May 2008

Surrounded by Buddhas

War Eagle’s Tres Marias germanium project

By D. Zlotnikov

Miners at work at Tres Marias

In its own way, the northern part of Mexico’s Chihuahua state is beautiful country. It takes the uninterrupted kilometres of dry, dusty roads flanked by undulating mountains to fully appreciate the rare explosion of lush green — a beacon marking a perennial body of water in a land crisscrossed by empty streambeds. The area is known for its unique limestone rock formations called “Budas” (Spanish for Buddha), so named for their remote resemblance to the famous Buddhist statues.

It is in the shadow of one of these evocative mountains, a short hike from the Rio Grande River, that you will find the Tres Marias mine site, a zinc/germanium property owned by Vancouver, British Columbia-based War Eagle Mining Company, Inc.

A new frontier

The Tres Marias site was originally discovered and developed almost 60 years ago. Since that time, the mine has changed ownership a handful of times, having been shut down and brought back online with changing political and environmental circumstances.

War Eagle optioned the mine from Tombstone Exploration de Mexico, S.A. de C.V., a local mining exploration firm, under a royalty agreement in 2001, and purchased it wholly in 2006. Tombstone is still engaged in exploratory drilling on the site, now as a wholly owned subsidiary of War Eagle.

According to company president Terry Schorn, War Eagle is first and foremost a germanium company. So, while the Tres Marias mine is a dual-product exploration property, the company’s focus is on the germanium. War Eagle’s previously acquired properties — a gold property and a diamond property in Saskatchewan and a Tantalum project in the Northwest Territories — are being spun off either as partnerships or under royalty agreements, keeping the focus on germanium.

In short supply

The emphasis War Eagle places on germanium has very good reasoning behind it. The germanium market is very small. Production in 2007 was estimated at 110 to 120 tonnes worldwide, including that from recycled sources. Demand for the mineral comes mainly from the plastics industries, fibre optics manufacturers and the producers of infrared sensors. The latter also includes military infrared and night-vision systems, so it’s no surprise that the United States has long included germanium in its Defense National Stockpile Center (DNSC). More recently, there has been increased demand from the expanding green energy sector. Germanium, when used as a substrate in photovoltaic cells used in solar panels, offers excellent conversion rates and is extremely lightweight.

“There is very little transparency in the germanium market,” said Keith Knobelauch of Murdock Capital Partners Group. “The only source of publically available, reliable stock prices is the DNSC, but that price has little bearing on what the major consumers of germanium pay their suppliers.”

The size of the market also means that normal commodity rules don’t quite apply. For one thing, germanium is currently only economically extracted from certain zinc deposits and coal fly ash.

The nature of the extraction process is such that the processor must first extract the zinc through a flotation acid leaching or smelting process and then run the resulting concentrate through a second loop to separate the germanium. With all the effort already invested in producing commercial-grade zinc concentrate, it would be extremely wasteful not to sell it along with the germanium; however, few zinc ore processing plants contain germanium extraction loops.

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