industries. Tungsten is widely used in light bulb and vacuum tube filaments, as well as electrodes, because it can be drawn into very thin wire with a high melting point. Other uses:

Its high melting point makes tungsten suitable for aerospace and high temperature uses which include electrical, heating, and welding applications, notably in the GTAW process (also called TIG welding).
Hardness and density properties make this metal ideal for making heavy metal alloys that are used in armament, heat sinks, and high density applications, such as weights, counterweights, ballast keels for yachts and tail ballast for commercial aircraft.
The high density makes it an ideal ingredient for darts, normally 80% and sometimes up to 97%. This allows darts containing tungsten to have a smaller diameter than those of other metals at the same weight, permitting tighter groupings.
High speed steel contains tungsten and some tungsten steels contain as much as 18% tungsten.
Superalloys containing tungsten are used in turbine blades and wear resistant parts and coatings. Examples are Hastelloy and Stellite.
Tungsten powder is used as a filler material in thermoplastic composites which are used as a nontoxic substitute for lead, in bullets, shot, and radiation shields.
Tungsten chemical compounds are used in catalysts, inorganic pigments, and tungsten disulfide high-temperature lubricants which are stable to 500 °C (930 °F).
Since this element's thermal expansion is similar to borosilicate glass, it is used for making glass-to-metal seals.
It is used in kinetic energy penetrators, usually alloyed with nickel and iron or cobalt, to form heavy alloys, used as an alternative to depleted uranium.
Tungsten is used as an interconnect material in integrated circuits. Contact holes are etched in silicon dioxide dielectric material, filled with tungsten and polished to form connections to transistors. Typical contact holes can be as small as 65 nm.
Tungsten carbide is one of the hardest carbides and is used in machine tools such as make milling and turning tools, and used together with cobalt and carbon is often the best choice for such applications.
Used extensively for shielding in the radiopharmaceutical industry. It is often employed when transporting individual FDG doses (called 'pigs') - the high energy of fluorine-18 makes lead much less effective.
Tungsten is used in the emitters of focused ion beam and electron microscopes.
Tungsten is also beginning to be used in jewelry. Its hardness makes it ideal for rings that will never scratch, are hypoallergenic and will not need polishing. This property is especially useful in designs with a brushed finish.
Miscellaneous: Oxides are used in ceramic glazes and calcium/magnesium tungstates are used widely in fluorescent lighting. Crystal tungstates are used as scintillation detectors in nuclear physics and nuclear medicine. The metal is also used in X-ray targets and heating elements for electrical furnaces. Salts that contain tungsten are used in the chemical and tanning industries. Tungsten 'bronzes' (so-called due to the colour of the tungsten oxides) along with other compounds are used in paints. Some types of strings for musical instruments are wound with tungsten wire.

High speed steel (often abbreviated HSS) is a material usually used in the manufacture of machine tool bits and other cutters. It is often used in power saw blades and drill bits. It is superior to the older high carbon steel tools used extensively through the 1940s in that it can withstand higher temperatures without losing its temper (hardness). This property allows HSS to cut faster tha

[Huang Chung]

Just to expand on my last, rather flippant comment on non-toxic bullets...I recall reading a couple of months ago that the U.S. Navy was refused permission to set up a live fire zone on Lake Michigan because of concern about the amount of lead that would be deposited on the lake bed from the spent rounds (presumably .50 cal MG, 25mm chain gun rounds and the like)...so the use of lead bullets is a real problem at least in some of the more sensitive environments.

They also had to move away from using depleted uranium as the penetrator in their CWIS 20mm missile defense 'gatling gun', used on nearly all their ships as well as the ships of many other western navys, for similar reasons....I believe they now use a tungsten penetrator instead.

[Scuffer]

I know that the tungsten carbide machine tool tips cost a fortune and engineering machines use **** loads and have done for years.

[Huang Chung]

Yep, capital raising Farmer George.

No complaints here...fully underwritten non-renouncable one for eight offer at 60c, with a free attached option for every two shares subscribed for exercisable at 80c in just over a years time.

Very fair deal for shareholders, in my view.

[FarmerGeorge]

Turns out you are not the first to pick this one HC. Others on the forum have also done very well out of it, I just ran a search. Thanks for the heads up, scoured the net and VML website, bought in on the dip after the placement announcement, up about 20%ish with placement shares and options to come. So far, so good.

[Huang Chung]

Well there you go FG....didn't realise there was another thread. Yes, these guys were talking about Vital before I became aware of it. I hope they kept their shares.....

Anyhoo, glad you did your own independent research and came to a positive conclusion. Nice timing by the way....just that momentary dip after the announcement and then it powered ahead. VML is now ex-entitlement, but it hasn't dropped back...a bit of a wobble this morning but closed flat for the day.

Cheers HC [8D]

[Huang Chung]

FG....if you've got the time, do a bit of homework on Industrial Minerals Corporation (IDM). Will start a thread sometime soon.

Disc. I hold. :)

[Huang Chung]

Vital was up 4.3% to 85c on what was otherwise a dog of a day.

All the more impressive considering that their one for eight rights issue with attached oppies has gone ex-entitlement.

When the market settles or rebounds, VML might start to get some momentum.

[FarmerGeorge]

Up some more today, any idea what's happening HC? Glad I took up the full entitlement. With the market today VML is holding me at breakeven pretty much on its own right now. I looked into IDM but it doesn't appeal to me: it may be successful but I didn't think it looked really cheap. Best of luck with it though, will continue to monitor.

[Huang Chung]

Seems like someone is trying to build a stake, hey Farmer George. Just short of half a million shares changes hands again today, for a gain of 5.3% That's nearly a 10% gain whilst the rest of the market has been heading south.

I wonder if its got anything to do with the Consilodated Minerals bidding war?....CSM are VML's major shareholder with a 13.7% stake.

[Huang Chung]

VML shot up by 12% today, after what looks like a forced seller took it down by 16% on the close yesterday.....it's enough to give you a nasty case of whip-lash. [B)]

Other than that momentary blip, VML has been a tower of strength in this torrid market.

[Huang Chung]

Even the very steadfast VML wilted under the pressure today.....so I bought some more. :):confused::eek:

[Huang Chung]

Extract from the 'Pure Speculation' column in the business pages of today's Australian....

...'Bill Ryan's tungsten vehicle, Vital Metals, which has a JORC resource of 56,300 contained tonnes, fell from 92c last month to as low as 56c a week ago. Like iron ore, there has been no price erosion with tungsten still fetching $US25,000/tonne.
Interestingly, one of Japan's largest trading houses, Sojitz, has just sealed its takeover of Toronto-listed Primary Metals, a producer of tungsten concentrates. And then there was the report in the Johannesburg-based daily Business Report that Japan's Ministry of Economy, Trade and Industry had mapped out a new and comprehensive strategy to secure projects overseas producing specialty metals - especially tungsten, cobalt, vanadium, molybdenum, indium, platinum and rare earths.'

[FarmerGeorge]

Interesting note HC. I haven't bought any more in the last few weeks but I haven't sold any either and am still waiting on the extra shares and options I applied for which should boost my holding a little bit. Did you subscribe/Have you received yours? Noticed you realised this also applies to LYC, I made a wee bit on them and used it to buy VML but now I'm thinking it might be worth owning both.

[Huang Chung]

Hi Farmer George

Yes, I've been buying lately. Latest parcel added last Thursday. Subsrcibed for my full entitlement of shares, and received confirmation from the registry today. Will likely buy a few more on any dips (almost certain in these volatile times). ;)

[tricha]

Hi Farmer George

Yes, I've been buying lately. Latest parcel added last Thursday. Subsrcibed for my full entitlement of shares, and received confirmation from the registry today. Will likely buy a few more on any dips (almost certain in these volatile times). ;)

Well done Huang Chung, u must be smiling all the way to the bank:D

[Huang Chung]

Hi Tricha....yes, very pleased with the bounce, but looks like I may not be able to buy more at firesale prices unfortunately. VML held up vey well through most of the recent turmoil, which gave me extra confidence. I figured that, when it did eventually fall over, it would bounce back strongly, which it has.

VML is my biggest holding, and would expect it to move through $1 in the not too distant future. Don't plan on selling anywhere under $2, which would make it nearly a three bagger from here. :)

[Huang Chung]

Sectorsurfa...WTF are you going on about??

If you don't like the comments, make a mental note to put your time to better use elsewhere, and don't bother reading this thread again.

[Huang Chung]

Some nice extensions and infill news from VML at their Watershed tungsten project. Most of the extensions reported are at less than 100m depth. Brief extract from the release is copied below.

New Mineralised Zones Confirmed at Watershed

Vital Metals Ltd (ASX: VML) has confirmed the presence of two new zones of scheelite mineralisation at the company’s wholly-owned Watershed Project in far North Queensland and has indicated continuity of mineralisation between the current ‘eastern’ and ‘western’ zones of the deposit.

New drill results have verified the presence of strong mineralisation in multiple quartz vein swarms at shallow depths in a zone situated some 300 metres south of the current limits of the Watershed deposit and in a new area about 500 metres north of the known mineralisation.

Infill diamond drilling work has also been in progress, with the analytical data for a further six holes now available. The results of two of these holes, which were completed in the section between the western and eastern zones of the deposit, are particularly significant in that they suggest, on evidence so far, that there is continuity between these two zones. (This ‘central’ zone is located in steep terrain and it was not feasible, during last year’s campaign, to drill in this area and, as a consequence, it was omitted from the previous resource estimate.)

[Huang Chung]

Pushed through the 80c level today on no news. Volumes terrific as well.

I have been told that Commsec have slapped a 'speculative buy' on VML. Can anyone confirm this, or even post what was said please.

[Huang Chung]

Top noch outcomes being achieved in metallugical tests being conducted on bulk samples from Watershed.

Nearly a perfect outcome...Chairman Bill Ryan said "While there is no premium to be had for tungsten concentrates in excess of 65% WO3, (In testing they got 78.4% WO3), the knowledge that we can achieve such high grade concentrates using simple processing techniques now gives us the ability to focus on achieving high recovery'.

He added "Things can only get better after the planned implementation of X-Ray Ore Sorting at course crush sizes prior to the gravity concentration plant".

[Huang Chung]

I have also posted this on the 'China Changes Policys on Mining Investments' thread, but it is particularly relevant to VML.

Extract from the Pure Speculation column in today's Australian....

'While we keep happily digging up our metals and shipping them out, the Chinese are taking a slightly longer term view. The Ministery of Commerce and the National Development Reform Commission have reclassified China's tungsten, molybdenum, tin, antimony and fluorite as being in the "prohibited category".

What this means is that no foreign company can get involved in mining these metals. Add this to earlier moves to raise export taxes on metals and the message from Beijing is clear: you westerners can exhaust your deposits and in 50 years we'll still have ours.

....What China's move means for these metals is that prices, let alone demand, are not going to collapse'.

VML also released more close spaced drilling results today from within the existing resource. Three holes have confirmed that the mineralised zone extends across the previously untested gap between the eastern and western sectors of the deposit, at its southern end.

Drilling continues, including outside of the known resource confines.

[Huang Chung]

As Consolidated Minerals are VML's major shareholder with 12% of the stock, it will be interesting to see what new owner Palmary's intentions will be..... sell, hold or takeover. :rolleyes:

Things are currently quiet on the news front, but busy at the mine site, trying to get all of the planned drilling done before the wet.

Resource upgrade expected first quarter next year.

[Huang Chung]

Just caught part of CNBC's three day road trip (or rather Executive Jet trip) to China and Korea with Warrent Buffet.

Buffett was explaining how China will be a massive market for one of Birkshire Hathaway's latest acquisitions.....Israel based Iscar cutting tools. He was obviously very excited about Iscar's growth potential, especially in China. He noted about three times that tungsten was integral to what Iscar make, and how incidently most tunsgten comes from China.

As a holder of the stock, it's nice to know that VML is shaping up to be a major supplier of tungsten to the world, especially in view of the Chinese Government's attempts to protect their remaining tungsten resources (see post #33 above).

Who knows, even Iscar might one day be an end user of VML's tungsten.:)

Link to Iscar's website attached below.

http://www.iscar.com/

[Huang Chung]

A couple of interesting reports on the market for tungsten commissioned by Vital.

Quite encouraging......

P.S..... a Metric Tonne Unit (MTU) is 10kg....ie 1% of a tonne.


Tungsten Market Survey:

http://stocknessmonster.com/news-item?S=VML&E=ASX&N=393238


Tungsten Market Study - Executive Summary January 2008:

http://www.vitalmetals.com.au/images/vitalmetals-13--ezeed.pdf

[Huang Chung]

Nice pop in the share price today on better volumes.

Hopefully an update on how they're going with the Mt. Mulgine drilling won't be too far away.

[Huang Chung]

Trading halt.

Mt. Mulgine drilling results perhaps??

[Huang Chung]

Trading halt related to the release of infill drilling results at Watershed.


They have used an RC rig to complete a series of close-spaced (10 metre by 10 metres) patterns of holes to shallow depths to gain better knowledge of the grade distribution within the higher-grade, east-west striking quartz-vein zones.....and by all accounts the results seem to be pretty darn good. There is a high level of confidence that the three zones drilled are typical of all 17 such structures so far discovered.


The updated resource statement expected in late April should be very interesting indeed. Can't wait! :D

[Huang Chung]

Tick off another box! :)

Metallurgical test work confirms that x-ray ore sorting is ideally suited to low cost pre-concentration of Watershed scheelite ore.

What does this mean? - Substantial reduction in both capital and processing costs of treating the ore.

http://stocknessmonster.com/news-item?S=VML&E=ASX&N=398257

[Huang Chung]

Topped up with a few more VML today.

Revised resource statement due late next month.

[Huang Chung]

Folks, whilst you're all sitting on the sidelines waiting for this funk to end, you may want to do a little digging into the looming supply / demand crunch for tungsten.

I've just read an article put out by highgrade.net (http://www.highgrade.net), which was compelling reading. Unfortunately, its a subscription site, so I'm not going to get into strife by posting it here.

VML's Chairman Bill Ryan and Director Andrew Simpson are quoted extensively.

Some key points:

There are only a few significant tungsten mines in the pipeline, and even fewer whose development is on track.
Previous Chinese domination of world primary tungsten supply continued to be curtailed by a government concerned to grow value-added manufacturing and preserve state-controlled mine reserves.
The grades of Chinese mines have decreased significantly - reports of some mines running on grades of less than 0.15% WO3.
The Chinese Government is keen to retain remaining reserves for their own future domestic consumption, so mining licences are strictly controlled.
The sale of concentrate from China has already been banned, and it may only be a matter of time before they ban the export of the semi processed ammonium paratungstate (APT).
Dispite their domestic production, China is already the worlds largest importer of tunsgten concentrates and scrap, and this is expected to increase strongly over the next 5 years.Plenty more as well.

As always, do your own research.

[Huang Chung]

Lycopodium Engineering has been commissioned to undertake the process plant design work, as part of the Watershed Project's feasability study.

The feasibility study is on schedule for completion in Sepetember this year.

The target production level for Watershed is 4,000 tonnes of WO3 in concentrates per annum, which represents approximately 5% of world demand.

[suntboy]

Gee HC do you get tired of talkin to yourself
Just think with Tungsten being what is is for your stock in a wee while you may have Shasta and all the Uranites posting LOL


Welcome to Suntland

[Huang Chung]

Damn you Suntboy!

I was trying to break the record for the number of posts without getting a response.....I think that record is probably held by the late Gerry Stolwyk, but I must have been close. :D

I've got something like 2/3 of my capital tied up in VML, so you could say my confidence in the stock is high.

I'm not really sure why VML musters virtually no interest from the ST membership, as the pay-off looks like it will be substantial (barring any development hiccups, which are always possible).

Thanks for taking pitty on me. :)

[shasta]

Gee HC do you get tired of talkin to yourself
Just think with Tungsten being what is is for your stock in a wee while you may have Shasta and all the Uranites posting LOL


Welcome to Suntland

Love your sense of humour...:D

Uran is a bona fide emerging Tungsten player, lol :D

HC - How does the 0.7% stated in the Uran ann compare to VML?

[Huang Chung]

Ha Ha Shasta.....I was waiting for that question!

On face value, the .7% grade that URA mention is terrific, and far better than VML's average!

I might be proved wrong Shasta, but I think it might be a case of what you don't know that might critical when it comes to Uran's diversification into Tungsten. IMHO, that grade is simply too good to have gone unnoticed until now, unless there are other (negative) issues that come part and parcel with this good grade.

If they got hits of .7% themselves, I'd be impressed, but a lot of industry players would know about these historical results. Lets face it, it's a small field of prospects and players.....

Shasta, you might find some helpful info on Tungsten in some of my previous rantings, or check out the VML website which also has some background info that might help you.

http://www.vitalmetals.com.au/

[shasta]

Ha Ha Shasta.....I was waiting for that question!

On face value, the .7% grade that URA mention is terrific, and far better than VML's average!

I might be proved wrong Shasta, but I think it might be a case of what you don't know that might critical when it comes to Uran's diversification into Tungsten. IMHO, that grade is simply too good to have gone unnoticed until now, unless there are other (negative) issues that come part and parcel with this good grade.

If they got hits of .7% themselves, I'd be impressed, but a lot of industry players would know about these historical results. Lets face it, it's a small field of prospects and players.....

Shasta, you might find some helpful info on Tungsten in some of my previous rantings, or check out the VML website which also has some background info that might help you.

http://www.vitalmetals.com.au/

Thanks HC

Will look at VML, & Tungsten in general

[shasta]

Thanks HC

Will look at VML, & Tungsten in general

At first glance VML & URA have Ross Kennedy as Non Exec Director in common :eek:

[Huang Chung]

I don't hear Kennedy's name mentioned around the traps, so to speak, so I can't really tell you much of his involvement or input into VMLs development.

At least from URA's perspective it does provide some tungsten experience at the Board level.

[Huang Chung]

Tick off another box...agreement reached with traditional landowners.

http://www.stocknessmonster.com/news-item?S=VML&E=ASX&N=400861

Looks like VML has also been caught up in Opes Prime to some extent, which probably won't help the share price short term.

[Huang Chung]

Last of the 2007 diamond drill hole results released today.

Typically a mixed bag, but these 8 holes have more than their fair share of good intercepts.

One hole in the south-west corner returned 2 metres at 4.17% WO3, as part of a wider intercept of 13 metres at 1.14% WO3. :)

Updated resource statement delayed a couple of weeks - now due by mid-May.

[Huang Chung]

Geez, more drill results released today!

(Yesterday's were infill results (on the outskirts of the known resource) Today's results are in respect of a limited campaign to test surface outcrops 150m south-west of the southern limits of the existing resource, and 300m north of the northern boundary of the existing resource.)

Significant mineralisation was encountered (particularly in the south-west), which will be the subject of further drilling this year. Numerous intercepts of over 0.5% WO3.

Implications of these results are not yet fully understood, but certainly bodes well for potentially increasing the size of the orebody.

http://www.stocknessmonster.com/news-item?S=VML&E=ASX&N=402232

[Huang Chung]

Possible breakout taking place.

Price rising above its recent highs of 65c, on good volume.

We know that a resource upgrade is only a matter of days away. :)

[gisborne_gold]

Well spotted, thanks for the posting.
I may wait for price to break past 69c where it peaked in February and April as that mark may represent overhead resistance.

[Huang Chung]

I see the offer is up to 69c already.....let's see if there are any takers.:D

I'm loaded to the gunwales with VML, so the trading action is largely academic to me.

A true believer holding long term. ;)

[gisborne_gold]

And now we have the price up to 70c, the break past the 69c potential resistance. You called it, HC.

[Huang Chung]

Revised resource statement out today did not do much to captivate the market. Wasn't the next leg up I was hoping for.

Underlying story remains intact, and the company is proceeding with its feasibility study.

[Huang Chung]

Got down to 62c this morning on bugger-all volume AA. Probably someone who had bought in hoping for a bounce on the resource upgrade bailing on the news.

Been a bit of a Mexican stand-off all day, little buyer interest and low bids and even less seller interest at prices just at or below last week's close.

[Huang Chung]

Updated company presentation.

http://www.vitalmetals.com.au/images/vitalmetals-44--fibef.pdf

[Huang Chung]

The presentation that I've linked to above provides a nice summary of some of the better drilling results from Watershed. These results are really nothing short of spectacular, and very close to the surface.....by way of comparison, a grade of 0.30% WO3 would be regarded as pretty good.

Northern:

7m @ 1.59% from 29m.
37m @ .72% from 2m.
13m @1.94% from 23m.
12m @1.37% from 46m.

Central:
22m @ 1.08% from 19m.
42m @ .46% from 12m.
3m @1.42% from 65m.

Southern:
8m @ .56% from 8m.
8m @ .43% from 13m.

The amazing thing is that a sizable amount of their resouce will be able to be mined open cut with very low strip rations, as the deposit starts at or near surface and sits within a 180m high ridge. This means that early years, they just need to cut down the ridge, rather than going 'underground' as in a conventional open cut pit. The obvious benefit is that you don't have the cost of cutting back into non-mineralised ground to establish your pit walls.

Another feature of Vital is that they are pioneering the use of x-ray and ultraviolet ore sorting technology in processing tungsten. It's still at the trial stage, but results so far have been very impressive. This technology will result in a reduction of around 55% of the material that would otherwise go to the fine grinding / wet stage of the plant, thus reducing processing costs.....in other words, essentiallydoubling the grade of the ore that you process.

Production will be some 4,000 tonnes of WO3 per annum, around 5% of world demand. Drilling continues, and the deposit is open to the north, south and at depth.

By way of comparison, Heemskirk will produce around 800tpa from their Los Santos operation in Spain, and the often talked about Queensland Ores will produce about 400tpa from their Wolfram Camp operation in Nth Queensland....In other words, Watershed will be a BIG tungsten project.

Feasability study should be out in July, and all tonnage / grade scenarios are to be considered....they already have a comfortable 10+ year mine life, so it would not be surprising to see a bit of selective mining being applied to lock in some nice margin.

All this, and the market has not cottoned on to the looming worldwide tungsten shortage around the corner. Vital are predicting APT prices of around $300 a metric tonne unit...that's $30,000 a tonne....up from the current $25,000 a tonne.

At 4,000tonnes of WO3 per annum, yearly revenue should be around $120m, or twice the current market cap of the company. Capital costs will be around $100m.

[FarmerGeorge]

I've been in and out of this and continue to watch after you mentioned it on the PDZ thread. How long until these guys are in production Huang?

[tobo]

from their May08

Watershed Timing
New marketing report (Jan ’08) available on web site.
Preliminary Mining study complete - May 2008.
Metallurgical Flow Sheet – April 2008.
Infrastructure costs (camp, road, power) – June 2008.
Feasibility Study complete – August 2008.
EIS Clearance – December 2008.
Production scheduled for late 2009 / 2010.

and
Watershed Project - Environmental
EIS lodged with Queensland EPA (Jan 08) .
EIS approval will determine timing of start-up – estimated clearance late 2008.
Native Title negotiations well advanced as ILUA.

[xman]

down 14% today. any clue?

[Huang Chung]

Share price has been dropping for a few days, on no new news. Looks like there was a seller offloading a 100,000 or so late this arvo which pushed the share price below 50c.

Little buying in the queue compounding the problem. If the buyer sitting there at 41c gets his/her order filled, then they've grabbed a bargain in my opinion.

Price of tungsten continues to be steady as a rock.

Hopefully someone will step up to the plate tomorrow to stop the rot.

[Huang Chung]

Nice news release today.

These guys are pioneering the use of x-ray sorting in tunsgten mining.

Was impressed with the grade...11 large diameter core holes considered to represent the variability of the geological setting at Watershed averaged .425 WO3.

Combine that with around a 50% reduction in the material that needs to go through the find grinding stage onwards (thanks to x-ray sorting), low strip ratio, and good tonnage makes this a pretty special project.


http://www.stocknessmonster.com/news-item?S=VML&E=ASX&N=412285

[Huang Chung]

Generally disappointing quarterly released today. Everything from rising costs, rising $A and complex geology have lead management to scale back the size of the initial operation.

Capital costs are now greatly reduced also, but the immediate large scale mining originally envisaged now won't happen.

I will probably reduce my position as a result of these developments.

[Huang Chung]

Disappointing developments have lead me to sell out of VML. The timeframes to get to previously advised production levels would now appear to be quite long.

Longer term though, this company still looks to be an excellent proposition....I just can't see the catalyst now for a re-rating.

[JBmurc]

Looking to BUY a position @ 1.4c ....looking well oversold ....funding tender closed without a result along with African Gold project write off plus CR major shortfall,Low Tungsten price..... has seen them smashed to new low today 1.3c


Has the making of a 10 bagger+ IMHO if they can secure the funding to production >and see a turn round in the tungsten price

recent QnA

http://vitalmetals.com.au/wp-content/uploads/180915_Vital_Metals_Mark_Strizek_in_Proactive_QnA_ Sessions.pdf

FEB 15 article piece >>

Vital is developing its Watershed mine, located 130 kilometres north-west of Cairns, which is projected to be capable of processing 2.5 million tonnes of ore a year, to produce up to 6,000 tonnes of tungsten concentrate a year, over an expected lifespan of ten years, with significant potential to extend that mine-life by exploration. Production is expected to start in 2016.

Japanese interest in alternative tungsten supply is starkly demonstrated by Vital’s partner in Watershed, the Japanese Oil, Gas and Metals National Corporation (JOGMEC), which has earned a 30% interest in Watershed through stumping up $5.4 million to fund the definitive feasibility study (DFS), completed last year. JOGMEC is also working to source potential off-take/funding/development partners – most likely Japanese – to take the project through to production.

The Watershed tungsten deposit was discovered and explored by Utah Development Company in the early 1980s, with limited further work conducted by Peko-Wallsend in the mid-1980s. Vital bought the project in 2005 and has been developing the deposit since then.

It is a big deposit: Vital says Watershed ranks among the ten largest unexploited non-Chinese tungsten deposits worldwide. The resource is currently estimated at 49.2 million tonnes of scheelite ore at 0.14% WO3 (tungsten trioxide), for 70,400 tonnes WO3. The definitive feasibility study (DFS) put the reserve at 21.3 million tonnes of ore grading 0.15% WO3 (31,400 tonnes of contained WO3), over a mine life of ten years, at throughput of 2.5 million tonnes of ore a year, with about 40% of the resource extracted.

The mine will be open-pit, meaning cheaper costs – although with the resource open at depth and along strike, the company says there should be great opportunities to extend the life of Watershed through future underground or satellite open-pit operations.

Vital says market forecasters predict tungsten supply to decrease by about 3% a year over 2015–2017, while demand grows at 6% a year. Tungsten is not a traded metal on the commodities exchanges: metal producers usually strike their own deals with suppliers. Moving into a shortfall of supply, Vital says metal producers that fail to secure their raw-material supplies are running “considerable strategic risk.” From price levels around US$480 a metric tonne unit (mtu) of APT, Tungsten Market Research estimates that the price could go as high as $US650 a mtu of APT by 2019.

Watershed is expected to produce high-grade 65% WO3 ‘clean’ concentrate, of a kind that currently sells for about US$32,000 a tonne. At 2.5 million tonnes a year for ten years, Vital estimates that Watershed could earn $526 million from revenue of $1.08 billion. Given a lower Australian dollar falls and Australian mining costs, the project returns could be expected to increase.

The company says it has a “clear pathway” to commence the project in 2015. The main thing the share market will want to see is the signing of an off-take partner to help take Watershed through to production, which would result in a significant re-rating of the stock. Research firm Breakaway Research values Vital Metals at 16 cents a share – more than four times its current share price of 3.9 cents. Vital also has a gold exploration project in the West African nation of Burkina Faso, but that is an afterthought at present – tungsten and its positive market fundamentals are the big attraction in Vital Metals.

[JBmurc]

Gutted to have my order filled ..now 2.2c >>>>