Yellow Rock Resources (ASX: YRR) has commenced a milestone concept engineering study for the generation of vanadium pentoxide (V2O5) products from its Gabanintha Vanadium Project in Western Australia.
Shares should open higher this morning on the news.
The company is also well-funded after recently raising $3.36 million to fund work at the project.
The study will evaluate the potential to take advantage of high grade near surface mineralisation at Gabanintha.
Battery Limits Pty Ltd will conduct the study, which is expected to be completed next month.
A plus for Yellow Rock in engaging Battery Limits is that the company already has knowledge of the deposit after completed a concept study for the production of ferro-vandium in 2009.
Lorry Hughes, chief executive officer, said the current study has been instigated due to increased interest in the chemical applications for vanadium, particularly the redox battery market.
“Vanadium redox batteries for grid-scale energy storage are becoming more and more commercially viable and now they are getting built in the hi-tech manufacturing economies of the world.
We believe there is real potential for growth in this area to positively impact vanadium demand."
Gabanintha has one of the highest grade vanadium deposits in the world with an Indicated and Inferred Resource of 60.4 million tonnes grading 0.98% V2O5, 11.4% TiO2 and 42.15% iron.
Demand for vanadium is projected to increase given the growing market for its use in rechargeable batteries.
The initial scope of the work will include
- Preparing a start-up project scenario based on small scale mining and processing to produce V2O5 products with consideration given to whole ore roasting;
- Designing a conceptual flowsheet and plant description;
- Defining conceptual capital and operating cost estimates and conducting financial analysis to assess potential project economics.
The Gabanintha Vanadium Project
The wholly-owned Gabanintha Vanadium Project is located in Western Australia’s Murchison District about 600 kilometres from the port of Geraldton and 200 kilometres from the Windimurra Vanadium Mine.
It is also located just 40 kilometres form the mining town of Meekatharra.
Initial magnetic separation test work has been highly encouraging, producing a concentrate with 1.37% V2O5, 58% iron and 12.3% TiO2.
Gabanintha has mineralisation outcrops for over 12 kilometres and up to 100 metres in places and continuous.
Mining costs are expected to be simple and inexpensive with no significant environmental impediments identified for future mining activity.
The concept study is a key milestone and is share price accretive and is expected to be completed next month providing a strong price catalyst given interest in vanadium.
Other share price catalysts ahead include:
- Finalise scope and tender process for an updated metallurgical testwork program targeting specific ore types and specific high grade locations within resource to unlock potential - 8th August 2014;
- Finalise scope to complete an updated engineering scoping study to define the most economical start-up mining and product combination that minimises capital expense and maximises value – Q1 2015;
- Commence application process for a Mining Lease over the Gabanintha Resource including EIS Baseline and Stakeholder consultation – Q1 - 2015;
- Complete updated metallurgical testwork program – Q2 – 2015;
- Review results and determine next steps – Q2 – 2015;
- Name change to reflect company focus – Q2- 2015;
- Continue to engage with potential strategic investors from the vanadium industry - ongoing;
- Advance non-core projects toward commercial outcomes - ongoing.
So although early days for the reincarnated Yellow Rock, Proactive Investors has estimated a near term price target of $0.032 - $0.046.
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