Revival planned for CanTung mine

Armed with funds provided by two end-users of tungsten, North American Tungsten (NTC-V) is aiming to revive the dormant CanTung mine in the Northwest Territories, near the Yukon border.

The Vancouver-based junior recently reached an agreement with Sandvik of Sweden and U.S-based Osram Sylvania Products. Both firms are leading producers of tungsten products and cemented carbides.

Under the terms of the preliminary agreement, North American Tungsten (NAT) was given a US$3-million advance toward startup costs for the CanTung mine, to be repaid over 36 months. The junior needs to raise an additional $5 million in order to re-activate the mine, which has been closed since 1986 because of low tungsten prices.

President Udo von Doehren says the agreement includes a concentrate-sales provision that will give Sandvik and Osram Sylvania a secure supply of western mine production. At present, most of the tungsten sold on world markets comes from China, which has largely drawn down the stockpiles that kept prices depressed in recent decades. Prices have strengthened considerably in the past few months, with concentrates now selling at between US$67 to US$74 per metric tonne unit (10 kg).

NAP says its CanTung mine and MacTung deposits represent the Western World’s largest, high-grade tungsten reserves, comprising some 15% of the world’s proven reserve base. Subect to project financing, the CanTung mine is to resume production in late 2001, with an estimated annual production of 300,000 tonnes over the next three years. Reserves and resources are sufficient for at least 30 years. The company has informed local communities of its plans to reopen the mine.

An agreement with Placer Dome (PDG-T) paves the way for Seabridge Resources (SEA-V) to acquire the Kerr-Sulphside copper-gold project, in the Iskut-Stikine region of northwestern British Columbia.

The project consists of the Kerr copper deposit, which has a resource of 140.8 million tonnes grading 0.75% copper and 0.36 gram gold per tonne at an 0.4% copper cutoff grade. Seabridge is primarily interested in the Sulphurets gold deposits, which have 1.8 million oz. gold contained in a resource of 54.8 million tonnes grading 1.02 grams gold. The cutoff grade is 0.5 gram per tonne.

Seabridge President Rudi Fronk ackowledges that the deposits are not economic at current prices. “However, our strategy is precisely to acquire this kind of asset as a perpetual call option on gold for our shareholders.”

In keeping with this strategy, Seabridge previously acquired two low-grade projects in Oregon: Grassy Mountain and Castle/Black. Holding costs on the company’s various projects are said to be less than $250,000 per year.

The Kerr-Sulphside acquisition calls for Seabridge to issue Placer Dome 500,000 of its shares, plus a similar number of warrants. Should a positive feasibility study be tabled, the junior would have to buy a 1% net smelter return royalty from Placer Dome for $4.5 million.