Chinese tungsten producer takes interest in Yukon deposits

The Yukon government is taking some credit for a deal announced late Wednesday between a Chinese metal producer and the owners of a tungsten mine near the Yukon-N.W.T. border.

Hunan Nonferrous Metals Corp. signed an agreement to acquire just under 10 per cent of Vancouver-based North American Tungsten Corp. Ltd., which operates the Cantung mine in the eastern Yukon. It alsoowns the rights to the Mactung property located near Cantung.

Hunan will buy about 13.4 million share and warrant units of North American Tungsten at $1.45 per unit in a private placement, according to a news release issued after stock markets closed on Wednesday.

The $19.4 million financing will give the Chinese company a 9.9 per cent equity stake in North American Tungsten and help the Canadian company develop the Mactung project.

The financing deal is subject to approval of the TSX Venture Exchange and is expected to close in 30 days.

"We are pleased that the strategic nature and value of the company's world-class Mactung tungsten development project has been validated by an investment of this scale by Hunan Nonferrous, which is a world leader in tungsten mining and processing and has a market capitalization of approximately $1.8 billion," North American Tungsten CEO Stephen Leahy saidin the release.

Company officials have said that combined, the Cantung and Mactung deposits may hold roughly 15 per cent of the world's known tungsten supply.

Yukon Economic Development Minister Jim Kenyon said he is excited with Wednesday's agreement, noting that he helped broker the deal by bringing Hunan executives to the Yukon last summer to tour the tungsten deposits.

"This is a good example of what we've been doing, bringing investment into the Yukon," Kenyon said Wednesday.

"The Mactung project is the largest undeveloped tungsten project in the world. Hunan happens to control basically the largest production facility in the world. So we're merging the largest source with the largest producer."

A feasibility study on the Mactung project is due to be completed this summer.