Vanadium Resources (ASX:VR8) reports a Scoping Study for its proposed V-Iron Plant indicates potential for ‘robust’ economic outcomes and positions the company to advance to a Definitive Feasibility Study (DFS).
The study evaluates an integrated vanadium and iron co-production operation incorporating the Steelpoortdrift Project in South Africa’s Limpopo Province and a proposed V-Iron plant at Highveld Industrial Park.
Under the base case scenario using 2016–2025 real median prices, the study indicates a post-tax net present value of US$842 million ($1.21 billion) and an internal rate of return of 36%. The study also outlines an estimated minimum debt service coverage ratio of 3.5 times, well above typical project finance requirements of 1.3–1.4 times.
The proposed operation targets nameplate production of approximately 603,000 tonnes per annum of pig iron and 65,000 tonnes per annum of vanadium-rich slag grading 26.7% vanadium pentoxide. The vanadium slag would contain approximately 17,300 tonnes of contained vanadium pentoxide annually.
Pre-production capital costs including contingency are estimated at US$400 million. The study contemplates a 30-year operating period with 18-month construction and commissioning at 50% utilisation in the first production year.
The processing concept comprises three stages: pre-treatment of vanadium titanomagnetite concentrate in fluidised beds, open bath direct current electric furnace smelting using a 55-megawatt furnace, and vanadium recovery through oxidative blow to produce the vanadium-rich slag and de-vanadised pig iron.
Executive Chairman Jurie Wessels says the study provides ‘compelling’ preliminary validation for the company’s pivot to a pyrometallurgical co-production process.
“We believe [a pyrometallurgical co-production process] offers greater robustness, reliability, and long-term optimisation than the hydrometallurgical methods presently relied upon by most western-hemisphere vanadium producers,” Wessels says.
The company holds a non-binding offtake term sheet with US Vanadium covering 100% of planned vanadium slag production.
The study assumes vanadium slag payability of 50% of the vanadium pentoxide reference price of US$7.86 per pound, with pig iron sales targeting South African steelmaking customers at approximately US$480 per tonne ex-works.
Sensitivity analysis also shows the project remains positive across individual 30% variations in exchange rates, pig iron prices, and vanadium prices.
The production target of approximately 90 million tonnes of run-of-mine ore over 30 years draws on the existing mineral resource of 680.1 million tonnes at 0.70% vanadium pentoxide. Approximately 97.5% of the life-of-mine production target comprises measured or indicated mineral resources.
CEO Nick Diack says completion of the Scoping Study is “an important milestone in translating [VR8’s] V-Iron strategy into a defined development opportunity”.
“The base case results are robust and compelling, with the downside analysis demonstrating a resilient project,” Diack says.
The company has appointed RMB as exclusive financial adviser and capital sourcing agent to pursue development finance institution support and strategic equity funding.
VR8 holds an 86.49% interest in the Steelpoortdrift mining project and 100% interest in the proposed V-Iron plant through subsidiary VR8 Highveld. The company has secured rights over the preferred Highveld Industrial Park site, which offers established heavy industrial infrastructure including electricity, water, and rail connections.
The Steelpoortdrift Project holds granted mining rights, a water use licence, and an integrated environmental authorisation for the mine and concentrator components.
Vanadium Resources is a mineral explorer and developer focused on its flagship Steelpoortdrift Project in South Africa.
Write to Paula Fabe at Mining.com.au
Main image: Vanadium Resources
