Special report: TNG Limited’s Mount Peake vanadium, titanium and iron project — which is on track to be Australia’s next major resources development — is quickly increasing in value due to the soaring vanadium price.
While many commodities have taken a hit in recent months, vanadium has gone from strength to strength, inflating TNG’s potential profit margins in the process.
The metal, traditionally used as a strengthening agent in construction steel (rebar or reinforcing bar), has more than trebled in price in the past 18 months – last week hitting $US20 a pound as long-term market forces took hold.
The runaway price, which some analysts say is set to go even higher as demand outstrips supply, compares with the price of $US10 a pound used by TNG in its updated Mt Peake Definitive Feasibility Study, completed in November.
The vanadium price has several key drivers. 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.
Demand is also on the rise thanks to the growing use of vanadium in the aerospace industry and in the energy storage and renewable energy sectors courtesy of “vanadium redox batteries” or VRBs, which have grid-scale applications in the storage and dispatch of renewable energy sources.
At the same time, the vanadium supply chain – particularly from some ageing mines in South Africa – is looking increasingly vulnerable.
Metal Bulletin reported this week that low inventories and concerns over ongoing supply/demand tightness have prompted buyers to lock-in deals for ferro-vanadium slightly earlier than normal, pushing the price for the strategic metal above US$100 a kilogram for the first time since 2005.
While positive investor sentiment in vanadium has already flowed through to some junior explorers, analysts believe that it will be large-scale projects with the scale, mine life and economic attributes required to underpin long-life operations that will ultimately be best placed to fill the looming supply gap.
The soaring vanadium price – and its potential impact on TNG’s profit margins – is likely to further strengthen the company’s push to finalise funding for Mt Peake.
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 net present value 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 75c and an assumed vanadium price of $US10 a pound (half of what it is today).
While the broader retail market may not have woken up to TNG’s potential yet, some of the world’s larger players in the strategic metals space clearly have.
The company continues to work closely with German engineering giant SMS Group on the final engineering plans and financing proposals to build a state-of-the-art metals refinery using its proprietary TIVAN™ Process, a hydrometallurgical process that will facilitate the extraction of all three valuable metals from the Mount Peake resource – vanadium, titanium and iron.
TNG has already signed life-of-mine off-take agreements for its vanadium and iron products, and it’s close to completing one for its titanium products.
Just earlier this week, it unveiled a landmark $10 million cornerstone investment by a leading Indian iron-ore mining conglomerate, the Vimson Group, with Vimson also agreeing to enter into discussions regarding the potential off-take of its high-purity iron ore products.
And yesterday it announced a binding heads of agreement with a leading German technology group, Ti-Cons, to supply a full technology package for its titanium pigment plant, including engineering and construction support, procurement support, training and commissioning.
This deal paves the way for TNG to commercialise its breakthrough titanium pigment production process announced earlier this year, ensuring that it maximises returns for all three high-value metals that make up the Mount Peake resource.
The Perth-based company is also getting a lot closer to finalising the last stage of permitting for the Mount Peake development. Approval was received for a landmark Native Title Mining Agreement in early August, which should pave the way for the grant of a Mining Lease.
The breakthrough agreement means TNG can get cracking on securing financing for the $850 million Stage 1 Mount Peake Project.
There is 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.
Soundings have also made to Australia’s own export credit agency, EFIC, and the North Australian Infrastructure Fund (NAIF), which just last week offered a $95 million debt facility for Sheffield Resources’ Thunderbird mineral sands project.
Then there are the all-important life of mine off-take agreements which have also been secured for Mount Peake’s trio of products, and what might come from the “strategic co-operation’’ agreement between TNG and BBI Group, an offshoot of New Zealand heavyweight Todd Corporation, and owner of the Balla Balla vanadium and titanium project in the Pilbara.
BBI was attracted by TNG’s proprietary TIVAN processing technology for potential use at Balla Balla, as well as investigating “commercial operation and synergies in the possible development’’ of Balla Balla and Mount Peake.
This special report is brought to you by TNG Limited.
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