Tungsten Mining (TGN.AX) has recently started its Reverse Circulation program on the Mt Mulgine project in Western Australia. The RC drill program will consist of 40,000 meters of drilling in 130 holes, and will be important towards realizing its exploration target of 165-200 million tonnes at an average grade of 0.10-0.12% WO3. While that grade wouldn’t have been very viable when the tungsten price was trading at just $300-400 per mtu, the situation on the tungsten market has changed pretty dramatically with prices coming in at $3000/mtu in the recent past.
This means we likely are in a ‘new world’ for tungsten. While it would be wrong to use $3000/mtu as long-term price, it also doesn’t look like the tungsten price on the markets will drop back to $300-400 per mtu. And even if you would use $750 or $1000/mtu, a resource with an average grade of 0.10-0.12% WO3 could be viable (1% represents 1 mtu, so 0.10% represents 0.1 mtu before taking recovery rates and payability percentages into account). So at a tungsten price of $750/mtu, 0.10% WO3 mineralization has a gross rock value of $75 per tonne before recoveries and payabilities.
Additionally, 37 PQ diamond holes will be drilled for a total of 4,700 meters. The purpose of this drill program is to collect more material for metallurgical test work, and to gather data for the potential pit design at Mt. Mulgine.
Disclosure: The author has no position in Tungsten Mining. This post is for educational purposes only; be mindful investing in junior mining stocks is risky and you may lose your entire investment if things go wrong. Please read the disclaimer.
