Australian tungsten developer Vital Metals announced that it has regained 100% ownership of its Watershed Tungsten Project in North Queensland after the company’s partner, the Japan Oil, Gas and Metals National Corporation (JOGMEC), forfeited its 30% interest in the project due to failure to meet the Joint Venture agreement’s objectives.
Under the JV agreement, JOGMEC was to complete its transfer to an incoming Japanese partner by 31 December 2015. By failing to do so, JOGMEC was forced to surrender its interest in the project to Vital Metals for no consideration, allowing the company to commence discussions with potential new development partners who have expressed interest in the project.
Global tungsten demand looks strong moving into the new year, stimulated in part by low oil prices that provide customers with increased spending power. Supply fundamentals also seem to be improving with Chinese tungsten producers looking to restrict supply – a move which many analysts see as prelude to moving into a supply deficit in the coming years as high-cost production is shut down.
Vital Metals said that the metrics of its Watershed Tungsten Project have improved significantly over the past two years as a result of the increased competition and falling costs in the global and Australian mining sectors.
Additionally, the company believes that significant reductions in the oil price and the US$/AU$ exchange rate have reduced the project’s forecast operating costs, mitigating the impact of lower commodity prices.
The company’s Managing Director Mark Strizek said the Watershed Project was one of the very few fully permitted open pit tungsten projects in the world with all landowner and indigenous agreements in place.
“Watershed ticks virtually every box from the perspective of potential development partners looking to invest in a high-quality, long-life tungsten deposit. It is de-risked and ready to commence construction; and it is located in a Tier-1 jurisdiction where costs are falling rapidly and a highly skilled workforce is available,” Mr Strizek said.
“There is no better time to be developing a resource project as all CAPEX and OPEX cost inputs are now at historical lows. With the right support, Vital Metals will be well placed to capitalise on the development of this high quality asset as the commodities cycle begins to turn. We look forward to commencing discussions with potential new partners in the months ahead.”