Mining News: Northern Neighbors: Strongbow cuts deal to buy Mactung, Cantung royalties

Strongbow Exploration Inc. March 7 said it has reached an agreement to purchase Teck Resources Ltd. royalty interest in the Mactung and Cantung tungsten projects located along the border between Yukon and Northwest Territories. Under the terms of the agreement, Strongbow will pay Teck C$1.5 million on closing of the acquisition, and make a further C$1.5 million payment when either there has been a decision to develop Mactung or commercial production resumes at Cantung. “We are extremely pleased with this transaction, which represents the first step in our plan to build a strategic metals company, with a focus on high quality assets located in supportive mining jurisdictions,” said Strongbow President and CEO Richard Williams. According to a 2009 feasibility study commissioned by North American Tungsten Corporation Ltd., the Mactung project 33 million metric tons of indicated resource grading 0.88 tungsten trioxide, plus 11.9 metric tons of inferred resource grading 0.78 percent tungsten trioxide. Additional drilling is required to upgrade the resources and a new feasibility study is required to demonstrate the project’s economic viability. The Government of Northwest Territories, which currently owns the Mactung deposit, intends to sell the asset in order for project development to proceed. Cantung was an operating tungsten mine until 2015, when the owner, North American Tungsten, entered Companies’ Creditors Arrangement Act proceedings. According to a 2014 technical report prepared for North American Tungsten, Cantung hosted 1.82 million metric tons of probable reserves grading 0.81 tungsten trioxide. The historical reserves were a sub-set of 3.84 million metric tons of indicated resources grading 0.97 percent tungsten trioxide. Additionally, the report included 1.37 million metric tons of inferred resources grading 0.8 percent tungsten trioxide. Strongbow says additional drilling is required to expand the resource prior to a decision to restart mining operations at Cantung. Strongbow’s agreement with Teck includes the purchase of a 4 percent net smelter returns royalty on Mactung, a tungsten project that straddles the Yukon Northwest Territories border about 390 kilometers (240 miles) northeast of Whitehorse. One half of this royalty may be purchased by the Mactung property owner at any time for C$2.5 million. The agreement with Teck also includes a 1 percent net smelter returns royalty related to the Cantung tungsten project, which is located along the border about 160 kilometers (100 miles) southeast of Mactung. Osisko Gold Royalties, a significant shareholder of Strongbow, has agreed to provide Strongbow with a C$1.5-million non-interest-bearing line of credit to complete the royalty acquisition. Repayment of the loan is due upon any sale of the Mactung project by the Government of the Northwest Territories and is secured by the royalties.

–Shane Lasley