Electric Royalties Ltd. (TSXV:ELEC) (OTCQB:ELECF) (“Electric Royalties” or the “Company”) is pleased to announce that Voyager Metals Inc. (TSXV:VONE) (“Voyager”) has filed a Preliminary Economic Assessment (“PEA”) of the Mont Sorcier iron and vanadium project (“Mont Sorcier”) located near Chibougamau, Quebec, Canada, on SEDAR.
Electric Royalties holds a 1% gross metal royalty on vanadium production at Mont Sorcier, which is projected to have a 21-year operating mine life. If the anticipated project is placed in production as set out in the PEA, the Company estimates that for the life of mine, average annual royalty revenues of US$750,000 to US$1.5 million per year, based on the US$15 to US$30 per tonne vanadium credits forecast in the PEA, may be payable.
Brendan Yurik, CEO of Electric Royalties, commented: “We are pleased with the results of the PEA that forecasts robust economics based on the Indicated Resources of Mont Sorcier’s North Zone only. This leaves significant upside potential from the conversion of Inferred Resources in the future. The project is well positioned to leverage the production of premium high-grade magnetite iron concentrate with valuable vanadium credits. Further, the advantageous infrastructure may help to shorten the development timeline. We look forward to additional favourable news from Voyager as it continues work on the feasibility study expected in Q1 2023 to bring Mont Sorcier to a formal development decision.”
Highlights of the PEA (all dollar values are in US dollars unless otherwise stated)1:
An after-tax NPV at 8% discount rate of $1.6 billion and IRR of 43%
Potential 21-year life of mine (“LOM”), with positive after-tax cash flow commencing in year 1 of operation
Annual average EBITDA of $348 million and average annual free cash flow of $235 million over LOM
Annual production targeted at approximately 5.0 million tonnes of high grade, low impurity, iron concentrate grading approximately 65% iron with 0.52% vanadium pentoxide (“V2O5”) per tonne of concentrate
Total operating costs of $66 per tonne of concentrate over LOM (freight to China included)
Initial Capex estimated at $574 million includes $118 million contingency
Payback period under 2 years
21-year LOM uses fraction of total resources
Open-pit mining operation with a LOM strip ratio less than 0.9:1
There is potential to enhance the value of the overall project through future upgrading of the North Zone Inferred Resource and the potential mining of the South Zone Indicated and Inferred Resources that would be expected to improve the economics by potentially increasing the overall life-of-mine or open up the potential for future expansion in production capacity
Iron and Vanadium Pricing Market Study
Voyager commissioned an Independent Market Pricing Study in 2019 to determine the potential value of the vanadium-rich iron product produced by Mont Sorcier, given the lack of available quoted market index prices. The study reviewed main iron index price forecasts as well as estimates of the applicable vanadium credits. The study reviewed a value-in-use methodology based upon a review of the grade and concentrate chemistry from Mont Sorcier relative to other similar iron products. The study concluded that the concentrate from Mont Sorcier should receive a $15 per tonne premium to the Platts 65 price iron index for the contained vanadium credits (based on a net attributable value using a long-term V2O5 price of $7.25 per pound).
Mont Sorcier Concentrate Pricing
Mont Sorcier iron and vanadium concentrate is a high grade, low impurity product. The silica level is slightly lower than that of the Platts 65 benchmark, however due to low alumina and phosphorus content, it is considered a high purity iron and vanadium concentrate. This should attract improved pricing providing that customers (steel plants) that will benefit from the absence of these elements are targeted. The fine particle size may result in a customer discount depending on the market; however, the magnetite content (and decreased sintering/pelletizing costs) could partially or completely offset the possible penalty. Based on the various market studies and analyst forecasts for iron ore fines and high iron grade (65%) of Mont Sorcier concentrate and vanadium credits, a long-term price of $135 per tonne of concentrate (with freight to China) was selected for use in the PEA.
Project Summary
Mont Sorcier is located approximately 18 km east of Chibougamau, Quebec, in a region with a long history of mining and established infrastructure to support future development. Mont Sorcier has access to all season roads, low-cost provincial hydropower and is within 50 km of rail connection to two all season, ocean-going ports. The railway runs approximately 370 km to the Port of Saguenay which is currently underutilized and can provide sufficient capacity for the project needs.
About Electric Royalties Ltd.
Electric Royalties is a royalty company established to take advantage of the demand for a wide range of commodities (lithium, vanadium, manganese, tin, graphite, cobalt, nickel, zinc and copper) that will benefit from the drive toward electrification of a variety of consumer products: cars, rechargeable batteries, large scale energy storage, renewable energy generation and other applications.
Electric vehicle sales, battery production capacity and renewable energy generation are slated to increase significantly over the next several years and with it, the demand for these targeted commodities. This creates a unique opportunity to invest in and acquire royalties over the mines and projects that will supply the materials needed to fuel the electric revolution.
Electric Royalties has a growing portfolio of 20 royalties, including one royalty that currently generates revenue. The Company is focused predominantly on acquiring royalties on advanced stage and operating projects to build a diversified portfolio located in jurisdictions with low geopolitical risk, which offers investors exposure to the clean energy transition via the underlying commodities required to rebuild the global infrastructure over the next several decades towards a decarbonized global economy.
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