Allegheny Technologies Incorporated (NYS: ATI) announced today that it has reached an agreement to sell its tungsten materials business to Kennametal Inc. (NYS: KMT) for $605 million. The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to be completed during the fourth quarter 2013. As a result of this agreement, ATI will report the financial results of the tungsten materials business in discontinued operations pending completion of the transaction.

The tungsten materials business, called ATI Tungsten Materials, is part of ATI's Engineered Products segment. ATI's tungsten materials business has approximately 1,175 employees and produces tungsten powder, tungsten heavy alloys, tungsten carbide materials, and carbide cutting tools. For the year ended December 31, 2012, ATI's tungsten materials business generated total net revenue of $338.6 million, operating profit of $37.2 million, and EBITDA of $45.3 million.


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VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 20, 2013) - Blackheath Resources Inc. (TSX VENTURE:BHR)(FRANKFURT:04B) ("Blackheath) is pleased to announce that the Government of Portugal has granted an Experimental Mining Licence ("Licence") for the Covas Tungsten Project in northern Portugal. The Licence is valid for a period of three years, which may be extended by a further two years, and is held by Blackheath under an option from Avrupa Minerals Ltd. Under the terms of the Licence, which replaces the previous exploration licence, Blackheath may carry out test mining programmes as well as further drilling and metallurgical work at Covas.

The Licence covers an area of approximately 1,948 hectares and has been granted for the exploitation of mineral deposits of tungsten, tin and gold. Granting of the Licence follows the established practice under Portuguese mining law and may be followed, if warranted, by the grant of a full licence for full-scale commercial exploitation of mineral deposits on the property.

"We are delighted that the Experimental Mining Licence has been granted at Covas and we will now be able to proceed with the next phase of our work programme," said James Robertson, P. Eng., President and CEO of Blackheath. "We plan to complete trenching and other surface work in preparation for starting our next round of diamond drilling at Covas, as well as at our contiguous tungsten permit at Arga, in September."

Covas is a past-producing tungsten mine and remaining historic resources on the property have been estimated at 922,900 tonnes of 0.78% WO(3) (tungsten trioxide) by Union Carbide in 1980, based on work including 329 drill holes on the property. Mineralization is open to expansion. The price of tungsten has increased significantly in recent years and is currently approximately $42 per kilogram of contained tungsten trioxide. (These resources are historic in nature, prepared by Union Carbide Corp. in 1980 and are considered relevant. However, a qualified person has not done sufficient work to classify the historical estimates as current mineral resources and the Company is not considering the historical estimates as current mineral resources.)

Highlights from the Phase 1 program completed by the Company early in 2013 included high grade tungsten mineralization of 2.11% WO(3) over 7.98 metres starting at a depth of 44.57 metres in Hole CO 7/12 at the Telheira target and 2.89% WO(3) over 5.10 metres in Hole CO 13/12 starting at a depth of 52.70 metres at the Lapa Grande target at Covas, as previously reported. Other results from the program confirmed extensions of tungsten mineralization in the skarn zones at Covas. (See news releases dated November 26, 2012 and March 1, 2013 for details)

The Covas property is located about 100 kilometres north of Porto, Portugal's second largest city. Blackheath holds the property under an option from Avrupa Minerals Ltd. to earn up to an 85% interest in a joint venture in the project, after incurring minimum exploration expenditures of EUR1 million in two stages to earn a 70% interest followed by completion of a prefeasibility study to earn the additional 15% interest. Blackheath also holds options for a 100% interest in the past-producing Borralha tungsten mine and the Bejanca tungsten-tin mine where exploration is also underway.

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Kennametal Inc said it would buy Allegheny Technologies Inc's tungsten materials business for $605 million to boost supply of the raw material used to make its metal-working tools, increasing its exposure to aerospace and energy markets.

Allegheny's tungsten material business, ATI Tungsten Materials, makes tungsten powder, tungsten heavy alloys, tungsten carbide materials and carbide-cutting tools.

"It is a very core strategic deal for (Kennametal) that enhances its tungsten recycling capability," Longbow Research analyst Eli Lustgarten told Reuters.

Kennametal said the acquired business, which recovers tungsten from scrap, would boost raw material sourcing and accelerate plans to develop an advanced tungsten carbide recycling facility in the United States.

"We expect this acquisition to reduce our raw material costs while securing our supply of tungsten," Chief Financial Officer Frank Simpkins said on a conference call with analysts.

Kennametal's metal-cutting tools, tooling supplies and other products are used for making products such as airframes, and in mining operations and oil wells.

The deal with Allegheny also aligns with Kennametal's acquisition of Comercializadora Emura S.R.L. that closed in August, the company said.

La Paz, Bolivia-based Emura processes and sells tungsten ore material.

Kennametal's shares were up 1.2 percent at $46.54 in afternoon trading on the New York Stock Exchange, while those of Allegheny Technologies were up nearly 9 percent at $31.12.

Allegheny said the sale would help it concentrate on its high-performance metals and flat-rolled products businesses.

Kennametal said the acquisition would also strengthen its tooling business in the areas of metal cutting and metal finishing technologies, adding brands such as Stellram Products and Garryson Products.

The company said it expects the acquisition to reduce planned capital expenditure by about $30 million-$35 million.

Kennametal said it plans to fund the acquisition through a combination of cash and credit. The deal is expected to be neutral to earnings for fiscal 2014 ending June.

"The acquisition will be accretive to earnings per share within a year," Chief Executive Carlos Cardoso said on the call.

J.P. Morgan Securities LLC advised Kennametal. Goldman, Sachs & Co was the financial adviser to Allegheny, while K&L Gates LLP was the legal counsel.


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Yesterday, the Ministry of Land and Resources issued the announcement about tungsten concentrate output limitation in 2013. In 2013, the tungsten concentrate output limitation is 890,000 tons. The Ministry of Land and Resources will keep the output control in 2012 and continue imposing control on total of comprehensive utilization. On December 31, 2013, the general office of the Ministry of Land and Resources issued the first of tungsten concentrate output limitation, based on 50% of output limitation in 2012. 2,000 tons of tungsten concentrate was not distributed. Tungsten concentrate output limitation which has been sent to every province and autonomous region is increased by 2,000 tons, compared with 2012. Total of primary mining is 71,000 tons and total of comprehensive utilization is 18,000 tons, increased by 1,600 tons and 400 tons respectively.

Tungsten concentrate output limitation for Jiangxi is 37,750 tons, increased by 650 tons; for Hunan is 23,100 tons, increased by 500 tons; for Yunnan is 6,000 tons, increased by 500 tons; for Guangdong is 3,260 tons, increased by 110 tons; for Zhejiang is 450 tons, increased by 100 tons; for Heilongjiang is 1100 tons, increased by 100 tons; for Xinjiang is 300 tons, increased by 100 tons; for Hubei is 300 tons, increased by 50 tons.

Tungsten concentrate output limitation for Guangxi is 3,000 tons, decreased by 110 tons.

Tungsten concentrate output limitation for Fujian is 2900 tons; for Inner Mongolia is 1,500 tons; for Qinghai is 140 tons; for Henan is 6,000 tons; for Gansu is 1,710 tons; for Hainan is 190 tons and for Shanxi is 100 tons. The output limitation for those provinces or autonomous regions is the same as last year.

The announcement requires to stopping accepting application on prospecting and mining for new rare earth or tungsten concentrate. The new set-up rare earth and tungsten concentrate must conform to output limitation and requirements for capacity balance. Compared with 2012, the fifth situation is set up: the program which is in accordance with industrial policy, mineral resources development program, configuration scheme of mining right, output limitation and requirements of provincial government should be given key support.

The announcement also stresses that the Ministry of Land and Resources will decompose the tungsten concentrate output limitation which has been sent to every local competent department of land and resources. The Ministry of Land and Resources will also inspect monthly reports or quarterly reports and check the implementation accordingly.   



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