Vancouver — Since first entering into Vietnam in 1996,
The company, partnered up with Thai Nguyen Mineral Co. (TNMC) and Export-Import Investment Co. Thai Nguyen (Intraco), was granted a 4,600-hectare exploration licence in late 1997 located in the far north-central section of the country.
Vietnam, which was reliant on Soviet aid for a major portion of its national budget throughout the 1980s, began reforming its economy after the aid disappeared in 1989. The government’s response to the pinching-off and eventual termination of the economic assistance was the declaration of doi moi, which translates as “renovation” or “reform.”
Rich in minerals and petroleum, the country began encouraging private enterprise and foreign investment in its natural resource development. Major multi-nationals now have a presence in Vietnam as the country moves towards expanding international trade relationships. Vietnam has also recently applied to join the World Trade Organization.
Regulations in the mining sector underwent extensive revision throughout the mid to late-1990s, and into 2002. The current version of the mineral tenure act sees a well-defined, staged licensing system from prospecting, to exploration through to extraction. The tabled system of taxation, including a royalty system, based on commodity, is well documented and not viewed as excessive.
The government has also demonstrated incentives ranging from reduced tax rates to complete tax holidays during startup phases.
Following a positive economic mineral potential assessment of the Nui Phao region, located 80 km northwest of Hanoi, Tiberon’s systematic program of exploration, including extensive airborne geophysical surveys with follow-up ground programs, identified targets for follow-up work. Drill programs, in late 2000 through to 2002 targeted tin mineralization and eventually tied into a tin skarn with significant values of tungsten, copper and gold.
Numerous rounds of drilling, totalling 174 holes, have now outlined a large tungsten deposit (also containing significant gold, copper, bismuth and fluorine) with over 1.7 km of strike length and over 400 metres width. The mineralized body is up to 160 metres thick and lies near surface, with thin to moderate overburden consisting of clays and saprolites, making it very amenable to open-pit mining.
The Nui Phao deposit is skarn/ greisen-hosted and related to a nearby granitic intrusive complex. Replacement (skarn) and greisen mineralization occurs both within and along the margins of the intrusion.
The 2001-03 drill programs provided sufficient data for a resource calculation and a prefeasibility study on the project.
A measured and indicated resource of 60.5 million tonnes grading 0.2% WO3, 8.4% CaF2, 0.18% copper, 0.2 gram gold per tonne and 0.092% bismuth (giving a 0.6% WO3-equivalent grade) has been calculated. There is an additional inferred resource of 27.4 million tonnes of 0.16% WO3, 7.1% CaF2, 0.17% copper, 0.15 gram gold and 0.08% bismuth (0.5% WO3-equivalent). A cutoff grade of 0.2% WO3-equivalent was used in both figures. The tungsten trioxide equivalent grade was calculated using assumed prices of US$5,475 per tonne for contained WO3, US$140 per tonne for fluorite concentrate, US$0.85 per lb. for copper, US$325 per ounce for gold and US$3.20 per lb. for bismuth. The deposit remains open towards the west.
Subsequent to the completion of the 2003 prefeasibility study, significant price increases in the primary commodities, tungsten and fluorspar, plus a rise in prices of the secondary products (copper, bismuth and gold), have sweetened the project’s economics. Additionally, the latest metallurgical test work has returned recoveries above those obtained in the feasibility study.
Using the latest commodity pricing, revised project economics show average annual revenue from the mine at US$94 million, over the 16-year life of the mine, and average annual cash flow of US$44 million over the same period.
This area of Vietnam offers excellent operational logistics for development of the deposit. Significant infrastructure exists in and around the project area, including a highway, power grid, and an active rail line that connects the site to a port. In addition, energy costs in the region are thought to be competitive.
Tungsten is the hardest of all the metals with an extremely high melting point. It is categorized as a strategic metal primarily used as an alloying agent in hardening special usage steel (such as tungsten carbide) for application in drilling and wear resistant needs. The metal is also used extensively in electronics and in electrical applications such as filaments in light bulbs. Use as a replacement for lead in bullets and shot — due to tungsten’s chemical inertness and low environmental impact — has seen a steady increase and will consume over 5% of world supplies by 2005.
China has been far and away the world’s predominant tungsten producer, supplying about 28,000 tonnes annually or 76% of world production. Russia annually produces about 3,000 tonnes or 8%. Other countries that produce significant amounts of tungsten are Austria, Bolivia and Portugal.
The metal is being viewed as a growth commodity due to an increasing number of uses and application coupled with tightening supply. A significant rise in prices has been fueled from China’s move to shut down illegal private miners that produced appreciable amounts of the metal, and also by recent mine closures in the West.
The other main constituent commodity outlined at Nui Phao is fluorspar. The principal use of fluorspar, consuming about 70% of world supply, is to produce hydrofluoric acid. There is additional demand from the steel making and aluminum production industries as well as in the production of gasoline. Hydrofluoric acid is a major feedstock in the production of hydrofluorocarbons (HFCs) used in refrigeration and air conditioning, now replacing chlorofluorocarbons (CFCs) due to environmental concerns. Once again, China controls most of the world’s supply of fluorspar and has recently reeled back export volumes, driving up world prices.
Nui Phao represents one of the largest deposits of tungsten outside of China. The latest studies outline proposed annual production of 4,850 tonnes of tungsten trioxide (9% of present world supply) and 220,000 tonnes of fluorspar (about 7% of present world supply), plus a significant amount of copper, gold and bismuth.
Elevated levels of secondary metals in the Nui Phao ore, including the unusually high gold values, provide a recovery credit that directly lowers the operating costs for mining tungsten and fluorspar. High recovery rates, using conventional methods, have been demonstrated in metallurgical studies.
Tiberon’s development of the Nui Phao tungsten-fluorspar project has taken a major step forward following the recent appointment of two banking groups to help with US$100 million in debt financing.
The Fortis Bank and WestLB will jointly structure and arrange a term loan facility for Tiberon and the Nui Phao Joint Venture Mining Co.
The 2003 Nui Phao prefeasibility study outlined an estimated initial capital cost of US$140 million for the tungsten project, with a 70% debt/30% equity financing structure for its development.
Tiberon, through its 77.5% interest in the Nui Phao Joint Venture Mining Co., now plans to push forward on completing a bankable feasibility study on the project. The project financing is expected to be finalized in mid-2005 upon completion of the study.
Fortis Bank and WestLB, both European based financial institutions, are experienced in mine project financings and have been involved in a number of large projects throughout Asia.
Tiberon has also recently entered an agreement to acquire a controlling interest in the Panasqueira tungsten mine in Portugal from
e anticipated production from Nui Phao in 2006, the acquisition will establish Tiberon as a major world producer of tungsten and fluorspar.
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