Canada Tungsten sells interest in Queenstake

Hurting from a dismal tungsten market, Canada Tungsten Mining has decided to sell its 32% interest in Queenstake Rsources.

That equity position represents about 1.98 million shares and a market value of approximately $3 million. A spokesman for Cantung confirmed that negotiations were under way with one possible buyer but he wouldn’t divulge any details.

Chinese sales on international markets have depressed tungsten prices to uneconomic levels for most free world producers, and Cantung has been forced to close its mining operation in the Northwest Territories indefinitely. Its equity position in Queenstake has been diluted by about one-third from 45% in recent years and Queenstake’s share price has tumbled from a 53-week high of $2.35 to around $1.54.

In the past few years, Queenstake has produced 6,000 to 8,000 oz of gold annually from its Yukon placer operations and it’s a recognized leader in this particular field. The company has said previously that its Yukon placer operations could generate about 20,000 oz gold per year but there has been no optimization of production there yet.

Earlier this month, Queenstake announced plans to issue $2.1 million in new equity (including $600,000 of flow-through financing with NIM and Co.-1987) which will be used for working capital and also to fund the acquisition and testing of placer properties. Drilling and development work is also planned on two hardrock gold properties.

The majority of the flow-through funds will be spent at the Moyie River placer property nqar Cranbrook, B.C.; for placer exploration in the Atlin area also in B.C. and, of course, the Yukon. Queenstake says more drilling is planned on the Mar tungsten deposit near Mayo, Yukon, to delineate the gold mineralized areas. The Mar gold vein project could be explored on a joint venture basis.