Australian Vanadium (ASX: AVL) has completed the first phase of drilling in a pre-feasibility study for the Gabanintha vanadium deposit in Western Australia, with the results to be included in an updated mineral resource estimate.
In addition, the emerging vanadium producer has pegged a new exploration licence next to its world-class resource near Meekatharra, further strengthening the company’s position in the Gabanintha area.
The company told the market today it has completed 1,089m of reverse circulation (RC) drilling in 14 holes at the project, with 11 of these targeting infill resource drilling and a conversion of inferred to indicated resources.
It has now moved on to a short diamond drilling program, aimed at providing further support for the mineral resource by resolving key parameters required for a successful and safe, long-term open pit design as well as further resource conversion.
Gabanintha’s indicated and inferred mineral resource currently stands at 175.5 million tonnes grading at 0.77% vanadium pentoxide, including a high-grade zone of 93.6Mt at 1% vanadium pentoxide.
Australian Vanadium managing director Vincent Algar said the new drilling would add further confidence to an already world-class resource.
“We are confident this resource, which we believe is currently the most mineable vanadium deposit globally, will move through to its project development phase shortly,” he said.
In addition, Mr Algar said the company was “in continuing talks with prospective financiers to raise funding for the project and being meticulous with the detail of the pre-feasibility study which we are currently in the process of completing”.
New vanadium ground
The new tenement covers 49.7 square kilometres, bringing Australian Vanadium’s total mineral rights position in the Gabanintha area up to 240sq km across eight exploration licences.
Additionally, the new ground also overlies a 9.5sq km section at the southern end of the Gabanintha vanadium deposit.
According to the company, the licence is prospective for extensions to this vanadium deposit, as well as for gold, copper and uranium.
Mr Algar said the tenement not only provides the company with the potential to define additional mineral resources, but also consolidates accessibility to all of the company’s deposits in the Gabanintha area.
Today’s news comes as vanadium prices continue to be supported around US$20 per pound in 2018, thanks to the rising demand in the steel sector, particularly from China, and its newly recognised potential in energy storage technology.
“It is hard to imagine a better time to move a high-grade Australian vanadium project into production, as right now,” Mr Algar said.
He explained the Chinese government is introducing steel rebar regulations aimed at ensuring new buildings would be more resistant to earthquakes.
With vanadium being used as a strengthening agent in steel, this means steel producers will need to add greater quantities of vanadium to the production mix.
“Many commentators believe the Chinese vanadium market may swing to a deficit this year, underpinned by the revised standards for the tensile strength of rebar products and a ban on vanadium slag products,” Mr Algar said.
He added that China’s Belt and Road government initiative has resulted in the construction of enormous public works with capex requirements of projects ranging from US$4-8 trillion.
“Those will need high-quality steel and therefore, demand for vanadium is continued to be expected to be strong,” Algar said.
Australian Vanadium shares rose 2.22% to $0.046 on the news by midday trade.