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Stock to watch: Tungsten discovery a boon for Happy Creek

Make-up lights with tungsten light bulbs seen here in Vancouver October21, 2010.

John Lehmann/The Globe and Mail/John Lehmann/The Globe and Mail

Happy Creek Minerals Ltd.

Monday's close: 24.5 cents, up 1 cent

52-week trading range: 11 cents to 27.5 cents a share

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Annual dividend: none

Analysts' ratings: none

Recent history: Shares of the junior miner have languished since they plunged to 4 cents a share in 2008 when small-cap companies got crushed during the stock market meltdown. Happy Creek, which specializes in finding metals like tungsten, copper, molybdenum, gold and silver, has seen its stock rise 26 per cent this year. The company has no revenues, but its shares started to rise in the summer following drill results on its Fox tungsten property in British Columbia. Tungsten is used to make tungsten carbide and other hard metals used for industrial metal fabrication, rock drill bits and other high tech applications.

Outlook: Happy Creek, which announced final 2012 drill results at its tungsten property on Monday, said it has advanced the Fox prospect from "a very early stage to a new tungsten discovery with large scale and grades that are thought to be comparable to some of the best tungsten mines or advanced-stage projects world-wide."

The deposit is very high grade, but the key is that it also near surface, says Steven Palmer, president of Toronto-based AlphaNorth Asset Management Inc. "They would have a cost advantage in terms of mining. It could be an open pit, which is cheaper than underground mines. And it is in British Columbia, which is a favourable jurisdiction."

The company plans to have an official resource calculation by the end of next year, Mr. Palmer said. "If they prove up an adequate size resource, then they can proceed towards mining it. The capital expenditure requirements would be quite low. For example, a 2,000-tonne per day mill would be roughly $25-million."

If Happy Creek can continue to provide favourable drilling results "this stock should have significant gains from current levels," he said. He has owned its shares for a couple of years, having acquired them through private placement and flow-through financing at 27 cents to 30 cents a unit [including a warrant].

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This mining junior has multiple projects so that if one does not work out, there are others to fall back on, Mr. Palmer said. But the tungsten property is a "unique story," he added. "There are not many around. It's not like a junior gold company where there is probably 500 of them in Canada."

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