2011 FeV Scoping Study
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2011 FeV Scoping Study
TNG has reported further significant results from a supplementary independent Scoping Study to evaluate the potential of producing a high-value ferro-vanadium product from its 100%-owned Mount Peake Vanadium-Iron-Titanium Project in the Northern Territory.
TNG commissioned metallurgical consultants, Mineral Engineering Technical Services (METS) and Snowden Mining Industry Consultants Pty Ltd (“Snowden”) to commence the study following the February 2011 Scoping Study based on a proposal to divert part or all of the vanadium pentoxide (V2O5) product to a downstream ferro-vanadium (FeV) plant. Such a plant could be constructed in Darwin or elsewhere, such as Whyalla.
Click here to view the full Snowdens Scoping Study on the Mount Peake Project.
METS’ Scoping Study assumed a fixed production of 4,700 tonnes per annum of ferro-vanadium – or 105,000 tonnes over the life of the Project. This assumption was based on processing of the currently defined Inferred Resource at a rate of 2Mtpa. The capital cost for constructing the ferro-vanadium plant is estimated at A$43.8 million.
The study estimates a Nett Annual Cashflow1 of $78 million from the production of FeV and increases the Mount Peake Project’s Total Nett Annual Cashflow1 to $226 million or $5.34 billion over the estimated mine life of 24 years. This represents a substantial 50% increase and improvement on the project operating and financial parameters of the Mount Peake Project as outlined in the February 2011 Scoping Study (see Appendix 1 below). This cashflow was based on a projected ferro-vanadium spot price of US$50/kg (refer below).
Ferro-vanadium is a highly valuable downstream product which sells for more than double the price of vanadium pentoxide.
Ferro-vanadium, which is produced in an electric-arc furnace, is an alloy of iron and vanadium. It is used to help make specialist steel, particularly for high-speed tools which require hardness and strength. Demand for vanadium products has risen sharply on the back of high-technology applications in the medical, electronics and aerospace industries.
Independent metal experts Roskill noted recently that the longer-term price for ferro-vanadium is forecast to rise from the current price of US$35/kg to US$75/kg by 2015. In the past decade, China has become both the main producer and main consumer of vanadium. Over the next decade, demand for vanadium is anticipated to be driven by emerging economies as they grow steel output and increase production of high-strength steels which have a higher vanadium content.
The Ferro-vanadium Scoping Study has been based on the same mining parameters as the project Scoping Study completed in February 2011 (see ASX announcement of 15 February 2011 ), with the contemplated mining and expansion sequence remaining unchanged except for the construction of a separate FeV plant.
The key findings of this Ferro-Vanadium Scoping Study are as follows:
- Mine Life: 23.63 years
- Ferro-vanadium processing rate (life-of-mine): 2 Mt /annum
- Total FeV metal production: 105,000 tonnes
- Total operating costs (excluding royalties): $5.36/tonne
- Preliminary capital estimate2: $43.8M (for Stage 1 – 2Mtpa)
- Nett Cashflow1 $78M / annum
- New Total Project Nett Cashflow1 $226M / annum
Key assumptions of the Scoping Study included:
- Operating costs and pit slope angles related to mining estimated to a Scoping Study level (±50%)
- V205 produced at site and transported by rail to FeV plant in Darwin
- Commodity pricing based on Roskill price forecast assumed for commencement of production by 2015
- FeV price of USD $50/kg
- Royalty rate of 2.5% per tonne of plant feed
- A$/US$ exchange rate of 0.85 US$ = 1A$
Ore processing Rate:
This Study is based on the processing of anticipated V2O5 production from a 2 million tonne per annum (Mtpa) mining operation over the life of the mine, and does not take into account TNG’s plan to increase mining levels to 5Mtpa through a Phase 2 mine expansion. This indicates there is significant potential to further enhance the project economics through additional ferro-vanadium production under an expanded mining scenario and from the identification of high-grade zones within the currently Inferred Resource.
Operating Cost:
A conservative operating cost has been estimated to take into account power generation requirements.
Exchange Rate:
The exchange rate was selected as the average forecast from 7 banks for the next 4 years. However in light of current exchange rate movements a parity exchange rate test using $1 US = $1 AUD, was also performed by Snowden and also a lower USD $30 / kg FeV price (current price USD $35/kg). All tests produced POSITIVE Nett Cashflow1 (table 1) providing further support to a robust project. The tests also clearly highlighted the sensitivity to price fluctuations for Vanadium. The company considers it is in an advantageous position to absorb these with the ability to produce additional commercial high-grade Iron and Titanium products thereby not have a total reliance on a single product.
| Parameter | Unit | Value | Value | Value |
| Exchange Rate | $AU/$US | $0.85 | $0.85 | $1.00 |
| FeV Price | US$/t | $50,000.00 | $30,000.00 | $50,000.00 |
| V2O5 Price | US$/t | $17,637.00 | $17,637.00 | $17,637.00 |
| TiO2 Price | US$/t | $155.60 | $155.60 | $155.60 |
| Iron Price | US$/t | $200.00 | $200.00 | $200.00 |
| NPV (M) | $1,598.51 | $763.12 | $879.34 |
Table 1: FeV Price & Exchange Rate sensitivity test
In order to progress the ferro-vanadium concept, Snowdens recommended that TNG seek specialist advice on projected price and demand for ferro-vanadium, conduct further process recovery research and confirmation of process flows and undertake more detailed investigation of capital and operating costs and the financial parameters of a downstream operation. All these will be addressed in the company’s Pre-Feasibility study.
The company is proceeding with the next phase of pilot plant test work and pre-feasibility studies on the Mount Peake Project, including further resource drilling to upgrade the current JORC resource to Indicated and/or Measured standard and environmental studies.
Appendix 1:
FEBRUARY 2011 SCOPING STUDY RESULTS:
The key findings of the Scoping Study are as follows:
- Mine Life: 23.63 years
- Processing rate (life-of-mine): 5 Mt /annum
- Life-of-mine production: 107.1 million tonnes
- Process head grade: 0.33% V2O5, 25.39% Fe, 6.04% TiO2
- Total metal production: 349kt V2O5, 27,182kt Fe, 6,463kt TiO2
- Total operating costs (excluding royalties): $46.6/tonne
- Preliminary capital estimate: $370.3M (for Stage 1 – 2Mtpa)
$307.6M (for Stage 2 – 5Mtpa)
- Nett Cashflow1 $148.37M / annum
Key assumptions of the Scoping Study:
- Operating costs and pit slope angles related to mining estimated to a Scoping Study level (±50%)
- Commodity pricing based on a previous 4 year average
- V2O5 price of US$8.00/lb
- TiO2 price of US$155.60/tonne
- Fe2O3 price of US$200/tone
- Royalty rate of 2.5% per tonne of plant feed
- A$/US$ exchange rate of 0.85 US$ = 1A$
1Nett Cashflow
Nett Cashflow is defined as the average undiscounted cashflow per annum after all CAPEX (pre-strip CAPEX, initial CAPEX, and expansion CAPEX has been deducted, but ignores cost or source of capital, hedging, tax, depreciation, rehabilitation and salvage.
2 FeV plant capacity capital cost estimate (+- 35% Accuracy)
| Area | A$ Million |
| Direct cost | |
| Ferrovanadium plant | 28.8 |
| Direct cost sub-total | 28.8 |
| Indirect cost | |
| Field indirects | 3.5 |
| EPCM | 4.3 |
| Vendor reps | 0.2 |
| Capital spares | 0.7 |
| Commissioning spares | 0.2 |
| Insurance | 0.4 |
| Indirect cost sub-total | 9.3 |
| Total cost | |
| Contingency | 5.7 |
| Grand total | 43.8 |