Apart from the significant potential upside as highlighted by SRK Consulting, a key reason for Hardey acquiring the project is Argentina’s favourable mining regulatory system.
This enables a legacy mining right to be expediated for reactivation compared to other mining countries.
Hardey Resources executive chairman Terence Clee said, “The board’s immediate core objective is to capitalise on Argentina’s comparatively favourable mining laws to expedite re-opening Nelly Vanadium Mine.”
Compared with the typical 3-5 years to transform a greenfield project into a viable mining operation in Argentina, the relative timeframe to reactivate Nelly’s mining right is potentially under 12 months.
In most developed countries this timeframe is 5-7 years.
Based on preliminary geological evidence to date, the company’s board believes the reopening the mine and scaling up production of vanadium pentoxide will expedite creating value for shareholders at a materially faster rate.
This will, in turn, supplement the future development of Hardey’s Australian greenfield assets.
Clee said, “Our initial goal, pending the mining right being granted, is approval of the exploration permit.
“This will enable the geology team to commence work verifying the extent of vanadium mineralisation and potentially monetising the historical stockpiles.”
To demonstrate Hardey’s strategic imperative to re-open Nelly, a formal letter has been sent to the director of San Luis’ Mining Department (SLMD) that details the change of ownership and forward plans.
Visit to San Luis
In addition, senior company representatives will travel to San Luis from Australia in early September to expedite the re-opening process.
This will involve meeting the SLMD director and key officials to establish a working rapport.
A liaison office will be set up in San Luis province to directly manage ongoing contact with the SLMD to progress the exploration approval and mining right.
An exploration approval application and accompanying EIA have been lodged with the relevant authorities.
There are a considerable number of documents that SLMD requires before the process to reactivate the mining right can commence.
The company hopes that these initiatives will enable it to fast-track the process to reactivate the mining right.
Once exploration approval is granted, the company’s geology team can start verifying the extent of mineralisation within the project and bulk sample legacy stockpiles.
Quantifying the mineral potential of these stockpiles is the priority before prospective offtake partners undertake independent metallurgical testing.
Plan to monetise stockpiles
Upon approval of the mining right reactivation, the stockpiles can potentially be monetised to facilitate generating early stage cash flow.
This can occur while the technical team works on feasibility plans for optimal open pit mining operations, with forward planning to accommodate future underground mining operations.
Next steps post-exploration permit and mining right approval.
The board believes that Nelly delivers Hardey a significant comparative advantage in enabling it to potentially jump-start vanadium pentoxide production faster relative to peers with predominantly greenfield assets.
Shareholders approve acquisitions
At an extraordinary general meeting last week Hardey's shareholders approved the company's acquisition of two private vanadium companies - Nelly Vanadium Pty Ltd (NVPL) and Vanadium Mining Pty Ltd (VanMin).
NVPL owns the Nelly mine while VanMin owns six high-quality vanadium projects across Queensland and Northern Territory.
The company's due diligence supports this decision.
Aeromagnetic and soil sampling evidence shows that the Wollagalong and Chisholm prospects in the NT are highly prospective for vanadium mineralisation.
In Queensland, incremental due diligence on four highly prospective vanadium projects has increased the confidence to geologically model, estimate and report under the JORC 2012 Code.
Hardey has uncovered further historical evidence there are actually 383 air-core drill-holes targeting the Toolebuc Formation along the 150 kilometres strike running through the Spike, Cera and Petrie projects and within the Sharptooth prospect.