W : Tungsten - Worth a closer look ?

[drbubb]

W : Tungsten - Worth a closer look ?

 

Mark Seddon: Why You Should Look Twice at an Ugly Duckling Metal

 

TICKERS: AII, NTC, WLF*

 

Source: Alec Gimurtu of The Metals Report (8/20/13)

Tungsten just doesn't have the sex appeal that made investors fall for the rare earth story. But maybe that's its trump card, considering the boom/bust cycle that swept rare earths didn't touch tungsten's slow, steady price increases. Analyst Mark Seddon of Tungsten Market Research has long been watching the often ignored metal, and asserts that tungsten is a harder sell, but a better buy for investors. In this The Metals Report interview, Seddon outlines tungsten's finer points and suggests miners are poised to reap rewards.

 

*Companies Mentioned: Almonty Industries Inc. : North American Tungsten Corp. Ltd. : Wolf Minerals

====================

 

Market Cap Comparisons:

======

ALL.v - : Almonty Industries- : $1.03 : 37.04 Mn shs = $ 38.15 Mn

BHR.v- : Blackheath Res.---- : $0.19 : 17.58 Mn shs = $ 3.340 Mn

CNQ.au: Carbine Tungsten- : $0.07 : 179.0 Mn shs = $ 18.00 Mn

NCF.t : Northcliff Resource- : $0.30 : 77.40 Mn shs = $ 23.99 Mn

NTC.v : No.Amer. Tungsten : $0.14 : 238.1 Mn shs = $ 33.34 Mn

WLF.v : Wolf Minerals------- : $0.17 : 50.01 Mn shs = $ 8.502 Mn

=====

Total Market Cap : $ 125.3 Mn

Using price of -- : $ 48.00 per kilogram

That represent how much Ferro-Tungsten? = 2.61 million kg = 2,610 mt

 

The Global market is approximately 80,000 tons* of tungsten metal content.

These companies have a value = Only about 3% of the Global Tungsten annual market

(Remembering that only 20% is outside China, they are worth 15% of ex-China)

 

*(per Post #2, below)

 

AII.v / Almonty Industries Inc. ... update

 

NTC.v / North American Tungsten Corp. Ltd. ... update

 

WLF.v / Wolf Minerals ... update

 

To give some idea of the (healthy) state of the Tungsten market, here's a 5-year price chart:

 

/source: http://www.infomine....tment/tungsten/

===

The recent price of Ferro-Tungsten is: $48 / Kilogram

========

 

 

[drbubb]

The Metals Report: Mark, what is the supply situation with tungsten?

 

Mark Seddon: China accounts for approximately 80% of global tungsten supply, so it's the clear dominant player when it comes to both tungsten and rare earth elements (REEs), both of which are on most national lists of strategic or critical materials. The Chinese government has recently taken an active role in managing supply for a broad range of strategic metals, including tungsten, through export quotas, mining quotas and licensing systems. These actions have reduced the availability of ores, concentrates and intermediate products available for export. China's goal is to add value to their natural resources by serving its own domestic markets rather than export these materials—and refining and manufacturing jobs along with it. That dynamic applies to both tungsten and REEs.

 

"Tungsten is a very industrial metal. It's mainly used as a carbide or 'hard metal' in drilling and cutting tools used in heavy industry. Tungsten is not sexy in that sense."

Another similarity is the fairly significant price rises in both markets. But while REE price hikes have been labeled a bubble, that's not the case with tungsten, simply because there has not been a lot of interest from the investment community. It is possible that a bubble in tungsten will happen in the future as investors see prices for products rising and that feeds a self-reinforcing investment case and increases investor interest. But we are not anywhere near that now.

 

There are notable differences between the two markets as well. One of the big differences between tungsten and REEs is their applications. Tungsten is a very industrial metal. It's mainly used as a carbide or "hard metal" in drilling and cutting tools used in heavy industry. Tungsten is not sexy in that sense. It's a very solid industrial market.

. . .

TMR: How large is the tungsten market?

MS: I evaluate it in terms of volume. The global market is approximately 80,000 tons of tungsten metal content. When looking at supply/demand statistics, it is important to make sure that you are using consistent units. For clarity, I use tungsten metal content (W) rather than WO3 or other intermediaries.

 

TMR: Overall, is the tungsten market growing?

"Tungsten demand growth, over time, has consistently outperformed GDP."

 

MS: The largest segment of the market is in cemented carbides or hard metals, which probably accounts for about a quarter of the market. Tungsten demand growth, over time, has consistently outperformed GDP. In the mid- to late eighties, for example, tungsten demand increased up to 8–10% a year when global GDP was growing at between 4–5%. The historical use of tungsten metal in mill products like filaments for light bulbs accounts for around 15% of the market. The demise of the incandescent light bulb is not a major problem for the tungsten market, as tungsten is still used in some of the newer light bulbs.

. . .

TMR: How do you track the pricing trends in the various global markets for tungsten?

MS: One feature of tungsten, as with REEs, is there's no terminal market. There's no exchange where you can pull up the tungsten price like you can do with copper, gold or wheat. You're relying on price discovery publications like Metal Bulletin, Metal Pages and Metals Weekly.

[drbubb]

Here's another one:

 

NCF / Northcliff Resources ... update

 

 

Northcliff Resources Ltd. is a mineral development company focused on developing its wholly-owned advanced stage Sisson Tungsten-Molybdenum Project in central New Brunswick. Sisson has excellent potential to be a near-term metal producer, with the capability to meet increasing tungsten demand from North American and European markets.

The Sisson property hosts a large, structurally controlled, intrusion-related tungsten-molybdenum deposit amenable to open pit mining.

 

Northcliff has embarked on a program comprised of drilling, engineering and environmental studies to advance the Sisson Project through feasibility and into permitting. The Feasibility Study is now complete and an Environmental Impact Assessment report was submitted in July 2013.

 

===

/website: http://www.northclif....com/s/Home.asp

[drbubb]

A Video from NCF on Tungsten, "The Next growth Metal"

 

[drbubb]

WHERE IS the New Tungsten going to come from ?

 

If you look at the fundamental situation, the tungsten market is going to need new production from somewhere. The Chinese aren't pumping out extra tungsten. In fact, if anything they're exporting less and less tungsten, particularly the intermediate and unrefined products. Demand in 2012 was level or down because of the problems in Europe. This year, I would expect demand to pick up a little bit.

 

The current producers of tungsten don't have the capacity to materially increase production. The biggest mine outside of China, the Cantung mine in Canada, which is owned by North American Tungsten Corp. Ltd. (NTC:TSX), is producing at close to capacity and has only two or three years of reserves—and that's a generous estimate. Most of the other mines, including a couple of mines in Europe, are producing close to capacity, so they don't have much leeway. If demand starts to pick up, new projects or restarts will be needed to fill the gap.

 

"If tungsten prices do take off, as I expect they will, the beneficiaries should be the producers."

 

In the last couple of years, the only major project that's started production is the Nui Phao project in Vietnam, owned by Masan Group (private). It's a Vietnamese company. That project has been through a number of hands and has been in development for quite a long time. At least $500 million ($500M) has been spent on the project. It is somewhat unique in that it is a polymetallic deposit. The process flow sheet is fairly complicated and getting the entire plant up and running will take some time. Other new producers include a smaller-scale operation in Australia and Almonty Industries Inc.'s (AII:TSX.V) Los Santos mine in Spain. These are not particularly large projects, with annual production at less than 1,000 tons of tungsten each.

 

The largest projects in the tungsten market are up to $500M in size. That is small compared to world-class gold or copper projects. But it is large for this market, and far larger than many of the smaller mining companies can pull off. In that sense, the tungsten market falls between large-scale and small-scale mining. And there might be an opportunity in that space. You could say that the tungsten market "falls between two stools."

 

In the context of an approximately 80,000-ton annual market with 3% growth, you need 2,400 tons of additional tungsten metal per year in supply, and with 5% growth you need 4,000 tons. That's one new big tungsten project per year. It is difficult to see where that supply could come from. In the current market, miners can't get the financing needed to take projects from a bankable feasibility study to construction. It's a big problem.

 

The only other apparently fully funded project that I know of is the Hemerdon project in the U.K., which is owned by Wolf Minerals (WLF:ASX). That project is beginning construction now, but won't be in production until late 2014 at the earliest. There aren't any other significant projects that will come on-line in less than two years. Most of the larger projects have at least a two-year construction phase, but most of those projects aren't fully funded yet. The fundamentals in the tungsten market are good. Price projections for tungsten are good.

 

The problem is getting the funding. Add it all together and it appears that the tungsten market is storing up trouble.

. . .

MS: Investment in mining companies is the only practical way to access this market right now. Tungsten is one commodity that's mostly traded between producers and consumers. Historically, governments would enter the market and stockpile, but as an individual investor, you can't really go out and easily buy a couple of tons of tungsten and warehouse it. That would be far outside normal market behavior.

 

If tungsten prices do take off, as I expect they will, the beneficiaries should be the producers. One of the larger current producers outside of China is North American Tungsten. Its current production comes from the Cantung mine, which hasn't got much life left in it. The company has additional projects, like Mactung, that may be able to come on-line. A potential investor would need to examine each project closely.

 

===

(Mark Seddon, TMR, The Metal Report)

[drbubb]

NOTES : spr-ger

======

Resource - : - Grade - : STU's----------------------------- : MTU's :

Ind.Sutton

0,355,000 - : 0.537% : 190,635 x $xxx = $xx Mn : 172,990

Inf:3 loc's

1,933,620 - : 0.493% : 952,326 x $xxx = $xx Mn : 864,180

========

Annual Rev. : $43.2 Mn at $400/MTU (APT equiv.) that's 108k MTU

===

$48 per KG : 1000 / 453.6 = $2.205 per lb

$400 /$2.2 = 181.8 lbs

========

[drbubb]

(NOTE - should this be here?)

 

Date: Thur, Oct 24th, 5pm
Venue: Level 8, Two Exchange Square

This will be a small session, and you're welcome to join. Please let me know if this would be of interest to you.

Thanks
Brian

________________________________________

CANADA JETLINES

Canada Jetlines Ltd. (Jetlines) is currently in the build out phase as a low cost, non-union airline, operating modern Airbus 319 jet aircraft focusing on the 120 seat Point-to-Point (P2P) service initially on non-served and underserved routes in the Canadian secondary markets and seasonal southern sun destinations. It will make its home base at Vancouver International Airport and plans to commence operations in the summer of 2014. Jetlines expects to enter the market with two jet aircraft and plans to grow to sixteen aircraft by the 27th month of operations. In year four of operations Jetlines plans to place deposits on new aircraft to add to the 16 plane fleet or replace aging aircraft. As Jetlines gains economy of scale, it expects to enter the primary markets with very competitive lower costs and lower ticket prices than Canada’s existing exiting legacy airlines. Jetlines will focus on routes not served or which are underserved by commercial jets.

Jetlines aims to operate at an equal or lower cost structure than Westjet and a much lower cost structure than other competitors. Thus, the proposed low cost Jetlines expects to offer jet service on non-served and underserved routes that will both greatly stimulate these markets with lower airfares and will divert passengers from any turbo-prop air service currently operating or expected to operate on some of these routes. Jetlines plans to service 2.1 million passengers in its fourth year of operations with a projected gross profit of $34.7 million in that year. Jetlines has retained Salman Partners Inc. of Vancouver, Canada, to assist in raising $100 million in startup equity for the completion of the Jetlines business plan.

INVESTMENT HIGHLIGHTS

- Canada Jetlines – structured as a new lower fare, non-union airline based at the Vancouver International Airport.
- Focus on underserviced and un-served markets in Western Canada and select sun destinations.
- YVR Endorsement & Support
- Modern jet fleet (Airbus A319).
- Attractive operating environment with high domestic yields and high load factors.
- Experienced, proven management team with solid airline experience.
- People focused culture with emphasis on employees and strong customer satisfaction.
- Financial objective - positive cash flow and earnings within 16 months of start-up.


MANAGEMENT TEAM

Jim Scott, President/CEO, BGS, ATPL (B747 & FK28)
- Founder and visionary of Canada Jetlines.
- 25 years aviation experience globally, including Boeing 747-400 pilot with Cathay Pacific.
- Senior planner for the 2010 Olympic Winter Games security operations.
- Aviation Consultant providing flight training, testing and airline culture training.

Dave Solloway, Chief Commercial Officer