Icon Resources is soon to be a tungsten producer from its flagship project, the Mt Carbine tungsten mine in North Queensland. A three-stage project is under way: retreatment of tailings commencing 2011, followed by processing the low-grade stockpiles and then hard rock mining. Present project life of 20 years is expected to be significantly increased by further exploration of the hard rock resource.

ASX: III

BackgroundTungsten is a rare metal, critical to modern industry. Half the tungsten produced worldwide goes to making tungsten carbide and high strength high speed steel, both indispensible in cutting or grinding hard materials. A quarter of the tungsten produced is used to harden steel, and the remainder is used in a wide variety of uses, ranging from jet engines to electronic circuitry. There is no substitute for tungsten in most of its applications.

Tungsten is extremely heavy, has a very high melting point (~3,400oC) and, as tungsten carbide, is very hard wearing - second only to diamonds.

Approximately 75% of the world’s tungsten and tungsten products come from China. Tungsten was declared a ‘strategic metal’ by China in January 2010, and a ‘critical raw material’ by the European Commission in June 2010. China has imposed export bans, quotas and tariffs on exports of tungsten products.

As developing economies increase their manufacturing capacity, the demand for tungsten will increase further.

High volume consumer items that also use tungsten include mobile phones, light bulbs and golf clubs. But there are some new developments that underscore reasons to be excited about tungsten.

MIT materials scientist Christopher Schuh stands next to a truck bumper coated with a new nickel-tungsten alloy that could replace chrome plating. Photo / Donna Coveney

good BYE cHroMEChromium plating is a $20B industry. The industrial process to create chrome is under pressure with issues of workers’ health and environmental impacts. But the challenge for scientists has been to deliver a product that combines hardness, long-lasting shine and corrosion protection. MIT researchers have developed a new nickel-tungsten alloy that is environmentally friendly, safer to produce and more durable than chrome. Nickel-tungsten plating has markets in the automotive, household fixtures, printing, and electronics industries.

THE sMarTEsT windows in THE rooMSome of the greatest challenges to the building industry in seeking greener outcomes, remains heating, cooling and lighting (and their costs).

The latest advance in ‘smart window’ technology uses a tungsten/platinum nanotechnology to create a self-powered photovoltachromic cell (PVCC) within a film. The film has both photoelectrochromic (colour changing) and photovoltaic characteristics that control the amount of light and heat passing through the glass, and doubles as a solar cell, using sunlight to power its chromic behaviour. There is a global market for smart window and display applications.

nucLEar PowEr saFETYFor decades, lead blankets have been the backbone of radiation shielding applications, from medical x-rays to nuclear power plant surfaces. Researchers have now developed a flexible heat-resistant shielding made of tungsten and iron metal powder immersed in a silicone polymer. The new generation tungsten shielding uses imbedded magnets which makes it form fitting, so it can be used on wall and floor surfaces, and around pipes.

It has proven to be up to twice as effective as lead in lowering radiation exposure rates, is easy to decontaminate, is lighter weight and cheaper to install, and is an easier surface to work on than lead, improving worker safety, plant efficiency and costs. The new shield is also heat resistant to 300oC, allowing applications close to weld sites. Personnel at a nuclear power plant in Arkansas, USA, drove the development of the tungsten radiation shielding, already in use at several power plants in the United States.

Below, aerial view of Mt Carbine mine today, with open pit in foreground.

MT carBinEThese are just three of the new technologies that expand the uses for tungsten. Coupled with increased demand for ‘standard’ manufacturing applications, analysts forecast a deficit of tungsten concentrate on current global production of more than 12% by 2015.

Historically one of the world’s largest tungsten mines, Mt Carbine delivered 40% of Australia’s annual tungsten production. It produced approximately 17,000 tonnes of premium wolframite and scheelite concentrates, extracted from some 13.5 Mt of sheeted quartz veining, until low metal prices forced the closure of operations in the mid-1980’s. When operations ceased, underground development was well advanced to access high-grade mineralisation extending beneath the floor of the open cut.

Most of the required infrastructure to re-start the mine is already in place (eg. granted mining leases, power, sealed roads, tailings storage facilities, environmental approvals etc), and it is located just 120km (~1.5 hours drive) from the port of Cairns in Far North Queensland.

Mt Carbine is scheduled to start producing concentrate from retreatment of tailings in 2011, and producing high grade concentrates to customer specification firstly from low grade stockpiles in 2012-13 (5-7 year project) followed by production from hard rock mining. It is planned to position Mt Carbine as the leading Australian tungsten producer.

Above, tungsten supply/demand trends (Roskill Information Services, September 2009). The white line delineates surplus (above) and deficit

(below).

TungsTEn PricEsThe tungsten price is commonly referenced to ammonium paratungstate or APT, with concentrates of scheelite and/or wolframite usually 70-75% the APT price. Tungsten dropped less than most metals during the global financial crisis and is now back to its pre-GFC levels. Further increases are indicated with higher demand from countries increasing their manufacturing capabilities and from new applications.

China controls 75-80% of the tungsten market. In the past year, China has imposed export restrictions on tungsten products, and also shut down key mines. As a result, tungsten prices have nearly doubled in the past six months as the accompanying chart from Metal Pages (6th May 2011) shows. The prices are quoted in Rinminbi (on 8/5/2011 A$1.00= RMB 6.698) and other sources suggest that the actual price for concentrates is significantly higher than reported by Metal Pages.

ProsPEcTsThe Icon Board of Directors has approved the purchase of equipment to implement the tailings retreatment of tailings, to produce ~50 tonnes of WO3 (approximately 5000mtu) per month. Capital expenditure for this part of the project is expected to be $4.4 million.

Following highly successful X-ray ore sorter trials on bulk samples from the low grade stockpiles the Board has also authorised implementation of the final feasibility study for processing the low grade stockpile (12 million tonnes plus approximately 4-6 million tonnes of sorter reject from the previous mining operation).

Processing the low grade stockpiles is expected to produce ~100 tonnes of WO3 (~10,000 mtu) per month, for a period of at least 5 years, with a capital expenditure of less than $20 million. The results of exploration drilling close to the existing open pit in early 2010, integrated with analyses obtained from original drill core from Mt Carbine led to the announcement in November 2010 of a maiden JORC Inferred Resource of 39 million tonnes at 0.14% WO3 at a cut-off of 0.05% WO3.

There is no exploration drilling more than 75m from the pit, yet historic tungsten workings and mines extend for at least 400m north of the pit, and significantly, a drill hole into the historic Iron Duke workings north east of the pit intersected 35m at 0.29% WO3 (ie. twice the grade of the ore in the Inferred Resource).

Below, Mt Carbine mine circa 1980, with highway in foreground.

Corporate Structure Icon Resources Ltd is listed on the Australian Stock Exchange (ASX), ASX code: III.

Mt Carbine was the first mine in Australia to use ore-sorters (above) which resulted in significant cost savings. Ore-sorters have been much improved in the thirty-plus years since these were installed and greater efficiencies are expected in the new plant. Other processing improvements include high speed centrifugal concentrators which are capable of separating down to much finer particle sizes, thus leading to higher recoveries.

Above, Google view of Mt Carbine tungsten mine, showing waste dumps and Tailings dam.

Icon Resources recently acquired two EPMs surrounding and adjacent to Mt Carbine. Image above right shows existing mine site in relation to new ground. EPMs contain old tungsten workings with no modern exploration. Field reconnaissance has identified zones of anomalous tungsten in soils. Acquisition facilitates potential extension to mining lease.

~ 5000m diamond drilling (HQ core) was completed July 201, and resulted in maiden JORC Inferred Resource estimate of 39 million tonnes at 0.14% WO3 at a cut-off of 0.05% WO3.

Share RegisterComputershare Investor Services Pty Ltd Level 4, 60 Carrington Street, Sydney NSW 2000, AustraliaTelephone: (Australia) 1300 555 159

DirectorsDr Leon Pretorius, ChairmanIan Sheffield-Parker, Managing Director Dr Andrew White, Non Executive Director

Registered OfficeSuite 505, 35 Lime St, Sydney NSW 2000Telephone: +61 (0)2 9279 1252Website: www.iconresources.com.auEmail: info@iconresources.com.au

214,421,396 shares issued (assuming July 2011 Rights Issue and placement of any shortfall)

23M unlisted options (21M options expire June 2011)

Current share price ~10c (@July 2011)

Market cap ~$21M

suMMarYThe outlook for tungsten is extremely positive. Despite the volatility of exchange rates and world stock markets, tungsten prices continue to increase due to fundamental supply and demand issues. Increasing pressure on supply, together with the rapid growth of manufacturing sectors in developing economies and new uses across a broad spectrum of industries, has forced China to restrict exports. Still the largest producer, China is a net importer.

“Western world future supply ‘desperately thin’ & limited number of projects” (PDAC, March 2009)

“Tungsten - the next sexy metal?” (Strictly Boardroom, August 2009)

“Increasing deficit in tungsten from 2013” (Roskill, September 2009)

“In 2012, it will be tin, tungsten & molybdenum” (CRU, October 2009)

“Tungsten a ‘critical’ raw material” (European Commission, June 2010)

“China’s demand to increase 8% in 2010” (Investing in Tungsten, July 2010)

The full extent of economic tungsten mineralisation at Mt Carbine is hence unexplored. Significant exploration drilling is budgeted in the 2011-12 period, in order to provide a robust understanding of the ore body as a basis for hard rock mine planning anticipated to commence towards the end of the low grade stockpile processing project. The hard rock mining options presently under consideration include extension of the open pit, and underground mining by bulk mining methods.