Signing of native title agreement a watershed for TNG
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Special report: Strategic metals company TNG Limited (ASX: TNG) has taken a crucial step towards financing and development of its $850 million Mount Peake vanadium-titanium-iron project in the Northern Territory with the signing of the eagerly-awaited Mount Peake Project Native Title Agreement.
TNG announced to the ASX this morning that the agreement has been entered into between its wholly-owned project level subsidiary, Enigma Mining Limited, the Central Land Council and the Eynewantheyne Aboriginal Corporation RNTBC, the registered native title body for the Traditional Owners of the area.
The signing of the agreement follows a successful on-site meeting with the native title holders and the CLC on 26 July 2018 which itself marked the culmination of extensive negotiations between the parties over the past year.
“Given the diversity of parties and formal execution requirements, this process took some time to complete,” the company said in a statement.
The crucial breakthrough means that the complex permitting process for the Mount Peake Project is now nearing completion. The signing of the Mount Peake Project Native Title Agreement is expected to pave the way for the grant of the Mining Lease in the near future.
This in turn means that TNG can get cracking on completing final off-take agreements and securing financing for the $850 million Stage 1 Mount Peake Project.
Located in Australia’s northern development hub, 230km north of Alice Springs, Mount Peake has a JORC compliant resource of 160 million tonnes grading 0.28% vanadium (V205), 5.3% titanium (TiO2) and 23% iron (Fe), 118 million tonnes of which is at Measured Resource status.
The November 2017 feasibility study outlined a $4.7 billion NPV and 44 per cent Internal Rate of Return for a 17-year project commencing production at 3Mtpa before expanding to 6Mtpa after four years.
The study forecast net annual operating cash-flows of $738 million and life-of-mine net cash-flow of $11.7 billion – and that was using an AUD: USD exchange rate of $0.75 and an assumed vanadium price of US$10 a pound (half of what it is today).
The vanadium price has gone from strength to strength this year, more than trebling in the past 18 months and recently hitting US$22 a pound as a number of long-term market forces have begun to take hold.
Among them has been China mandating that its construction industry use more high-strength steel to protect against earthquakes and building collapses from the use of sub-standard steel.
The runaway price, which many analysts say is set to go even higher as demand outstrips supply, compares with the price of US$10 a pound used by TNG in its updated November 2017 Mt Peake Definitive Feasibility Study.
Against this backdrop – and with permitting now almost complete – there is growing optimism that financial close for Mount Peake might well come in 2019.
That is due in part to the “development partner” status in Mount Peake of SMS Group, which is one of Germany’s leading users of export credit financing. It is said to be the best credit in the world.
The Mount Peake Native Title Agreement has been structured to ensure that employment, training and other benefits from the development of the world-class Mount Peake Project will flow back to the Native Title Holders and the local community.
TNG’s Managing Director, Paul Burton said the completion of the formal execution of the Agreement marked a huge milestone for the Mount Peake Project and all stakeholders involved in the proposed development of what is expected to be a major new resources project for Northern Australia.
“We are absolutely delighted to have signed this pivotal Native Title Agreement with the Eynewantheyne Aboriginal Corporation RNTBC and the CLC, and we are looking forward to working closely with them as we advance this major new Australian resources project towards development and construction,” he said.
“The signing of this landmark Agreement will lead to security of tenure which will facilitate approval for the development of our proposed mining operations at Mount Peake, a vital step forward which will greatly assist our ongoing financing and off-take discussions.”
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