Advanced Pre-Feasibility Study for Santa Comba Open Pit Confirms Strong Economics and Supports Re-Opening of Integrated Mine with 63% Increase in Ore Reserves

Rafaella Resources Limited (ASX:RFR) (‘Rafaella’ or the ‘Company’) is pleased to announce the results of an advanced open pit pre-feasibility study (Advanced PFS) conducted at the Santa Comba Tungsten and Tin Project (“Santa Comba Project’ or the ‘Project’) in northwestern Spain. The PFS shows the Project to be economically robust, complementing the permitted underground mine and offering significant upside due to the obvious scalability.

Announcement Highlights

• The “open pit only” Advanced PFS shows a pre-tax NPV of A$ 94.8M (US$ 67.3M) and IRR of 32.6% (Management Case). The above numbers include Inferred Resources representing 5.6% of total production*.
• The Project is robust with rapid payback of 2.3 years post-commissioning.
• Proven and Probable Ore Reserves are estimated to be 7.48 million tonnes at a grade of 0.15% WO3 (cut-off 0.05%) for 12,374t of contained WO3, being an increase of 63% over previous numbers.1
• Open Pit Upside: Recently drilled additional resources have translated into a higher NPV, demonstrating the importance of size and scalability on open pit projects:
  • 90% of the open pit project area has yet to been drilled. The wider project area offers significant potential for expansion, with a near surface Exploration Target** of 25,000 to 112,000 tonnes contained WO3. 2
• Underground Upside: The open pit is complementary to the recommissioning of the high-grade underground operation containing JORC Inferred Resources of 2,752 tonnes of contained WO3 and 662 tonnes of contained Sn with an additional Exploration Target** of between 6,000 to 12,400 tonnes of contained WO3 and 1,300 to 2,200 tonnes contained Sn.3
• The Advanced PFS results support the Company’s application for ‘Strategic Industrial Project’ status for the Project, to facilitate an acceleration of the permitting process.

Cautionary Statements

*There is a lower level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised.

** The potential quantity and grade of the Exploration Target is conceptual in nature; there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration work will result in the estimation of a Mineral Resource.

The Advanced PFS has been prepared in accordance with JORC 2012 by Consultores Independientes en Gestión de Recursos Naturales, S.A. (CRN) and follows the 42% increase in the Mineral Resource Estimate4 reported in August 2021 (after the 2021 drill campaign) and test work that showed improved metallurgical recoveries5 from Santa Comba project ores in January 2022.

Managing Director Steven Turner said:

“The study work has been carried out to a definitive feasibility level in most areas with CAPEX and OPEX estimations having an accuracy of +/- 10-15% at the time of estimation. Further work to finalise the definitive study is mainly related to metallurgical optimisation studies, however sufficient understanding of the processing has been achieved to confirm the attractiveness of the open pit as a complementary operation to the permitted underground mine, creating a long-term integrated scalable project. The Company is now able to move to the next important development stage and commence the open pit permit application process, presenting the Project as one of strategic importance to Galicia and Spain. The integrated Santa Comba project provides the Company with a future world class tungsten operation, combining (i) a high-grade underground operation, which is highly synergistic to the recent San Finx tin and tungsten mine acquisition, with (ii) a large scale, high volume, open pit development. The Project will bring major regional investment, securing long term jobs and a responsibly operated domestic source of a critical metal, highly vulnerable to Chinese and Russian supply chain disruption.”

Tungsten Mining Strategy

Rafaella aims to be a significant supplier of tin and tungsten to Europe and North America through the development of its two Galician mines; Santa Comba and San Finx. The Company is actively seeking ways to advance both projects which have previously operated and benefit from pre-exiting permits and substantial infrastructure.

The plans for Santa Comba project to operate as an underground and open pit mine are expected to extend the Project’s mine life and support regional investment and local job creation.

Tungsten Industry

The two naturally occurring tungsten minerals, that currently support commercial extraction and processing are wolframite ((Fe,Mn)WO4) and scheelite (CaWO4). Tungsten has a unique set of physical properties; it has the highest melting point of all the elements (~3,400°C), has a density that is 19.3 times that of water, making it among the heaviest metals, has excellent electrical conductivity and its coefficient of thermal expansion is the lowest of all metals.

Tungsten is classified as a critical metal due to its importance to key industries, whilst being vulnerable to supply chain disruption. 85% of global tungsten concentrates come from China. Importantly around 20% of Europe’s current demand is met from Russian sources (Argus Media). Given geopolitical events, the risks to future supply disruptions are very real and have been the subject of increasing concern at the European Commission level. A key mitigant to this risk would be the development of domestic resources. The Santa Comba project contains such a resource.

Prices for tungsten concentrates have historically tended to follow the same trend as prices for ammonium paratungstate (APT), which is the key intermediary product in the tungsten supply chain. APT prices are quoted on the basis of metric tonne units. A metric tonne unit (MTU) is 10 kg. An MTU of tungsten trioxide (WO3) contains 7.93 kg of tungsten (W). Standard industry grade specification for tungsten concentrate is 65% WO3.

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