TORONTO (miningweekly.com) – Malaga Inc, the only operating primary tungsten miner in the Americas, could start considering a second, “much bigger” mill at its Pasto Bueno mine, in Peru, by 2012 and is looking at acquisition targets in North America and Europe, CEO Jean Martineau said on Tuesday.
Demand for tungsten, which is used to strengthen steel and prevent corrosion, is being driven by China, which is also the biggest producer of the metal.
The APT European bid price stood at $185/t at the end of 2009, and has gained in value each week this year, to $210/t at the moment.
Martineau said he expects to see prices recover to $250/t by the end of 2010.
“And after that, who knows? But we think we are going to have a nice market, a very nice market,” he said in an interview on the sidelines of the Prospectors and Developers Association of Canada's annual convention.
Malaga bought the Pasto Bueno mine in 2005 and hit commercial production two years later, at a rate of 250 t/d.
The company then arranged $5-million in finance from customer Global Tungsten Powders in February 2009 for a mill expansion, which began two months later in April last year.
Throughput is already up to 375 t/d, and the company expects to hit 500 t/d by May this year, and could ramp up to 800 t/d in 2011, Martineau said.
The firm expects to be cash flow positive by the second quarter of this year, and the focus for the next two years will be on increasing production and recoveries at Pasto Bueno, as well as on exploring the company's property.
“When we bought this property, there were 31 known veins and they have extracted more than six-million tons over the 60 years of operations, but just from five structures,” Martineau said.
Since 2005, the company has increased the known veins to 78, of which 25 are major structures.
Given the potential for increased resources and reserves, the company may look at building a second, larger mill, he said.
“But the size will be decided by the reserve.”
ACQUISITIONS, CHINESE INTEREST
Chinese companies are very active in looking to acquire new sources of production, and Malaga has definitely received approaches, Martineau said.
“They are becoming more and more aggressive in this market,” he said.
“But right now, what we want to do is develop the company.”
As far as its own acquisitions are concerned, the company is eyeing a number of tungsten projects in Europe and North America, and there are two in particular that are of interest, Martineau said.