Tungsten explorers think the future looks bright, but it’s a tough metal to work with
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Tungsten is a metal that is not a well known by many ASX small cap investors. But explorers are confident that this will change.
Tungsten, one of the hardest known metals, is used in industrial applications such as drill bits and saw blade hardening. And right now it fetches around $US227 ($331) per metric tonne unit (MTU).
One company involved in the tungsten space is explorer Thor Mining (ASX:THR).
Thor is searching for tungsten at two projects in the Northern Territory. One project, Bonya is a joint venture with rare earths play Arafura Resources (ASX:ARU).
Earlier today it announced drilling results from the Bonya project, including 2m at 0.71 per cent tungsten tri-oxide.
The other, Molyhil, is at a more advanced stage. The company is seeking capital to bring the project into production following a definitive feasibility study completed last year.
Thor also has a tungsten project at Pilot Mountain in Nevada.
“It [tungsten] is a commodity for which there are very few, if any, substitutes for the vast majority of its uses,” chairman Mick Billing told Stockhead.
“I think what we have [in Molyhil] is one of the lower cost potential tungsten mines around the world.
“It’s quite a high-grade open cut mine. Not the highest but one of the higher and as a result, the cost per unit of production is low.
“Our problem is mine life – there’s an open cut mine of seven years, it’s a bit skinny. We want to get it up to 10.”
But tungsten’s toughness is not entirely a blessing — it is a tough commodity to process even more so than titanium and steel.
This is why companies such as Thor are opting to on-sell tungsten — specifically the intermediate compound ammonium paratungstate (APT) — to downstream processors rather than process themselves.
“[There are] stacks and stacks of APT capacity around the world – it wouldn’t be economic for us to put in an APT plant for a project with a mine life of 10 years or less,” Billing said.
“It would be foolish in the extreme.
“We add the most value in the mine and producing a concentrate. The additional value is modest by comparison.”
As with other commodities it is also heavily dependant on the global economy.
“A bouyant world economy is good for tungsten,” he said.
ASX small caps with exposure to tungsten have been mixed in the last year. While only a handful have gained, the lucky few have made spectacular gains.
The top performer in the past 12 months is Speciality Metals International (ASX:SEI), which is up 344 per cent.
Among other interests, it owns a tungsten project in North Queensland at Mt Carbine. It has laid dormant for over three decades but was one of the world’s highest grade and lowest cost producing mines.
Also performing well in the last 12 months is Vital Metals (ASX:VML), which has a tungsten project in Germany and has rallied 57 per cent.