Pre-Feasibility Study confirms Mokopane Vanadium Project as one of the lowest cost vanadium projects with strategic importance to the future vanadium market
Bushveld Minerals Limited (AIM: BMN), a mineral development company with a portfolio of vanadium and titanium-bearing iron ore, tin and coal assets in Southern Africa, has presented DirectorsTalk a summary of the Pre-Feasibility Study (PFS) at its 64 % owned Mokopane Vanadium Project (“Mokopane Vanadium” or the “Project”) in South Africa. The results of the PFS confirm the emergence of Mokopane Vanadium as a market-leading vanadium project that, on all objective measures, compares favourably with other leading vanadium deposits.
Highlights
· PFS confirms Mokopane Vanadium as a strategic asset of major significance to the future global vanadium market based on:
– Long-term mine life: Ore Reserve of 28.56 million tonnes (“Mt”) supporting a minimum 30 year life of mine (“LoM”) from less than 10% of the total project resource of 298 Mt, which represents significant exploration upside
– Established processing method lowers project risks: selected salt roast processing methodproven on a commercial scale by existing facilities over many decades of operation
– High-quality product: PFS contemplates a 1.0 Mtpa run of mine (“RoM”) operation producing on average 9,525 tpa of vanadium pentoxide (V2O5) flakes at 99.5 weighted percent (wt%) purity
– Robust project economics: Payback period of four years with a Pre-tax NPV of US$418.0 M (based on a 9% base case discount rate) and an IRR of 24.8% (pre-tax) using a conservative long-term US$:ZAR12.75 exchange rate and a real vanadium price of US$7.50/lb (US$16.53/kg) for V2O5flakes at >98 % purity
– Significant market share: RoM production to contribute as much as 6 % of global annualised vanadium output and ~50 % of South African output relative to actual 2014 market supply figures
· Base case scenario involves an integrated mining-concentrator-salt roast process business case for a modest capital expenditure of US$ 298.1 M to produce the 9,525 tpa V2O5
· The mining right application for the Project was submitted in Q1 2015 and Bushveld awaits approval.
Bushveld Minerals CEO, Fortune Mojapelo, said: “We are pleased to present such a positive PFS for the Mokopane Vanadium Project. The results support our long-held goal to develop this project into a highly profitable, significant contributor to South African and global vanadium market output.
With a first quartile cash cost proposition, the project provides precisely the sort of asset we require to pursue our recently announced integrated vanadium development strategy. We have taken a conservative approach in determinig the PFS parameters and, in my view, as the global economic environment improves the economics of the project will only get better.
While we are mindful of the recent low commodity price environment including sub-US$3.50/lb V2O5 prices, an analysis of the fundamentals of the market, backed by independent research, suggests that a significant proportion of the current global vanadium production is unsustainable at these levels. Significant reductions in vanadium supply during the past 6-12 months, coupled with a robust demand outlook, present a compelling argument for sustainable vanadium price recovery in the medium to long term.
We continue to engage with potential partners on ways to take this project forward towards a Definitive Feasibility Study. We also continue to explore, assisted by insights developed by this PFS, potential brownfield opportunities that could serve to further reduce the capital expenditure requirements from what are already very modest levels, thereby providing an option to bring forward the date of production commencement and cashflow generation.”
