North American Tungsten is looking for a partner with deep pockets to help develop its Mactung deposit.
The Vancouver-based company’s board struck a special committee in May to chat up big global tungsten producers and buyers.
Since then, they’ve whittled down several dozen potential contenders to fewer than 10 “really serious groups that are motivated,” said CEO Stephen Leahy.
“The reality is, because of our size, and the amount of money needed for Mactung, there’s a disconnect. We do need outside support to develop this massive project.”
The company aims to build an underground mine that would be open for at least 11 years and employ between 150 to 200 people.
The minesite is at MacMillan Pass, near the Northwest Territories border, 250 kilometres northeast of Ross River.
But building the mine would cost approximately $400 million - far more than a junior, like North American Tungsten, is able to leverage alone.
The company has several options. It could arrange a supply arrangement with a big tungsten buyer. It could strike a joint venture. Or it could simply sell the deposit.
“If someone came along and offered us an extraordinary amount of money, obviously we’d have to look at it, from our shareholders’ perspective,” said Leahy.
Unsurprisingly, some of those groups are based in China. That country’s voracious appetite for metals has led to several Chinese partnerships in the territory already.
And China has a particular interest in tungsten, a metal used to strengthen steel drillbits and sawblades. The country already produces and consumes the lion’s share of the world tungsten supply.
“They have a vested interest, obviously. And they know a jewel when they see it. They’re not alone, but we have talked to groups there,” said Leahy.
North American Tungsten isn’t just an exploration company. It’s also a producer, as the owner of the Cantung mine, which also straddles the Northwest Territories border, 300 kilometres east of Watson Lake.
Of the 220 workers employed at Cantung, 22 per cent are Yukoners. Of those, 23 per cent are First Nation. That’s not counting caterers and cleaners who are also hired from the territory.
North American Tungsten recently posted its first-ever profit, thanks to improving operations at Cantung. The mine shuttered in 2009 because of falling tungsten prices, which have since rebounded.
“The world’s gone back to work ...
everybody wants to order and there’s just not enough,” said Leahy.
North American Tungsten initially hoped to have Mactung built and open by 2013. But the global financial downturn caused the company’s financing plans to fall apart.
“Everyone ran and hid in their shell,” said Leahy.
Now, the Mactung proposal is still wending its way through Yukon’s regulatory regime. Leahy asserts this is because the company has focussed its efforts on “staying alive” following the financial crash, rather than because of any big technical concerns.
The Yukon government has tried to egg along the construction of Mactung, with plans to upgrade the North Canol Road that approaches near the minesite. But no major work on this road has been done yet.
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