Could Tungsten be the next market darling or has it already had...

Could Tungsten be the next market darling or has it already had its 15 mins of fame? The ingredients are there for a boom including china controlling supply and a rapid increase in the spot price. Tough market for specs however.

http://au.news.yahoo.com/thewest/opinion/post/-/blog/13639204/japanese-alliance-provides-vital-edge/

The weak capital markets weighing on minerals explorers have underscored the value of Vital Metals’ tungsten tie-up with its Japanese big brother.

Resources juniors are struggling to get cash from investors unnerved by slowing equity markets and the revival of tensions in Europe. Vital is among those caught in the squeeze, its $2.8 million rights issue in March coming up $2.1 million short.

Unlike some of its peers, however, Vital is able to fall back on an earn-in by a major, in this case, Japan’s national “scouting” agency, Japan Oil, Gas and Metals National Corporation (JOGMEC).

JOGMEC is spending $5.4 million to earn 30 per cent of Vital’s Watershed tungsten project in north Queensland, with the cash — the first tranche was paid in September — funding the completion of a definitive feasibility study by year’s end.

The State-owned Japanese group scouts resources opportunities for Japanese companies in strategically important sectors, and provides financial and technical support for the groups and their partners.

At the end of JOGMEC’s spend, Vital expects the Watershed stake to be offloaded to a Japanese company which will partner the WA company in development.

Japan is keen to secure new resources of tungsten, a metal hardening element used in the likes of electronics, chemicals, golf clubs and armour-piercing artillery shells, in the face of tightening supplies from China, the world’s biggest producer.

Demand is expected to continue to grow to 2016 and beyond, requiring new sources of supply.

The outlook has been supported by a doubling in the spot price of tungsten over the past two years to about $US435 a tonne.

North Queensland was the world’s biggest producer of tungsten before World War I. It remained a key source of the metal for another 70 years before a glut and resultant low prices forced the closure of the last mine in the 1980s.

However, the region has just resumed production through German group Deutsche Rohstoff’s Wolfram Camp project, 90km west of Cairns, which shipped its first concentrate in March.

Vital, which is advancing metallurgy, geology and mine planning as part of the DFS, believes Watershed can be under construction next year and in production in 2014, turningout 2 to 5 per cent of world supply.

In the meantime, don’t be surprised if the company considers offloading its Kollo gold prospect in Burkino Faso to allow it to focus on its activities in Queensland.