Photo by: Bloombeg
PERTH (miningweekly.com) – The share price of ASX-listed TNG spiked by more than 21% on Monday after the company signed a binding life-of-mine (LoM) offtake agreement over its Mt Peake vanadium project, in the Northern Territory.
The offtake agreement with Korean ferrovanadium group Woojin covered a minimum 60% of all vanadium products produced at Mt Peake over its 15-year mine life.
Woojin would buy the vanadium product at an annually-agreed market price under a LoM take-or-pay agreement, which incorporated a guaranteed minimum price of 20% above TNG’s cost of production estimates.
TNG also inked a binding LoM technology transfer agreement with Woojin to use its proprietary technology for the production of ferrovanadium at the TIVAN refinery site. This technology would provide TNG with the flexibility to diversify its product portfolio with a product directly saleable to major steel mills and to potentially profit from the price advantage over the life of the project.
TNG MD Paul Burton said the signing of the first-ever offtake agreement represented a huge milestone for the company and for the Mt Peake project.
“The significance of this historic agreement should not be underestimated, with Woojin’s commitment to purchase at least 60% of our vanadium production on a take-or-pay basis with a guaranteed minimum price and opening the way to secure investment from Korean and other international companies towards financing and development.”
Burton said the agreements with Woojin crystalised a very close and strong relationship, developed over the past year from a nonbinding memorandum of understanding to a commercial agreement for the life of the project.
A July definitive feasibility study found that the project would require a capital investment of A$970-million. The study considered a two-staged development, with Stage 1 comprising a three-million-tonne-a-year operation, expanding to six-million tonnes a year in Stage 2, after four years of production.
The project was expected to produce about 17 560 t/y of vanadium oxide, 236 000 t/y of titanium dioxide and a further 637 000 t/y of pig iron.