Group 6 Metals – The Dolphin Tungsten mine restart

After closing the Dolphin tungsten mine in 1992 due to prolonged low tungsten prices, Group 6 Metals (ASX:G6M) has restarted operations and began commercial production of tungsten concentrate earlier this year.

Located on King Island between Victoria and Tasmania, the Dolphin tungsten mine is known for hosting the highest-grade tungsten deposit of significant size in the western world. It has a JORC 2012 compliant mineral reserve of 4.43mt at a grade of 0.92% tungsten trioxide.

From 1917 to 1990, Dolphin operated on and off before being rehabilitated then ultimately closed, leaving only the old open pit which filled with water.

Group 6 Metals managing director and chief executive Keith McKnight spoke with the Australian Mining Review on the decision to restart production.

“When the current directors took over management of the project in 2011, they explored many development models and partnerships to redevelop the mine, eventually landing on the current development

which is a six-year open cut operation followed by six years underground, then a final open cut to extract the last of the high-grade ore in the Dolphin Pit,” Mr McKnight said.

“As the cashflow ramps up from the Dolphin operations, the company intends to undertake a systematic exploration program to delineate an economic deposit to increase the mine life of the operation.”

Due to the historical volatility of tungsten prices, Mr McKnight said different mining and processing options were looked at.

“Many different mining and processing options were looked at, with a view to striking a balance between capital and operating expenditure which would deliver the best result for the project,” he said.

In mid-2021, the Tasmanian Government gave a $10m loan to the Dolphin tungsten mine, giving Group 6 Metals momentum to secure necessary project funding from major shareholders, Cat Finance and Pure Asset Management.

This was support by an equity raise from both new and existing shareholders, allowing Group 6 Metals to proceed with re-development activities for Dolphin in late 2021. Construction began in late January 2022, with successful commissioning achieved in June 2023.

“While the site could be considered a brown field site, we installed a brand-new tungsten concentrate plant, tailings storage facility, power station and other mine support infrastructure,” Mr McKnight said.

By installing a new process plant, Group 6 Metals was able to add certain improvements to a traditional gravity circuit to optimise the overall performance of the plant. The company is now reaping the benefits with the plant producing a high grade concentrate in excess of 70%.

The continuing operation of the process plant is being supported by Gekko, Cromarty and original equipment manufacturers and their agents to ensure the equipment is maintained in good working order.

Mr McKnight said the project development was predominantly self-executed with input from key specialist consultants.

“The project development was largely self-executed with input from key specialist independent consultants that were involved in the project for quite some time prior to commencement of construction,” he said.

“While others may have lost hope that the project would ever get redeveloped, they showed great commitment and belief in the project playing a very significant role in the success achieved to date.

“The project development was also supported by William Adams, Gekko Systems, Frontline Electrical, JMK Civil Construction and DGA Australia.

“While the company run the mining fleet, we have enlisted the services for Maxfield Drilling and Maxam to provide drill and blasting services.”

When steady state production has been reached, Mr McKnight expects to export 70t to 80t of concentrate per week, equating to around four 20ft containers.

“Our concentrate is a low volume, high value commodity and therefore not particularly challenging from a logistics point of view. We are fortunate the operation is located adjacent to the Grassy Port and we have direct private access to it,” he said.

“We currently have two offtake agreements with Wolfram Burgbau Hutten (a wholly owned subsidiary of Sandvik) and Traxys, both of which are based in Europe. It was a major milestone for the company export its first container of concentrate off the Island in July.”

Environmental Protection

Since 1917, Dolphin has been operating in a way that is low impact to the flora and fauna of King Island.

“The company is very focused on preserving the local environment around the mine and on King Island. King Island is a beautiful island with a world-renowned reputation for its produce and tourism,” Mr McKnight said.

“The company has put 38ha premium conservation area under a conservation covenant which will preserve this disturbance on the mine, electing to locate the tailings storage facility on the old historic tailings area.

“Our key focus going forward is reducing our diesel power generation on the Island which we hope can be achieved over the next two years with the execution of a renewable energy project.”

Impact on Local Economy

Since operations began in 2022, Dolphin has had a positive impact on the local economy, with Group 6 Metals trying to use local materials and service providers where possible.

There has been strong support from the King Island community as well as the wider Tasmanian economy. Furthermore, the local town of Grassy has seen a big boost in activity as a result of the mine.

“We have had strong support from the King Island community and the local town of Grassy has received a big boost from the increase in activity as a result of the mine,” Mr McKnight said.

“We currently employ around 105 people to support the operations at the mine with approximately 25% of those residing on King Island. What is also very pleasing is we have King Islanders returning to the island to take up employment at the mine.

“Longer term, we would hope the mine can provide opportunities for young King Island residents seeking skilled training allowing them to remain on the island.”

Future Focus

Group 6 Metals’ site team is now focused on ramping up production and fine tuning the performance of the process plant to maximise recovery and concentrate production.

The company will also focus on developing its renewable energy project which will deliver cost savings to the Dolphin Tungsten Mine.

“Following the ramp up of the mine to steady state production, the company will focus its efforts on developing its renewable energy project to replace a significant portion of the current diesel power generation which will deliver significant cost savings to the project,” Mr McKnight said.

“Earlier this year the company executed a Memorandum of Understanding (MOU) with Fortescue Future Industries (FFI) to explore the development of a renewable hydrogen project to supply cheaper renewable energy to the mine to meet its current and future power requirements.

“Not only will this improve the green credentials of our tungsten products but would also supply hydrogen and heat energy required for downstream processing.

“We are hopeful we can conclude this initial due diligence phase in the next six to eight weeks and progress to a feasibility study.”

Dolphin currently has a mine life of 13 years but with the significant regional exploration area surrounding the mine, it’s expected to extend well beyond 20 years.

Over the next 18 to 24 months, Group 6 Metals will be focusing on advancing its regional exploration strategy at Dolphin to identify another economic resource. This could potentially extend the mine life, maximising the potential of the newly installed process plant.