Technology Metals Australia (ASX: TMT) is laying the groundwork to establishing a vanadium offtake agreement after securing a memorandum of understanding with China-based rare metal manufacturer CNMC Ningxia Orient Group Company Ltd (CNMNC).
The non-binding MoU paves the way for the parties to establish a binding offtake agreement for Technology Metals’ vanadium ore from its flagship Gabanintha project in Western Australia’s Murchison region.
“We are very excited to have entered into this agreement with CNMNC, a China Nonferrous Metal Mining (Group) company, as a key step in establishing a strong and supportive customer base for the development of the high quality, globally significant Gabanintha vanadium project,” Technology Metals’ managing director Ian Prentice said.
“The very high purity of the Gabanintha vanadium pentoxide product provides a clear competitive advantage for the project,” he added.
Under the MoU, CNMNC will purchase 2,000 tonnes per annum of vanadium pentoxide on a take-or-pay basis over an initial three-year period.
The price will be negotiated based on the Metal Bulletin vanadium pentoxide pricing index and comprise a floor and ceiling price.
Both parties plan to make a binding agreement by October this year when the MoU term expires.
Prior to finalising the agreement, due diligence will be carried out with Technology Metals to also progress the Gabanintha definitive feasibility study, which is scheduled for completion mid-year.
Gabanintha vanadium project
A pre-feasibility study was finished on Gabanintha in June last year and revealed a 13-year operation, producing 13,000tpa of vanadium pentoxide.
The study estimated capital expenditure of $380 million to generate life of mine earnings before interest tax depreciation and amortisation of $3.07 billion.
Since the study was published, the resource for the project has been updated to 131 million tonnes at 0.9% vanadium pentoxide and 10.1% titanium dioxide.
The resource includes a high-grade component of 71.2Mt at 1.1% vanadium pentoxide and 12.7% titanium dioxide.
Pilot plant test work at the project is nearing completion, with offtake discussions ongoing with a number of potential parties across Japan, Korea, India and Europe.
During morning trade, Technology Metals’ share price lifted 2% to $0.24 high before sliding more than 10% to reach $0.21 before midday.