North American Tungsten announces tungsten JV update
Source: Press Release
metalsplace.com
American Tungsten Corporation Ltd. said Thursday that it will hold a live web cast September 21, 2006 at 2:00pm PDT to present an update on its joint venture with Tundra Composites LLC and its pilot plant processing facility in White Bear Lake, Minnesota.
1. AGREEMENT
NTC announced on May 5, 2006 that it had entered into a Memorandum of Understanding ("MOU") with Tundra of White Bear Lake, Minnesota, to create a 50/50 joint venture for the processing and production of a variety of tungstate powders, intermediates (including Ammonium Paratungstate – "APT") and composites from tungsten concentrates and other metal powders including Bismuth and Steel.
The MOU called for NTC to contribute US$2.85 million (US$2,250,000 has been contributed to date) to the Venture for the Pilot Plant and Tundra will contribute capital assets, research, engineering, the use of its technology with a deemed value of US$8.5 million.
The initial Pilot Plant is operational at Tundra's facility in Minnesota for establishing the technical viability of the process to the point of commercial production.
Pilot production has commenced, with full-scale operation expected by October 31, 2006. The Pilot Plant's annualized output is anticipated to be initially 700,000 pounds of Tungsten (W) Powder, and intermediates, rising to 1.3 million pounds thru 2007.
On October 31, 2006 (amended from the MOU original date of September 1, 2006), a decision will be made by NTC and Tundra for the commercial production phase. The current projected capital cost estimate of the commercial production facility is US$10.0 million: NTC has the option to provide the funds directly or through mutually agreeable third party financial partners to be negotiated. Any costs for the joint venture beyond the US$12.85 million will be shared by Tundra and NTC.
2. TUNGSTEN MARKET
Based solely on traditional global consumption, the tungsten market has seen record level prices.
The majority of historical demand has been driven by the performance of the world's industrial economies. More recently, advanced technology has allowed Tungsten to be utilized in numerous new composite materials that the Company believes will greatly enhance its worldwide demand. These new potential markets involve both consumer products for the replacement of lead and also high end technology applications that benefit from the unique attributes of tungsten.
3. THE JV TECHNOLOGY
The technology developed for the pilot plant and scale-up allows for the use of low-grade tungsten ores to be directly converted into tungsten intermediates with a significant simplification and reduction of costs for production. The process specifically removes all ore impurities in its first step and represents a significant simplification to the production of Ammonium Paratungstate (APT) and subsequent processing to tungsten powders. The process is intended to yield low-grade powder for composites and intermediate purities for tungsten carbide, as well as high-purity tungsten for various applications. In addition, the plant is expected to produce other metal powders for use in composites and specific other markets.
4. STATUS OF PILOT PLANT
Based on completion of operational development of the manufacturing equipment, the pilot plant has begun production scale-up on September 15, 2006. By October 31st, a study will be completed on the yield and scale of the pilot plant for various products. The anticipated production volumes in Phase I of the pilot plant are 700,000 pounds of Tungsten products and in Phase II, 1,300,000 pounds of Tungsten products.
5. FULL SCALE PLANT
The J.V. plans to construct a full-scale processing facility at Hoyt Lakes, Minnesota with a proposed annual production capacity of over 7 million pounds of Tungsten with additional volumes of bismuth and stainless steel powders. The product mix of APT, tungsten powders and other metal powders will ultimately be market driven, but the largest segment is likely to be tungsten.
The J.V. has successfully negotiated a total of US$14,000,000 in benefits from various State and Federal agencies that will accrue to the operation, once in commercial production. These benefits are comprised of grants and tax relief on future revenue.
6. FINANCIAL PROJECTIONS
The joint venture's production strategy calls for the pilot plant to ramp up to an annualized production capacity of 1.3 million pounds of tungsten in 2007, generating estimated revenues of just over US$15.0 million with a potential forecasted EBITDA of $3.5 million. Beyond 2007, financial projections are likely to be driven by the larger output of the Hoyt Lakes plant and also the internal product mix that the joint venture markets to its customers.
7. MARKETING
It is the intent of the J.V. to market its own products by way of both contractual agreements and spot sales. It is anticipated that the majority of the low grade tungsten (92% W) and stainless powder will be sold directly to Tundra Composites. |
