Tando Resources announces mining right granted over SPD Vanadium Project

Tando Resources ASX TNO mining right granted SPD Vanadium Project
Tando Resources is set to start an extensive two-pronged drilling program at its SPD Vanadium Project in South Africa in August.

South African authorities have granted the mining right over the SPD vanadium project, with drilling scheduled to kick-off next month.

The country’s Department of Mineral Resources granted the mining right, which completed Tando Resources’ (ASX:TNO) last step in its formal due diligence process to acquire 73.95% of the South African project.

Tando expects it will officially lock-in the stake once it has gained approvals from the South African Reserve Bank and Tando shareholders. This is expected to occur before the end of August.

“We believe SPD is a world-class vanadium asset,” Tando managing director Bill Oliver said.

“Our view is supported by the historical drilling results, and more recently, the outstanding results we have achieved from sampling the vanadium pipes on-site,” he added.

In anticipation of getting the green light from authorities, Tando has engaged drilling contractors, with rigs to be mobilised to site shortly, and advanced site preparations underway.

According to Tando, the drilling campaign will be extensive and have a two-pronged approach.

The phase one drilling program will total 18-holes for 1,650m at the primary SPD deposit where a foreign SAMREC code resource of 513 million tonnes grading 0.78% vanadium exists.

Tando aims to convert the SAMREC resource to comply with the JORC Code 2012, with the company anticipating the converted resource will be released by October.

“We are confident that the imminent drilling program will justify our strong belief in the SPD project, which we already know hosts an extensive deposit with high-grade vanadium,” Mr Oliver said.

During the phase one program, Tando will also target the shallow, high-grade vanadium pipes where numerous in-situ rock samples have assayed above 2% vanadium.

The pipes sit within a 3km radius of the primary deposit and Tando believes it may be able to develop a “simple, low-cost, high-grade, direct shipping ore operation (DSO)” from the pipes within a relatively short timeframe.

“There is also substantial upside in the vanadium pipes, where the sampling results show there is potential to generate significant early cashflow via a low-cost DSO vanadium operation,” Mr Oliver explained.

Meanwhile, the second drilling phase will aim to upgrade the maiden JORC resource to indicated status and will include 58 holes for 5,550m.

Vanadium fundamentals

Tando entered into an agreement to acquire SPD in March this year.

The company targeted vanadium due its increased consumption within the emerging renewable energy market, primarily in the vanadium redox flow batteries.

Tando anticipates the mounting demand for batteries in large scale energy storage solutions, which require vanadium redox flow batteries, will result in a “significant increase” in vanadium demand as the industry takes off.

The Australian-invented vanadium battery technology offers a longer lifespan of around 20 years compared to most lithium-ion batteries.

Additionally, vanadium batteries provide greater chemical stability due to there being a sole element in the electrolyte.

Other advantages include the battery’s capability of holding charge for up to 12 months and discharge completely without damage. The battery is easily scalable, which enables the construction of larger energy storage facilities.

There are also financial incentives for higher uptake of vanadium batteries, with Lazard (NYSE: LAZ) claiming the “levelized cost of storage” in vanadium batteries outstrips that of the lithium-ion battery by 32%.

As a result of a firming steel sector and the growing vanadium battery market, the vanadium pentoxide price has spiked in the last 18 months from US$3.50 per pound in early 2017 to its current price of around US$18/lb.

“With the vanadium price surging 200% since January this year and demand for the metal forecast to grow strongly, our drilling program at SPD is timed perfectly,” Mr Oliver said.