Medcalf’s Strong Economics Face Environmental and Market Hurdles

Medcalf Project Overview

Audalia Resources Limited (ASX – ACP) has taken a significant step forward in advancing its Medcalf Titanium-Vanadium-Iron Project in Western Australia by announcing its maiden Ore Reserve estimate, following the completion of the January 2026 Pre-Feasibility Study (PFS) update. The project, located approximately 100 km southwest of Norseman, targets the production of high titanium lump and fine ores designed for refractory lining protection in blast furnace applications.

The Ore Reserve, compliant with the JORC 2012 code, totals 11.77 million tonnes grading 11.0% titanium dioxide (TiO2), 0.6% vanadium pentoxide (V2O5), and 53.8% iron oxide (Fe2O3). This reserve underpins a planned nine-year mine life with a rapid payback period of just one year, reflecting the project's strong economic fundamentals.

Economic Viability and Development Options

The PFS update evaluated two distinct development pathways – a high capital expenditure (CAPEX) with low operating expenditure (OPEX) option, and a low CAPEX with high OPEX alternative. Both options demonstrate compelling financial returns. The high CAPEX/low OPEX scenario delivers a net present value (NPV) of AUD 227 million with an internal rate of return (IRR) of 64%, while the low CAPEX/high OPEX approach offers a higher IRR of 164% but a lower NPV of AUD 141 million.

These outcomes are supported by updated mineral resource estimates, metallurgical test work, and mine scheduling that optimise the production of High Titanium Lump Ore (HTLO) and High Titanium Fine Ore (HTFO). The project’s simple processing route; primarily crushing and screening; facilitates direct shipping to customers, primarily in Asian markets, via the port of Esperance.

Technical and Environmental Considerations

Audalia has incorporated comprehensive geotechnical studies, hydrological assessments, and environmental management plans into the project design. The mining lease is in good standing, with environmental approvals secured through the Western Australian Environmental Protection Authority (EPA) and heritage agreements established with the Ngadju People.

While groundwater licensing and environmental offset requirements remain under review, the company has proactively acquired offset leases and is conducting further hydrogeological studies to ensure compliance. The project’s infrastructure includes a 74 km access road, onsite camp facilities, and diesel-generated power, all factored into the updated capital and operating cost estimates.

Market Position and Sensitivity

Market analysis indicates a strong demand for high-titanium ores, driven by declining global ilmenite reserves and increasing demand for blast furnace refractory materials. Pricing assumptions used in the financial model are based on recent negotiations and research, with HTLO priced at USD 100 per tonne and HTFO at USD 90 per tonne, subject to minor penalties for silica and alumina content deviations.

Sensitivity analysis reveals that the project’s economics are most influenced by operating costs and product pricing, with the NPV and IRR remaining robust under reasonable fluctuations. The project can tolerate over 25% increases in OPEX and significant CAPEX overruns, though a price drop exceeding 25% could challenge viability under the high CAPEX/low OPEX scenario.

Next Steps for Audalia

With the maiden Ore Reserve now established, Audalia is positioned to advance towards definitive feasibility and development approvals. The company plans to focus on securing groundwater licenses, finalising environmental offsets, and progressing marketing and offtake agreements to underpin project financing and construction.