Tungsten is an essential component
in many industrial applications including drilling & cutting tools,
electronics and specialist steels. The European Union categorises
tungsten as a “critical raw material”. China currently produces 85% of
the world’s tungsten but their factories are ravenous consumers and
China is a net importer. USA, Europe and Japan consume 55% of world
tungsten, but produce only ~5%. It should be no surprise that tungsten
prices have surged in the last year, while many other commodities have
experienced price decline. Image Link: http://www.metalinvestmentnews.com/wp-content/uploads/2011/12/PLY1-Dec.jpg Tungsten
is currently selling for $20 a pound. New growth markets include
nickel-tungsten alloys which can substitute for gold-nickel plating.
Playfair’s
tungsten properties contain an estimated 100 million pounds of 43-101
compliant tungsten, and significant additional historical resources.
These resources have potential for expansion.
Tungsten
is a low profile commodity. There is no tungsten ETF, and few pure
plays. Outside of China only two publicly traded companies currently
produce tungsten: Malaga (MLG-TSX) and North American Tungsten
(NTC-TSX). With four high-grade Tungsten deposits, Playfair Mining
(PLY-TSX) is highly leveraged to rising prices and looming tungsten
shortages. Image Link: http://www.metalinvestmentnews.com/wp-content/uploads/2011/12/PLY2-Dec.jpg
“We
feel very fortunate to have 4 high grade tungsten deposits at a time
when the price of tungsten has started to move sharply higher,” states
Don Moore, Playfair CEO, “We acquired these projects when tungsten
prices were depressed. China has an ironclad grip on the market. It’s
not surprising that we are starting to see some serious interest from
large tungsten end-users who need to get stable supply from outside of
China.” Image Link: http://www.metalinvestmentnews.com/wp-content/uploads/2011/12/PLY3-Dec.jpg Tungsten
is an essential industrial product but typically insignificant on a
cost basis. Like the salt in a bag of potato chips – the price of salt
could triple and the bag of chips would only increase a penny. But you
can’t sell chips without salt. So with China slurping up most of the
global supply – tungsten could see dramatic price increases with little
demand destruction. Playfair’s veteran team of Donald G. Moore, Neil
Briggs is augmented by Director James Robertson who was a principal in
Primary Metals, a tungsten producer taken out by Japanese giant, Sojitz
Inc.Judging from public statements by Playfair’s management, the
strategy may well be to partner with a tungsten end user to help finance
the project into production.
In
addition to the compliant resources at Grey River (16.2m lbs) and Risby
(89.4m lbs), Playfair has historical resources of 18.5m lbs at Lened
and 5.3m lbs at Clea. Four high grade Canadian deposits: Grey River
representing near term production potential, Risby offering massive size
potential and all offering room for exploration upside.
Grey
River, located on the south coast of Newfoundland, consists of nine
mineral claims covering 1,750 hectares. The Grey River tungsten veins
are typical fluorite-rich wolframite-quartz greisen vein deposits. A
1984 GSC Economic Geology Report lists the Grey River deposits as “one
of the largest typical wolframite deposits in Canada” and states “It
would be remarkable if there were not many more tungsten occurrences’
[on the property].” The Grey River deposit sits at tidewater in an ice
free, deep water Atlantic port that offers year round shipping.
Risby
is an advanced stage deposit in the Yukon accessible by a 25 km tractor
road from an all-weather highway. The property is located approximately
55 kilometres west of Ross River and is comprised of 38 quartz mineral
claims, all 100% owned by Playfair Mining.
The
property was worked on from 1968 to 1982 by the Caltor Syndicate and
Hudson Bay Exploration and Development Co. Ltd. Together their
exploration efforts include 48 diamond drill holes (7,057 metres),
geological mapping, trenching, stream sediment sampling and ground
geophysics (magnetometer and EM surveys). Recent work by Playfair
includes diamond drilling, resource expansion and a NI 43-101 compliant
inferred resource calculation of 8,537,000 tonnes of 0.475% WO3 at a
0.2% cut-off.
Despite surging
tungsten prices, Playfair has been hit hard by tax loss selling is
currently trading close to all-time lows at $.07. It has a market cap of
$5.4 million. The British Geological Survey (BGS) has tungsten #4 on
its “Risk List” stating that it is critically vulnerable to supply
disruption. With 122 million fully diluted shares and 100 million pounds
of 43-101 compliant tungsten on the books – worth about $2 billion at
current prices – Playfair is definitely worth a closer look.
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