[Ferro-Alloys.com] Vanadium Resources Limited (ASX: VR8; DAX: TR3) (the “Company”) provides the following update for its world-class Steelpoortdrift Vanadium Project (the “Project”) in South Africa.

CHINESE VANADIUM INDUSTRY ROADSHOW: CONCLUSION AND IMMEDIATE NEXT STEPS

The Company wishes to advise that its Chinese Vanadium Industry Roadshow (“Roadshow”), which involved a series of high-quality meetings throughout China with potential offtake partners, strategic equity investors, Engineering-Procurement-Construction (“EPC”) firms and financiers, concluded on 24 May 2024.

The Memorandums of Understanding (”MOUs”) for offtake already signed with ‘Hexiang’, ‘Enerflow’ and ‘Zhongxin’ represent over 100% of planned production from Phase 1 of the Project. The Company is continuing discussions with a range of other parties across China, Japan, Korea, North America and Europe in relation to further potential offtake agreements, strategic equity interest, EPC and financing. The objective is to run a competitive process to secure binding agreements for offtake, potentially including additional features such as EPC and financing, with the most suitable and value-accretive partners.

CHINESE VANADIUM INDUSTRY ROADSHOW: IMPORTANT FEEDBACK

The key takeaway from the Roadshow was that China is highly focused on the rapid deployment of a substantial number of grid-scale Vanadium Flow Battery (“VFB”) power storage systems. Consequently, there is a significant need for large quantities of high-quality Vanadium Pentoxide (>99.5%) over the next 3 to 5 years. In addition, potential offtake partners emphasised the appeal of the Project as a reliable, long-term source of Vanadium Pentoxide. They noted its advantageous position on the global cost curve and its ability to supply up to 180 years' worth of Vanadium Pentoxide (at the proposed mining rates), as detailed in the Company’s previously released Definitive Feasibility Study (“DFS”).

DUAL PRODUCT STREAM SUITED TO THE STEEL AND VFB SECTORS

In line with this anticipated increase in demand for VFB energy storage systems over the coming years, the Company has elected to modify the back end of the salt-roast-leach (“SRL”) processing plant to be able to produce two product streams. This includes: 98% V2O5 for the steel markets and 99.5% V2O5 for the VFB market. The final split between 98% and 99.5% V2O5 produced is yet to be determined and will be driven by finalised offtake agreements. This modification is different to the single 98% V2O5 product which formed the basis of the original DFS, and it has now been incorporated into the front-end engineering and design (“FEED”) process. This will have the benefit of enhancing realised sales pricing by targeting higher-purity forms of V2O56. Consequently, the Company believes the likely overall net-effect of these changes will result in an enhancement in post-tax NPV when compared to the DFS (all else remaining equal).

The FEED will now form the basis of the proposed project implementation plan and contracting strategy. This will involve finalising material contracts which will include the completion of remaining detailed design work, provide fixed price, target schedules and performance guarantees for the Project. Work has already begun on preparing these tender packages, which will be issued under a competitive tender process.

OPPORTUNITIES OUTSIDE THE STEEL AND VFB MARKET

In addition to the opportunity to directly address the VFB market, the Company is also considering alternative value-accretive product options, including the potential to produce ammonium metavanadate (“AMV”) and other related products such as vanadium electrolyte, vanadium nitride and ferrovanadium. The consideration of these alternatives by the Company is in direct response to requests for supply/offtake from Chinese parties received during the Roadshow.

Commenting on the Steelpoortdrift Vanadium Project Update, Mr John Ciganek, Chief Executive of VR8 said:

“We have always anticipated that Steelpoortdrift would be banked and developed solely on the back of the steel market, which currently accounts for 89.2%7 of vanadium demand. However, after our recent Roadshow, it became evident that the demand for high-quality Vanadium Pentoxide in China for grid-scale VFB systems is significantly larger than previously estimated. Our strategic decision to enable dual product streams of 98% and 99.5% V2O5 is a direct response to this market demand, futureproofing Steelpoortdrift’s production profile and maximising its total long-term sales value.”

Commenting on the Steelpoortdrift Vanadium Project Update, Mr Jurie Wessels, Executive Chairman of VR8 said:

“During our visit it became increasingly clear that many Chinese consumers of vanadium require a reliable supply for manufacturing products aimed at the steel market, as well as a consistent supply of high-purity vanadium for the VFB and specialist alloy markets. We left China with the impression that the domestic supply of vanadium is inconsistent, at times scarce and frequently lacks the required purity levels. As such, the perception we gained was that China’s vanadium supplies are either inconsistent or inadequate, resulting in higher purification costs in the energy storage and alloy markets.

Considering these supply-side complications, we firmly believe that VR8 is privileged to be advancing a world-class asset like Steelpoortdrift, given the anticipated exponential growth of VFB systems on the horizon. Thanks to its lower impurity levels, Steelpoortdrift holds a clear competitive advantage over its slag-sourced V2O5 counterparts in the VFB market, an advantage that VR8 intends to fully capitalise on for the benefit of shareholders. Coupled with its potential 180-year mine life and projected bottom quartile operating costs, Steelpoortdrift is in the box seat for development.”

• [Editor:tianyawei]