back to homepage

Vital Metals (VML.AX) - significant value to be realised in its Watershed project

Full Report by Objective Capital , Mar 12, 2011 download full report
Click for previous reports on this company
Questions? |

Key Points:

  • The Watershed tungsten deposit is Vitalís flagship project
    Vital Metalsí management is focused on aggressively developing its 100‑percent owned Watershed tungsten project in the far north of Queensland, Australia. To advance its timetable, Vital has entered into a formal earn‑in agreement with Japan Oil, Gas and Metals National Corp (JOGMEC), whereby JOGMEC will contribute A$5.4m in exchange for a 30‑percent interest. The money will be used to complete a definitive feasibility study.

  • Watershed hosts a substantial tungsten resource
    A JORC‑compliant resource compilation completed in 2008 estimated Watershed contained an indicated 15.3 million tonnes of scheelite, averaging 0.46 percent tungsten oxide (WO3), based on a cut‑off of 0.1 percent WO3. This translates to 69,000 tonnes of contained tungsten. Watershed is a large deposit and remains open both along strike and at depth.

  • Vital had largely completed a feasibility study in 2009
    Vital Metals had been advancing Watershed on its own prior to the economic turmoil that developed late in 2008. By early 2009, the company had nearly completed a feasibility study of the project, based on a plan to mine approximately 3.7 million tonnes of ore at 1,750 tonnes per day. The economics were attractive, based on a projected capital cost of A$69m and operating costs just under A$65 per tonne.

  • A definitive feasibility study is expected next year
    With the participation of JOGMEC, Vitalís management expects to complete a definitive feasibility study later next year. With the bulk of the required work already completed, the only outstanding items are metallurgical testing and model confirmation, as well as the application of new cut‑offs, processing rates, mining schedules and a revised pricing of required components and goods.

  • Vital also has an early stage gold prospect under option in Burkina Faso
    Vital has currently earned a 60‑percent interest in the Doulnia and Kampala tenements in southern Burkina Faso. A major drill programme took place during the year, with 12,000 metres of drilling completed at Kollo. Among the encouraging intercepts was a near‑surface interval that returned 6.39 grammes of gold over 44 metres.

  • Vital is sufficiently financed with the injection of A$5.4m by JOGMEC into the Watershed project
    As at June 30 2011, Vital Metals had A$3.6m in cash, trade and other receivables and A$0.6m in accounts payable. With JOGMEC contributing A$5.4m to complete the definitive feasibility study of Watershed, the company should have adequate financing in place to advance its Burkina Faso gold prospect. As a result, additional financings may not be required until late 2012.

  • Our assessment of Vital yields a base-case valuation of A$0.15 per share
    Our assessment of Vital Metals and its Watershed project, based on reasonable probabilities of exploration success, yields a base‑case valuation of A$0.15. Assuming success at all stages of future exploration and development, our assessment would increase to A$0.25, and with more optimistic assumptions, to A$0.49.

Get full report

Other coverage

Other opinions

Canoel International Energy (CIL.V) - revitalisation on track; acquiring cogen plant
Apr 21, 2014 | Previous
Canoel International Energy (CIL.V) - preparing for its next stage of development
Jan 21, 2014 | Previous
Canoel International Energy (CIL.V) - building a portfolio in undervalued Italian gas
Jan 15, 2013 | Previous
Adroit Resources (ADT.V) - building Italy's antimony industry
OCIC. Nov 06, 2012
African Consolidated Resources (AFCR.L) - Andrew Cranswick discusses their new Zimbabwean gold project
OCIC. Sep 25, 2012
Helio Resource's (HRC.V) - Richard Williams presents on new PEA
OCIC. Sep 25, 2012
Great Western Minerals (GWG.V) - Gary Billingsley shares his views on the state of the Rare Earth sector
OCIC. Sep 25, 2012
Wishbone Gold (WSBN.L) - Richard Poulden discusses Wishbone Gold's strategy as a consolidator of global gold assets
OC. Sep 25, 2012
Woulfe Mining (WOF.V) - Nick Smith discusses expanding tungsten resources in South Korea
OCIC. Jun 12, 2012
Kibo Mining (KIBO.L) - updates on the progress of its new coal deal
OCIC. Jun 12, 2012
Volta Mining (VTM.AX) - David Sumich discusses their pending Gabon iron ore transaction
OCIC. Jun 12, 2012
Andiamo Exploration - Tim William's introduces their Haykota gold project in Eritrea
OCIC. Jun 12, 2012
Gentor Resources (GNT.V) - Peter Ruxton briefs investors on their copper project in Oman
OCIC. Jun 12, 2012
Peak Resources Limited (PEK.AX) - Richard Beazley provides an update on their Ngualla Rare Earth Project in Tanzania
OCIC. May 22, 2012
Kibo Mining (KIBO.L) - Louis Coetzee discusses their new coal deal
OCIC. May 22, 2012

Occasional papers