2011 Scoping Study

2011 Scoping Study

The February 2011 Scoping Study was based on the revised JORC Inferred Resource for Mount Peake published in 2010 of 139.1Mt @ 0.29% V2O5, 5.34% TiO2 and 23.66% Fe. In addition to this resource, TNG has published an Exploration
Target1 of 500-700Mt grading 0.2-0.4% V2O5 and 25-35% Fe.

Click here to view the full Snowdens Scoping Study on the Mount Peake Project.

The Scoping Study was commissioned based on a conventional open pit mining operation processing 5Mtpa, which is
significantly higher than the original 2Mtpa processing rate contemplated in the original 2009 Scoping Study. Initial
optimization work by Snowden indicates that the economics of the Project is sensitive to commodity pricing, exchange
rates and processing rates.

Open pit optimizations were performed based on a 5Mtpa operation, with production commencing at 2Mtpa and ramping
up after three years to the long-term processing rate of 5Mtpa. The study was based on a total identified mining inventory
of 106Mt @ 0.33% V2O5, 6.04% TiO2 and 25.39% Fe with ore processed initially through a 2Mtpa plant designed to
produce vanadium pentoxide (V2O5), titanium dioxide (TiO2) and iron oxide (Fe2O3) concentrate utilizing the newly
developed hydrometallurgical process.

The initial plant total CAPEX2 included in the modeling has been estimated by METS to be $370M, with a +- 35%
accuracy. This would be expanded to 5Mtpa capacity at an additional estimated total CAPEX of $307M after three years,
partially funded by cash flow.

Test work carried out by TNG and METS has shown that the magnetic concentrate that would be produced from Mount
Peake material is amenable to hydrometallurgical processing, resulting in high recoveries of vanadium (90%) and iron
(58%) in the acid leaching. METS advise that recoveries may continue to improve with further optimization work currently
underway.

Concentrate product would be trucked to a conceptual railhead near Barrow Creek on the Alice Springs-to-Darwin railway
line (approximately 70km) and then railed to Darwin (approximately 1,180km) for shipping.

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 estimate2:
$370.3M (for Stage 1 – 2Mtpa)
 $307.6M (for Stage 2 – 5Mtpa)
  • Nett Cash Flow3
$148.37M / annum

 

Key assumptions of the Scoping Study included:

  • 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/tonne
 
  • Royalty rate of 2.5% per tonne of plant feed
 
  • A$/US$ exchange rate of 0.85 US$ = 1A$
 

 

To view the announcement regarding the recent Scoping Study results, please click here.

 

1The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resources.

 

2Estimate of Capital cost include both Direct and Indirect costs,.
                         2Mtpa plant capacity capital cost estimate
Area
A$ Million
Direct cost
  
Crushing
13.8
Beneficiation
2.3
Leaching and CCD
32.5
Metal extraction and purification
24.1
Vanadium precipitation, drying and packing
12.3
Acid regeneration and precipitation of iron oxide
131.2
Reagent and utilities
26.9
Direct cost sub-total
243.0
Indirect cost
  
Field indirects
29.2
EPCM
36.4
Vendor reps
1.8
Capital spares
6.0
Commissioning spares
1.8
Insurance
3.7
Indirect cost sub-total
79.0
Total cost
 
Contingency
48.3
Grand total
370.3
                         5Mtpa plant capacity capital cost estimate (includes existing 2Mt, ie upgrade is $307.5M)
Area
A$ Million
Direct cost
  
Crushing
25.2
Beneficiation
4.2
Leaching and CCD
59.4
Metal extraction and purification
44.2
Vanadium precipitation, drying and packing
22.5
Acid regeneration and precipitation of iron oxide
240.1
Reagent and utilities
49.2
Direct cost sub-total
444.8
Indirect cost
  
Field indirects
53.4
EPCM
66.7
Vendor reps
3.3
Capital spares
11.2
Commissioning spares
3.3
Insurance
6.7
Indirect cost sub-total
144.6
Total cost
 
Contingency
88.4
Grand total
677.8
 
3Nett Cash Flow
Nett Cash Flow is defined as the average undiscounted cash flow per annum after all CAPEX (pre-strip CAPEX, initial CAPEX, and expansion CAPEX has been deducted, but cost or source of capital, hedging, tax, depreciation, rehabilitation and salvage.