NA Tungsten greenlights Cantung restart

Vancouver With tungsten prices at record highs and off-take agreements in hand, it comes as little surprise that North American Tungsten (NTC-V) has decided to re-start its moth-balled Cantung mine in the Northwest Territories at the Yukon border. The company expects to spend about $5 million to get Cantung up and running again to a rate of 1,000 tonnes per day by August.

Investors cheered the news sending the company’s shares up a healthy 17% on heavy volume to close at a yearly high of $1.58 on June 9.

North American Tungsten has had its eye on getting operations under way again ever since Cantung was shut down in late 2003 after its two customers terminated their off-take agreements and sent the company into bankruptcy.

At the time, prices for tungsten were at around US$47 per metric tonne unit (MTU) – one MTU being equal to 22 lbs.

The company sprang into action last summer as prices for tungsten started their climb on the back of a supply shortage. Since then, it has completed its restructuring and has been able to lock into off-take agreements accounting for 70% of its forecast annual production of 400,000 MTUs of tungsten concentrate.

The new customers are based in the U.S., Asia and Europe.

While no details of the off-take agreement with its customers were forthcoming, the company ventured to say that it may hold back some of the remaining 30% of Cantung’s production to sell on the red hot spot market.

During the past year, a global supply shortage has caused tungsten prices to skyrocket to all-time record levels currently around US$285-295 per MTU.

Tungsten is a strong metal used mainly as a steel hardener, in light bulbs, and as a substitute for lead in ammunition.

“China is keeping its own material for its own uses”, says Stephen Leahy, Chairman of North American Tungsten. China had been a chief exporter of tungsten for years.

The Cantung mine property covers 16,000 acres along the Flat River, between McKenzie and Logan Mountains. The mine is in the Selwyn tungsten belt.

Two deposits were mined at Cantung — one by open-pit methods between 1962 and 1973; the other, by underground methods between 1974 and 1986 and from 2001 to late 2003. Both are disseminated scheelite deposits in calc-silicate skarn replacement zones within limestone.

North American Tungsten was looking at a lower break-even point with a lower mill cut-off grade, which would increase minable reserves and the life of the mine. The higher prices for tungsten auger well for boosting reserves as lower grade material becomes economic and cut-off grades are lowered.

“We hope to finish an update to our reserves within the next few weeks and hope the numbers will change”, says Leahy.

The present resource at Cantung comprises the West Extension, stopes and pillars in the Main zone, and ore stockpiles. At September 2002, minable reserves stood at 771,000 tons grading 1.75% WO3, and indicated resources were pegged at 6.5 million tons grading 0.95% (historical resource).

The company is also eager to revisit its Mactung deposit, near Ross River which is believed to be the largest in the world and hasn’t been worked since 1982.

In September 2002, Mactung was estimated to hold 2.6 million tons of 1.34% WO3 in minable reserves, as well as more than 45 million tons of material grading 0.96% in all categories of a historical resource.

Plans call for more drilling this summer in an effort to raise the resources into compliance with National Instrument 43-101.