Australian Vanadium has confirmed the viability of its namesake project in Western Australia with the release of its bankable feasibility study (BFS).
Based on a price of $US10.50 ($13.90) per pound of vanadium pentoxide (V2O5), the BFS demonstrated the project to have a pre-tax net present value (NPV) of $833 million and an equity internal rate of return (IRR) of 20.6 per cent.
Australia Vanadium’s ore reserve has been updated to 30.9 million tonnes (Mt) at 1.09 per cent V2O5 , comprising a proved reserve of 10.5Mt at 1.11 per cent V2O5 and a probable reserve of 20.4Mt at 1.07 per cent V2O5.
The project’s pre-feasibility study (PFS), released in December 2020, indicated an ore reserve of 32.1Mt at 1.05 per cent V2O5.
Australian Vanadium expects the project to produce 24.7 million pounds of V2O5 per annum as a 99.5 per cent high purity flake, and 900,000 dry tonnes per annum of iron-titanium (FeTi) by-product.
With an expected mine life of 25 years, Australian Vanadium will generate an estimated $175 million in annual EBITDA (earnings before interest, taxes, depreciation and amortisation) for a total EBITDA of $4.4 billion.
The project payback period following first production is estimated to be 7.3 years.
En route to first production, Australian Vanadium also has a $49 million Australian Government grant at its disposal, which was awarded as part of the Modern Manufacturing Initiative’s collaboration stream.
Australian Vanadium managing director Vincent Algar said it was the perfect time to bring a vanadium project onstream.
“We are in a period of growing demand for vanadium from both steel and energy storage markets,” he said.
“The robust designs and financials presented in this work firm the pathway to new vanadium production and sets the project apart as the most advanced new primary vanadium project globally.
“The thorough study process has reduced risks and therefore increased confidence for parties looking to invest in the future of vanadium from a stable mining region.”
To support a final investment decision (FID) expected in the fourth quarter of 2022, Australian Vanadium is currently working with debt advisors to structure and secure debt financing. An equity strategy is also being finalised.
Following the FID, Australian Vanadium will select engineering, procurement and construction management (EPCM), and engineering, procurement and construction (EPC) contractors, and complete the front-end engineering design (FEED).
If relevant approvals and financing are achieved, Australian Vanadium expects to commence construction in the fourth quarter of 2023.