CanTung mine to be put on care and maintenance

Declining tungsten prices and rising inventory are forcing North American Tungsten (NTC-V) to put its 100%-owned CanTung mine in Canada’s Northwest Territories on care and maintenance, temporarily suspending production starting from Oct. 15.

The company will continue to sell product from inventory and will have enough material to meet its contractual sales obligations. The company will continue spot sales through early 2010.

“I expect that a tungsten supply shortfall will develop as the world economy improves,” Stephen Leahy, the company’s chairman and chief executive, said in a statement. “We fully intend to pursue plans to return the mine to full operations after markets have significantly firmed.”

The news sent the Vancouver-based company’s shares down 3¢ apiece or 21.9% to 12.5¢. (North American Tungsten has a 52-week trading range of 10¢-$1.13 per share and 126.9 million shares outstanding.)

The CanTung mine is about 300 km northeast of Watson Lake, Yukon, close to the Yukon border, and was opened in 1962. CanTung is a primary producer of tungsten concentrate from open pit and underground mines.

North American Tungsten says it is proceeding with its summer drill plans at both the CanTung mine and at its MacTung deposit to expand known resources. The majority of funds, however, will be spent at  MacTung. The latter  is one of the world’s largest known undeveloped high-grade tungsten-skarn deposits, the company says.

As of September 2006, the CanTung mine has a probable reserve of 1 million tons grading 1.17% tungsten oxide; an indicated resource of about 3 million tons grading 1.21% tungsten oxide and an inferred resource of 734,000 tons at 0.74% tungsten oxide.

The company claims it is the largest producer of tungsten concentrate “in the Western World,” with a producing mine and a strategic tungsten development asset.

Tungsten concentrate is a strategic industrial metal used in a variety of products ranging from jet turbine engines and high-speed cutting tools to electronic circuitry and surgical instruments.