Vancouver – With the price of tungsten recovering from a low of US$185 per metric tonne unit to the current price of US$240 per MTU, North American Tungsten (NTC-V) has decided to re-start production at its Cantung mine in the Northwest Territories.
The company shut its wholly-owned tungsten mine eight months ago due to the low price of the metal, but low customer inventory and renewed demand have helped the price rebound.
As of a July, 2009 reserve update the mine hosts 1.02 million reserve tons grading 1.08% WO3. The reserve estimate is based on a long-term base case estimate of US$205 per MTU, an operating cost of $152.22 per ton and a cut-off grade of 0.8% WO3. Reserves support a mine life of 2.5 years while the mine churns through 1,100 tons per day.
The underground and open pit oxide mine sits 300 km northeast along an all-weather road from Watson Lake, Yukon.
Since starting production in 1962 the Cantung mine has had operations suspended several times due to fluctuating tungsten prices. North American Tungsten bought the mine in 1997 and reopened it in 2001 after it had been closed for 15 years. In 2003 the company was placed under creditor protection and was forced to shut down the mine again. The company reopened the mine in late 2005 after completing a plan of arrangement to deal with creditors.
North American tungsten expects the mine to be fully operational by October. The company has arranged offtake agreements with several customers for a high portion of its planned output.
The company also owns the MacTung tungsten deposit in the Yukon. The deposit hosts 33 million indicated tonnes grading 0.88% W03 and a further 11.9 million inferred tonnes grading 0.78% WO3.
A 2009 feasibility study on MacTung outlined underground probable mineral reserves of 8.5 million tonnes grading 1.08% W03. The study estimated an 11.2 year mine-life processing 730,000 tonnes per year. The net present value was set at $346.4 million using a 6% discount and the pre-tax internal rate of return at 23.5% using a price of US$300 per MTU of ammonium paratungstate concentrate.
The MacTung project is currently being screened through the Yukon Environmental and Scocio-economic Assessment Act after being declared adequate by the Yukon Environmental Socio-Economic Assessment Board.
North American Tungsten closed almost unchanged on news of the reopening at 18.5¢ on 984,000 shares traded. The company has a 52-week share price range between 12¢ and 26¢ and 189 million shares outstanding.
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