Australian Vanadium unlocks cobalt potential at Gabanintha vanadium project

Australian Vanadium ASX AVL managing director Vince Algar
Australian Vanadium’s managing director Vince Algar (pictured) says its Gabanintha cobalt will be an ethically sourced option for buyers.

Australian Vanadium (ASX: AVL) could potentially add cobalt to its planned production at its flagship Gabanintha vanadium project in Western Australia after metallurgical test work produced up to 2.02% cobalt in a sulphide concentrate.

In light of the rocketing cobalt price, the company reviewed 2017 drill results from Gabanintha which had returned cobalt mineralisation along with nickel and copper.

“In March last year, Australian Vanadium reported significant cobalt assays from drilling in fresh rock containing vanadium in magnetite,” Australian Vanadium managing director Vincent Algar said.

“The company now reports successfully extracting a 30% sulphide concentrate containing up to 6% cobalt, nickel and copper from the non-magnetic tail produced when preparing its primary vanadium concentrate found in magnetite.”

Mr Algar noted the results were an opportunity to include another revenue stream at Gabanintha and place the project at the “lowest end” of the vanadium cost curve.

“Adding a high-value battery-focused metal to the potential product suite at Gabanintha is a significant outcome,” he said.

Samples from 99 drill holes in the 2017 program assayed at 0.02% cobalt, with the average grade 0.027% cobalt and maximum cobalt grade tipping 0.18%.

Metallurgical test work on Gabanintha non-magnetic tailings produced sulphide concentrates from flotation ranging between 3.8% and 6.3% base metals.

Of that, up to 2.02% was cobalt, 2.58% nickel and 1.70% copper.

“Since we initially identified this opportunity, we have been interested in its implications for the project,” Mr Algar said.

“A preliminary design and costing for a sulphide recovery circuit has been added to the pre-feasibility scope in light of these results,” Mr Algar added.

An updated mineral resource, which will include the sulphur and base metals is also under preparation.

According to Mr Algar, the updated resource will be included in the pre-feasibility study.

Cobalt market

Cobalt has reached an all-time high price of US$90,500 per tonne and Australian Vanadium has developed its own patented process for liberating the cobalt and benefiting from the mineral’s presence in the project.

Mr Algar attributes the soaring cobalt price to the mineral’s critical status in the lithium-ion battery and believes the price will continue growing pushed by mounting Ebola concerns in the Democratic Republic of Congo (DRC).

With more than 60% of the world’s cobalt arising out of the DRC, Ebola is just one factor that concerns miners and end-users, with the country marked by allegations of human rights violations in recent years.

“The extraordinarily high value is partly driven by increased use in batteries globally and consumers’ increasing demand for ethically-sourced cobalt,” Mr Algar said.

“Our eventual production at Gabanintha will be managed under Australia’s high standards, subject to all the necessary approvals. It will be ethically sourced, and very attractive to global buyers,” Mr Algar added.

As Gabanintha advances towards development, Australian Vanadium will also begin talks with potential offtake parties to gain an indication of the value of its sulphide concentrate.

Gabanintha vanadium focus

Earlier this year, Australian Vanadium confirmed the potential of its vanadium to meet end-user needs in steel and vanadium battery sectors.

The project is near Meekatharra and has a JORC resource of 179.6 million tonnes grading 0.75% vanadium pentoxide, with a higher-grade zone of 92.8Mt grading 0.96% vanadium.

Metallurgical test work was undertaken on 24 diamond drill core composites from the project and magnetic separation resulted in “exceptional concentrate recovery” and a 1.42% vanadium concentrate.

Base metals at Gabanintha

Bryah Resources (ASX: BYH) holds the mineral rights to any nickel, copper or gold recovered from production at Gabanintha.

As a result, Australian Vanadium is focused on liberating any cobalt value from the base metals within the project. However, Australian Vanadium remains indirectly exposed to any nickel, copper and gold upside from Gabanintha due to its 14% interest in Bryah.

By mid-afternoon trade, Australian Vanadium’s share price was at A$0.042 – a 2.44% gain.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.