Oriental Minerals (OTL-V), the only foreign mining company in South Korea, has started drilling at its newly acquired Sangdong tungsten-molybdenum mine, which closed in 1992 because of low metals prices.
Since the mine closed, tungsten prices have risen from US$4 per lb. to US$70 per lb. while molybdenum has gone from less than US$2 per lb. in 1992 to US$38 per lb.
Tungsten is the hardest of all metals and is used for a diverse range of commercial, industrial, and military applications. It’s used as a substitute for lead bullets, lamp filaments and in diamond tools used to drill or cut rock and concrete.
Molybdenum is largely used as an alloy for stainless and full-alloy steels. The metal strengthens steel, allows it to expand and contract and makes it easier to weld. It also has some newer uses such as fertilizers and catalytic converters.
Sangdong mine, south-east of Seoul, was one of the world’s largest tungsten mines when it closed.
In 1989 the Korea Resources corporation estimated the remnant ore reserve at 189 million lbs. of WO3 from 15.6 million tonnes grading 0.5% WO3 in the main ore body and 1.4 million tonnes grading 0.55% WO3 in the east ore body.
A molybdenum deposit beneath the existing tungsten mine was also estimated to contain resource of 16 million tonnes or 140 million lbs. of molybdenum sulphide grading 0.4% MoS2 and an historical global resource of 120 million tonnes or 340 million lbs. grading 0.129% MoS2.
Oriental Minerals, which is based in Vancouver, is not treating this data as current because of the age of the report and is conducting further tests to determine its own results.
Oriental Minerals expects to drill hole SD-01 to a depth of 750 metres over two months. The hole will then be sampled on a split core, one-metre interval basis. Samples will be sent to ALS Chemex Laboratory in Brisbane, Australia for analysis.
The acquisition includes paying more than US$800,000 cash and US$800,000 in company stock issued at 10-day market average price at closing by Feb. 28, 2007, followed by US$2.4 million cash and US$800,000 in company stock issued six months after closing and again at 18 and 30 months after closing.
In the first and second years, the company must spend US$800,000 followed by US$2.4 million during the third fourth and fifth years unless it is undertaking commercial production whereby it must spend US$16 million.
Oriental Minerals will earn 51% of the ownership interest at closing, 19% by completing a prefeasibility study within five years and earns the final 30% if it starts a feasibility study during year five and completes it within 18 months.
As the operator of the project the company also recently acquired the Chongyang molybdenum-tungsten mine closed in 1977, the Muguk gold-silver mine, formerly the country’s largest producing gold mine and the Gasado gold-silver project on Gasado Island, five kilometers off the south-west coast of the country.
Oriental Minerals also has the Geodo gold-copper project under way on the north-east part of the peninsula.
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