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Yellow Rock Resources sets foundation for lucrative vanadium project

Yellow Rock Resources has underlined the high-margin potential of its Gabanintha vanadium project with an extremely high-grade resource re-estimation.
Yellow Rock Resources sets foundation for lucrative vanadium project

Yellow Rock Resources (ASX:YRR) has underlined the high-margin potential of its Gabanintha vanadium project with an extremely high-grade resource re-estimation.

The revised resource paves the way for upcoming economic studies and feasibility work expected to outline a low-cost operation with strong margins targeting both the battery and steel markets.

Yellow Rock has defined a high-grade zone of 11.3 million ones at 1.1% V2O5 within a measured and indicated resource of 24.7 million tonnes grading 0.8% V2O5.

The total measured, indicated and inferred resource in both low and high-grade domains is 91.4 million tonnes at 0.8% V2O5 and contains 750,000 tonnes of V2O5. This includes a high-grade zone of 56.8 million tonnes at 1% V2O5 for 563,000 tonnes of V2O5.

The extremely high-grade nature of this resource, which contains 200,000 tonnes of V2O5, and includes a substantial high grade zone over 1% in grade, highlights the strong potential for Gabanintha to be a world-class vanadium project with critical mass and low costs.


Economic studies are expected to begin early next year with a view to initiating a full Definitive Feasibility Study by mid-2016.

This work will include detailed metallurgical studies to determine the optimum processing route for making Gabanintha vanadium suitable for sale to the high-tech battery industry.


Moving forward

With the release of the updated resource statement, Yellow Rock is now set to advance Gabanintha further. Key activities planned over the coming months include;

– Completion and reporting of a series of detailed metallurgical tests on sampling of mineralisation domains to allow definitive processing studies to commence.

– Commencement and completion of a Mining Study that will include pit optimization and a preliminary economic assessment and initial mine schedule

– Incorporation of metallurgical test results and mining study results into a Scoping Study.

– Definition of parameters and commencement of a Feasibility Study.

The company will also incorporate results from additional research it will be carrying out on Vanadium Electrolyte for use in Vanadium Redox Flow Batteries (VRFB).

The manufacture of electrolyte is a process that can be achieved as part of the processing of vanadium ore. It offers the company an opportunity to value-add and become a part of the flow battery market cycle.

It is expected that over the next few years, as demand for grid-scale energy storage grows, up to 30% of the storage demand will be satisfied by VRFBs as part of over 185 gigawatt hour of expected storage.

As a result, this could result in demand for an additional 300,000 tonnes of vanadium, purely for use in batteries. This represents a three-fold increase in current vanadium consumption in the global steel industry.


Moving up the value chain

Yellow Rock recognises the importance of the steel markets in the vanadium space, but is also actively seeking to link the use of its products to the rise of this globally significant use Vanadium Battery technology.

As such, it has continued to advance its opportunities in the Vanadium Redox Battery (VRB) market by forming relationships with key players. The company has also formed a battery focused subsidiary, VSUN Pty Ltd, which will sell Vanadium Batteries on behalf of two European producers in the Australian Market.

Opportunities will focus on businesses and off-grid opportunities, but due to the scalability of VRBs, many other applications can be envisaged. These include applications such as domestic power, farm-production and Electric Vehicle charging stations.

The rapid acceleration in the development of renewable energy projects on a global scale is being accompanied by rapidly growing interest and need for grid storage technologies. The uptake of VRB technology along with other grid storage technologies could have a significant effect on the vanadium market as the use of V2O5 electrolyte is a large component (up to 50% of current cost) of the battery units.

The unique characteristics of VRBs, specifically their scalability, long lifespan cycles and the use of one battery element, make them a strong candidate to earn up to 30% of the growing energy storage market, which is expected to grow from a current 0.4GW to 40GW in just the next seven years.


Analysis

The size and the grade of the resource indicate that Gabanintha is ideally placed to become a world-class vanadium project.

The revision of the inventory at Gabanintha is also important because the establishment of a substantial high-grade resource allows for the creation of a more competitive vanadium project in the expanding high-tech battery market.

Throughput of higher grades allows for lower feed volumes, resulting in lower capex and opex.

Historically, only high-grade vanadium projects have ever made it into production.

Given that the current resource is already sufficient to underpin a significant project, Yellow Rock is now able to focus its efforts on the economic and metallurgical studies in the short term. This focus on efficiencies will be further supported by the project’s proximity to infrastructure.

Potential remains, however, to grow the Gabanintha resource even further, with mineralisation remaining open at depth and along strike.

Recent mineralogical testwork at Gabanintha has indicated favourable processing characteristics that bode well for a streamlined operational flowsheet.

Yellow Rock’s move to become a vertically integrated vanadium company will allow it to claim a chuck of the growing battery storage market, with the grid-storage sector alone estimated to be worth US$100 billion by 2020.

Growing awareness of the potential of the high-tech battery market has coincided with a 37.5% increase in Yellow Rock share price over the past two months to A$0.011.

Potential near-term catalysts for the stock will include the upcoming economic optimisation and feasibility work along with ongoing flowsheet design optimisations, VRFB research updates and discussions between the company and vanadium battery manufacturers.


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