Vanadium Resources (ASX:VR8) has executed a binding offtake with China Precious Asia (CPAL) to further advance its Steelpoortdrift Vanadium Project in South Africa as part of its strategy to produce direct shipping ore (DSO).
A pricing agreement is expected to be decided by the two companies by 30 August, due to the ore having no spot price in the market, though Vanadium Resources anticipates an extension might be necessary.
Vanadium Resources and CPAL will establish a pricing mechanism reflective of the nature of startup operations at the project and CPAL’s demand for the product.
Several starter pits at the Steelpoortdrift Project are under consideration to commence initial operations for this agreement, prioritising known homogenous magnetite seam areas, zones with ‘high-grades’ of iron and vanadium, optimised mining-and-blasting conditions, and “favourable” stripping ratios.
Executive Chairman Jurie Wessels says he was invited by CPAL to view its Chinese facilities in exchange for a visit at Vanadium’s Steelpoortdrift Project next week, as the companies strategically align.
“I am encouraged by the evident market appetite for vanadium-bearing magnetite and particularly impressed by the extensive scale and sophistication of the blending and beneficiation facilities observed near Tangshan Port,” Wessels says.
“Finalising the work streams to firm up on pricing terms and locking in a mining contractor are immediate priorities for Vanadium as we focus on getting the mining operation and our near-term cash flow strategy underway.
“Both parties wish to see first ore shipped as soon as is practicable.”
This agreement comes in time for the Steelpoortdrift Project’s advancements to produce DSO, currently seeking leasing agreements with local communities and to potentially to acquire or partner for existing processing infrastructure.
“The offtake with CPAL is only one part of our near-term cashflow strategy, as well as our broader strategy of realising the full value of our world-class vanadium asset,” Wessels adds.
“All of the initiatives being advanced are focused on near-term and value-accretive growth whilst retaining the integrity of our Definitive Feasibility Study towards a salt roast leach operation of our own, and minimising shareholder dilution.”
Vanadium Resources is currently creating a detailed site plan ahead of initial mining to produce DSO from the project, which has already been granted a mining right, integrated environmental authorisation, and a water use licence.
The project is still awaiting approval from the Department of Mineral Resources and Energy for its updated social and labour plan, which the company expects shortly.
Vanadium Resources will continue to search for growth opportunities for its Steelpoortdrift Project, with potential to search for additional DSO agreements and offtake agreements that will further develop the concentrator.
Write to Maddison Elliott at Mining.com.au
Images: Vanadium Resources
