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North American tungsten suppliers gear up as China constrains output

With the majority of tungsten coming from China, Chinese economic activity arguably has the greatest effect on tungsten metal prices. In 2005 China depressed their exports and increased their domestic consumption. This caused tungsten prices to go through the roof. Later in the year, Tungsten prices began a rapid drop surrounding the speculations that Chinese tungsten was being smuggled into the European Market. Currently, Tungsten prices have witnessed an upside as Chinese supply disruptions in early '08 decreased stockpiles and drove the price of the concentrate higher. Strict controls on illegal mining activity and excessive exploration ahead of the Beijing Olympic Games have kept supplies tight. 

In order to create a more diversified market, one that will not respond to every hiccup China makes, exploration is currently underway in other regions.  The West Coast of Canada has shown great potential, and over the recent years junior mining companies been getting their feet wet in this promising area.

North American Tungsten Corporation (TSX.V: NTC), the western world's biggest producer of tungsten concentrate, closed their public offering this past Thursday.  The offering was for 4,170,000 common shares at a price of $1.20 per share.  Gross proceeds of $5,004,000 went through Haywood Securities Inc who acted as agent for the Company. In exchange, Haywood Securities Inc was issued 250,200 share purchase warrants. Each warrant will entitle the holder to purchase one common share of North American Tungsten, exercisable at a price of $1.20 at any time prior to 4:00 p.m. on August 7, 2009. North American Tungsten Corporation Ltd is ranked number eight in the mining sector of the 2008 TSX Venture 50.

Sultan Minerals Inc ^[2]. (TSX.SUL) is nearing the half way point of their diamond drill program in Salmo, BC. This 1500m drill program will provide infill sampling within the expansive East Emerald Tungsten zone. The current program has completed three drill holes to date, with an additional six to eight drill holes planned. Interpretation of the historic and recent drilling indicates two mineralized bodies. Drill core analyses within these mineralized zones indicate elevated grades of tungsten over significant widths. Exploration for tungsten on the property is continuing toward the goal of outlining a resource that meets the requirements for production. The current preliminary resource estimate for tungsten of 2,510,000 tonnes grading 0.379% tungsten was evaluated from the East Dodger and Invincible mine areas. With the addition of the Emerald Mine remnant material, and East Emerald tungsten zone, the total tungsten resource is expected to improve dramatically.

Largo Resources Ltd ^[3] (TSX:LGO) is in the midst of a 5757m diamond drill program on their Northern Dancer tungsten-molybdenum project in the Yukon. To date, nine drill holes have been logged with six holes split and sent to ACME laboratories in Vancouver for analysis. Results from these drill holes are expected in August, at about the same time that the Northern Dancer Scoping Study being performed by Snowden Mining Industry Consultants will be completed. The goals of these programs are to further define he extent of the higher grade tungsten and molybdenum zones intersected in prior programs.

After the Beijing Olympics ^[4] conclude, we could be in an entirely different situation when it comes to tungsten, and many of the other base metals.  With the diversification of tungsten mining operations, there is a good chance that tungsten's future will be less volatile.