Tungsten prices have been on a tear this year, approaching a record US$3000 per metric tonne unit.

“Obviously, the tin price has been performing incredibly strongly, and that really underpins this project,” Sky managing director Oliver Davies told the Resources Rising Stars Gather Round conference in Adelaide yesterday.

“The silver price has also appreciated very nicely, but really that tungsten price has seen a phenomenal appreciation.”

China has tightened export controls on the tungsten market and there is little production in the Western World.

“The US has introduced new legislation because of tungsten defence applications, where they are very much tightening down on their supply chains for tungsten,” Davies said.

“All of this has seen tungsten go up over 10 times over the last few months, and what was a really handy by-product for this project has now become a serious revenue stream, and we’re very excited by how this is developing.”

Davies said the project had a tungsten to tin ratio of about one to five.

“We always thought that was going to be a handy extra 10 or 20%, in terms of revenue, on this project, but now that the tungsten price is up by 10 times, it’s now looking like it’s approaching an equal in revenue to tin,” he said.

“We think this project will run on the tin alone. Obviously, having that incredible appreciation in the tungsten price just continues to improve this project and also the silver here is also a terrific bonus.”

Resource set to grow

Tallebung currently has an indicated and inferred resource of 15.6 million tonnes at 0.15% tin and 0.03% tungsten trioxide for 23,200t of contained tin and 433,940 metric tonne units of tungsten trioxide.

The company has also set an exploration target of 23-32Mt at 0.14-0.17% tin.

“We’ve now defined it for over 2km. We’re growing it with every drill hole, and we’ve got a very large shallow tin system here,” Davies said.

“The real advantage is that we have a project where we’ve got tin sticking out of the ground. We can walk up there tomorrow and see the tin literally sticking out of the ground. You can see it on surface.”

Sky is close to wrapping up a 15,000m drilling program, which will underpin a resource update in May.

“We anticipate not just an increase in confidence in the resource, but also an increase in size heading towards that exploration target,” Davies.

The company has also been focused on fleshing out some of the new tungsten zones being encountered in drilling.

Recent drilling returned 6m at 1.32% tungsten, 20.2 grams per tonne silver and 0.1% tin from 21m.

“We’re finding new zones of the deposit that seem to be particularly tungsten-rich, particularly as we see this new price environment for tungsten,” Davies said.

“And we’re also discovering some very high-grade silver zones, particularly as we expand the deposit to the southeast.”

The company recently reported a hit of 3m at 686.3g/t silver and 0.96% tin from 24m.

“So, really quite exciting developments here, and potentially indicating we may have a large silver system developing to the south of this project as well,” Davies said.

Low-cost development

The shallow nature of the Tallebung mineralisation will lead to a low strip ratio, reducing costs.

The coarse nature of the mineralisation also means it is ideal for ore-sorting technology.

Stage one bulk TOMRA ore-sorting test work demonstrated increases in grade of more than 1000% and rejected more than 90% of mass.

“We take a 0.15% tin head grade, we upgrade it to over 1.5% tin which, if you put that in copper terms, that’s got a similar value to well over 6% copper, so very high-grade feed,” Davies said.

Reduced mass means smaller, lower plant costs and lower water use.

“That means that if we thought it was going to be A$100 million to build a plant here, now it’s going to be A$10 million,” Davies said.

“Our capital cost is hugely slashed by the effectiveness of ore-sorting on this project.”

The ore is also ideal for gravity processing.

“We can make a tin concentrate using only gravity processing, which means we don’t need to do tin flotation,” Davies said.

“We don’t need any reagents – very clean, very cheap, very low-cost, low-capex path to production, where we produce a very high-grade and very clean tin concentrate for sale.”

Sky expects to submit a NSW State Significant Development scoping report to the government this month as it starts to ramp up environmental and permitting activities.

A prefeasibility study is due in June.

The company raised A$20.5 million in February to fund upcoming work.

“We anticipate that money will get us all the way through to FID at our Tallebung project, so we’re very well-funded now to run this project through as quickly as possible and get it towards that production point.”