Toronto-listed Silver Elephant has announced the results of the preliminary economic assessment (PEA) for its Gibellini vanadium project, in Nevada, demonstrating an aftertax internal rate of return (IRR) of 25.4% and a net present value (NPV) of $127.9-million.
Gibellini, which Silver Elephant plans to spin off into a separate entity as part of a reorganisation of the company, will require a capital investment of $147-million to build a mine producing an average of 10.2-million pounds of vanadium pentoxide (V2O5) at an all-in sustaining cost of $6.04/lb.
The PEA base case assumes a vanadium price of $10/lb and Silver Elephant states that the project is well positioned to benefit from a rising price environment. A 30% increase in the vanadium price to $13/lb, relative to the base case, translates to a 42% IRR and a $295.4-million NPV.
The European price of V2O5 is currently $9.60/lb.
Vanadium is designated a critical material by the US government, owing to its importance to the defence and energy storage sectors. Supply is currently met through imports, mostly from Russia, China and South Africa.
Silver Elephant says that a structural vanadium deficit is expected to occur by 2025, with the rising popularity of the vanadium redox flow battery.
The PEA is based on a resource of 131.34-million pounds of contained V2O5 in the measured and indicated categories and 227.81-million pounds of contained V2O5 in the inferred category. The company believes that opportunity exists to upgrade the inferred resources to higher confidence categories through drilling.