Junior exploration company Hardey Resources (ASX: HDY) has announced plans to capitalise on growing global demand for vanadium by expediting the reactivation of a mining licence at its Nelly vanadium mine in Argentina’s San Luis Province.
The reactivation has been considered the “most critical regulatory comparative advantage” for Hardey, delivering the ability to bring production back online and generate early cashflows from legacy stockpiles at Nelly, which closed in 1957 after the partial exploitation of one vein and the remainder of the deposit left untouched.
Hardey will meet with Argentina’s government officials in coming weeks to discuss fast-tracking the regulatory process for the reactivation which, under Argentina’s current mining laws, is expected to be relatively straightforward.
The company will also expedite due diligence on the project, having announced earlier this week the appointment of mining engineering and geology firms in Australia and Argentina to jointly facilitate a site visit and thorough assessment.
A key part of the due diligence will be bulk sampling of legacy stockpiles at Nelly to determine the mined material’s viability as a potential direct shipping ore product to generate early cashflow for the project.
Hardey also plans to secure early-stage offtake partners which will aid project financing needs to accelerate recommencement.
A new, low-cost vanadium supply chain
Situated over a 53-hectare tenement approximately 170 kilometres from the capital of San Luis Province in one of Argentina’s leading vanadium districts, the Nelly deposit comprises several vanadium-rich polymetallic sheeted vein systems, aligned northeast to southwest, approximately 1 kilometre long and up to 5.5 metres wide.
Sampling and assay results throughout the historical workings produced grades from the partially-mined vein ranging up to 1.9% vanadium pentoxide, with a length-weighted sample average of 0.82% vanadium pentoxide.
Early recommencement of the mine will enable Hardey to potentially develop a new, low-cost vanadium supply chain to address a growing global supply-demand imbalance.
Over the longer-term, the company hopes to replicate the low-cost production structure of Brazil’s Maracás Menchen open pit vanadium mine, owned by Largo Resources and currently ranked second on the list of the world’s lowest cost producers.
Earlier this month, Hardey announced plans for a drilling campaign to form the basis of a JORC-compliant resource at Nelly, utilising modern exploration techniques focused on workings and surrounding areas and coupled with a desktop review.
Chief executive Terence Clee said successful early recommencement will help position Nelly as a primary, low-cost asset in Hardey’s portfolio.
“One of the attractive and unique features with [this mine] is the potential to fast track the commencement of mining operations and cashflow,” he said.
“This is a material comparative advantage over building up a resource from inception, which can take many years.”
At mid-afternoon, Hardey Resources shares had increased 25% to $0.0050.