Vanadium Resources (ASX:VR8) has signed a partly-binding memorandum of understanding (MoU), with China Energy International Group Co. (CEIG), to develop the Steelpoortdrift Project in South Africa.
The MoU is aimed at reaching an agreement on CEIG supplying engineering, procurement, and construction services (EPC), as well as assistance with financing for Vanadium Resources to develop Steelpoortdrift, including a solar plant and other associated aspects.
Both parties plan to use their endeavours to finalise an agreement, with appropriate conditions required.
Under the MoU, it is contemplated that CEIG will assist Vanadium Resources in securing debt financing for the project, and where feasible, introduce the company to potential strategic equity providers.
The parties anticipate that CEIG will provide assistance and support in the financing of the construction and commissioning of the solar plant and all other associated services.
Vanadium Resources, which has a market capitalisation of $21.37 million, says the proposed debt financing activities are intended to run in conjunction with the company’s existing debt funding process, which is well-advanced.
Any potential debt financing assisted by CEIG will only be considered by the company in the event it occurs within an acceptable timeframe and on terms that are satisfactory to the company.
Now that the MoU is in place, Vanadium Resources’ current competitive tender process has been terminated. EPC packages for each component of the project have been collated and are expected to be delivered to CEIG during the MoU, which will assist CEIG with preparing a competitive bid for Steelpoortdrift.
CEO John Ciganek says CEIG’s capabilities and breadth of expertise align to the Steelpoortdrift Project.
“We believe that this MoU will form the basis of a longer term relationship, which will leverage our substantial vanadium resources and CEIG’s expertise in renewable energy, particularly in relation to supporting the company’s objective of becoming a vertically integrated business, including the production of vanadium electrolyte production, VFBs, and renewable energy generation,” Ciganek says.
Executive Chairman Jurie Wessels says the MoU initiates the negotiation process and also presents the opportunity to combine the service excellence of a global provider such as CEIG with Steelpoortdrift’s compelling vanadium resource.
“We’re also excited about the potential to allocate 100% of our project’s output to the renewable energy sector, which could open doors to higher growth and higher margin markets,” Wessels says.
Last week, Vanadium Resources revealed it is expecting to begin mine and concentrator construction at Steelpoortdrift in the third quarter of 2025.
Once construction is underway, early concentrate production will begin, while expediting operating cash flow. The salt-roast-leach plant construction is expected to begin after the first quarter of 2026.
China Energy International is a subsidiary of China Energy Engineering Group (CEEC), which was established in 2011. CEEC is a comprehensive, central-level state owned enterprise and energy conglomerate that provides systematic, integrated, full-cycle and comprehensive development plans and services.
Vanadium Resources is focused on becoming a vanadium producer to provide a reliable and secure supply of vanadium to meet global market demands.
Write to Aaliyah Rogan at Mining.com.au
Images: Vanadium Resources
