Watershed tungsten project is given the green light by the Government of Queensland

 

Study to triple production in progress

Highlights

• Environmental Permit issued for the Watershed Project by the Department of Environment & Heritage Protection.

• The path for the granting of mining licenses by the

Department of Natural Resources & Mines is now free.

• Revised Feasibility Study (Definitive Feasibility Study – DFS) underway with an expanded production scenario of 3Mtpa for Watershed - results expected in Q1 2014.

• Study about potential underground mine for Watershed
Watershed, with the possibility, To increase project value and operating time, started.

• work plans for the next exploration period in
Burkina Faso were created and tested.

The year ending in September quarter included another major progress for Vital Metals' flagship, tie Watershed Wolframprojekt in Queensland, with the issuance of the environmental permit (Environmental Authority – EA) durch das Department of Environment & Heritage Protection Bundesstaates Queensland.

The EA was the last regulatory hurdle, bevor das Department of Natural Resources & Mines could consider the issue of mining licenses, which is prerequisite for the start of production on Watershed.

The receipt of the EA lifts the Watershed project to a new level and makes it clear from the amount of its competitors protrude. With the upcoming issue of mining licenses - expected before the end of the year 2013 - Watershed will complete the regulatory approval process.

The granting of the EA is a significant milestone for any mining project - especially for those in Australia, where a particularly high standard of environmental protection is applied - and the company would like to highlight the efforts of all those, which have contributed to this success.

During the quarter, the company announced, that it will begin two key studies, to optimize the mining plan for watershed.

First, the company announced in July, that it is the definitive feasibility study (Definitive Feasibility Study – DFS) für Watershed, which is currently with the support of our joint venture partner JOGMEC (Japan, Oil, Gas and Metals National Corporation) is driven, would extend to with regard to a tripling of annual mine production 3 Million tonnes of ore per year. Furthermore, Vital began the development of a preliminary study for a potential underground operation, which is to follow the opencast Watershed.

The company believes, that both initiatives involve large potential, to deliver significant economic and productive improvements on the running time of the mining operation Watershed.

The results of these two studies will play an important role in the current DFS
play, whose completion is now for the first quarter 2014 is planned.

Divisions

Watershed Wolframprojekt DFS - Queensland (Vital 70%)

Environmental permit

As reported in the highlights, an important milestone was reached in the quarter by issuing the final environmental permit (final Environmental Authority – EA) for the Watershed project by the Queensland Department of Environment & Heritage Protection after conducting a public review.

The granting of the EA is the final step required, bevor es für das Department of Natural Resources & Mines of the State of Queensland is possible, to consider the granting of mining licenses. It is expected, that the granting of such licenses before the end of the year 2013 is. This means, that the project will have all the necessary permits, to begin the construction of the mining operation.

Vital would like the support and assistance of the Department of Environment & Highlight Heritage Protection during the approval process, and it was encouraged in his efforts by the high level of support and interest in the project by authorities at all levels of government of Queensland.

The receipt of this grant is a key element in Vital's strategy, to develop and promote the Watershed tungsten project. The parallel work to minimize risk as well as the technical aspects of securing the necessary permits allow, the project design- promote and production phase.

Extension of DFS

During the quarter, vital made the decision, DFS to extend to the Watershed project with regard to the possibility, to increase production to three million tonnes of ore per year. This decision followed a review of the preliminary results of the study, which are based on a capacity of one million tonnes of ore per year. This demonstrated the ability to, to substantially reduce the current costs of production while increasing the production profile.

This material increase in the throughput is supported by the resource Watershed, in which 49.32 Million tonnes of ore 0,14% WO3 at a threshold level of 0.05% WO3 is (The resource estimate is in accordance with the JORC Code & Guidelines 2004 reported).

The preliminary results indicate, that the increase in capacity with an investment of approximately AU $ 150 million, with the associated benefit of reduced capital intensity ratio, can be achieved.

Vitals' decision, the 3 To examine million tons scenario was also caused by the recent strength of the tungsten price, and the predicted high demand and price levels for the metal and the youngest yielding of the Australian dollar.

The detailed analysis of the preliminary results by DFS consultants Tetratech have also identified a number of technical fields, which require further engineering work. These are considered part of the studies for the 3 Performed million tons scenario.

Work on the Watershed DFS in this quarter ranged at least the following areas:

• completion of the geotechnical studies for the mining of 3 Million
Tons scenarios;

• Initiation of a request for grid connection of Watershed by Ergon
Energy;

• revaluation of metallurgy;

• Completion of an evaluation of port- and freight options;

• Completion of budget proposals relating to mining contractors;

• Start of a geotechnical evaluation of mining infrastructure;

• start of a civil trial.

A report on a geotechnical study which the 3 Million tonnes option involves is currently in the evaluation stage. A 3D mining- Mass balance model of the relevant rock mass parameters and their valuation was. This was used for an analysis of the design for the open pit slopes. The positive results suggest, that the average slope angle of 45 ⁰ to 47 ⁰ can be increased to 55 ⁰.

Ergon Energy has been commissioned, a formal investigation into the connection of
Perform watershed to the electricity grid. A report is expected shortly.

Based on an independent evaluation of the performed test work was vital communicated, that there are very good opportunities for optimization of treatment- process are - by cleaning the <10mm Fraction, which passes the sorting. This would affect in the form of lower capital requirements, because the subsequent flotation can be configured smaller. There would also be savings in operating costs, because of the lower content of gangue leads to a reduction of the consumption of flotation reagents.

Study on underground mining

Vital has a study to examine the potential of civil engineering started on Watershed. This study examines:

• The potential for underground mining; and

• The probable transition point, and mining strategies for

Civil engineering scenario and the interaction with the surface mining operation.

At the moment geotechnical information will be used, which were collected for the work on mine. Depending on the results of the study it may be possible, that further geotechnical data are needed to evaluate in detail a downhole operation.

A civil standby at the end of the mining operation on watershed would bring benefits regarding the project value and the operation time of the mine. After completion of the study the optimization of the overall project is required. As a result of this work and other initiatives is the completion of the Watershed DFS in the first quarter 2014 expected.

Watershed Exploration

For Watershed new geological cross-section through the reservoir in NE was- Made WSW direction, along the alignment of the lower "pod" tunnel, which served the large sampling. The new section includes lithologic, structural, Alterations- and Vererzungsdaten.

Other completed work included a review of the available historical exploration reports, which relate to exploration licenses Vitals. There were additional data found, which were not included in the GIS format in our database. The inclusion of these new data to a digital data which can be analyzed by methods GIS is of high value in order to identify potential targets for future exploration programs.

It is worth mentioning, that the sensing data, which of the Utah Development Company Ltd. (“Utah”), the original discoverer of the Watershed deposit, were collected, are of world class standard and is higher than in, what normal arterial as junior exploration company is available. Utah had a large number of thin sections of core samples and rock samples from watershed today's exploration areas Vitals create. The thin section petrographic studies which descriptions and qualitative and quantitative mineralogical data will include being digitized and will be useful for further geological interpretation of Watershed and the surrounding areas of high value.

Tungsten market

Following the sharp price increase in mid-tungsten prices fell during the quarter from their year high following the European and Chinese holiday season, which led to reduced buying activity. This Chinese and European APT prices are currently around $ 400 per mtu. These are still good and prices are significantly higher than the situation at the beginning of this year.

The Australian dollar managed a comeback against the U.S. dollar, resulting in erosion of the price premium, which were expressed in Australian dollar terms.

To view the entire press release, please follow the link:

http://www.irw-press.com/dokumente/VitalMetals_041113_DE.pdf

There is a positive consensus on rising demand for tungsten, which at the annual meeting of the International Tungsten Industry Association (ITIA) was expressed. The summary of the conference is that there will be average demand and growth in Western markets while demand in China much more pronounced. Labor and production costs are still rising in China and exert additional pressure on Chinese metal producers.

Chinese market trend

• The estimated total consumption of tungsten in 2013 intended to 4% on
36.000t rise.

• The tungsten export quota remains at 15.400t.

• The consumption of tungsten carbide industry will continue to 10% increase per year. The demand comes mainly from the domestic market and increases with the increasing vehicle production. One of the goals of the Chinese government is to increase the capacity of Chinese in this division.

• The Chinese labor costs continue to rise year by year. There are
Labor costs are no longer considered as a cheap.

• The Government prescribes the closure of unprofitable mines and polluting.

Japanese market trend

• The reduction of tungsten stocks began in 2012 and reached a
Low. Buyers began negotiations for future supply.

• The Japanese tungsten industry is trying to 10% World market share to secure through technological innovations and high quality products.

• The Japanese tungsten industry is highly dependent on the automotive industry in Asia
from (80%). Japan's three biggest automakers reported a sharp increase in sales in China in recent months, with some deliveries are doubled on a 21-month high.

U.S. market trend

• 2013 will end with an increase compared to the first half of, and
Growth for the first quarter 2014 predicted.

• The demand for tungsten increased by about 7% in the first half of the year
2013.

Russian market trend

• deficits in tungsten raw materials impacted on military orders and
Government stocks of.

• Recent higher prices for APT enabled smelters in new
To invest in equipment and revise technological processes.

• Significant resource projects continue to be out of the question to rest by internal disputes.

European Market Trend

• In the year 2013 demand from outside the EU was the main drive for the European economy and in 2014 domestic demand will take over the role of the main demand driver.

• The tungsten market in Europe is due to the global automotive industry, Worn machine tool manufacturer and the mining industry. As a result, the tungsten market exceeds the GDP growth of the European Union.

Doulnia Gold Project - Burkina Faso

Acquisition of 100% ownership of the project Doulnia

Vital acquired during this quarter 100% the ownership of the gold Doulnia
Project by a commercial venture with its joint partner Ampella Mining.

As part of this trade is Ampella 30% its shares 2 the 4 Licenses, which make up the project Doulnia, overwriting of vital, was Vital 100% secures ownership of all licenses.

In return Ampella receives a donation of 2.25% for all the gold, which is produced on Doulnia. Vital has the right of first refusal to purchase the output of Anrechtes Ampella.

Ampella has the right, reclaim his 30% share in the same two Doulnia licenses, falls die JORC Resource of Projektes 1 Exceeds million ounces of gold over the next two years. Refund in this case must Ampella for the repurchase of shares vital that the equivalent of the associated exploration costs and other 500% pay this amount in cash. A repurchase of shares would make the tax void right.

Licences to which Ampella 30% the shares are held Doulnia and Kampala.

Exploration Activities

No field work on Doulnia were conducted this quarter, However, plans were for a drilling program, which gaps in the Collo-South and Kollo- Central to fill areas, completed. In these areas interesting mineralized structures have been drilled through during the previous drilling program.

A total of 20 Holes 2.000 Meters of drilling planned. It is expected that could prove another mineralized area the size of Central Colloids and near surface ounces these holes.

For the Kampala license is detected, Auger that further bores should be carried out in areas of high coverage, to complete the sampling program, which in January 2013 was begun.

On the License Zeko an Auger program was proposed, which is an area sampled southeast of Boungou-South geochemical. The proposed program covers an area of ​​meta-sediments Contact for Boungou south granite / granodiorite. This area was previously sampled with an insufficient sample density, an exploration target of the size as Boungou-South to prove reliable in the flat-lying areas. The previous geochemical exploration program includes areas of anomalous results, including two samples with >67ppb Gold, in relatively flat-lying farmland with quartz pebbles.

Business

Vital Metals Ltd had cash and cash equivalents of A $ 1.47M to 30 September 2013. The company requested the reimbursement of development costs for 2012-13, which is expected for the December quarter. JOGMEC has continued to participate proportionately in the costs of the feasibility study, which the equivalent of their
30%cent share in the project complies.

The overwhelming impression, to which Vitals management after attending the annual meeting of the International Tungsten Industry Association (ITIA) cam in Sydney, was the JOGMEC's ​​investment in the Watershed Project, a strategic and far-sighted decision was.

JOGMEC's ​​support was invaluable for the development of the project and the investment incurred by JOGMEC provided the necessary capital for Vital available, order to minimize the risk of the project to a point, which allows for the future participation of Japanese consumers on tungsten project.

JOGMEC has recently signed a Memorandum of Understanding with the State of Queensland for future cooperation in the field of exploration of metal- Energy and raw materials, which underlines the level of concern, with which Japan is the safe and reliable supply of raw materials in the future encounters.

The strategic importance of tungsten and the need for metal producers ensure a reliable supply in the future increasingly starting to gain in the trade and general press of attention. This took vital signs by an increasing number of inquiries about information on the project was.

Vital's goal is, Watershed with a stable and reliable supplier for tungsten concentrate, which is necessary for the production of tungsten metal which plays such a critical role in so many aspects of our modern world, establish.

For more information, visit our website: www.vitalmetals.com.au

Contact: Mark Strizek MD
Vital Metals Ltd
Phone: +61 8 9388 7742
Email: vital@vitalmetals.com.au

Press Inquiries:

Nicholas Read/ Paul Armstrong
Read Corporate
Phone: +61-8 9388 1474
Email: info@readcorporate.com.au

Information on the competent person

The information in this report, that relate to Exploration Results and Mineral resources, based on information, of which Mr Mark Strizek (MD), a tilted one of the company, were compiled. Mr. Strizek is a member of the Australian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience pertinent to the assessment of the types of deposits under consideration and undertaken business activities, by the Qualified Person under the definition of the output 2004 des Joint Ore Reserves Committee (JORC) Australasian code for reporting of exploration results, Mineral resources and ore reserves.

ÜBER VITAL METALS

Vital Metals Ltd (ASX: VML) Development is- and exploration company with a focus,
promote two highly perspective projects: the advanced Watershed Tungsten Project in far north Queensland, Australia, and the Doulnia Gold Project in southern Burkina Faso, West Africa.

Watershed Tungsten Project – Queensland
Das Watershed Scheelitprojekt (Scheelite – Calciumwolframat), in the far north of
Queensland, 150 Kilometers northwest of Cairns, is the flagship project of the company. Vital ing a form otherwise Abkommen with JOGMEC (Japan Oil, Gas and Metals National Corporation), under which JOGMEC a 30% stake in the project for AU $ 5.4
Million acquired (with a value of the project at the time the contract of
AU$18M). The funds were used to conduct the feasibility study, in which
2013 is to be completed.

Doulnia Gold Project – Burkina Faso
Das Doulnia Goldprojekt (100% Vital) located in southern Burkina Faso, West Africa. The
Project consists of 4 explore related areas; the Doulnia Kampala and explore areas that recently as part of a trade with Ampella Mining Ltd. were secured and the Mediga and Zeko exploration areas. The project is located in hochprospektiven Birimian greenstone belt, with over 850 km2 contiguous exploration areas that lie on the trend of the fault zone and the Markoye Bole Scheer zone and the Kollo gold project and include gold Boungou South prospectus..

About JOGMEC
Japan Oil, Gas and Metals National Corporation (JOGMEC) was in 2004 founded. JOGMEC is a state-owned enterprise combines the functions of the former Japan National Oil Corporation, which was responsible for the secure supply of oil and gas and the former Metal Mining Agency of Japan, which had the responsibility for ensuring a safe supply of non-ferrous metals and mineral resources and the implementation of measures to reduce pollutant emissions from mines. The Company has an annual budget of about 1.564 Milliarden Yen (AU $ 18
Billion) and provides financial assistance, Technology development and technical assistance to Japanese companies and their foreign subcontractors.

To view the entire press release, please follow the link:

http://www.irw-press.com/dokumente/VitalMetals_041113_DE.pdf

For the correctness of the translation is any liability assumed! Please note original English message!

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