VR8 CEO John Ciganek
Vanadium Resources (VR8), a South Africa-focused, ASX-listed junior, on Thursday announced an offtake memorandum of understanding (MoU) with one of China’s leading vanadium nitride producers, Panjin Hexiang New Materials Technology.
Under the terms of the MoU, VR8 will supply 4 000 t/y of vanadium pentoxide (V2O5) from its Steelpoortdrift and Tweefontein vanadium operations to Hexiang. The agreement spans a period of five years, with the potential for Hexiang to extend for an additional five years.
The offtake agreement accounts for about 37% of VR8’s planned V2O5 flake production capacity of 11 000 t/y for the initial Phase 1 operations.
VR8 CEO John Ciganek has expressed enthusiasm about the partnership, citing Hexiang’s expertise in converting V2O5 into vanadium-nitrogen alloys, primary used in the steel industry.
In addition, he said that VR8 retained production capacity to explore offtake opportunities in other regions or to venture into the vanadium redox flow battery market.
VR8’s Steelpoort project boasts a substantial vanadium deposit that promises to endure for generations. With a mineral resource of 680-million tons at an average in-situ grade of 0.7% V2O5, equivalent to 4.74-million tons of contained metal, and a proved and proven ore reserve of 77-million tons at an average grade of 0.72%, equivalent to 0.55-million tons of contained metal, the project demonstrates immense potential.
From Steelpoortdrift, VR8 plans to produce a vanadium-rich concentrate, which will be transported to the nearby Tweefontein project, with the aim of producing an average of 18 000 t/y of V2O5.
At proposed throughput rates for concentrate at the Tweefontein plant, the Steelpoortdrift project has the capacity to sustain production for over 180 years.
An October 2022 definitive feasibility study (DFS) over the combined projects confirmed them as a world-class deposit with robust economics. The study yielded an attributable post-tax net present value (NPV), using a 7.5% discount, of $0.9-billion (based on 73.95% ownership), an internal rate of return of 42%, and a 27-month payback period, considering a preproduction capital expenditure of $211-million and an initial 25-year mine life.
Subsequent to the DFS, VR8 increased its ownership in the Steelpoortdrift project to 86.49%, resulting in an improved attributable NPV of $1.05-billion.