Nelly comprises several vanadium-rich polymetallic sheeted vein systems, aligned northwest to southeast, that are around 1-kilometre long and up to 5.5 metres wide.
Under the terms of the agreement, Hardey has been granted a 40-day option to acquire 100% of the issued capital of Nelly Vanadium.
Hardey paid Nelly Vanadium $75,000 in consideration for the option, and if exercised, will issue 737.5 million fully paid ordinary shares of the company and the same number of listed options to acquire shares.
Hardey will also pay a 3% net smelter royalty to Nelly Vanadium’s founding shareholders.
Aim to delineate a resource
Nelly historically produced vanadium pentoxide and the company will soon lodge an application with the San Luis regulator to re-open the mine.
When Nelly was operating from 1949-57, only one vein was partially exploited, leaving most of the deposit intact.
Historical sampling and assay results produced grades from the partially mined vein that ranged up to 1.9% vanadium with a length weighted sample average of 0.82% vanadium
Focusing on the historical workings and surrounding areas, and a desktop review, Hardey is planning a drilling program to generate geological and assay information with the aim of modelling a resource.
Board optimistic of vanadium demand
Supply shortages and accelerating demand from the battery metals sector has underpinned a substantial increase in the vanadium price over the last several years, improving the financial case for reopening Nelly.
Hardey’s executive chairman Terence Clee said the board would focus on exploration activities to prove up a resource and move to re-open the mine upon finalising the acquisition.
“The board is optimistic demand for vanadium will remain robust over the next few years, as structural changes augur favourably for the continued expansion of the renewable battery sector.”