Viking Mines has a vanadium story to tell

Asked if there’s anything in particular he’d like investors — anyone, really — to understand about Viking Mines (ASX:VKA), Managing Director Julian Woodcock doesn’t hesitate.

“I think we really don’t get significant recognition for the value of vanadium. It’s a commodity that’s not well understood,” he says.

“When I go to presentations and meetings with brokers and investors, there’s usually about a third of my slide deck about: What is vanadium? What’s it used for? What’s the outlook for it? Some people, you ask them: Do you know much about vanadium? They say: I don’t even know what it is.”

About 80% of the vanadium produced globally — most of which comes from China, Russia and South Africa — is used to make metal alloys for high-strength steel production. More obscure applications include the production of ceramics and electronics, textile dyes, fertilisers, synthetic rubber, welding, and other alloys used in nuclear engineering and superconductors.

But in the age of electrification, vanadium’s role in the global economy appears to be shifting. With expanding sources of renewable energy comes the question: How, exactly, do we store it for later use? That burden currently falls largely on lithium-ion batteries, which got a jump on the market thanks partly to the billions of US government dollars pumped into Tesla’s ‘gigafactories’, which have been producing the batteries at relatively low cost.

But compared to the lithium-ion variety, vanadium redox flow batteries (VRFBs) present an alternative widely thought to be safer, cheaper in the long-run, and, with proper maintenance, technically capable of lasting forever — a vast improvement over the 2- or 3-year lifespan lithium-ion batteries are typically limited to.

The catch, however, is that vanadium is currently more expensive to extract than lithium, meaning a key factor in manifesting the world’s VRFB dreams is jacking up supply chains. It’s a weakness in the global economy not lost on Woodcock and the team at Viking Mines, which is positioning itself to help fill the gap.

Canegrass Battery Minerals Project

Central to Viking’s operations is a 25% stake in the Canegrass Battery Minerals Project in Western Australia, which the company has now secured as part of a farm-in agreement with Red Hawk Mining (ASX:RHK) in December 2022.

“We have sole management rights and discretion on activity,” Woodcock says.

“Essentially, through the farm-in arrangement, we ultimately have a pathway to 100% ownership of the project. The farm-in takes us to 99% and then for the last 1%, there’s a future series of production payments if the project ever goes operational, where we get that last 1%. Red Hawk has been very supportive of our work and collaborative when we’ve needed some assistance or information from them, but essentially we’re leading.”

Located 620km north-east of Perth near Mt Magnet in Western Australia, the Canegrass Project was the subject of a 7,500m reverse circulation drilling program in 2023 focusing on the Kinks, Kinks South and Fold Nose deposits, which — prior to the farm-in agreement and excluding Kinks South — hosted a collective JORC-compliant resource in 2017 measuring 79 million tonnes at 0.64% vanadium pentoxide (V2O5), 29.7% iron (Fe), and 6% titanium dioxide (TiO2).

With the recent drilling and the subsequent inclusion of Kinks South, Viking announced in November 2023 it had grown the resource by a whopping 103% to 146 million tonnes at 0.7% V2O5, 31.8% Fe, and 6.6% TiO2 — equivalent to some 2.2 billion pounds of contained V2O5. That estimate includes a higher-grade subset measuring 27.5 million tonnes at 0.87% V2O5, 37.3% Fe, and 8% TiO2.

“At this stage, our strategy is not about growing the resource further,” Woodcock explains.

We’ve done a good enough broad sweep across the whole area that we now want to focus on the richest part in order to be able to determine where there could be mineable resources

“I’ve said this for quite a long time — we’ve always been looking for a high-grade subset of the resource, around 30 million tonnes, which, on the basis of a 2-million-tonnes-per-year operation, would deliver about 15 years of mine life. We’ve done a good enough broad sweep across the whole area that we now want to focus on the richest part in order to be able to determine where there could be mineable resources.”

The intention, eventually, is to move into a Scoping Study stage. But Viking needs to better understand the resource — much of which sits in the inferred category — before that can happen. 

It was with such a milestone in mind that Viking launched a pit optimisation study, which it said will help identify what portion of the resource will provide positive returns based on project economics such as mining, processing and logistical costs. The findings will then assist in prioritising future drilling campaigns to elevate the company’s overall confidence in the resource.

A second-stage metallurgical testwork program is also underway after previous sighter testwork in 2023 produced concentrate up to 1.41% V2O5 and 58% Fe. The goal, Viking says, is to produce V2O5 flake and maintain the iron-titanium residue at marketable levels to add further value to the Canegrass Project. Results from the bulk concentrate sample are expected this month and throughout the March and June quarters.

But despite Viking’s clear focus on the potential of vanadium, Woodcock isn’t putting all his eggs in one basket.

First Hit Lithium and Gold Project

Second to Canegrass is the First Hit Lithium and Gold Project, which Viking acquired in November 2020. Located along the Ida and Zuleika shear zones in the Eastern Goldfields region of Western Australia, the project has been intermittently expanded over the years, most recently at the start of February when Viking won a ballot process to secure an additional 32km-square of tenure, taking the total land package to roughly 493km-square.

Prior to its closure in 2002, when gold prices hovered at a pitiable US$320 per ounce, an underground gold mine at the First Hit Project produced roughly 30,000 ounces at an average grade of 7.7 grams per tonne (g/t) gold. Little modern exploration has been carried out on the tenure since then, which Viking says presents a compelling opportunity to test near-mine extensions and regional targets for both gold and lithium.

“Late last year, we recognised the lithium prospectivity across the ground. We completed an initial first-pass auger drilling program in late November, early December, and submitted samples which we’re currently waiting for assays for,” Woodcock says.

Viking’s recognition of the lithium potential was sparked partly by Delta Lithium’s (ASX:DLI) success at its Mt Ida Project to the north of First Hit, which — according to an October 2023 announcement — hosts a mineral resource measuring 14.6 million tonnes at 1.2% lithium oxide (Li2O).

A review of historic soil sampling work has also had an impact.

“We identified these 50 parts per million (ppm) anomalies, which are high enough levels to be looking to follow up, considering it’s just soils,” Woodcock adds.

“That’s the reason we said: Okay, we’ll do this big auger program to try and identify some more anomalies that then will lead on to doing more field work. We’ll look at undertaking geological mapping to see if we can identify anything outcropping, rock chip sampling, or — in the case that we don’t see anything at surface because of cover — we’ll probably look to undertake some aircore drilling. That strategy is evolving and dependent on the results that we’re due to get imminently.”

‘We’ve still got $5 million in the bank’

Unique to Viking Mines is the way it’s funding all this.

“We haven’t raised any capital since 2021,” Woodcock says.

“That’s really been a fortuitous outcome of an asset the company had way before I got involved, in Ghana. The previous board sold a gold project there for US$10 million. The acquirers of that project basically didn’t pay and we chased them through the courts over the last eight years. Over the last few years we’ve received periodic payments as part of that process. So that’s been funding all of our activity. In April, it’ll be three years since we last raised and we’ve still got A$5 million in the bank at the end of the December quarter.”

Woodcock also noted Viking’s strong shareholder base, which he says recognises the long-term economic potential of the company’s assets over the coming years.

“They’re not in for a quick flip — buy stock now, sell in six months. We’ve got some substantial shareholders that have bought on the basis of the appreciating outlook for these commodities.”

The road ahead

Though Viking is not actively pursuing further project acquisitions, few options are off the table. Not married to any one commodity, Woodcock and the board “routinely” assess projects with resources showing strength in the market.

“I’d like to think we’d maybe bring another transaction into the company within the next 12 months, whether it be a mature, advanced project or an earlier-stage project,” he says.

“Again, it depends on the opportunity that we review. I think bringing another substantial project in would be a benefit. We’d probably be looking at reaching our limits there in terms of capacity. That said, the company and the board are supportive of growing. And if we get the right projects and we can get the share price appreciation and we can raise the money to fund it, we’re happy to plough forward on that basis.”

“I’d like to think we’d maybe bring another transaction into the company within the next 12 months, whether it be a mature, advanced project or an earlier-stage project

But some things are beyond the company’s field of control. What would be a substantial boon, Woodcock says, is a lift in vanadium prices over the next 6 or 12 months.

“The vanadium price” — currently around US$5.80 per pound of V2O5 — “is down at a bit of a low. This time 12 months ago it was double the price it is now. So a kind of reappreciation of the requirement for vanadium would see that uplift, which would put strength to our Canegrass Project.”

Such a scenario goes hand in hand with the measure of demand, which seems to be gaining traction.

In early February this year, British-owned energy company Pacific Green Australia made headlines for its plan to build a huge 1-gigawatt, 30-hectare grid-scale battery park — set to be one of Australia’s largest — in Portland, Victoria. Only a week earlier, Origin Energy (ASX:ORG) landed approval to build a 300-megawatt battery at its Mortlake Power Station in the same region.

Though significant, experts say the installations will barely scratch the surface of Australia’s energy storage needs.

“We’ve done various studies on this,” Bruce Mountain, head of the Victoria Energy Policy Centre at Victoria University, said in an interview with the ABC.

“Absolutely enormous amounts of storage are needed once you get to 90% wind and solar, as a proportion of your energy mix. There are other massive battery developments much closer to Melbourne. But we will need in the order of 100s to 1000s more to fully decarbonise energy supply, just in Victoria.”

For companies with a significant interest in the vanadium sector, it’s a sizeable opportunity. How much of that opportunity a player like Viking Mines might be able to net for itself is, of course, what Woodcock and his team are looking to figure out.

Write to Oliver Gray at Mining.com.au

Images: Viking Mines
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Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.