Special Report: Australian Vanadium’s (ASX:AVL) updated pre-feasibility study for its namesake project has substantially improved economics, particularly operating cost.
The reduction in C1 cash costs from $US4.15 ($5.47) per pound of vanadium in the original 2018 PFS to the current $US3.66/lb – including a $US0.49/lb credit from an iron titanium co-product – makes the project near Meekatharra, Western Australia, competitive with global primary vanadium producers.
Net present value (NPV) and internal rate of return (IRR), which are both measures of a project’s profitability, have improved by 184 per cent and 41 per cent to $909m and 17.5 per cent respectively.
Project payback has improved by 17.5 per cent to 6.6 years while average annual EBITDA has increased by 31 per cent to $144m.
Anticipated mine life has also increased from 17 years to 25 years while ore reserves are up 76 per cent to 32.1 million tonnes grading 1.05 per cent vanadium.
The Australian Vanadium project is forecast to have ore to concentrate recovery of 74.8 per cent over the life of mine while the new flowsheet for the processing plant is expected to result in 88 per cent recovery of vanadium using tried and tested grate kiln technology.
Managing director Vincent Algar says the update outlines a robust processing environment for the exceptional orebody that is able to generate significant cash flows.
“We have achieved our objective of outlining a low-cost, globally competitive operation, able to operate over a long life under all market conditions,” he added.
“We have many opportunities to outperform our objectives, as we drive towards funding and project construction.
“The changes we have made are substantial, but considered, aiming at maximising the value of vanadium in its role as both a critical steel material and a battery metal.”
Further developments
Australian Vanadium has identified synergies with the growing energy storage market and
hydrogen industry capability in Australia.
Opportunities for improvements include the consumption of hydrogen in processing and haulage along with the use of renewable energy and vanadium redox flow battery (VRFB) based energy storage at its planned operations.
The company is also driving vanadium market growth through its VRFB-focused subsidiary VSUN Energy, with downstream processing opportunities available through vanadium pentoxide and vanadium electrolyte production.
Additionally, the updated PFS supports the completion of a bankable feasibility study in mid-2021, finalising offtake, obtaining final approvals and securing project finance.
This article was developed in collaboration with Australian Vanadium, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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