Australian Vanadium Ltd. said Dec. 19 that it recommended that the Gabanintha vanadium project in Western Australia proceed into a definitive feasibility study as a pre-feasibility study returned positive financial outcomes amid strong vanadium market fundamentals.
The preliminary study outlined an ungeared posttax net present value, discounted at 8%, of US$1.41 billion and a 47.5% internal rate of return based on a steady vanadium pentoxide price of US$20 per pound over the operation's initial 17-year mine life.
Posttax NPV, discounted at 8%, jumped to US$1.64 billion, based on prevailing vanadium pentoxide market prices of US$22/lb as of the release date.
The study also presented pricing scenarios ranging from US$8.67/lb to US$13.00/lb of vanadium pentoxide, which resulted in posttax NPV, discounted at 8%, of between US$125 million and US$616 million and an IRR of between 12.4% and 27.2%.
A maiden ore reserve of 18.24 million tonnes grading 1.04% vanadium pentoxide will support a production rate of approximately 22.5 million pounds per annum of vanadium pentoxide.
Total capital expenditure was estimated at US$354 million, which includes owner's costs, contingencies and a partial gas pipeline investment.
The open pit mining and beneficiation operation is projected to produce 900,000 tonnes of magnetic concentrate at a planned grade of 1.4% vanadium pentoxide, with C1 operating expenses valued at US$4.15/lb.
Multiple opportunities to improve the project's economics were identified, which require further test work. The additional work will result in a revised project timeline, but Australian Vanadium said it is confident in advancing the operation toward implementation.
A diamond drilling program is scheduled for January 2019 that aims to provide material for pilot-scale test work to support the definitive feasibility study.