Australian Vanadium Ltd's (ASX:AVL) (OTCMKTS:ATVVF) (FRA:JT71) updated pre-feasibility study (PFS) for the Australian Vanadium Project at Gabanintha, near Meekatharra in Western Australia reflects robust economics, an extended ore reserve and a revised layout and location.
Positive economic results give grounds for completion of the bankable feasibility study (BFS) in mid-2021, finalising offtake, obtaining final approvals and securing project finance.
The ore reserve has increased 76 per cent to 32.1 million tonnes at 1.05% vanadium pentoxide comprised of a proved reserve of 9.8 million tonnes at 1.08% vanadium pentoxide and a probable reserve of 22.4 million tonnes at 1.04% vanadium pentoxide.
Move towards funding and project construction
Australian Vanadium managing director Vincent Algar said: “The phenomenal work by the AVL team and its consultants has outlined a robust processing environment for this exceptional vanadium ore body, able to generate significant cash flows.
“We have achieved our objective of outlining a low-cost, globally competitive operation, able to operate over a long life under all market conditions.
“We have many opportunities to outperform our objectives, as we drive towards funding and project construction.
“The changes we have made are substantial, but considered, aiming at maximising the value of vanadium in its role as both a critical steel material and a battery metal.”
The highlights of the updated PFS includes:
➢ Project pre-tax NPV of A$909 million increased by 184% from A$320 million;
➢ Project internal rate of return (IRR) rises to 17.5%, up 41%;
➢ Project payback is now 6.6 years, down by 17.5%;
➢ Project annual EBITDA average for 25 years of A$144 million, up 31%;
➢ Plant and associated infrastructure capital cost of US$253 million;
➢ Total project capital cost of US$399 million, up 13%, includes area and regional infrastructure, indirects, EPCM, growth and owner’s costs;
➢Increased anticipated mine life from 17 to 25 years, supporting a long-life, consistent ore feed operation on AVL’s granted mining lease;
➢ Increased nominal vanadium production to 24.3 million pounds of vanadium pentoxide annually, up 8%;
➢ Forecast vanadium ore recovery to concentrate of 74.8% life of mine, supported by pilot testing;
➢ New innovative flowsheet for processing plant recovers 88% vanadium pentoxide utilising tried-and-tested grate kiln technology;
➢ Separation of processing plant from the mine site provides access to cheaper competitive natural gas near Geraldton, local workforce and FeTi co-product sales opportunities for 900,000 dry tonnes per annum over the mine life.
Energy storage and hydrogen synergies
Capital and operating costs reported have been developed to a level of accuracy of plus/minus 25% and include mine and processing circuit designs, a detailed financial model and supporting bodies of work.
The company has identified synergies with the growing energy storage market and hydrogen industry capability in Australia.
Opportunities include consumption of hydrogen in processing and haulage and use of renewable energy and vanadium redox flow battery (VRFB) based energy storage at its planned operations.
AVL is driving vanadium market growth through its VRFB-focused subsidiary VSUN Energy, with downstream processing opportunities available through vanadium pentoxide and vanadium electrolyte production.
Increased vanadium consumption in the steel market and vanadium’s use in long-duration energy storage are major global levers in energy efficiency and the achievement of emission reduction targets.
AVL has in-house international expertise of vanadium process technology and processing plant operation, which brings significant capability to ensure process and plant design is “best practice” and utilises “lessons learned” from other operations.
The company has funding in place for work on the BFS, including cash at bank of A$7.5 million at the time of reporting.
Funding for the initial stages of the BFS is expected to be provided by existing working capital.
The full budget estimates for the completion of the BFS phase have not been completed.
The Australian Vanadium project consists of 11 tenements covering 760 square kilometres and is 100% owned by AVL.