The Credit Crunch is hurting tungsten miners

By Leia Michele Toovey- Exclusive to Tungsten Investing News

A strong growth in Chinese consumption, an unlikely substitute for the metal, and the high cost of getting new mines into operation will likely support tungsten prices over the next five years, according to Haywood Securities. In Haywood’s Tungsten Industry Report, they predict growth in consumption will require an additional three million metric tonnes of tungsten per year, a 32 per cent increase in current global production.  By 2013, they predict that global demand will hit 125,000 tonnes per year, with China leading the way.

China is a recent net importer of Tungsten; and the largest producer of the metal on a global scale.  The western world produces only a marginal supply, and is still reliant on China to supplement their needs.  The increase in Chinese domestic demand threatens the stability of supply to the western world. The tungsten price has held steady this year; however, tungsten companies are seeing a decline in their share value. The discontinuity between tungsten focused equities and prices has recently widened as a result of the credit crunch compromising the ability of miners to obtain financing to grow their ventures. The inability of near-term western world suppliers from obtaining the financing they need for new mine construction could very well exacerbate the already tight market fundamentals for tungsten.

While the high tungsten price and positive fundamentals for the metal have instigated exploration and mine development ventures outside of China, the earliest that new production could be realized is 2013. In the meantime, the shortage will support higher tungsten prices.  

Japanese Marubeni Corp is researching the possibility of working with the Russian firm Wolfram Co. to resume production at the Tyrnyauz Tungsten and Molybdenum Mining and Concentrating Plant. The plant closed down earlier this decade as a result of plummeting tungsten prices and the ensuing market flood in tungsten concentrate. With the return of feasible tungsten prices, the company is reevaluating the value of the project, with Marubeni as a potential financer. Marubeni executives are currently performing their due diligence on the project and if the results are favourable they will invest.  In order to restore production, it would take between 36 and 42 months and cost about $120 million, and the mine will potentially produce one million tonnes of ore a year. Japan is in dire need of a stable tungsten supply as they are among the world’s largest users of tungsten.

The Tyrnyauz plant is located in the Russian republic of Kabardino-Balkaria in the Caucasus Mountains. The republic’s government owns the majority of the project and Wolfram Co, a Moscow-based company owned by businessman Mikhail Gorbachev, has a 25 per cent share. Russia has an estimated 14 per cent share of world tungsten reserves. Last year Russia lifted an import duty on tungsten ore and concentrate in a move that allowed Wolfram to secure more raw materials from abroad.

Largo Resources Ltd. announced that based on the significant results from the first 13 drill holes on their Northern Dancer Project, management has decided to wait for the results of the remaining 25 drill holes.  Once they have all the results on hand, they will prepare an updated mineral resource that will serve as the basis for the preliminary economic assessment for Northern Dancer. Largo President and CEO Mark Brennan commented: “We believe it is in the best interest of Largo shareholders to base the Scoping Study on an updated resource estimate that incorporates the results of the 2008 drill program-designed as it was to upgrade and expand the existing resource and confirm higher-grade zones of mineralization. Based on the positive results in the first 13 holes, we expect that the updated resource model could significantly improve overall project economics.”

30 percent of world's tungsten supply comes from recycled scrap

By Leia Michele Toovey- Exclusive to Tungsten Investing News

Scrap recycling is an important facet of the globe’s tungsten supply, with approximately 30 per cent of the world’s supply coming from recycled material.

Last Wednesday, Liquidity Services, Inc. (LSI) kicked off it’s first-ever sale for scrap tungsten. The auction is of three lots containing over 190,000 pounds of the scrap metal in the form of Tungsten Nylon Core (95 per cent tungsten, 5 per cent nylon), Completed Projectiles (inert nylon core, steel insert and copper jacket), Silver Tungsten Nylon Core (57 per cent tungsten, 43 per cent nylon).

LSI is accepting bids for this “unique” sale through its online auction marketplace. The scrap tungsten is made available through the U.S. Department of Defense’s Army Ammunition Plant in Missouri, and is part of the overall effort to recycle scrap that has a remaining useful life. The tungsten processing industry is able to treat and recover almost every kind of tungsten-containing scrap. Tungsten scrap, due to its high tungsten content in comparison to ore, is a very valuable raw material. The auction closes on September 12 at 8 p.m ET

Survey in British Columbia

Geoscience BC and Natural Resources Canada have announced the start of a US$542,000, airborne Geophysical Survey in the Kootenay Area of British Columbia. It will cover a 609 sq. km. area that the BC Ministry of Energy, Mines and Petroleum Resources has rated as having some of the highest mineral potential in British Columbia.

The search will provide more information on the sub-surface stratigraphy in order to identify new exploration targets beyond the limits of the historic mines. According to the President and CEO of Geoscience BC, Lyn Anglin, “The aim is to provide new geoscience information to help attract additional mineral exploration investment into this region and its communities.” The survey will be flown by Fugro Airborne Surveys and is expected to commence in mid-September.

Sultan Minerals, (TSX.V: SUL), one of the largest mineral title landholders in the survey area, is also participating in the survey. Sultan is contributing to the project by funding the flying of intermediate, 100-metre spaced survey lines over its Jersey-Emerald Tungsten property within the Geoscience BC survey area. Sultan’s historic Emerald Tungsten mine, also included in the survey, is Canada’s second-largest tungsten producer.

The detailed airborne geophysical coverage is expected to identify new exploration targets outside of the seven historic mines on Sultan’s extensive property. In addition to Sultan’s Jersey Mine, the HB and Reeves- Macdonald mines will be included in the survey area. These mines are the second, third and fourth largest historic lead-zinc producers in the province respectively.

Positive drill

Peel Exploration (ASX: PEX) has announced positive drill results from its 100 per cent-owned Attunga Project. RC drilling at the Kensington Gold-Tungsten Prospect of the Attunga Project area, has encountered widespread gold mineralization.

Encouragingly, gold mineralisation was intersected in all drill holes. In July 2008, Peel completed an RC drilling program comprising 10 holes for 1,229m, discovering significant tungsten mineralization in the form of scheelite. Prior discovered tungsten anomalies have been sent to ALS Chemex with certain individual meter intervals returning up to 0.21 per cent WO3. Adding this recent gold discovery to previously targetted tungsten mineralization confirms that Kensington represents a significant gold-tungsten system.

Exploration at Kensington in the ’80s reported substantial gold and tungsten mineralization including the delineation of an historic tungsten resource. The only other drilling completed at Kensington occurred in 1987 and comprised 7 diamond drillholes for 822m. The drilling has highlighted several areas requiring follow-up with a particular focus on the near-surface gold potential. To date, drilling has been relatively shallow, and Peel believes that good potential exists for the discovery of an economic tungsten-gold system.