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Investing
in
Tungsten
Tungsten Price,
Tungsten Demand
and Tungsten
Companies at a
Glance
A collection of articles from Tugnsten Investing News
looking at the companies shaping the investment
opportunity
By Kristen Moran
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 1
Table of Contents
When Will the Tungsten Price Go Up?..........................................................................................................2
Current tungsten price..............................................................................................................................2
Tungsten price outlook.............................................................................................................................2
What’s an investor to do?.........................................................................................................................3
Tungsten Demand Growth vs. Global Supply ...............................................................................................4
Tungsten supply crunch............................................................................................................................4
Tungsten demand shift .............................................................................................................................5
Investor takeaway.....................................................................................................................................5
Tungsten Companies in Spain, Portugal and the United Kingdom...............................................................6
The United Kingdom .................................................................................................................................6
Spain..........................................................................................................................................................7
Portugal.....................................................................................................................................................8
Tungsten Companies in Asia, North America, Africa and Australia..............................................................9
Asia............................................................................................................................................................9
North America.........................................................................................................................................10
Africa.......................................................................................................................................................11
Australia..................................................................................................................................................11
10 Top Tungsten-producing Countries .......................................................................................................12
1. China ...................................................................................................................................................12
2. Russia ..................................................................................................................................................12
3. Canada ................................................................................................................................................13
4. Vietnam...............................................................................................................................................13
5. Bolivia..................................................................................................................................................13
6.Austria..................................................................................................................................................14
7. Democratic Republic of the Congo .....................................................................................................14
8. Portugal...............................................................................................................................................14
9. Rwanda ...............................................................................................................................................14
10. Australia ............................................................................................................................................15
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 2
When Will the Tungsten Price Go Up?
China plays a dominant role in the
tungsten industry. It accounts for about
84.5 percent of the world’s total output,
and is a net importer of tungsten
concentrates; as a result, it heavily
influences the tungsten price.
But while it’s no secret that China holds a lot
of sway over the tungsten price, it can be
difficult to get exact information about the
tungsten price. That’s largely because unlike metals such as gold and silver, the metal
is not traded on an exchange.
To learn more about the current tungsten price and prospects for the metal moving
forward, the Investing News Network reached out to Chris Ecclestone, an analyst at
Hallgarten & Company. Here’s what he had to say.
Current tungsten price
The tungsten price rose fairly significantly in 2010, and then traded in the range of $350
to $450 per MT between 2012 and 2014, as per Ormonde Mining's (LSE:ORM) website.
However, after peaking in 2013, it fell due to improving availability from new mines.
That trend has continued in 2015. In fact, the latest price analysis from Argus Minor
Metals shows the tungsten price at a high of $190 and a low of $180; it’s down about
$200 since the beginning of the year.
"$190 is a pretty crap price compared to what it has been in recent years. I would
suggest that [the tungsten price] is probably bottoming out at this price level, as with
most metals," Ecclestone said.
Tungsten price outlook
While Ecclestone sees the tungsten price improving moving forward, he doesn’t expect
the process to be quick.
"I think we will see the price begin to rise slowly as economic demand recovers, but it is
going to be nothing dramatic. If financing improves for the mining sector, it's not going to
be a case of everyone in the mining sector suddenly being be able to get money. It will
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 3
probably be gold projects and big base metals projects getting funding before specialty
metals," he said.
Still, he said he does see the tungsten price improving this year.
"I would not be surprised if it was back up to $200 by the end of the year. By early next
year, it could be at $220. Through next year, it could go up to the $250 to $300,
depending on how things go and if China gets its act together," Ecclestone noted.
A 2014 report from Roskill is a little less optimistic. The firm states that it expects the
tungsten price to fall in 2015, though beyond that, "increasing demand and diminishing
new production are likely to make the market more balanced, and could also push
prices up."
What’s an investor to do?
While it remains to be seen where the tungsten price will go moving forward, it is nice to
know that experts see improvements on the horizon.
For clues on where the market will turn, investors would do well to keep an eye on China. As
mentioned, the Asian nation currently dominates the tungsten market and heavily influences the
metal’s price. However, that could be set to change. Read on to find out why that’s the case.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 4
Tungsten Demand Growth vs. Global Supply
China is by far the most dominant tungsten
producer in the world, accounting for about 84.5
percent of global output in 2014. What’s more, it
holds the highest reserves, at 1.9 million MT.
However, the Asian nation’s supply dominance
may be set to falter in the coming years. After
removing export restrictions on tungsten earlier
this year, China vowed to strengthen mining
regulations for the metal.
Meanwhile, tungsten production outside of China is expected to increase in the next few
years, according to a US Geological Survey report, and secondary production has
become an important source of the metal. Impressively, it accounted for 22 percent of
global supply in 2013.
But will non-Chinese tungsten producers be able to put out enough of the metal to
satisfy growing demand? Here, the Investing News Network explores that question and
what it may mean for investors.
Tungsten supply crunch
Speaking about tungsten supply from outside China, Almonty Industries (TSXV:AII)
states on its website, “[w]estern world supply is tightly constrained and future production
is limited to a small number of projects that have been delayed or put on hold due to
technical or financing issues.”
It adds, “[r]ecent consolidation in the industry has also limited the amount of tungsten
concentrate available for sale with most future production locked into off-take
agreements with end users.”
Blackheath Resources (TSXV:BHR) CEO James Robertson also spoke on non-Chinese
tungsten supply in an interview with Peter Epstein this past April, noting that there are
limited sources of tungsten outside of the Asian nation. “There are very few companies
pursuing production of tungsten and Portugal is one of the countries where tungsten is
found,” he said in the interview.
Lack of exploration outside of China is not the only thing that’s constraining tungsten
supply. Other countries that produce the metal are seeing their supply hampered by
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 5
conflict minerals regulations. For instance, the Democratic Republic of the Congo and
Rwanda were two of the 10 top tungsten-producing nations in the world in 2014, but as
conflict minerals regulations intensify, they may see their output drop.
Tungsten demand shift
With Chinese tungsten output set to fall and supply from non-Chinese countries not yet
up to snuff, it’s clear that production of the metal is precarious. Meanwhile, as
mentioned, a shift in tungsten demand is also expected.
In previous years, tungsten demand has mainly been fueled by consumption from
cemented carbide producers; they accounted for about 60 percent of total demand in
2013. Use of tungsten-bearing steels and alloys in aerospace manufacturing and
energy industries has also supported demand.
However, moving forward, the electronics and electrical industries are expected to take
a greater share of tungsten demand. Tungsten’s hardness, stability and ability to
withstand extreme temperatures make it a perfect material to use in the manufacturing
of electrodes and components used in touch screens.
In fact, according to Roskill, tungsten consumption from electronic and electrical
applications, including electrical contacts, electron emitters and lead-in wires, is forecast
to grow at 5.4 percent per year through to 2018 — that’s more than double the overall
trend.
Meanwhile, tungsten demand for lighting products is expected to fade away and
decrease by about 5 percent annually to 2018.
Investor takeaway
Summing up the tungsten supply and demand situation Roskill states in its report,
“[t]rade in tungsten materials may be on the verge of significant changes, with multiple
new projects expected to enter production and potential alterations to Chinese export
controls.”
Overall, the firm expects China’s share of global tungsten production to fall to 78
percent in 2018.
Whether that will have an impact on the price of the metal remains to be seen.
However, the long-term tungsten market situation appears to be bullish, and investors
looking to cash in may want to start looking at companies working to bring non-Chinese
projects into production.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 6
Tungsten Companies in Spain, Portugal
and the United Kingdom
Global tungsten supply has been short for
years, causing the European Union to
categorize the metal as a “critical raw
material.”
China has most tungsten in the world, with
reserves of 1.9 million metric tons (MT), but
notable deposits can also be found
throughout Europe. Many tungsten
companies are now exploring the continent
with the hope of finding valuable assets to
help meet worldwide demand. Tungsten is
primarily used for industrial drilling and
cutting tools, as well as for electronics and specialized steels.
The United Kingdom
The majority of tungsten reserves in the United Kingdom are in the southwest of
England, primarily Western Devon and Cornwall. Both of these locales have long
histories of mining, though operations have declined in recent years. There are currently
not enough reserves in the area to be reported by the US Geological Survey.
Specialty metals company Wolf Minerals (ASX:WLF) is one of the major companies
operating tungsten projects in the United Kingdom. Its primary asset is the Hemerdon
tungsten and tin project, which is located 10 kilometers northeast of Plymouth in Devon,
England. The company increased Hemerdon’s ore reserves by 34 percent earlier this
year following a successful geotechnical drilling program in 2014. Total proven plus
probable reserves now sit at 35.7 million tonnes at 0.18 percent WO3.
Wolf also provided a new mineral resource estimate for the project that’s compliant with
the JORC 2012 code. The measured and indicated resource for the project is now 58.6
million tonnes at 0.17 percent WO3 and 0.02 percent tin, while the inferred resource is
86.6 million tonnes at 0.14 percent WO3 and 0.02 percent tin. Altogether that’s 145.2
million tonnes at 0.15 percent WO3 and 0.02 percent tin.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 7
Hemerdon is currently the third-largest tungsten and tin resource in the world, and is set
to be the first new metals mine in Great Britain in over 45 years. Production is estimated
at 5,000 tonnes per year of tungsten concentrate and 1,000 tonnes of tin concentrate.
Spain
There are currently not enough tungsten reserves in Spain to be reported by the US
Geological Survey, but the western side of the country is home to the most mining of the
metal. Mining began in the Salamanca region in the early 1900s and continued well up
until 1982; a renewed interest in the region will likely see more companies set up
projects there. Four companies engaged in the exploration, development and mining of
tungsten assets in Spain are Almonty Industries (TSXV:AII), Ormonde Mining
(LSE:ORM), Plymouth Minerals (ASX:PLH) and W Resources (LSE:WRES).
Almonty Industries prides itself on acquiring distressed tungsten assets and operations
and applying its know-how to better the projects. The company is currently working on
its Los Santos mine in Northern Spain and the Valtreixal project in the northwest. The
company gained a 25-percent interest in Valtreixal in January, with the option to acquire
the remaining 75 percent through additional instalment payments. Almonty also
attempted to acquire Ireland-based Ormonde and its assets on multiple occasions this
past spring to no avail.
Speaking of Ormonde Mining, it has a heavy presence in Spain, with all three of its
projects located there. The company’s main focus is its Barruecopardo tungsten project
in Western Spain, which has a combined measured, indicated and inferred mineral
resource of 27.39 million tons at 0.26 percent WO3. Ormonde expects the asset to
produce 227,000 tonnes of tungsten per year. The company most recently closed a
financing for the project, and has received the initial US$25 million of equity funds.
W Resources is a tungsten exploration and development company with projects in both
Spain and Portugal. Its La Parilla project is located in the Extremadura region of
Southwest Spain. The asset was previously mined from 1954 to 1986, and W
Resources is now working to restart operations there. The company completed a mine
development study at La Parrilla in June, seeing a 150-percent increase in its
production target there. The company expects the mine to begin production in mid-
2016, with a production rate of 1,200 to 1,300 tonnes per year of 66 percent WO3. The
full mine will be developed in 2017/2018, and target production will increase to 5,000
tonnes per year of tungsten.
Finally, Plymouth Minerals holds the Morille tungsten-tin project in Spain. Before
Plymouth gained rights to the property, the area had not been previously explored. In
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 8
May, the company provided an update on sampling and drilling target definition at
Morille.
Portugal
Portugal has 4,200 MT of tungsten reserves, as per the US Geological Survey, and in
2014, the country produced 700 MT of the metal. It is one of the top exporters of
tungsten ores and concentrates in the world, and was the eighth-biggest tungsten-
producing country last year. The Panasqueira mine is Portugal’s largest tungsten-
producing mine, and Borralha, which is now owned by Blackheath Resources
(TSXV:BHR), is the second-largest tungsten mine in the country. The company just
completed its first drill program at the Santa Helena breccia at Borralha, reporting a
118-meter intersection at 0.29 percent WO3.
Blackheath’s main asset is the past-producing Covas tungsten project, a joint venture
with Avrupa Minerals(TSXV:AVU) in Northern Portugal that has a historic resource of
922,900 tonnes of 0.78 percent WO3. The company released its maiden resource
estimate for Covas in March — it has an indicated mineral resource of 449,800 MTUs
WO3 based on 1,081,000 tonnes at an average grade of 0.42 percent WO3;
meanwhile, its inferred resources sits at 767,100 MTUs WO3 based on 2,211,000
tonnes at an average grade of 0.35 percent WO3. Blackheath also has options to gain
100-percent interests in other tungsten projects in the region, including Bejanca, Vale
Das Gatas and Adoria.
Colt Resources (TSXV:GTP) is another exploration and development company focused
in Portugal, and currently holds interests in various gold and tungsten projects in the
country. One example is the Tabuaço project, the company’s main advanced-stage
tungsten project, which has an indicated mineral resource of 1,495,000 tonnes at 0.55
percent WO3, according to a 2012 resource estimate. The company also has the Santo
António experimental mining licence in Northeastern Portugal, a joint venture between
Colt and Brazilian company Contecnica.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 9
Tungsten Companies in Asia, North
America, Africa and Australia
Global tungsten supply has been short
for years, with most production coming
from China. The Asian nation holds the
largest reserves of the metal, and
accounts for about 84.5 percent of the
world’s total tungsten output.
However, a recent report speculates
that Chinese tungsten supply may be
set to tighten in the coming years.
Indeed, it notes that the country is
currently “manag[ing] export quota[s], purchas[ing] and stor[ing] tungsten resources, as
well as implement[ing] other tightening policies.”
That might spell bad news for tungsten end users, but it could be a boon for tungsten-
focused companies outside of China. With that in mind, the Investing News Network is
working to provide overviews of publicly traded tungsten companies working in
countries other than China. Take a look at our primer on tungsten companies in Spain,
Portugal and the UK here, and read on to learn about tungsten companies operating in
Asia, North America, Africa and Australia.
Asia
The Sangdong tungsten-moly deposit in South Korea is one of the largest tungsten
resources in the world. It has an estimated mineral resource of 357,799,000 tonnes,
including an indicated resource of 16,431,000 tonnes and an inferred resource of
19,368,000 tonnes. Sangdong was owned by Woulfe Mining before the company was
acquired by Almonty Industries (TSXV:AII).
Almonty believes that it has the financial support to bring Sangdong into production, and
recently announced that it will complete a non-brokered private placement of a secured
convertible debenture in the principal amount of $4 million, plus a non-brokered private
placement of 2.1 million common shares at a price of $0.08 per share for aggregate
gross proceeds of $1.68 million. Furthermore, it will complete an unsecured bridge
financing of $2.1 million for combined total gross proceeds of $7.78 million.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 10
Hazelwood Resources (ASX:HAZ) is a specialty metals producer focused on its 60-
percent-owned ATC ferrotungsten project in Vietnam. In September, the company
announced that it had signed long-term contracts with three Japanese buyers for
ferrotungsten from ATC.
North America
Once one of Canada’s main tungsten producers, North American Tungsten
(TSXV:NTC) is now receiving creditor protection, and recently announced that its
Cantung mine will close temporarily from October 27. The company said that it hopes to
resume operations at Cantung, which is one of the largest operating tungsten mines
outside China, by summer 2016.
Explorer Knick Exploration (TSXV:KNX) holds the Trecesson tungsten-gold project in
Quebec. It also holds the Quebec-based East-West project, and in September it
initiated a major review of that project. The review will include an in-depth review of
Knick’s major database.
Happy Creek Minerals (TSXV:HPY) is a junior exploration company with various
projects in BC, including its Fox tungsten-moly project. The company closed a $1.1-
million financing in September, and proceeds will be used to further explore Fox and for
general working capital.
Also in BC is Margaux Resources (TSXV:MRL) with its Jersey Emerald tungsten-zinc
property. In March, the company updated its resource estimate for the project, seeing a
6-percent increase in the measured plus indicated category, as well as an 84-percent
rise in the inferred category. The new measured and indicated resource stands at 3.071
million tonnes averaging 0.341 percent tungsten, while the inferred resource is 5.48
million tonnes of 0.273 percent tungsten; both are at a 0.15 percent cut-off grade.
Another company working in Canada is Northcliffe Resources (TSX:NCF), which holds
the advanced-stage Sisson tungsten-moly project in New Brunswick. The New
Brunswick Department of Environment and local government accepted the project’s
final environmental impact assessment in March, which was a critical milestone for the
company. More recently, Northcliffe announced that it has closed a private placement
financing for $2.57 million.
Elementos (ASX:ELT) is an ASX-listed company working in the US. The company
recently announced theresults of an independent open-pit scoping study, the second
stage of a three-stage development plan for its Cleveland tin-copper-tungsten project.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 11
Africa
Premier African Minerals (LSE:PREM) is a London-listed company that is focused on its
49-percent-owned RHA tungsten project in Zimbabwe, which began production in June.
The company completed an offtake agreement with Noble Resources in March; it will
see Premier supply 500 tonnes of wolframite concentrate from RHA. Most recently, the
company reported that the project’s processing plant is performing 25 percent higher
than initial design expectations.
Australia
Australia is the 10th-largest tungsten-producing country in the world, and saw significant
output growth in 2014 — production jumped from 320 MT to 600 MT.
Vital Metals (ASX:VML) is an ASX-listed company focused on the development of its
Watershed tungsten project in Queensland. The company announced revisions to the
definitive feasibility study for the project this past June; the new study shows a reduction
in pre-production capex from AU$172 million to AU$143 million.
Carbine Tungsten is also working in Queensland at its Mt Carbine tungsten mine. In its
annual report, released in September, the company said that it has been working with
two tungsten offtake and investment groups to advance its plans both technically and
commercially for the open-pit redevelopment phase of the project. Carbine also secured
a US$15-million secured loan from Mitsubishi (TSE:8058) for the first phase of the Mt
Carbine hard-rock project.
Another company with a tungsten project Down Under is Thor Mining (LSE:THR,
ASX:THR) with its advanced Molyhil tungsten-moly project in the Northern Territory. In
its 2015 annual report, the company said that its project development capex estimate
has been reduced by 8 percent, to AU$64 million. The project has a post-tax NPV of
AU$72 million and a 50-percent IRR.
King Island Scheelite (ASX:KIS) is working to redevelop the Dolphin tungsten project on
King Island, which is just off the coast of Tasmania. The former mine at Dolphin was run
as an open-pit operation until 1875 and as an underground mine up to 1990. In its
September corporate update, King Island Scheelite said that the existing open-cut mine
has been dewatered; it is in the process of finalizing all necessary land, permits and
approvals to commence construction.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 12
10 Top Tungsten-producing Countries
Tungsten, also known as wolfram, is a
metal with many uses. It is commonly
used to produce electrical wires and
heating and electrical contacts, but is also
used in welding, heavy metal alloys, heat
sinks, turbine blades and as a substitute
for lead in bullets.
According to a US Geological Survey
(USGS) report, world tungsten production
reached 82,400 metric tons (MT) in 2014,
an increase over 2013′s 81,400 MT.
Here’s a brief overview of the 10
countries that produced the most tungsten last year.
1. China
Mine production: 68,000 MT
China is the largest producer of tungsten, accounting for about 84.5 percent of the
world’s total output. In 2014, the country produced 68,000 MT of tungsten, the same
amount as the previous year. That’s a lot of tungsten, but a recent report notes that the
Asian nation’s tungsten production may fall in the future as supply grows tighter. China
also has the highest reserves in world with 1.9 million MT.
2. Russia
Mine production: 3,600 MT
Russia produced much less tungsten than China in 2014, but still took second-place
spot, putting out 3,600 MT of the metal. That’s the same amount the country produced
in 2013. MBendi Information Services states that in the past Russia has flooded the
market with tungsten in order to drive the metal’s price down.
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 13
3. Canada
Mine production: 2,200 MT
Canada saw an increase in tungsten output in 2014, producing 2,200 MT of the metal;
that’s compared to 2,130 MT in 2013. One of the country’s main tungsten producers is
North American Tungsten (TSXV:NTC) — in particular, its Northwest Territories-based
Cantung mine, which is one of the largest operating tungsten mines outside China, is a
significant producer.
4. Vietnam
Mine production: 2,000 MT
Vietnam also enjoyed increased tungsten production in 2014. The country bumped up
its output to 2,000 MT from 1,660 MT the previous year.
Privately owned Masan Resources owns the Nui Phao mine, which accounts for 22
percent of world tungsten production outside of China. Since Masan acquired the mine
in 2010, it has seen consistent growth. The company expects to produce more material
in 2015, and intends to list its shares to provide greater flexibility for long-term growth.
5. Bolivia
Mine production: 1,300 MT
Bolivia produced 1,300 MT of tungsten last year, an increase over the 1,250 MT
produced in 2013. However, in 2013, companies started making moves to promote
tungsten in the country. For example, Kennametal (NYSE:KMT) acquired tungsten
processing operations in Bolivia, also securing related material sourcing agreements.
The company hopes the move will allow it to expand global growth while avoiding risks
associated with owning mining operations.
“Tungsten is a key ingredient for technologies we develop, and ultimately vital to
virtually every kind of manufacturing,” said Carlos Cardoso, chairman, president and
CEO of Kennametal. “We look forward to welcoming the employees of Emura to our
company family, and adding these assets to serve customers with the most advanced
capabilities in our industry.”
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 14
6.Austria
Mine production: 850 MT
Austria produced 850 MT of tungsten in 2014, the same amount it produced in 2013.
Much of that production can be attributed to the Mittersill mine, which is located in
Salzburg and owned by Wolfram Bergbau and Hutten. The Mittersill mine is the largest
tungsten deposit in Europe.
7. Democratic Republic of the Congo
Mine production: 800 MT
The Democratic Republic of the Congo saw a decrease in tungsten production from
2013 to 2014. In 2013, the country produced 830 MT, while it produced only 800 MT of
the metal in 2014. That drop is largely due to tougher regulations regarding conflict
minerals, and those regulations are being further enforced still.
According to The Guardian, European imports from conflict zones are now subject to
increased surveillance procedures, a system that will affect 800,000 European
countries. That is going to limit the amount of imported material European countries will
accept, and will ultimately affect the amount of tungsten and other materials that many
mines, located largely in Africa, will be able to export.
8. Portugal
Mine production: 700 MT
Portugal increased its tungsten production in 2014, reaching 700 MT compared to 692
MT in 2013. The Panasqueira mine is Portugal’s largest tungsten-producing mine, and
Borralha is the largest past-producing mine in the country.
9. Rwanda
Mine production: 700 MT
Rwanda produced 700 MT of tungsten in 2014, less than its 2013 production of 730 MT.
Similar to the Democratic Republic of the Congo, the drop has much to do with
tightening regulations surrounding conflict minerals, as noted by Bloomberg.
“The revenue from this year will not be good as those of last year unless there is a
tremendous increase in prices in the last six months of the year, and we don’t expect
that,” said Evode Imena, state minister for mining. “Companies have been reluctant to
Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies
© 2015 Tungsten Investing News 15
buy tungsten from Rwanda because of reasons related to conflict minerals. Tungsten
buyers have returned but with bad prices.”
10. Australia
Mine production: 600 MT
Australia had significant growth in its tungsten production from 2013 to 2014. Last year,
the country produced 600 MT of the metal, a large jump from 2013′s 320 MT.

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Investing in tungsten

  • 1. Investing in Tungsten Tungsten Price, Tungsten Demand and Tungsten Companies at a Glance A collection of articles from Tugnsten Investing News looking at the companies shaping the investment opportunity By Kristen Moran
  • 2. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 1 Table of Contents When Will the Tungsten Price Go Up?..........................................................................................................2 Current tungsten price..............................................................................................................................2 Tungsten price outlook.............................................................................................................................2 What’s an investor to do?.........................................................................................................................3 Tungsten Demand Growth vs. Global Supply ...............................................................................................4 Tungsten supply crunch............................................................................................................................4 Tungsten demand shift .............................................................................................................................5 Investor takeaway.....................................................................................................................................5 Tungsten Companies in Spain, Portugal and the United Kingdom...............................................................6 The United Kingdom .................................................................................................................................6 Spain..........................................................................................................................................................7 Portugal.....................................................................................................................................................8 Tungsten Companies in Asia, North America, Africa and Australia..............................................................9 Asia............................................................................................................................................................9 North America.........................................................................................................................................10 Africa.......................................................................................................................................................11 Australia..................................................................................................................................................11 10 Top Tungsten-producing Countries .......................................................................................................12 1. China ...................................................................................................................................................12 2. Russia ..................................................................................................................................................12 3. Canada ................................................................................................................................................13 4. Vietnam...............................................................................................................................................13 5. Bolivia..................................................................................................................................................13 6.Austria..................................................................................................................................................14 7. Democratic Republic of the Congo .....................................................................................................14 8. Portugal...............................................................................................................................................14 9. Rwanda ...............................................................................................................................................14 10. Australia ............................................................................................................................................15
  • 3. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 2 When Will the Tungsten Price Go Up? China plays a dominant role in the tungsten industry. It accounts for about 84.5 percent of the world’s total output, and is a net importer of tungsten concentrates; as a result, it heavily influences the tungsten price. But while it’s no secret that China holds a lot of sway over the tungsten price, it can be difficult to get exact information about the tungsten price. That’s largely because unlike metals such as gold and silver, the metal is not traded on an exchange. To learn more about the current tungsten price and prospects for the metal moving forward, the Investing News Network reached out to Chris Ecclestone, an analyst at Hallgarten & Company. Here’s what he had to say. Current tungsten price The tungsten price rose fairly significantly in 2010, and then traded in the range of $350 to $450 per MT between 2012 and 2014, as per Ormonde Mining's (LSE:ORM) website. However, after peaking in 2013, it fell due to improving availability from new mines. That trend has continued in 2015. In fact, the latest price analysis from Argus Minor Metals shows the tungsten price at a high of $190 and a low of $180; it’s down about $200 since the beginning of the year. "$190 is a pretty crap price compared to what it has been in recent years. I would suggest that [the tungsten price] is probably bottoming out at this price level, as with most metals," Ecclestone said. Tungsten price outlook While Ecclestone sees the tungsten price improving moving forward, he doesn’t expect the process to be quick. "I think we will see the price begin to rise slowly as economic demand recovers, but it is going to be nothing dramatic. If financing improves for the mining sector, it's not going to be a case of everyone in the mining sector suddenly being be able to get money. It will
  • 4. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 3 probably be gold projects and big base metals projects getting funding before specialty metals," he said. Still, he said he does see the tungsten price improving this year. "I would not be surprised if it was back up to $200 by the end of the year. By early next year, it could be at $220. Through next year, it could go up to the $250 to $300, depending on how things go and if China gets its act together," Ecclestone noted. A 2014 report from Roskill is a little less optimistic. The firm states that it expects the tungsten price to fall in 2015, though beyond that, "increasing demand and diminishing new production are likely to make the market more balanced, and could also push prices up." What’s an investor to do? While it remains to be seen where the tungsten price will go moving forward, it is nice to know that experts see improvements on the horizon. For clues on where the market will turn, investors would do well to keep an eye on China. As mentioned, the Asian nation currently dominates the tungsten market and heavily influences the metal’s price. However, that could be set to change. Read on to find out why that’s the case.
  • 5. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 4 Tungsten Demand Growth vs. Global Supply China is by far the most dominant tungsten producer in the world, accounting for about 84.5 percent of global output in 2014. What’s more, it holds the highest reserves, at 1.9 million MT. However, the Asian nation’s supply dominance may be set to falter in the coming years. After removing export restrictions on tungsten earlier this year, China vowed to strengthen mining regulations for the metal. Meanwhile, tungsten production outside of China is expected to increase in the next few years, according to a US Geological Survey report, and secondary production has become an important source of the metal. Impressively, it accounted for 22 percent of global supply in 2013. But will non-Chinese tungsten producers be able to put out enough of the metal to satisfy growing demand? Here, the Investing News Network explores that question and what it may mean for investors. Tungsten supply crunch Speaking about tungsten supply from outside China, Almonty Industries (TSXV:AII) states on its website, “[w]estern world supply is tightly constrained and future production is limited to a small number of projects that have been delayed or put on hold due to technical or financing issues.” It adds, “[r]ecent consolidation in the industry has also limited the amount of tungsten concentrate available for sale with most future production locked into off-take agreements with end users.” Blackheath Resources (TSXV:BHR) CEO James Robertson also spoke on non-Chinese tungsten supply in an interview with Peter Epstein this past April, noting that there are limited sources of tungsten outside of the Asian nation. “There are very few companies pursuing production of tungsten and Portugal is one of the countries where tungsten is found,” he said in the interview. Lack of exploration outside of China is not the only thing that’s constraining tungsten supply. Other countries that produce the metal are seeing their supply hampered by
  • 6. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 5 conflict minerals regulations. For instance, the Democratic Republic of the Congo and Rwanda were two of the 10 top tungsten-producing nations in the world in 2014, but as conflict minerals regulations intensify, they may see their output drop. Tungsten demand shift With Chinese tungsten output set to fall and supply from non-Chinese countries not yet up to snuff, it’s clear that production of the metal is precarious. Meanwhile, as mentioned, a shift in tungsten demand is also expected. In previous years, tungsten demand has mainly been fueled by consumption from cemented carbide producers; they accounted for about 60 percent of total demand in 2013. Use of tungsten-bearing steels and alloys in aerospace manufacturing and energy industries has also supported demand. However, moving forward, the electronics and electrical industries are expected to take a greater share of tungsten demand. Tungsten’s hardness, stability and ability to withstand extreme temperatures make it a perfect material to use in the manufacturing of electrodes and components used in touch screens. In fact, according to Roskill, tungsten consumption from electronic and electrical applications, including electrical contacts, electron emitters and lead-in wires, is forecast to grow at 5.4 percent per year through to 2018 — that’s more than double the overall trend. Meanwhile, tungsten demand for lighting products is expected to fade away and decrease by about 5 percent annually to 2018. Investor takeaway Summing up the tungsten supply and demand situation Roskill states in its report, “[t]rade in tungsten materials may be on the verge of significant changes, with multiple new projects expected to enter production and potential alterations to Chinese export controls.” Overall, the firm expects China’s share of global tungsten production to fall to 78 percent in 2018. Whether that will have an impact on the price of the metal remains to be seen. However, the long-term tungsten market situation appears to be bullish, and investors looking to cash in may want to start looking at companies working to bring non-Chinese projects into production.
  • 7. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 6 Tungsten Companies in Spain, Portugal and the United Kingdom Global tungsten supply has been short for years, causing the European Union to categorize the metal as a “critical raw material.” China has most tungsten in the world, with reserves of 1.9 million metric tons (MT), but notable deposits can also be found throughout Europe. Many tungsten companies are now exploring the continent with the hope of finding valuable assets to help meet worldwide demand. Tungsten is primarily used for industrial drilling and cutting tools, as well as for electronics and specialized steels. The United Kingdom The majority of tungsten reserves in the United Kingdom are in the southwest of England, primarily Western Devon and Cornwall. Both of these locales have long histories of mining, though operations have declined in recent years. There are currently not enough reserves in the area to be reported by the US Geological Survey. Specialty metals company Wolf Minerals (ASX:WLF) is one of the major companies operating tungsten projects in the United Kingdom. Its primary asset is the Hemerdon tungsten and tin project, which is located 10 kilometers northeast of Plymouth in Devon, England. The company increased Hemerdon’s ore reserves by 34 percent earlier this year following a successful geotechnical drilling program in 2014. Total proven plus probable reserves now sit at 35.7 million tonnes at 0.18 percent WO3. Wolf also provided a new mineral resource estimate for the project that’s compliant with the JORC 2012 code. The measured and indicated resource for the project is now 58.6 million tonnes at 0.17 percent WO3 and 0.02 percent tin, while the inferred resource is 86.6 million tonnes at 0.14 percent WO3 and 0.02 percent tin. Altogether that’s 145.2 million tonnes at 0.15 percent WO3 and 0.02 percent tin.
  • 8. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 7 Hemerdon is currently the third-largest tungsten and tin resource in the world, and is set to be the first new metals mine in Great Britain in over 45 years. Production is estimated at 5,000 tonnes per year of tungsten concentrate and 1,000 tonnes of tin concentrate. Spain There are currently not enough tungsten reserves in Spain to be reported by the US Geological Survey, but the western side of the country is home to the most mining of the metal. Mining began in the Salamanca region in the early 1900s and continued well up until 1982; a renewed interest in the region will likely see more companies set up projects there. Four companies engaged in the exploration, development and mining of tungsten assets in Spain are Almonty Industries (TSXV:AII), Ormonde Mining (LSE:ORM), Plymouth Minerals (ASX:PLH) and W Resources (LSE:WRES). Almonty Industries prides itself on acquiring distressed tungsten assets and operations and applying its know-how to better the projects. The company is currently working on its Los Santos mine in Northern Spain and the Valtreixal project in the northwest. The company gained a 25-percent interest in Valtreixal in January, with the option to acquire the remaining 75 percent through additional instalment payments. Almonty also attempted to acquire Ireland-based Ormonde and its assets on multiple occasions this past spring to no avail. Speaking of Ormonde Mining, it has a heavy presence in Spain, with all three of its projects located there. The company’s main focus is its Barruecopardo tungsten project in Western Spain, which has a combined measured, indicated and inferred mineral resource of 27.39 million tons at 0.26 percent WO3. Ormonde expects the asset to produce 227,000 tonnes of tungsten per year. The company most recently closed a financing for the project, and has received the initial US$25 million of equity funds. W Resources is a tungsten exploration and development company with projects in both Spain and Portugal. Its La Parilla project is located in the Extremadura region of Southwest Spain. The asset was previously mined from 1954 to 1986, and W Resources is now working to restart operations there. The company completed a mine development study at La Parrilla in June, seeing a 150-percent increase in its production target there. The company expects the mine to begin production in mid- 2016, with a production rate of 1,200 to 1,300 tonnes per year of 66 percent WO3. The full mine will be developed in 2017/2018, and target production will increase to 5,000 tonnes per year of tungsten. Finally, Plymouth Minerals holds the Morille tungsten-tin project in Spain. Before Plymouth gained rights to the property, the area had not been previously explored. In
  • 9. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 8 May, the company provided an update on sampling and drilling target definition at Morille. Portugal Portugal has 4,200 MT of tungsten reserves, as per the US Geological Survey, and in 2014, the country produced 700 MT of the metal. It is one of the top exporters of tungsten ores and concentrates in the world, and was the eighth-biggest tungsten- producing country last year. The Panasqueira mine is Portugal’s largest tungsten- producing mine, and Borralha, which is now owned by Blackheath Resources (TSXV:BHR), is the second-largest tungsten mine in the country. The company just completed its first drill program at the Santa Helena breccia at Borralha, reporting a 118-meter intersection at 0.29 percent WO3. Blackheath’s main asset is the past-producing Covas tungsten project, a joint venture with Avrupa Minerals(TSXV:AVU) in Northern Portugal that has a historic resource of 922,900 tonnes of 0.78 percent WO3. The company released its maiden resource estimate for Covas in March — it has an indicated mineral resource of 449,800 MTUs WO3 based on 1,081,000 tonnes at an average grade of 0.42 percent WO3; meanwhile, its inferred resources sits at 767,100 MTUs WO3 based on 2,211,000 tonnes at an average grade of 0.35 percent WO3. Blackheath also has options to gain 100-percent interests in other tungsten projects in the region, including Bejanca, Vale Das Gatas and Adoria. Colt Resources (TSXV:GTP) is another exploration and development company focused in Portugal, and currently holds interests in various gold and tungsten projects in the country. One example is the Tabuaço project, the company’s main advanced-stage tungsten project, which has an indicated mineral resource of 1,495,000 tonnes at 0.55 percent WO3, according to a 2012 resource estimate. The company also has the Santo António experimental mining licence in Northeastern Portugal, a joint venture between Colt and Brazilian company Contecnica.
  • 10. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 9 Tungsten Companies in Asia, North America, Africa and Australia Global tungsten supply has been short for years, with most production coming from China. The Asian nation holds the largest reserves of the metal, and accounts for about 84.5 percent of the world’s total tungsten output. However, a recent report speculates that Chinese tungsten supply may be set to tighten in the coming years. Indeed, it notes that the country is currently “manag[ing] export quota[s], purchas[ing] and stor[ing] tungsten resources, as well as implement[ing] other tightening policies.” That might spell bad news for tungsten end users, but it could be a boon for tungsten- focused companies outside of China. With that in mind, the Investing News Network is working to provide overviews of publicly traded tungsten companies working in countries other than China. Take a look at our primer on tungsten companies in Spain, Portugal and the UK here, and read on to learn about tungsten companies operating in Asia, North America, Africa and Australia. Asia The Sangdong tungsten-moly deposit in South Korea is one of the largest tungsten resources in the world. It has an estimated mineral resource of 357,799,000 tonnes, including an indicated resource of 16,431,000 tonnes and an inferred resource of 19,368,000 tonnes. Sangdong was owned by Woulfe Mining before the company was acquired by Almonty Industries (TSXV:AII). Almonty believes that it has the financial support to bring Sangdong into production, and recently announced that it will complete a non-brokered private placement of a secured convertible debenture in the principal amount of $4 million, plus a non-brokered private placement of 2.1 million common shares at a price of $0.08 per share for aggregate gross proceeds of $1.68 million. Furthermore, it will complete an unsecured bridge financing of $2.1 million for combined total gross proceeds of $7.78 million.
  • 11. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 10 Hazelwood Resources (ASX:HAZ) is a specialty metals producer focused on its 60- percent-owned ATC ferrotungsten project in Vietnam. In September, the company announced that it had signed long-term contracts with three Japanese buyers for ferrotungsten from ATC. North America Once one of Canada’s main tungsten producers, North American Tungsten (TSXV:NTC) is now receiving creditor protection, and recently announced that its Cantung mine will close temporarily from October 27. The company said that it hopes to resume operations at Cantung, which is one of the largest operating tungsten mines outside China, by summer 2016. Explorer Knick Exploration (TSXV:KNX) holds the Trecesson tungsten-gold project in Quebec. It also holds the Quebec-based East-West project, and in September it initiated a major review of that project. The review will include an in-depth review of Knick’s major database. Happy Creek Minerals (TSXV:HPY) is a junior exploration company with various projects in BC, including its Fox tungsten-moly project. The company closed a $1.1- million financing in September, and proceeds will be used to further explore Fox and for general working capital. Also in BC is Margaux Resources (TSXV:MRL) with its Jersey Emerald tungsten-zinc property. In March, the company updated its resource estimate for the project, seeing a 6-percent increase in the measured plus indicated category, as well as an 84-percent rise in the inferred category. The new measured and indicated resource stands at 3.071 million tonnes averaging 0.341 percent tungsten, while the inferred resource is 5.48 million tonnes of 0.273 percent tungsten; both are at a 0.15 percent cut-off grade. Another company working in Canada is Northcliffe Resources (TSX:NCF), which holds the advanced-stage Sisson tungsten-moly project in New Brunswick. The New Brunswick Department of Environment and local government accepted the project’s final environmental impact assessment in March, which was a critical milestone for the company. More recently, Northcliffe announced that it has closed a private placement financing for $2.57 million. Elementos (ASX:ELT) is an ASX-listed company working in the US. The company recently announced theresults of an independent open-pit scoping study, the second stage of a three-stage development plan for its Cleveland tin-copper-tungsten project.
  • 12. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 11 Africa Premier African Minerals (LSE:PREM) is a London-listed company that is focused on its 49-percent-owned RHA tungsten project in Zimbabwe, which began production in June. The company completed an offtake agreement with Noble Resources in March; it will see Premier supply 500 tonnes of wolframite concentrate from RHA. Most recently, the company reported that the project’s processing plant is performing 25 percent higher than initial design expectations. Australia Australia is the 10th-largest tungsten-producing country in the world, and saw significant output growth in 2014 — production jumped from 320 MT to 600 MT. Vital Metals (ASX:VML) is an ASX-listed company focused on the development of its Watershed tungsten project in Queensland. The company announced revisions to the definitive feasibility study for the project this past June; the new study shows a reduction in pre-production capex from AU$172 million to AU$143 million. Carbine Tungsten is also working in Queensland at its Mt Carbine tungsten mine. In its annual report, released in September, the company said that it has been working with two tungsten offtake and investment groups to advance its plans both technically and commercially for the open-pit redevelopment phase of the project. Carbine also secured a US$15-million secured loan from Mitsubishi (TSE:8058) for the first phase of the Mt Carbine hard-rock project. Another company with a tungsten project Down Under is Thor Mining (LSE:THR, ASX:THR) with its advanced Molyhil tungsten-moly project in the Northern Territory. In its 2015 annual report, the company said that its project development capex estimate has been reduced by 8 percent, to AU$64 million. The project has a post-tax NPV of AU$72 million and a 50-percent IRR. King Island Scheelite (ASX:KIS) is working to redevelop the Dolphin tungsten project on King Island, which is just off the coast of Tasmania. The former mine at Dolphin was run as an open-pit operation until 1875 and as an underground mine up to 1990. In its September corporate update, King Island Scheelite said that the existing open-cut mine has been dewatered; it is in the process of finalizing all necessary land, permits and approvals to commence construction.
  • 13. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 12 10 Top Tungsten-producing Countries Tungsten, also known as wolfram, is a metal with many uses. It is commonly used to produce electrical wires and heating and electrical contacts, but is also used in welding, heavy metal alloys, heat sinks, turbine blades and as a substitute for lead in bullets. According to a US Geological Survey (USGS) report, world tungsten production reached 82,400 metric tons (MT) in 2014, an increase over 2013′s 81,400 MT. Here’s a brief overview of the 10 countries that produced the most tungsten last year. 1. China Mine production: 68,000 MT China is the largest producer of tungsten, accounting for about 84.5 percent of the world’s total output. In 2014, the country produced 68,000 MT of tungsten, the same amount as the previous year. That’s a lot of tungsten, but a recent report notes that the Asian nation’s tungsten production may fall in the future as supply grows tighter. China also has the highest reserves in world with 1.9 million MT. 2. Russia Mine production: 3,600 MT Russia produced much less tungsten than China in 2014, but still took second-place spot, putting out 3,600 MT of the metal. That’s the same amount the country produced in 2013. MBendi Information Services states that in the past Russia has flooded the market with tungsten in order to drive the metal’s price down.
  • 14. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 13 3. Canada Mine production: 2,200 MT Canada saw an increase in tungsten output in 2014, producing 2,200 MT of the metal; that’s compared to 2,130 MT in 2013. One of the country’s main tungsten producers is North American Tungsten (TSXV:NTC) — in particular, its Northwest Territories-based Cantung mine, which is one of the largest operating tungsten mines outside China, is a significant producer. 4. Vietnam Mine production: 2,000 MT Vietnam also enjoyed increased tungsten production in 2014. The country bumped up its output to 2,000 MT from 1,660 MT the previous year. Privately owned Masan Resources owns the Nui Phao mine, which accounts for 22 percent of world tungsten production outside of China. Since Masan acquired the mine in 2010, it has seen consistent growth. The company expects to produce more material in 2015, and intends to list its shares to provide greater flexibility for long-term growth. 5. Bolivia Mine production: 1,300 MT Bolivia produced 1,300 MT of tungsten last year, an increase over the 1,250 MT produced in 2013. However, in 2013, companies started making moves to promote tungsten in the country. For example, Kennametal (NYSE:KMT) acquired tungsten processing operations in Bolivia, also securing related material sourcing agreements. The company hopes the move will allow it to expand global growth while avoiding risks associated with owning mining operations. “Tungsten is a key ingredient for technologies we develop, and ultimately vital to virtually every kind of manufacturing,” said Carlos Cardoso, chairman, president and CEO of Kennametal. “We look forward to welcoming the employees of Emura to our company family, and adding these assets to serve customers with the most advanced capabilities in our industry.”
  • 15. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 14 6.Austria Mine production: 850 MT Austria produced 850 MT of tungsten in 2014, the same amount it produced in 2013. Much of that production can be attributed to the Mittersill mine, which is located in Salzburg and owned by Wolfram Bergbau and Hutten. The Mittersill mine is the largest tungsten deposit in Europe. 7. Democratic Republic of the Congo Mine production: 800 MT The Democratic Republic of the Congo saw a decrease in tungsten production from 2013 to 2014. In 2013, the country produced 830 MT, while it produced only 800 MT of the metal in 2014. That drop is largely due to tougher regulations regarding conflict minerals, and those regulations are being further enforced still. According to The Guardian, European imports from conflict zones are now subject to increased surveillance procedures, a system that will affect 800,000 European countries. That is going to limit the amount of imported material European countries will accept, and will ultimately affect the amount of tungsten and other materials that many mines, located largely in Africa, will be able to export. 8. Portugal Mine production: 700 MT Portugal increased its tungsten production in 2014, reaching 700 MT compared to 692 MT in 2013. The Panasqueira mine is Portugal’s largest tungsten-producing mine, and Borralha is the largest past-producing mine in the country. 9. Rwanda Mine production: 700 MT Rwanda produced 700 MT of tungsten in 2014, less than its 2013 production of 730 MT. Similar to the Democratic Republic of the Congo, the drop has much to do with tightening regulations surrounding conflict minerals, as noted by Bloomberg. “The revenue from this year will not be good as those of last year unless there is a tremendous increase in prices in the last six months of the year, and we don’t expect that,” said Evode Imena, state minister for mining. “Companies have been reluctant to
  • 16. Investing in Tungsten Tungsten Price, Tungsten Demand & Tungsten Companies © 2015 Tungsten Investing News 15 buy tungsten from Rwanda because of reasons related to conflict minerals. Tungsten buyers have returned but with bad prices.” 10. Australia Mine production: 600 MT Australia had significant growth in its tungsten production from 2013 to 2014. Last year, the country produced 600 MT of the metal, a large jump from 2013′s 320 MT.