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The Yarrabubba Project has demonstrated the ability to produce a premium high-grade iron-vanadium magnetic concentrate product which will reduce funding and implementation risk for the Gabanintha Vanadium Project.
Technology Metals Australia Ltd (ASX:TMT) had a productive September quarter, identifying an opportunity to produce a high-grade, high-purity iron-vanadium concentrate containing up to 66.3% iron and 1.73% vanadium from the Yarrabubba Iron-Vanadium Project.
This premium product has very low levels of deleterious elements, which indicates there is scope to produce a Platts 65 iron product.
The emergence of Yarrabubba as a satellite project to the company’s flagship Gabanintha Vanadium Project (GVP) is a major breakthrough for the company to potentially deliver a low entry cost project that is complementary to and expected to reduce funding and implementation risk for Gabanintha.
Mineral resource estimate
While Yarrabubba was not included in the GVP definitive feasibility study, the updated Yarrabubba Project resource estimate was included in a revised global mineral resource estimate for the GVP.
This delivered an increased estimate of 137.2 million tonnes at 0.9% vanadium and 38.9% iron, containing a high-grade component of 75.1 million tonnes at 1.1% vanadium and 48.1% iron.
Yarrabubba's maiden probable ore reserve estimate is 9.4 million tonnes at 0.97% vanadium and 45.3% iron.
The life of mine operating schedule has also increased from 16 years to 22.5 years (with the company granted two project mining leases for an initial 21-year period) based on a total inventory of 58.1 million tonnes at 0.82% vanadium and a production rate of 13,000 tonnes per annum vanadium product.
Offtake agreements and EPC
During the quarter the company entered into an MOU with Sinosteel Australia to negotiate a life-of-mine offtake agreement for the Yarrababba product as well as an Engineering, Procurement and Construction (EPC) contract with Sinosteel’s affiliate Sinosteel Equipment & Engineering Co Ltd (MECC).
The off take MOU includes an annual quantity of up to 1.5 million tonnes per annum of Yarrabubba high-grade iron-vanadium magnetite concentrate for a term equal to the Yarrabubba Project life-of-mine.
The EPC contract 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.
TMT previously announced a 3,000 tonnes per annum vanadium offtake MOU with Shaanxi Fengyuan Vanadium Technology Development Co Ltd (Fengyuan).
The parties have mutually agreed to maintain the MOU in full effect until the end of December 2020 to enable the orderly progression of mutual due diligence and to ensure the parties have fully evaluated the project development impact of the emerging Yarrabubba Project.
TMT also entered into a binding vanadium pentoxide offtake agreement (BOA) with CNMC (Ningxia) Orient Group Company Ltd (CNMNC), a controlled subsidiary of China Nonferrous Metal Mining (Group) Co Ltd (CNMC).
The BOA includes minimum sales of 2,000 tonnes per annum on a take-or-pay basis, equating to about 16% of the GVP’s forecast annual average production, over a three-year term with an option to extend for a further three years.
Big Pawer opportunity
The company also progressed due diligence in regard to the business and technology of Big Pawer Electrical Technology Xiangyang Inc Co Ltd following the parties’ execution of a Memorandum of Understanding in the previous quarter.
This MOU contemplated negotiating a definitive and binding offtake agreement for the supply and purchase of vanadium pentoxide and the establishment of a JV to produce vanadium electrolyte/establish a VRFB manufacturing base in Australia.
TMT is confident this opportunity enhances the economic and social benefits for the Mid-West region of Western Australia, the State and the Nation that the development of Gabanintha is expected to generate over a long period of time.
Danish export credit agency
Following the execution of a binding Notice of Award (NoA) in the previous quarter, the company continued to work with Danish engineering company FLSMIDTH, vanadium industry-leading kiln suppliers, that offer advanced, custom-tailored rotary kiln solutions, with recent experience in the design, installation and support of roasting kilns for vanadium operations.
The supply contract with FLSMIDTH contemplates the completion of a front-end engineering and design (FEED) study and supply of the equipment for the roasting kiln section of the plant.
Equipment and technology supplied by FLSMIDTH qualifies for financing support through the Danish export credit agency EKF, subject to EKF board approval and thorough due diligence processes.
Reduced funding risk
During the quarter, the company continued to work closely with the Northern Australia Infrastructure Facility (NAIF) and other Government agencies in support of the development of Gabanintha.
The company and its financial advisers are incorporating the potential involvement of NAIF, EKF and the assistance of other Government agencies into the evaluation of a range of project financing strategies, which also include engagement with prospective strategic investors.
The Yarrabubba Project is expected to be viewed favourably by prospective project financiers and strategic partners, and to form a very important component in the company’s project financing strategy and the pathway to development of the GVP as the world’s next large-scale, low-cost, long-life primary vanadium mine.
Source: Proactive Investors 2020
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