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Australian Vanadium eyes potential deals with mining heavyweights

Australian Vanadium Ltd.'s focus is firmly fixed on bringing its Gabanintha project in Western Australia into production as soon as possible, but the ASX-listed junior is keeping its options open when it comes to potential investment by the larger players.

Managing Director Vincent Algar said that with rising vanadium demand, majors like Glencore Plc and POSCO will likely be "sitting up and taking notice" of large high-grade deposits.

"So that's obviously always on my agenda, looking and talking to those people about project-level investment," he told S&P Global Market Intelligence.

According to Australian Vanadium, the Gabanintha project is one of the highest-grade open pit vanadium deposits currently moving toward production.

The project hosts a measured, indicated and inferred resource of 91.4 million tonnes at 0.82% vanadium pentoxide, or V2O5, including a high-grade resource of 56.8 million tonnes at 1.0% V2O5.

Australian Vanadium has a strategic advantage in that it is located near Australia's only producing vanadium operation up until three and a half years ago.

The Windimurra mine, which is owned by Atlantic Ltd., was mothballed in February 2014 after a fire caused extensive damage to the processing plant, restructuring and funding talks failed and receivers were appointed to the Atlantic subsidiaries that operated the project.

"The shortest possible timeframe for any vanadium production in Australia would be if the old Windimurra operation was restarted," Algar said.

"That even in itself would take a bit of redesign and work from the current private owners, Atlantic Ltd., but that for us would be a great opportunity, because if Windimurra was restarted that would mean we would have a vanadium plant right down the road from us. That would give us a massive opportunity to leverage off."

Algar said Atlantic is "well healed" since its misfortune in 2014, which bodes well for a potential restart of the Windimurra operation.

"There's good money behind it so it will find its way, but I will do everything in my power to try and crystalize something there for the benefit of my shareholders," he said.

Australian Vanadium has the help of Nonexecutive Director Daniel Harris, who was formerly CEO and COO at Atlantic and helped to rebuild the Windimurra operation up until it was placed on care and maintenance.

"Having the only real working, already existing, care and maintenance vanadium plant right down the road from Gabanintha is very, very beneficial to us, and in addition that relationship strength from the work that Daniel's done is a good feather in our cap and that means we could probably be in production as an entity faster than anybody else except Windimurra itself," Algar said.

Sticking close to home

Australian Vanadium has identified a couple of opportunities for potential acquisitions or joint ventures within Australia, but currently has no plans to look overseas.

"In terms of offshore acquisitions in vanadium projects, I wouldn't think that we would need to go there at the moment," Algar told S&P.

"There's a lot of complexity in the vanadium world outside of the country and you're better off working on what you've got, and what we've got is really, really good. So until we've exhausted ourselves at Gabanintha in terms of resource feasibility and definition, I think we've got to keep sticking to that."

Australian Vanadium is planning to do more drilling, environmental studies and feasibility work at Gabanintha over the next six to 12 months.