TORONTO (miningweekly.com) – Canadian vanadium producer Largo Resources has released the results of a National Instrument 43-101-compliant technical report for its flagship Maracás Menchen mine, in Bahia, Brazil, outlining increased value of the mine and a significantly longer mine life, based on the development of several satellite deposits.
Brazil-based consulting engineering firm GE21 Consultoria Mineral Ltda prepared the report, which included a feasibility study for the Campbell pit and a preliminary economic assessment (PEA) for the Gulçari A Norte, Gulçari B, Novo Amparo, Novo Amparo Norte, Campbell in-pit resources and São José satellite deposits at the Maracás Menchen mine.
The report outlined an after-tax net present value (NPV), using an 8% discount rate, of $542-million for the reserves at the Campbell pit, representing an increase of about 195% over the NPV reported for reserves in Largo's updated mine plan and mineral reserve report filed on July 8, 2016.
The after-tax NPV for the mineral resources in the satellite deposits came to $140-million.
"Both the increase in the NPV of our operations and the greatly increased mine life that could be achieved as a result of the satellite deposits speak to what I view as a very bright future for Largo. This technical report further reinforces that Largo has a world class vanadium operation and I am confident that our team will continue to meet and exceed our operational expectations," CEO Mark Smith commented.
The Campbell pit has total proven and probable reserves of 19-million tonnes grading 1.13% vanadium pentoxide (V2O5), able to support mining in the pit for 11 years.
The technical report considered two expansions to increase output at Campbell Pit, comprising an expansion to 960 t/m in 2019 (11 520 t/y) and in 2020, expanding capacity to 1 100 t/m, or 13 200 t/a.
Should the company be successful to covert the inferred resources at satellite deposits to the mineral reserves classification, it could mean a further 12 years of production at the operation.
Largo advised that the technical report was based solely on vanadium, and did not add value for any by-products, including iron, ilmenite and platinum-group metals.
The report was based on a long-term V2O5 price assumption of $6.34/lb for the life of mine, except for the years 2018 and 2019, where vanadium pentoxide price of $9/lb was used.
The TSX-listed company said earlier this month that Maracás Menchen had produced 2 513 t of V2O5 in the third quarter ended September – 202 t more than the previous record set in the second quarter of 2016, and 4.7% above the plant’s nameplate capacity.
The record output dovetailed into a 249% jump in V2O5 prices, which according to Metal Bulletin, averaged $8.74/lb in the period – up from the $3.51/lb average price in the same period of 2016. Recent V2O5 prices have touched the $11/lb level, as a Chinese crackdown on illegal miners and increased environmental enforcement push prices higher.