NA Tungsten closes financing

Vancouver — Shortly after closing a $4.25-million financing, North American Tungsten (NTC-V) has announced another.

Proceeds from the latest private placement will be used to reactivate the Cantung mine, on the border of the Yukon and Northwest Territories.

The financing, which was recently increased to $8.25 million from $6.25 million, is being underwritten by Sprott Securities and Haywood Securities. The two firms are purchasing a total of 14 million units priced at 50 apiece, plus 2.5 million flow-through shares at the same price. A unit consists of one share plus half a warrant, with every warrant exercisable into one share at 60 for two years.

The underwriters have a “greenshoe option,” which allows them to buy an additional 4.5 million units at 50 apiece until the closing of the offering.

North American Tungsten recently closed a $4.25-million private placement consisting of 17 million units priced at 25 apiece. A unit consists of a share plus half a warrant, with a whole warrant exercisable for one share at 30 for two years. A portion of the proceeds are being used to settle debt.

Cantung was closed in late 2003 following the loss of sale agreements with Sandvik and Osram, who had been sole purchasers of the mine’s tungsten concentrate. North American Tungsten then filed for bankruptcy protection.

Cantung operated as an open-pit mine from 1962 to 1973, as an underground mine from 1974 to 1986 and from 2001 to 2003. Tungsten mineralization occurs as disseminated scheelite in a limestone-hosted calc-silicate skarn. The mine was the largest tungsten producer in the Western World. There are an estimated 700,000 tonnes of minable reserves remaining, the average grade being 1.75% WO3.

The company’s Mactung deposit, 200 km northwest of Cantung, was developed for underground mining in the mid-1980s, only to be shut down as a result of deteriorating tungsten prices. The historical reserve and resource base at Mactung, prior to National Instrument 43-101, was 45 million tonnes grading 0.96% WO3.

Aur Resources (AUR-T) holds a 1% net smelter return royalty on Cantung and Mactung. The royalty was reduced from 4% under an agreement that will see the company make staged payments to Aur for the amendment.

The two deposits account for about 15% of worldwide high-grade tungsten reserves and resources. Tungsten prices have surged over the past year, reflecting an increase in demand from Asia. The metal is primarily used as a hardening alloy in specialty steels and tools and also as filament in light bulbs, owing to its high melting point.