Speciality Metals Acquired Mt Carbine for Production of High Grade Tungsten

Speciality Metals International Ltd has signed transaction documents for the acquisition of 100% of Mt Carbine Quarries Pty Ltd, an entity that owns and operates the Mt Carbine quarry and mining leases ML4867 and ML4919, to produce tungsten.

Settlement is scheduled for 28 June, 2019, paving the way for this much anticipated North Queensland project to rapidly progress to production of high grade tungsten.

Investor confidence regarding Specialty Metals future has been bouyant. Even without the formal project green light, the company has been trading only 10% shy of its 12 month high.

Shares in tungsten stocks have gained renewed support in the last 12 months with the share price of another emerging player, King Island Scheelite Ltd (ASX:KIS), having nearly doubled in price since May 2018.

While the tungsten price eased in the latter half of 2018, it appears to have found support around current levels and with industry analysts indicating that the supply/demand equation has now turned in favour of producers, the timing couldn’t be better for Specialty Metals.

Roskill, a notable industry source in terms of analysing specialty metals noted last year that global tungsten markets were returning to growth following several years of oversupply and low prices.

In a 10 year outlook statement, Roskill said, “Tungsten market fundamentals have changed as demand from defence, industrial, and oil and gas applications has picked up, just as environmental policies in China have curbed supply and added cost pressures for producers.”

The issue of supply is potentially a long-term price driver as China is the largest producer of tungsten globally, accounting for more than 80% of supply of tungsten concentrates in 2017.

A tightening in environmental restrictions has impacted the supply of many metals mined in China, with coal being severely impacted in recent years due to both environmental and mine safety issues.

Roskill reported that China’s Ministry of Ecology and Environment had flagged a second round of central environmental inspections across all provinces within the next three years, an initiative that could result in either mine closures or the instigation of compliance demands that would result in increased costs of production.

This could potentially render some mines uneconomical, prompting the need for the manufacturing giant to source tungsten from overseas producers. Such a scenario where supply is constrained and demand increases should theoretically drive up prices. Specialty Metals is perfectly positioned to take advantage of such conditions because of its projected low-cost production.

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