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Speewah Metals Makes Major Breakthrough In Reducing Costs In Titanium, Vanadium Project

Speewah Metals' (ASX: SPM) massive titanium-vanadium-iron project in Speewah Dome Kimberley, Western Australia could have significantly reduced capital requirements using a modular development.

The hydrometallurgical process that delivered a recent positive Scoping Study project valuation would support a modular development that will substantially reduce technical and capital risk during project development.

This would occur as the process would allow the project to be built in stages that will allow commissioning and commercial production at materially lower start up capital requirements.

The project has world class JORC resources of Titanium / Vanadium / Magnetite and Fluorspar. In fact, the project boasts the largest JORC resource of its kind in the world (target is to mine 6 million tonnes/year from 5 Billion tonne Resource).

MODULAR DEVELOPMENT SCENARIO

The mixed chloride leach, solvent extraction and precipitation plant production facility can be developed in stages, allowing commercial production at lower target levels of production and then scaled up once commercialisation has been proven and customer and market levels dictate.

Initial development is likely to be planned around a production facility that would target annual production of:

- Titanium dioxide (TiO2) - 15,000 tonnes per year;
- Vanadium pentoxide (V2O5) - 2,450 tonnes per year;
- Hematite (Fe2O3) - 80,000 tonnes per year;
- Ammonium Sulphate ((NH4)2SO4) - 40,000 tonnes per year.

This initial production facility represents 20% of the annual production targets modeled in the Full Scale Scoping Study released in April 2012.

This will allow production to start at a lower cost than the initial US$896 million estimate detailed in the full-scale Scoping Study that it released in April.

Speewah would develop a construction plan through the feasibility process that will consider this staged development and estimate the capital requirements of this initial commercial production facility.

SCOPING STUDY

The original Scoping Study had demonstrated a conceptual project valuation of US$1.4 billion, almost three times the valuation in mid-2010 when it was just a vanadium project.

Project parameters include a target production of 75,000 tonnes per year of titanium and 12,400 tonnes per year of vanadium, with by-products of 410,000 tonnes of hematite and 200,000 tonnes of ammonium sulphate, at a strip ratio of 0.5.

Production of concentrate feedstock per year is estimated at 550,000 tonnes at metallurgical recoveries of 91.1% of titanium, 94.6% of vanadium and 97% of iron.

Importantly, the purity of the end products is extremely high at plus-99% for the titanium, vanadium and iron.

The Resource contains a high grade component that includes 181 million tonnes at 0.37% vanadium and 2.1% titanium in the Measured category and 404 million tonnes at 0.35% vanadium and 2.1% titanium in the Indicated category.

The Speewah tenements contain Australia's largest titanium-vanadium in magnetite deposit with combined Measured, Indicated and Inferred Resources of 4.7 billion tonnes at 0.3% vanadium and 2% titanium.

It is the largest resource of its type and style in Australia by some 10 to 15 times.

A differentiating factor of the Speewah deposit is the extremely high grades of vanadium and titanium found associated with magnetite.

The grades are world class and sometimes more than double what other projects are showing elsewhere in Australia.

Director Richard Wolanski said the opportunity to develop an initial commercial production facility that can be replicated and expanded to meet market demand once commissioning risk is eliminated, represented a major reduction in development risks.

"Capital expenditure for the initial production facility is expected to be significantly reduced, in line with production output," he added.

Speewah is now re-working its Scoping Study to develop operating and capital cost estimates for the initial start phase of the modular development with economic parameters expected to be released later this quarter.

Analysis

A modular, staged development of the massive project is a significant and quantifiable leap forward in its development as it further de-risks the project. It is also likely to find particular appeal from financiers and off-takers as it provides a alternative development path that is aligned with current capital market conditions.

The company is re-working the Full Scale Scoping Study to develop operating and capital cost estimates for this initial start phase of development - details are expected later this quarter.

The size and scale and global significance of the project in Australian is beyond doubt, the breakthrough in reducing capital and operating costs is significant for investors.

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