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Technology Metals higher on signing letter of intent with Sinosteel for Yarrabubba iron-vanadium offtake

The company has produced premium iron-vanadium concentrate at its Yarrabubba Iron-Vanadium Project and has signed a non-binding LOIwith Sinosteel Australia for life of mine offtake as well as an EPC contract.

Technology Metals Australia Ltd - Technology Metals Australia signs non-binding letter of intent with Sinosteel for Yarrabubba LOM offtake
250-micron magnetic concentrate product from Yarrabubba

Technology Metals Australia Ltd (ASX:TMT) is higher on signing a non-binding letter of intent (LOI) with Sinosteel Australia Pty Ltd for life of mine (LOM) offtake from its Yarrabubba Iron-Vanadium Project, a satellite project to the Gabanintha Vanadium Project (GVP) in Western Australia.

The agreement with Sinosteel also includes an engineering, procurement and construction (EPC) contract with Sinosteel’s affiliate Sinosteel Equipment & Engineering Co. Ltd (MECC).

TMT has also produced a premium product in test-work with up to 66.3% iron in magnetic concentrate produced from the fresh massive magnetite unit at Yarrabubba and a contained vanadium grade of up to 1.73% V2O5.

Shares have been up almost 15% to 39 cents, a new high of almost two years.

“Major breakthrough for the company”

Initial batches of magnetic separation test-work at Yarrabubba have identified the opportunity to produce a high-grade, high-purity iron-vanadium concentrate.

TMT managing director Ian Prentice said: “The emergence of this opportunity to produce a high-grade, high-purity iron-vanadium magnetic concentrate, the Yarrabubba High Grade Iron-Vanadium Product, is a major breakthrough for the company, potentially delivering a low entry cost project that is complimentary to, and expected to reduce funding and implementation risk of, the GVP.

“This premium product is expected to be well received by the steel industry, underlined by the support of a global industry leader in Sinosteel Australia.”

Notably, the very low levels of deleterious elements indicating scope to meet the premium Platts 65 product specifications.

Offtake and EPC  

The offtake framework developed in the LOI includes:

  • Pricing to be based on the Platts 65% iron index price (FOB) for contained iron and the FerroAlloyNet China vanadium index price (FOB) for vanadium;
  • Annual quantity of up to 1.5 million tonnes per annum of Yarrabubba High-Grade Iron-Vanadium product, subject to the product meeting defined quality specifications; and
  • A term equal to the Yarrabubba life-of-mine.

An EPC contract with Sinosteel will be subject to agreed competitive commercial terms and the availability of commercially viable project finance and will include the processing plant infrastructure, non-processing infrastructure and ancillary facilities.

In addition, the EPC contractor will manage the project implementation through to commercial production, including pre-defined recovery and product purity milestones, and engage with Australian engineering groups to assist as required.

The parties intend to enter into negotiations that may lead to binding agreements for offtake, EPC or both.

Yarrabubba Iron-Vanadium Project location.

Test-work ongoing

Test-work is progressing on the five remaining composite samples, with assay results for these composites expected in the coming weeks.

The data from the seven composites will provide a guide to the optimum blend of material types to deliver a consistent premium iron – vanadium product from the Yarrabubba Project.

Further test-work is also underway assessing the alteration in mineralogy that has led to these outstanding results and investigation of the components of the non-magnetic tails stream.

Quick facts: Technology Metals Australia Ltd

Price: 0.375 AUD

ASX:TMT
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Market Cap: $46.46 m
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Technology Metals Australia's Ian Prentice talks 'major breakthrough' at...

Technology Metals Australia Ltd's (ASX:TMT) Ian Prentice speaks to Proactive's Andrew Scott after signing a non-binding letter of intent (LOI) with Sinosteel Australia Pty Ltd for life of mine (LOM) offtake from its Yarrabubba Iron-Vanadium Project, a satellite project to the Gabanintha Vanadium...

on 26/10/20

3 min read