Autumn, as the Brits have it, or fall, as they say in Canada, looks like being an interesting time for tungsten development company Geodex Minerals. Over the summer Geodex completed a further round of drilling at its Sisson Brook tungsten-molybdenum project in New Brunswick. This consisted of 4,900 metres drilled out in 28 holes, and was designed to bring much of the inferred material at Sisson Brook into the measured and indicated categories. The results from that drilling will hit the market in the coming months, and if they live up to the company's expectations they'll be part of the basis for a prefeasibility study on Sisson Brook. A resource upgrade is due out in October.
After that the next step, says new chief executive Mark Fields, will be to raise the money for that study. This, he estimates, will cost in the region of C$1.7 million. As far as raising the necessary funds to get started goes, Mark explains that there have been some preliminary discussions, but says that the work in earnest will begin after the Labor Day holiday is over. That's when the Canadians really go back to work after the summer, ready for the fall trading season.
One issue that Mark and the markets will have to address is the company's share price. At C$0.115 per share Geodex is trading a long way off the C$0.40 level it was at a year ago. There's been some evidence of the recovery that many of the world's mining juniors have enjoyed this year, in that the company's shares are now the better part of 50 per cent up on the 52 week low of C$0.075 that they hit at the nadir. Still, tungsten can be a hard sell, even in the face of strong demand from steadily increasing Chinese and global infrastructure spend, and Geodex is some way from production yet. That it'll need a further C$15 million or so after the prefeasibility is completed for the full feasibility, and a further US$341 million to build the project also goes some way towards explaining a certain level of scepticism. The company's market capitalisation is only just north of C$10 million.
But Mark Fields knows all this. He's run development stage assets before, and successfully too. He wouldn't, he says, have joined Geodex, if he didn't believe in the story. He's had plenty of time to check it out, given that he's had long acquaintance with founders Jack Maris and Jack Marr, and that he's been a shareholder for some time too. The release of the company's preliminary economic assessment for Sisson Brook (otherwise known as a scoping study), does, he says, confirm the company's transition from an exploration company to a development stage company. With that in mind, he adds that it's unlikely that the release of any of Geodex's individual drill results this fall will move the company's shares. With over 46,000 metres of drilling now completed, those days are gone. But a positive move towards a prefeasibility study, on the basis of a strong resource upgrade would be another matter. That might be enough to shift Geodex's shares high enough for it to be willing to bear the pain of further dilution without too much complaint.
With the recent unfreezing of the capital markets, the ongoing health of the Chinese economy and the ratcheting up of US infrastructure spend, there's certainly plenty to whet the appetites of investors. The tungsten price is weaker now than it was a year ago, but, like Geodex, it's off its lows. And in the preliminary economic assessment Geodex demonstrated that it had 91 million tonnes at a grade of 0.125% WO3 equivalent in the measured and indicated categories. And, if this month's drilling delivers, there ought to be more to add to that.
Looking further ahead, at the moment the plan is for Geodex to bring in a partner on its own terms, when the funding requirements start to get more onerous. Such a partner would likely be an end-user of tungsten rather than a fellow miner - one looking to secure supply. "We've had some pretty close discussions with potential off-take users", says Mark. But Geodex won't rush into such a commitment until it's got all its ducks in a row. And once the autumn/fall is over, we'll know a lot more about how things stack up.
Source Minesite
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