NA Tungsten boosts latest financing to $8.25-million

Vancouver – Right on the heels of closing a $4.25-million financing, North American Tungsten (NTC-V) announced another private placement aimed at advancing reactivation plans at its wholly owned Cantung mine located on the Yukon-Northwest Territories border.

The latest planned financing has been increased from $6.25 million to $8.25 million. The brokered offering is being underwritten by Sprott Securities and Haywood Securities who are purchasing 14-million units at $0.50 per unit plus an additional 2.5-million flow-through shares at $0.50 apiece. Each unit will consist of one share plus a half-warrant, with every warrant exercisable into a common share at $0.60 for two years.

The underwriter’s greenshoe option will allow them to purchase an additional 4.5-million units at $0.50 apiece up until the closing of the offering.

North American Tungsten recently closed a $4.25-million private placement consisting of 17-million units at $0.25 apiece. Each unit consists of a share plus one-half warrant, with each warrant exercisable for one share at $0.30 for two years. Funds raised are for the company’s restructuring and will be primarily allocated towards settling outstanding debt and for working capital.

In late-2004, the company received British Columbia Supreme Court approval for its proposed plan of arrangement with creditors to settle all outstanding debt. Additionally, North American Tungsten settled with secured creditors AB Sandvik Coromant of Sweden and US-based Osram Sylvania Products (a subsidiary of Siemens AG), paying the pair US$300,000. To finalize its Sandvik-Osram settlement, the company must deliver US$600,000 in tungsten concentrate over a 24-month period from recommencement of production. In total, the company will pay about $2.1 million to extinguish $11.5 million in outstanding debt.

Also in late-2004, First Nations company Kaska Minerals agreed to invest $3 million into North American Tungsten, becoming the largest single shareholder.

Cantung ceased production in late-2003 and was placed under care and maintenance following the loss of its sale agreements with Sandvik and Osram, who had been sole purchasers of the mine’s tungsten concentrate output. North American Tungsten was then placed into bankruptcy protection following the closure.

Cantung operated as an open pit mine from 1962 to 1973, then as an underground operation from 1974 to 1986, and again from 2001 to 2003. Tungsten mineralization occurs as disseminated scheelite in a limestone-hosted calc-silicate skarn. The operation was the largest tungsten mine in the western world with remaining mineable reserves of about 700,000 tonnes grading 1.75% WO3. Significant additional underground resources also remain at the deposit.

The company’s Mactung deposit, located about 200 km northwest of Cantung, saw extensive drilling and underground development through the 1960s-70s with development plans shelved in the mid-1980s due to deteriorating tungsten prices. The historical reserve and resource base at Mactung, calculated prior to National Instrument 43-101, is about 45-million tonnes grading 0.96% WO3.

Aur Resources (AUR-T) holds a 1% NSR on Cantung and Mactung. The royalty was recently reduced from 4% under an agreement that will see the company make staged payments to Aur for the amendment.

The two deposits account for about 15% of worldwide high-grade tungsten reserves and resources. Tungsten prices have surged over the past year with growing demand from Asia. The metal is primarily used as a hardening alloy in specialty steels and tools and also as filament in light bulbs due to its high melting point.

Investors leapt on the issue following the financing announcement causing its share price to surge to a three-year high of 68 on volume of over 1.3 million shares.