Primary Metals lands tungsten sales agreement

Vancouver – The entire output from Primary Metals’ (PMI-V) Panasqueira tungsten mine in central Portugal will be bought by Osram Sylvania.

Under a multi-year sales agreement, Osram Sylvania is to purchase the mine’s tungsten concentrate production with contract pricing based on market levels for ammonium paratungstate (APT).

Primary Metals’ operating subsidiary, Beralt Tin & Wolfram, could realize annual sales revenues of US$25 million based on recent market price levels for APT plus other co-products.

The company plans to invest in an infrastructure modernization program at Panasqueira, increasing efficiency and capacity, while reducing operating costs. Additionally, Primary Metals is evaluating a recovery technology to capture the ultra-fine tungsten particles, further increasing overall recoveries. The technology may be applicable to a stockpile of fine tailings containing over 300,000 metric ton units (MTU) of WO₃ (tungsten trioxide).

World tungsten prices have soared due to supply shortages and tightening markets. Since early 2005, tungsten prices skyrocketed from below US$100 per MTU to almost US$300 per MTU. Despite its description, each MTU contains 10 kilograms of WO₃ (or 7.9 kilograms of tungsten).

Panasqueira is an underground tungsten-tin mine that has operated since the 1890s. Anglo American (AAUK-Q) group company Minorco acquired the mine in 1990 but ceased operations in 1993, placing it on care-and-maintenance. In 1994, a predecessor of UK-based Avocet Mining acquired the mine and resumed production in 1995 following considerable investments in streamlining the processing operation and developing the current mining level.

Low tungsten prices through the late-1990s and early-2000s impacted the mine’s economics, resulting in AIM-listed Avocet finally selling the mine to Primary Metals in 2003.

Investors noticed the deal, driving up Primary Metals’ share price 70% to the 90 level on volume of 275,000 shares. The company posts a market capitalization of $9 million based on its 10 million shares outstanding.