This small cap could cash in on the strengthening vanadium price much sooner than first expected
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Special Report: Vanadium hopeful Pursuit Minerals is looking to be in production much faster and more cheaply than some of its competitors to take advantage of the strengthening vanadium price.
Chinese buyers are willing to pay more for ferro-vanadium as Pursuit mulls its options for selling its high-grade vanadium magnetite concentrate from its fast progressing projects in Sweden and Finland.
A buoyant domestic market has reversed the downward trend of the Chinese vanadium price, which has gained over 5 per cent since mid-January.
Meanwhile, the price in Europe has remained relatively steady since early January.
Ferro-vanadium is used to strengthen steel.
Both vanadium magnetite concentrate and vanadium pentoxide flake can be used to make ferro-vanadium, but vanadium pentoxide flake is also used in batteries for energy storage and requires a more complicated and expensive process to refine it ready for use in batteries.
Pursuit Minerals has two key vanadium projects in Scandinavia; Airijoki in Sweden and Koitelainen in Finland.
It has already proven it can produce high-grade vanadium magnetite concentrate from both its projects, with the Koitelainen concentrates being amongst the highest grade globally.
“What we are looking at doing is developing our projects in a way that shortens the timeline to production by just producing a high-grade vanadium magnetite concentrate,” managing director Jeremy Read told Stockhead.
“That should enable us to take a couple of years out of the project development pipeline, in comparison to companies looking to produce vanadium pentoxide flake, so we can start to look at shorter term pricing.”
This also means Pursuit can bring its project into production at a significantly lower pre-production capital cost than its peers looking to produce vanadium pentoxide flake.
A mine and smelter producing vanadium pentoxide flake could cost from around $500M to $1-2 billion to develop, but an operation producing vanadium magnetite concentrate would cost substantially less, which should make Pursuit’s plans far easier to finance.
“Our plan is to produce high-grade vanadium magnetite concentrate, which keeps capex down, simplifies our approval processes from the government perspective and allows us to get into production more quickly,” Mr Read said.
Pursuit also does not need to complete a much more complicated feasibility study.
The company is in the process of completing Scoping studies for both Airijoki and Koitelainen and one of the key metrics to come out of these studies will be the pre-production capital expenditure required to build the projects.
There are three options Pursuit is investigating for the sale of its vanadium product.
A private Finnish company is planning to build a vanadium smelter about a five-hour drive away from Pursuit’s projects.
“We understand they are in the process of arranging their financing at the moment,” Mr Read explained.
“An off-take agreement with them would be the best outcome for us as the proposed smelter would be just down the road from both our projects.”
Pursuit is also investigating the potential to sell into the German steel market as well as export to China.
The vanadium magnetite concentrate produced from the Airijoki project in Sweden can be trucked 50km to a rail head and then railed to the Narvik port in Norway.
Meanwhile, vanadium magnetite concentrate produced from the Koitelainen project in Finland can be trucked five hours to a port.
“So getting the material out from either project is pretty simple,” Mr Read said.