Technology Metals Australia Ltd (ASX:TMT) has revealed a definitive feasibility study (DFS) confirming its Gabanintha Vanadium Project in WA to be a high value, long life, low cost technically robust project.
The DFS is based on the development of a steady-state mining operation, crushing, milling, magnetic separation, salt roasting – water leaching and chemical process plant to produce high purity (+99%) vanadium pentoxide (V2O5) product for use in the steel, specialty alloy, chemical and battery markets.
The Gabanintha DFS confirms the project to be relatively low risk and a technically strong development opportunity with a proposed average production rate of 12,800 tonnes per annum (tpa) high purity V2O5 product over a +16 year operating life.
Gabanintha DFS – Material physical assumptions and anticipated outputs
The peak steady-state production rate is proposed to be around 13,700 to 14,200 tpa which would establish the project as the world’s largest primary production vanadium producer.
The DFS has been developed to a confidence level of -5% to +15%.
The DFS indicates that the project generates significant levels of annual cashflow at the forecast vanadium pricing, with about $1.09 billion of free cash flow generated over the first six years of the operation
TMT managing director Ian Prentice said: “The very high quality Gabanintha Vanadium Project DFS has generated an outstanding result delivering lowest quartile operating costs over a long initial mine life at a scale that will make the project the largest single primary vanadium producer in the world.
“Delivery of this study is a key milestone in progression of discussions with prospective development partners that the Company has engaged with over the past 12 to 18 months.”
Life of mine cash operating costs (C1) are estimated at a highly competitive, lowest quartile US$4.04 per pound V2O5 with all in costs (AIC) including start-up and sustaining capital of US$5.75 per pound V2O5.
The chart highlights the competitive advantage that these low cash operating costs provide relative to the global vanadium industry (black dots represent existing V2O5 producers) and provides confidence that the project will be sustained through vanadium price cycles. The chart also highlights the spread of cash costs across the varying V2O5 supply sources, with Chinese Stone Coal supply identified as being relatively high cost.
TMT’s operating costs do not incorporate any revenue benefits that may be generated from by-product credits, such as base metal production as the study work on this product stream has not been completed to a DFS level.
Metallurgical test work completed as part of the DFS highlights the industry-leading vanadium recoveries of the massive magnetite hosted mineralisation at the project, with an end-to-end recovery of 77% for the undiluted massive fresh ore, which forms the majority of process plant feed for the first 12 years of the proposed operation.
The DFS mining and production schedule is based on the updated Ore Reserve of 29.6 Mt at a mined (diluted) grade of 0.88% vanadium pentoxide (V2O5).
The massive transitional ore, which has been used as the basis of design for the processing plant and represents about 50% of plant feed for the first three years, after which it rapidly reduces to less than 5% of feed, has an end-to-end recovery of 55%.
The estimated life of mine revenue projections from the DFS are based on forecast V2O5 sales prices sourced from Roskill Consulting Group Ltd.
Roskill, which has been completing research on the global vanadium industry since the 1970’s, has concluded that the vanadium market has entered into a period of structural deficit.
The consultant has developed a range of vanadium price forecasts for the outlook period from 2018 to 2028 based on its demand and supply forecasts.
Roskill expect the vanadium market to remain in deficit until the mid 2020’s as demand is set to increase considerably while supply will remain tight. Supply response is forecast to emerge from 2024, subject to the presence of ‘incentive pricing’, when forecast new ‘greenfields’ supply begins to generate a moderate surplus.
Indicative project timeline
An indicative project implementation schedule has been developed based on the longest lead path activities to highlight the critical path items.
Indicative implementation timetable
Critical path items have been identified as the ordering of long lead items, including the roasting kiln, the receipt of environmental and operating approvals, mining tenure and delivery of gas supply.
The timeline contemplates the commencement of the Front End Engineering Design (FEED) study in late 2019 leading to a conditional Final Investment Decision (FID) early in the June quarter 2020.