TORONTO (miningweekly.com) – TSX Venture Exchange-listed Energizer Resources could potentially supply approximately 14% of the global vanadium market when its Green Giant project in Madagascar starts up, said vice-president for business development Brent Nykoliation.
The Toronto-based firm, which changed its name in late 2009 from Uranium Star Corp, is looking to take advantage of expected growth in demand for the metal, which is used to strengthen steel and in speciality alloys, but also has new and growing uses in rechargeable batteries and for large-scale energy storage units.
Nykoliation said the company is targeting production in 2014 from Green Giant, which is already the third-biggest known vanadium deposit in the world. Only 25% of the 21-km vanadium trend has been drilled to date.
The Green Giant project is also unusual in that it is sediment hosted – most of the world's vanadium deposits are hosted in magnetite – and can produce high-purity vanadium pentoxide (V2O5), which is needed for the battery market and also used by steel producers, he said.
“That has big, big implications for us. We are positioning ourselves as a game changer,” Nykoliation said in an interview.
However, Byron Capital Markets head of global research Jon Hykawy said that there are still some questions about the economics of the metallurgical processes and estimated costs at the project.
“Without a doubt, it's an extremely large deposit,” he said in an interview.
“But large doesn't equate to economic, unless you can prove you can produce the material below what you can sell it for,” he said.
“I would say overall we are cautious regarding Energizer.”
Green Giant is one of three vanadium mines expected to start production in the next five years, although it is the only one that will produce V2O5, rather than ferrovanadium.
The other two are Largo Resources' Maracas deposit, in Brazil, and the Windimurra project in Australia, owned by Atlantic.
Energizer completed an internal economic analysis on the project, and has hired South Africa's DRA Mineral Projects for a preliminary economic assessment, which should be completed in the next four to six months.
A metallurgical scoping study indicated recoveries of around 82%.
The company has also engaged the Balloch Group to help identify potential strategic partners in China and will consider alliances and offtake deals with players in both the steel and battery sectors, Nykoliation said.
Energizer announced this month it would raise $15-million in a private placement, and that should see it through until the time comes to finance construction of the project.
The company is looking at taking on one or more strategic partners in an equity-for-offtake arrangement to fund development, he said.
The firm will be able to scale up production for the battery and steel markets to match demand, and sees the Green Giant project as likely helping to stabilise both production and prices of high-purity vanadium, Nykoliation said.
Steel producers are the biggest consumers, currently taking up around 85% of the market, and, as an alloying agent with titanium, vanadium is irreplaceable in aerospace applications.
Vanadium consumption is expected to grow around seven percent a year over the next decade, based on demand for use in steel and speciality alloys, with industry reports predicting supply shortages based on steel growth alone as early as 2013.
And on the battery side, lithium-vanadium-phosphate batteries are increasingly being viewed as the optimal combination for rechargeable batteries, including for vehicles, and are being developed by companies including Subaru, China's BYD and Japan's Yuasa Corp and Mitsubishi Motors.
There is also significant scope for demand growth from a more recent application, the vanadium redox flow battery (VRB), which is being developed as a means to store renewable energy and then redistribute it to the power grid.
“We are very bullish on vanadium,” Byron battery materials and technologies analyst Jonathan Lee told Mining Weekly Online.
“And with the implementation of a lot of other renewable energies you will need the capacity to store this energy, so we are very bullish on vanadium redox batteries, as well as vanadium-lithium phosphate batteries.”
The Green Giant project has an NI 43-101 compliant indicated resource of 49,5-million tons, at an average grade of 0,693% V2O5, containing 756,3-million pounds of V2O5. It also has an inferred resource of 9,7-million tons at an average grade of 0,632% V2O5, containing 134,5-million pounds of V2O5
Energizer Resources expects the initial cost to build the project will be relatively low, thanks to another project being developed nearby in Madagascar.
Asia Thai Mining is building the Sakoa coal project, including power, rail, water and port infrastructure, which Energizer expects it will be able to use on a 'pay-for-use' basis.
However, Hykawy noted that that adds risk to the project until the Sakoa infrastructure is in place and the arrangement is formalised.