Audalia Resources Limited announced completion of the Updated Pre-Feasibility Study (PFS) on its 100%-owned Medcalf Project, undertaken by METS Engineering Group Pty Ltd. (METS) with input from a group of consulting firms including Cube Consulting Pty Ltd. (Cube), together with Audalia's technical team. The PFS updates the previous pre- feasibility study completed in March 2016. The PFS includes an economic valuation and supports the potential for high grade titanium lump ore (HTLO) product Western Australia-based mining and processing operation suitable for the blast furnace steel mills in Asia as a hearth liner for protection of the furnace walls.

The study has been completed to a PFS-level of accuracy and all costings, unless specified otherwise, have been undertaken at an accuracy level of ± 25%. The PFS results indicate the potential to create value through a direct shipping operation producing a high-titanium lump ore for use in blast furnace liner protection. The PFS is based on an updated Mineral Resource estimate using a 6%TiO2 cut-off grade that was completed in March 2022.

The Mineral Resource estimate was prepared by Competent Person as defined in the JORC Code, Patrick Adams of Cube. A summary of the economic assessment based only on the Indicated category of the Mineral Resource estimate is provided in Table 1. The project will initially comprise three open pits (Egmont, Vesuvius and Fuji), a processing plant, private haul road, road train transfer area and associated infrastructure such as laydown areas, gravel pits, groundwater bores, workshops and an accommodation village. The project is contractor dominant, with contractors operating the crushing plant, haulage, mining, the accommodation village and communications.

Sensitivity of the project economics was also modelled against variable lump ore pricing, capital costs, operating costs and foreign exchange rates. Variations up to ± 35% were modelled. The NPV and IRR are less sensitive to the capital cost, whilst the project economics are highly sensitive to the operating cost, revenue drivers and FX rate as expected from a low CAPEX contractor dominant project.

Given the strong modelling results, the project has high tolerance for fluctuations in the FX rate and lump ore price. As a >30% decrease in the price, the project becomes uneconomic as the NPV becomes negative. However, the economics can tolerate a >35% increase in the OPEX and CAPEX.

The upside is strong as 30% increases in price will boost revenue pushing the NPV towards $400M and IRR above 300%. The Medcalf Project is a vanadium-titanium-iron project located some 470 kilometres south-east of Perth near Lake Johnston, Western Australia. The Medcalf Project comprises one mining lease (M63/656), two exploration licences (E63/1134 and E63/1855), one general purpose licence (G63/10), and two miscellaneous licences (L63/75 and L63/94).

All tenure is owned 100% by Audalia. In 2021, Audalia identified the possibility of producing high titanium lump ore (HTLO) product to be used for blast furnace refractory liner protection. The project scope was updated to reflect a low upfront capital expenditure direct shipping ore operation condensed from a hydrometallurgical facility previously aiming to produce refined titanium and vanadium products.

METS were engaged by Audalia to update the PFS based on the revised project scope to produce HTLO product to be shipped from the Esperance port. Metallurgical test work has been completed by Nagrom and the Mineral Resource estimate has been updated using a 6% TiO2 cut-off grade by Cube providing a basis for the engineering design and economics. Key outcomes from the PFS are detailed below.

The project will initially comprise three open pits (Egmont, Vesuvius and Fuji), a processing plant, private haul road, road train transfer area and associated infrastructure such as laydown areas, gravel pits, groundwater bores, workshops and an accommodation village. The three pits will be developed to a maximum depth of around 50 m below surface with no expected dewatering requirements.