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Australian Vanadium values Gabanintha at up to US$2.37 billion, shares rise

Initial findings highlight AVL’s potential to become a new low-cost vanadium producer.
Infrastructure Location Diagram (Initial Proposed) Gabanintha Project
The complete PFS is on schedule for delivery in December 2018

Australian Vanadium Ltd (ASX:AVL) has received positive results from its ongoing pre-feasibility study (PFS) on its Gabanintha Vanadium Project in Western Australia.

Significantly, the study estimates a net present value (NPV) range for the project that has a top end of US$2.37 billion when assuming a vanadium price of US$20 per pound.

The base case PFS scenario considers a 17-year initial open-pit mine life with a vanadium pentoxide refinery on site producing 22.5 million pounds of vanadium pentoxide per annum.

The base case life-of-mine (LoM) price estimate is US$13 per pound meaning the base case NPV is US$1.1 billion.

Capital costs are estimated at US$362 million ±35% which includes owner’s costs, contingencies and gas pipeline investment.

READ: Australian Vanadium completes PFS drilling for resource update

AVL’s managing director Vincent Algar said: “Our intention with the ongoing feasibility study work is to understand and design a long-life, low-cost vanadium pentoxide and cobalt concentrate production facility.

“It is essential that all technical aspects are understood and the capital and operating costs minimised, given the cyclical nature of the vanadium markets.

“Achievement of this objective will contribute greatly to a robust business case which will allow continuity of operation across a range of business conditions.”

PFS proceeding on schedule

The PFS is proceeding on schedule which will allow AVL to move quickly into piloting and definitive feasibility study (DFS) upon completion.

This base case demonstrates robust project fundamentals featuring competitive product costs and financials.

Notably, opportunities exist to further reduce costs and increase revenue through mine optimisation and alternative processing strategies.

Metallurgical test work is continuing to further define ore characteristics and vanadium recoveries.

More updates on PFS progress expected

The PFS is divided into three phases which are:

• Phase I – develop a mining and production base case using current metallurgical test work results and proven processing technologies as a basis;
• Phase II – define, analyse and compare a series of options that can potentially lower overall project risk or improve the project financial metrics; and
• Phase III – complete the PFS engineering and estimating to deliver a quality study that demonstrates the potential strong economic returns likely over the life of the project.

AVL will continue to provide updates as the phases are progressed.

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