Topaz and tungsten junior TopTung has warned investors it will likely deliver a smaller resource than expected for its Wild Kate prospect in New South Wales.
Drilling at the prospect, which is part of the Torrington project, has shown that although the tungsten is high-grade, it is not evenly distributed throughout the ore body.
Shares tumbled 29 per cent to 2.2c on Tuesday.
Tungsten, which is used to harden steel in ballistic missiles and drill bits, has witnessed supply cutback issues in China, which produces 80 per cent of global tungsten.
This has led to a surge in the price to almost $400 per tonne from a low point of around $210 per tonne in 2016.
Although the tungsten potential is not looking great at the Wild Kate prospect, the good news is TopTung (ASX:TTW) has identified other areas it can look for tungsten.
“It’s just the one prospect we’re talking about,” non-executive director Martin Kavanagh told Stockhead.
“The pipes are high-grade but they’re discreet. It’s not the proverbial needle in a haystack, but it makes it a little bit more difficult to explore for. It would be costly to drill out in detail in that particular area. There are other targets within the tenements and we’ll certainly be turning our attention to some of the other targets.”
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TopTung plans to produce both topaz and tungsten at its Torrington project, which is well-known for its topaz prospectivity, according to Mr Kavanagh.
The company expects to release a resource estimate in the next two weeks.