VANCOUVER – A preliminary economic assessment (PEA) of the tungsten mine that Colt Resources (TSXV: GTP) is planning at its Tabuaco project in northern Portugal works on paper, a vote of confidence that means Colt can focus on expanding the resource, trial mining a bulk sample, and pushing ahead with permitting in advance of a targeted 2017 start-up date.
Tabuaco hosts two tungsten deposits, known as Sao Pedro das Aguias (SPA) and Aveleira. Colt has punched more than 100 drill holes into the two bodies since acquiring the 45-km2 project in late 2007, and the effort has defined a resource totaling 1.5 million indicated tonnes grading 0.55% WO3 plus 1.2 million inferred tonnes averaging 0.59% WO3.
The tungsten at Tabuaco occurs in skarn type deposits of scheelite. The PEA envisions mining those deposits at a rate of 1,500 t/d. With a low strip ratio and a tungsten recovery rate of 90%, the mine should produce 1.24 million tonnes of tungsten trioxide in its 12-year mine life.
It would cost only US$86.8 million to put Tabuaco into production. Colt VP and COO Declan Costelloe says the deposit itself gets credit for the low development cost.
"The biggest strength would be, due to the natural geometry of the deposit, for Colt to mine the deposit underground," Costelloe wrote in an email to The Northern Miner. "Our underground mining approach, 'drift and fill', provides us with an opportunity to put all the tailing and most of the waste back underground. Because of that our modeling done to date indicates no need for a tailings facility, thereby removing a typically significant capital item."
Costelloe also noted that advances in scheelite processing and recovery technologies help in cutting back capital and operating costs. For example, the use of sorters at the crushing stage significantly reduces the amount of material sent through the plant, allowing for a smaller process plant and lower operating costs.
By investing US$86.8 million at Tabuaco, Colt should be able to produce a tonne of tungsten trioxide for US$201.20. Using a WO3 price of US$400 per tonne and a 5% discount rate, Tabuaco carries an after tax net present value of US$67.4 million and the mine would generate a 30.7% after tax internal rate of return.
Tabuaco is 100 km east-southeast of Porto, in the heart of port wine producing country. In fact, there is an operating vineyard on top of the deposit, which Colt bought in late 2010. The vineyard could potentially stay operational during underground mining operations.
"Colt has taken an aggressive stance towards minimizing the impact on the environment when planning the mining of this high grade tungsten deposit," Costelloe wrote. "The biggest weakness is that the area is well known for the production of port wine. Our project is being designed to have no impact on this business."
With the PEA complete Colt now plans to strengthen the project in a few areas before completing a feasibility study, which the company aims to release before the end of 2014. Before then Colt intends to upgrade the inferred resources at Tabuaco so that those tonnes could be included in a mine plan; develop an adit into the orebody to assess geotechnical conditions and take a bulk sample for further metallurgical test work; use the results of those met tests to finalize plans for the processing flowsheet at Tabuaco, where several options are still being considered; and continue to study options to minimize the mine's environmental impacts.
Tungsten has the highest melting point of all metals and is very hard, both attributes that have led to its primary use as a strengthener in metal alloys. Used in applications ranging from artillery to aerospace, tungsten enjoys steady global demand.
China produces 80% of the world's tungsten, but in recent years China has become a net tungsten importer. That shift has put pressure on tungsten supplies and, as a result, the price of ammonium paratungstate (APT), the primary form of raw tungsten traded on the market, has climbed. In early 2010 a tonne of APT could be bought in the European market for US$200; 18 months later the price had climbed above US$450 per tonne. Prices then settled through 2012 but have since inched back up to the US$415 per tonne level.
Colt has money in the bank, having recently closed a $5-million private placement. Those funds brought the company's bank balance up to approximately $6.5 million.
Colt's other assets are all in Portugal and include the prefeasibility stage Boa Fé gold project, four early stage gold projects, a gold-copper property, and a gold-tungsten project.
On news of the Tabuaco PEA, Colt's share price gained a penny to close at 32¢. The company has a 52-week share price range of 16.5¢ to 56¢ and has 153 million shares outstanding.
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