Advanced vanadium explorer Technology Metals Australia (ASX: TMT) has unveiled what managing director Ian Prentice describes as an “outstanding” definitive feasibility study for its flagship Gabanintha vanadium project in Western Australia, with the project estimated to generate A$1.09 billion in free cashflow over the first six years.
The study expects capital expenditure of US$318 million (A$454 million) to bring in total revenue of more than A$7 billion over the mine’s 16 year life.
Total earnings before interest tax depreciation and amortisation of A$4.063 billion are anticipated with average annual EBITDA of A$268 million.
The DFS assumes an average price for a vanadium pentoxide product of US$10.88 per pound, with revenue increasing or decreasing depending on vanadium price movement.
Average all in sustaining costs have been placed at US$5.75/lb of vanadium pentoxide.
“The very high quality Gabanintha vanadium project DFS has generated an outstanding result delivering lowest quartile operating costs over a long initial mine life at a scale that will make the project the largest single primary vanadium producer in the world,” Mr Prentice said.
“Delivery of this study is a key milestone in progression of discussions with prospective development partners that the company has engaged with over the past 12 to 18 months,” he added.
Underpinning the study is a reserve of 29.6 million tonnes at 0.88% vanadium and a global resource of 131Mt at 0.9% vanadium.
Technology Metals is targeting production for 2022 and expects to generate about 27.9 million pounds per annum (12,800tpa) of vanadium concentrate with an average feed grade of more than 1% vanadium over the first 12 years.
The company claims this production level would make it the world’s largest primary vanadium producer.
In readiness for production, Technology Metals has inked a memorandum of understanding for China’s CNMC Ningxia Orient Group to purchase an initial minimum amount of 2,000tpa vanadium from the project.
Technology Metals also noted it has received a “high level of interest” for its vanadium product.
Moving forward, Technology Metals expects to secure environmental approvals and a mining lease for the operation as well as advance offtake and finance discussions.
The company is targeting an investment decision for the beginning of the June quarter next year.
According to Technology Metals, Roskill has forecast the vanadium market will remain in a supply deficit until around 2024.
“As the adoption of the new quality standards accelerate in the near-term and environmental regulations continue to be enforced, it is expected that vanadium prices will return to a range of US$10-15/lb from recent lows of US$7.50-8/lb,” the company noted.
By mid-morning, Technology Metals’ share price had lifted 2.56% to $0.20.