Fireweed Zinc (TSXV: FWZ) has inked a binding Letter of Intent (LOI) to acquire a 100% interest in the Mactung Tungsten Project in Yukon and the Northwest Territories, the company said in a news release Tuesday.
The Mactung site, which straddles the border of the two territories contains one of the largest and highest-grade tungsten deposits in the world and is among the few potential sizable sources of the metal outside of China.
Under the terms of the agreement, the Government of the N.W.T. agreed to sell ownership of the site to Vancouver-based Fireweed for $15 million, that government said in a news release on Tuesday.
Fireweed CEO Brandon Macdonald said that in addition to its nearby Macmillan Pass zinc-lead-silver project, the acquisition of the Mactung tungsten skarn deposit will make Fireweed one of the leading critical mineral exploration companies.
“With both zinc and tungsten being designated as critical minerals by Canada, the U.S, and the EU, Fireweed is positioned to leverage the transition to a sustainable green economy,” Macdonald said.
“We are excited to be advancing both projects under the Fireweed umbrella to not just maximize value for Fireweed shareholders, but to also create increased opportunities for local Indigenous groups and the people of both Yukon and Northwest Territories,” he added.
The 37.6-sq-km property is adjacent to Fireweed’s flagship Macmillan Pass Property. It is also 13 km north of the company’s Tom deposit and is accessible by Yukon’s North Canol Highway, or by the government-maintained Macmillan Pass airstrip near the Tom site.
It is located within the traditional territories of the Kaska Dena and the Na-Cho Nyäk Dun First Nation in Yukon, and the Sahtú Settlement Area in N.W.T.
About 38,000 metres of drilling across 312 holes since the 1960s outlined a large, high-grade tungsten resource, leading to a positive historic feasibility study in 2009.
Indicated resources in a 2007 report showed 33 million tonnes grading 0.88% tungsten trioxide and historic inferred resources of 11.8 million tonnes grading 0.78%.
Haywood Capital Markets said in a research note published on Tuesday that the acquisition of Mactung “provides diversification and optionality to [Fireweed’s] existing base metals portfolio in the north.”
The project carries an existing Net Smelter Return Royalty of 4%, that is held by a third party, 2% of which can be purchased at any time for $2.5 million.
Haywood added that Mactung benefits from the significant historical work dating back to its discovery and staking in 1962. That work includes drilling, engineering, metallurgy, geotechnical and environmental baseline data collected by previous owners including the North American Tungsten Corp., which sold the property to the GNWT for $4.5 million in 2015 after that company’s insolvency.
Fireweed shares traded at 68¢ each on Wednesday in Toronto in a 52-week range of 0.50-0.91¢. With 91.7 million common shares outstanding, the company has a market capitalization of $62.4 million.
