Vancouver — With tungsten prices at all-time highs and offtake agreements in hand,
The Vancouver-based company expects the mine to be producing at the daily rate of 1,000 tonnes by August. The capital cost of achieving that goal is estimated to be $5 million.
Investors responded to the news by sending the company’s shares up a healthy 17% on heavy volume to close at a yearly high of $1.58 on June 9, the day of the announcement.
North American Tungsten closed Cantung in late 2003 after its two customers ended their offtake agreements, forcing the company to seek bankruptcy protection. At the time, prices for tungsten were US$47 per metric tonne unit (one MTU being equal to 10 kg).
The re-start initiative began last summer as tungsten prices started to climb. The company has since restructured, while locking into offtake agreements, which account for 70% of forecast annual production of 4,000 tonnes of tungsten concentrate.
Cantung’s new customers are based in the U.S., Asia and Europe. No details of the offtake agreements were available, though the company said it could hold back some of the remaining 30% of production to sell on the spot market.
Over the past year, a global supply shortage sent tungsten prices on a tear to all-time records of US$285-295 per MTU.
“China is now keeping its own material for its own uses,” says Stephen Leahy, chairman of North American Tungsten, though he adds that that country had been a chief exporter of tungsten for many years.
Tungsten is used mainly as a steel hardener, as well as in light bulbs and as a substitute for lead in ammunition.
The Cantung mine property covers 64,000 sq. km along the Flat River, between the McKenzie and Logan Mountains. The mine is in the Selwyn tungsten belt.
Two deposits were mined — 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 in limestone.
North American Tungsten had been looking for a lower break-even point with a lower mill cutoff grade, which would increase minable reserves and the life of the mine. Clearly, the higher prices for tungsten augur well for boosting reserves as lower-grade material becomes economic and cutoff grades are lowered.
“We hope to update our reserves in June,” says Leahy.
The Cantung resource comprises the West Extension, stopes and pillars in the Main zone, and stockpiles of ore. In September 2002, minable reserves totalled 771,000 tonnes grading 1.75% WO3, and indicated resources were pegged at 5.3 million tonnes grading 0.95%. (The resource figure is not compliant with National Instrument 43-101.)
Meanwhile, the company is also eager to revisit its Mactung deposit, near Ross River in the Yukon. Mactung has not been worked since 1982 and is believed to be the largest tungsten deposit in the world.
At last count, Mactung was estimated to have a measured and indicated resource of 13.7 million tonnes grading 0.95% WO3, or a resource in all categories of 27.5 million tonnes grading 0.89% WO3. This summer, more drilling will be carried out in an attempt to make the resource estimates compliant with National Instrument 43-101.
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