Guardian may skip feasibility on $660M Nevada tungsten mine

Guardian Metal Resources (NYSE-A: GMTL; LSE-A: GMET) could start preparing to build its Pilot Mountain tungsten project by August next year on the strength of a new prefeasibility study (PFS), skipping a full feasibility if market and US supply pressures hold.

The PFS, published Tuesday, puts the western Nevada project’s post-tax net present value (discounted at 8%) at $660.3 million, and pegs the internal rate of return at 59.6%. The study outlines a one-year payback on $288.7 million in initial capital costs. The asset is about 270 km southeast of state capital Carson City.

“We are in a position where, if required, we could build the mine on the back of the PFS,” CEO Oliver Friesen told The Northern Miner. “We wanted to retain that flexibility, given where the market is, given the fact that the United States needs new mine supply very quickly.”

Pilot Mountain is among the most advanced US tungsten projects at a time when the country has not mined tungsten commercially since 2015, according to US Geological Survey data. Washington seeks domestic tungsten before China’s grip on the market tightens further, Oliver said.

China produces about four-fifths of the world’s mined supply and restricted export controls in February last year. A $6.2-million Defense Production Act award helped fund Guardian’s PFS, tying the project to Washington’s push to rebuild metals supply for defence, aerospace and technology.

Guardian’s NYSE American-traded shares last traded at $14.21 apiece on Tuesday afternoon, giving it a market capitalization of $553.5 million.

Permitting clock

Guardian plans to file its mine plan with the Bureau of Land Management next month. Friesen said the company has allowed 12 months to receive a federal record of decision. A faster review could move a construction decision earlier, he suggested.

The study lays out an eight-year open-pit mine drawing from the Desert Scheelite and Garnet deposits, about 2 km apart. The pits would feed a 4,000-tonne-per-day mill and produce 15,916 tonnes of tungsten trioxide (WO₃) in concentrate over the mine life, plus 2.1 million oz. silver.

Probable reserves stand at 11.8 million tonnes grading 0.171% WO₃, 9.28 grams silver per tonne and 0.28% zinc for 20,275 tonnes WO₃, 3.5 million oz. silver and 33,396 tonnes zinc.

Price leverage

The base case uses a WO₃ price of $197,300 per tonne, a 35% discount to the June 12 ammonium paratungstate spot price – the main quoted benchmark for tungsten pricing. At that spot price, Pilot Mountain’s after-tax value rises to $1.4 billion, its return climbs to 102% and payback falls to six months.

The mine is to use truck-and-loader mining, crushing, grinding and flotation to produce concentrate grading 60% WO₃. Guardian pegs adjusted operating costs at $54,622 per tonne of WO₃ in concentrate, net of silver and zinc credits, and all-in sustaining costs at $58,151 per tonne.

Initial capital includes $39.1 million in contingency and $34.3 million for preproduction mining. Sustaining capital is $33.9 million, with closure costs at $22.3 million.

Funding path

The PFS opens talks with banks, government agencies and industrial partners. Friesen said the fast payback could push Guardian toward more debt than equity, though the board has not set a financing mix.

Guardian signed a non-binding 2023 letter of intent with Pennsylvania-based Global Tungsten & Powders for potential offtake, but no Pilot Mountain output is locked up under binding deals. The company is now advancing talks with Global Tungsten & Powders and other US industrial partners, Friesen said.

“The plan is for 100% of the concentrate to be processed on US soil,” Friesen said.

Nevada holdings

Guardian also holds Tempiute, 290 km by road from Pilot Mountain and north of Las Vegas. The former Emerson mine operated intermittently for about a century, most recently under Union Carbide from 1977 to 1984.

Guardian can earn all of the project by paying $1 million after an updated resource report, subject to a 1.5% royalty with a partial buyback. It is assessing old tailings and infrastructure, including a 3,000-kilowatt substation, as a possible nearer-term source of tungsten.