May 10 2006
North American Tungsten Corporation Ltd. (the “Company” or “NTC”) is pleased to announce that it has entered into a Memorandum of Understanding with Tundra Composites LLC (“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 metals including Bismuth and Steel.
Tundra has developed advanced technology that is markedly different from current industry methods and is intended to reduce processing costs, allow production of a wide range of products and utilize various grades of ore concentrates, scrap and intermediate products. The costs for processing tungsten ore with this new technology are projected to be significantly less than current methods.
An initial Pilot Plant will be established immediately at Tundra’s facility in Minnesota to establish the technical viability of the process to the point of commercial production.
NTC will contribute US $2.85MM to the Venture for the Pilot Plant and Tundra will contribute its technology with a deemed value of US $8.5 MM.
NTC will be the primary, if not exclusive supplier of the joint venture’s tungsten concentrate requirements. In announcing the joint venture, Stephen Leahy, NTC’s CEO, said, “this is an enormous opportunity for NTC, as it potentially allows the Company to become vertically integrated, accessing additional value added profits through processing and significantly enhance our potential customer base. In addition, the flexibility of the technology should allow the Company to commercialize its lower grade tungsten resources including the tailings at the Cantung Mine.”
The construction of the Pilot Plant is underway and pilot production will commence this summer, with full scale operation expected by September 1, 2006. The Pilot Plant’s annualized output is anticipated to be 800,000 lbs of Tungsten (W) Powder, and intermediates. As of September 1, 2006 a decision will be made for the commercial production phase. The current projected capital cost of the commercial production facility is US $10.0 MM: NTC has the option to provide the funds directly or through a mutually-agreeable third party. Any costs for the joint venture beyond the US $12.85MM will be shared by Tundra and NTC.
Tundra’s president, Kurt Heikkila, added, “The key for us was to find a long-term reliable supplier of tungsten concentrate for existing and new markets. We have been carefully tracking world-wide markets, we have visited the Cantung Mine and we have met with NTC’s management on several occasions. To Tundra, there was no doubt NTC was the ideal partner because we can now maximize the potential of our unique and proprietary technologies as a result of having a consistent supply of tungsten. We believe this will give the joint venture a long-term sustainable
competitive advantage.”
The majority of the joint venture’s initial Tungsten powder production is intended for sale to Tundra. Tundra is developing commercialized composite materials to replace lead-based products – a fact that was particularly attractive to NTC. As Mr. Leahy noted, “Tundra’s prospective market enables NTC to utilize its Western-based tungsten resources to participate not only in the multilayered value-added Tungsten business but also in the creation of a whole new market sector; the replacement of lead in certain consumer products.”