Tungsten exploration proceeding in Yukon

The southeast part of the territory has been the site for more tungsten exploration work after Yankee Hat Minerals Ltd. announced an agreement into March 2011 with the Japan Oil, Gas and Metals National Corp. (JOGMEC).

The southeast part of the territory has been the site for more tungsten exploration work after Yankee Hat Minerals Ltd. announced an agreement into March 2011 with the Japan Oil, Gas and Metals National Corp. (JOGMEC).

Under the exploration agreement, the two companies have agreed to do exploration work and project generation in the southeast corner and nearby Northwest Territories, it’s noted in last Wednesday’s announcement.

The area is also home to North American Tungsten’s CanTung mine.

Yankee Hat president Brad Kitchen said this morning the two companies could eventually end up working together to extract tungsten from some of its claims.

As he noted, Yankee Hat isn’t in the mining business like North American is, but rather the exploration business to get to the point of extraction while North American is a mining company.

Kitchen noted North American has already volunteered its camp and other services to Yankee Hat while it is working on exploration in the region.

“The exploration will concentrate on the region holding 15 per cent of the world’s known tungsten reserves and almost all of the available reserves outside of China,“ reads the announcement. “The region is highly prospective for new discoveries and has not been extensively prospected using modern exploration techniques.“

Under the initiative, the two companies have created a management committee of four with two members from each company.

As the project operator, Yankee Hat is responsible for coming up with an annual exploration budget that will then be up to the committee to approve.

Once the budget receives unanimous approval, JOGMEC will fund 60 per cent of it, with Yankee Hat funding the other 40 per cent.

A draft budget of $800,000 has already been proposed for this year. Kitchen said he expects about $2.4 million will be spent on exploration alone over the life of the project.

With about only one of every 10 identified properties on average going ahead to the drilling stage and about $5 million to $7 million spent on each drilling, Kitchen suggested upwards of $20 million could be spent on drilling over the next five years depending on the results of exploration.

Much of that money will go to Yukon-based companies contracted to do some of the work like Kluane Drilling, Aurora Geosciences Ltd. and others Yankee Hat works with.

“We’re very Yukon-based,“ Kitchen said, noting the Vancouver-based company has contracted with a number of local companies including Aurora Geoscience and Kluane Drilling, among others.

The deal gives JOGMEC the right to aquire a 60 per cent interest in any mineral property found out of the exploration work.

Any properties identified would mean a separate agreement being signed between the two companies for further work on those areas.

“Any property identified by the regional joint venture programs, but not selected as a designated property, will be 100 per cent owned by Yankee Hat,“ the announcement states, noting the company already has 294 claims in the area.

If those claims become designated areas, JOGMEC could acquire its 60 per cent interest.

While this year will mainly focus on the preliminary exploration work, year two would feature more extensive testing on areas potential areas.

The company is using numerous new technologies to test the earth and keep track of where its geologists are at all times.

Kitchen noted that while the company was focused on an area that’s 125 km by 125 km, that area for exploring has shrunk as the geologists have gone back to certain areas that appear to have more of the material.

“We’ve condensed that (area),“ he said.

Following the further testing that would be done in year two, certain areas would be further identified for drilling to determine in even further detail how much resource there may be.

On those drills that are successful, a feasibility study would then be done to determine whether to proceed with getting the tungsten out of the ground.

“We are honoured to establish this long-term exploration partnership with JOGMEC,“ Kitchen said in the statement.

“The agreement is an important milestone for our shareholders as we are the only company partnered with JOGMEC for generative, grass-roots tungsten exploration in North America, a testament to the technical expertise of our team and our ability to source and develop promising resource projects.“

After diamonds, tungsten is the hardest natural material known in the world, Yankee Hat noted in its statement. Tungsten is resistant to corrosion, doesn’t break down or decompose and has the highest melting point and tensile strength of all the metals.

The metal is used in mining, petroleum, the military, construction and metalworking.

“Until recently, 85 per cent of the world’s tungsten was supplied by China,“ the announcement reads.

“China is now restricting export and foreign investment in this important industrial commodity, making the need to secure supplies outside of China ever more important.“

With Japan using more natural resources than it produces, most resources are imported.

JOGMEC has been around since 2006 with its mandate to secure a stable supply of resources for the Japanese economy.

With an estimated 10 to 15 per cent of the world’s tungsten in the Yukon/N.W.T., it goes to show how important the territory is, he said.