May 2013

Tungsten trailblazer

Northcliff Resources intends to capture more value at its Sisson project in New Brunswick by upgrading tungsten to marketable ammonium paratungstate – a Canadian first

By Graham Chandler

Above left: Northcliff’s operations manager Drew Takahashi leads visitors on a tour of the Sisson project | Courtesy of Northcliff Resources


If all goes to plan, the Sisson project, a 100-kilometre drive northwest of Fredericton, New Brunswick, should be supplying world markets with refined tungsten in the form of ammonium paratungstate, or APT, by 2016.

The feasibility study, prepared under the direction of Denver-based Samuel Engineering, details a 30,000-tonne-per-day open-pit operation with a mine life of 27 years. Northcliff says the pre-tax net present value is $714 million at a discounted rate of eight per cent and an internal rate of return of 20.4 per cent – that means a payback of just over four years based on a project cost of $579 million. These values are calculated on long-term prices of US$350 per metric ton unit (MTU, or 10 kg) of APT and US$15 per pound of molybdenum.

The decision to build an APT plant on site was a significant part of the mine’s anticipated profitability.

“There is no getting around the fact that this is a lower-grade deposit and we needed to make sure that, from a metallurgical standpoint, we could get reasonable metal recoveries,” explains Chris Zahovskis, president, CEO and director of Northcliff. “Most tungsten mines will produce a concentrate and sell it to a refinery or an APT client. Our research shows the discount off the APT price – which is how tungsten is priced – ranges between 20 per cent and 40 per cent.” So, rather than lose the value to that discount over the mine’s life, Northcliff’s APT plant will capture it. Moreover, Zahovskis adds, the combination of where the mine is situated, its low-cost nature and the deposit’s long life further supports the APT plant decision.

Zahovskis says there have been small tungsten operations in the region in the past, “but nothing appreciable.” The Sisson deposit was identified in the late 1970s, but “nothing much happened” because of low prices, he points out. Geodex Minerals acquired the rights to the property and began exploring further in 2004. “In late 2010, Northcliff became a joint venture partner with Geodex with a majority share, and in the spring of 2012 we acquired the remaining interest,” Zahovskis adds.

Attention to metallurgy

Northcliff completed additional drilling in 2010 and 2011 to prepare for the feasibility study. The resource is a large, intrusion-related tungsten-molybdenum deposit. The company’s fact sheet describes it geologically as “hosted by deformed and metamorphosed Cambrian to Ordovician-aged volcanic and sedimentary rocks that are associated with Devonian-aged granodiorite, gabbro and granite intrusions. Tungsten and molybdenum mineralization occurs mainly as scheelite and molybdenite in steeply dipping quartz veins, on fractures, and as disseminations.”

In light of the lower grade, extensive ore testing was done. “We spent a lot of time – in fact about 18 months – on a metallurgical test program,” says Zahovskis. “In 2011, we embarked on a very significant sampling program. We collected a 35-tonne sample from across the deposit and composited that material to represent different phases of the mining and different lithologic domains,” he adds. “Then we undertook metallurgical testing – a very extensive program in SGS Lakefield. We started off with batch tests, followed by locked cycle and even ran a pilot plant for a short period at Lakefield to inform the design of the concentrator for the Sisson operation.”

The open pit will be mostly standard fare. “We’ll do clearing and grubbing initially to take the vegetation off. Drilling and blasting will follow that to get rid of some of the bedrock, and then we basically just work our way down,” says Zahovskis. Much the same as for a copper open pit mine, the pit design will be based on the ore geometry, grade and production rate. According to Zahovskis, “The design was put together with the thought of optimizing ore grades and operating costs as much as possible.

The primary crusher will be located adjacent to the pit, resulting in short trips for the 136-tonne capacity haul trucks expected to deliver 10.5 Mt of ore each year. The concentrator plant is a kilometre away, and includes secondary cone crushing and tertiary high-pressure grinding rolls, followed by single-stage, two‐line ball mill grinding. “After grinding, it goes through flotation; the molybdenum is floated off first followed by tungsten flotation,” explains Zahovskis. Concentrates for molybdenum and tungsten will then be dewatered. The molybdenum concentrate will be sold to other parties for further processing, while the tungsten concentrate will be processed into APT on site. The tailings storage facility will store tailings from the processing plant and the APT plant, along with the mine waste.

Zahovskis explains that overall, there is not much new being planned that is not currently being used in the industry, even the APT process. “We have done sufficient testing with our own material to give us confidence that we would get a very good recovery of tungsten trioxide from this plant,” he says.

Location is key

The site is well situated to get people and supplies in and the product out. The main road runs 100 kilometres from Fredericton and a rail line is currently within 15 kilometres – and either option connects directly to the deep sea ports at Saint John to the south and Belledune to the northeast. There is a 345-kilovolt transmission line which crosses the Sisson property, and a separate 42-kilometre, 138-kilovolt transmission line will be built to service the project exclusively.

Local labour at the ready will be a key aspect of the Sisson operation. “It’s not a fly-in/fly-out,” says Zahovskis. “It’s close enough to nearby communities and even Fredericton that people can come to work and go home at the end of their shift.” Fredericton, he says, is about an hour and 10 minutes away and there are small towns all along the way. “So we think there is ample opportunity for people not to have to endure long commutes.” Zahovskis says he knows of other mine workers enduring five-hour daily commutes in the area. And, he adds, “There’s a wealth of well-qualified mining people in the province.” Moreover, this year’s scheduled closing of Xstrata’s Brunswick mine in Bathurst, just to the north, may contribute to available supply of tradespersons and operators. Zahovskis adds that many qualified people have left the province to work and would welcome the opportunity to return to a job closer to home. “In addition, we’ll be training our own employees as we bring them on.”

There’s still a long way to go with a number of considerations – offtake agreements included – before the light turns green for the project. “Obviously without a feasibility study we couldn’t really talk too much about how everything was going to work out – quantities, cost and so on,” says Zahovskis. “Now that it’s complete, we are in a position to continue discussions with potential off-takers and others who have indicated a possible interest in participating in the project.”

Clearly the biggest competitor is Chinese production of the mineral (see below). But Zahovskis is confident about the Canadian project. “We actually expect ourselves to be in line with Chinese production in terms of cost to APT because we have our own plant,” he says. “Most Chinese exports go to three main areas: Japan, North America and Europe – the big users of tungsten outside China.” Sisson is handily located for easy access to North America and Europe, he reckons, and “once the product is on an ocean-going vessel we can ship anywhere.” Off-take contracts are expected to be in place by year’s end.

With the positive feasibility study in place, basic engineering will commence soon. And serious financing negotiations can now be approached. Stand-alone project financing for the $579-million undertaking might be challenging, so Zahovskis says he is looking at potential joint venture partners who would be interested in investing in the project. Those partners may or may not be off-takers as well. “And then obviously there will be a debt portion,” he explains. “Once we successfully secure the off-takes, then we can speak to the banks about the debt financing and that would determine what equity financing we need to do.” Mid-2014 is his target for finalization.

The final important piece, the environmental impact assessment report, will be submitted around the end of the second quarter of this year, says Zahovskis. “We expect approval sometime in the second half of 2014.” Meanwhile Northcliff will be preparing permits so upon EIA approval they will be ready to build.

The economics of tungsten

What are the distinctive properties of tungsten? Tungsten, also known as Wolfram – hence its symbol “W” on the periodic table – is grey to white metallic in colour. Its melting point of 3,422 degrees C is the highest of all metals and its thermal expansion is the lowest. The element is extremely hard and wear-resistant: about 100 times that of steel. It is highly corrosion-resistant and does not break down or decompose. Because of these attributes, there is no real economic alternative in industrial applications.

So what are these applications? Due to its unbeatable hardness, tungsten is used in cemented carbide and high-speed steel tools, notably in manufacturing, construction, mining and oil and gas drilling. It is also used in flat-screen and lighting technology (LCD and LED), electronics, power engineering, coating and joining technology, the automotive and aerospace industries, the nuclear industry, medical technology, and the solar energy industry.

Where is most of the world’s tungsten produced? China produces about 80 per cent of world supply (and consumes almost 60 per cent), followed by Russia, Bolivia and Austria. The largest individual producer outside China, the Cantung mine in the Northwest Territories, near the Yukon border, is Canada’s only major producer of tungsten. In its 2012 fiscal year, it produced 273,000 metric tonne units (MTUs) of concentrate.

What are pricing trends? With world trade in concentrates diminished in recent years, the market is increasingly trending to APT (ammonium paratungstate – the main tungsten raw material traded in the market) quotations as a price guide. Industry prices are normally based on biweekly quotations published by the Metal Bulletin in London. APT pricing has been up-trending over the past two years: from US$200/MTU (or 10 kg) in January 2010 to US$450 in early 2012 on the European Free Market.

“Tungsten consumption tends to follow industrial activity and general economic trends,” according to Kim Shedd, mineral commodity specialist for cobalt and tungsten at the National Minerals Information Center of the U.S. Geological Survey in Virginia, So tungsten hopefuls like Northcliff are particularly keen on a swift economic recovery.

Sources: Mining Journal, International Tungsten Industry Association, North American Tungsten Corporation Ltd. website, U.S. Geological Survey, InfoMine

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