Which junior vanadium mining stocks may be able to reap the benefits of expected vanadium demand growth?
Used primarily as an additive to steel, vanadium is typically recovered as a by-product or co-product. It’s found in about 65 different minerals, including patronite, carnotite and vanadinite, and is also found in fossil fuel deposits and during uranium mining.
The three top vanadium-producing countries, which are China, South Africa and Russia, account for the vast majority of global vanadium supply. The US and Australia both produced vanadium in 2013; however, neither reported any output in 2014, likely due to a fall in price for the metal.
Despite current vanadium market conditions, many experts see vanadium demand increasing in the coming years on the back of higher requirements from the construction industry. In fact, Oxford Economics predicts that the US and Chinese construction sectors will grow by 4.5 to 7.5 percent from 2016 to 2021. What’s more, growth in the global energy sector may also lead to higher vanadium usage.
With these figures in mind, it’s interesting to look at junior vanadium mining stocks. Though these companies are not yet producing, they may ultimately be able to reap the benefits of the expected upcoming vanadium demand growth.
Canada-based VanadiumCorp (TSXV:VRB) is working to advance its world-class Lac Dore vanadium project in Quebec with the aim of becoming North America’s only primary producer of high-purity vanadium. In June, the company filed an amended technical report for the project — it points to an inferred resource of 99,104,000 tonnes grading 0.43 percent V2O5; that represents 26,067,000 tonnes of magnetite concentrate grading 1.08 percent V2O5.
VanadiumCorp also recently announced a non-brokered private placement of up to 16,666,667 units priced at $0.03 per unit for total proceeds of $500,000.
As mentioned, Australia did not produce any vanadium in 2014; however, that doesn’t mean there isn’t any development there. In fact, TNG (ASX:TNG) has been making serious headway at its Mount Peake vanadium-titanium-iron project in the country’s Northern Territory.
The company put out a definitive feasibility study for Mount Peake in August, and it points to estimated pre-production capex of AU$970 million, a pre-tax IRR of 41 percent and a NPV of AU$4.9 billion. Operating cashflow for the project is projected to be AU$13.6 billion over an initial 17-year project life, while life-of-mine net cashflow is pegged at AU$11.6 billion.
Shortly after revealing the project’s robust economics, TNG announced that it has signed a binding life-of-mine offtake agreement with Woojin (KRX:105840), a major Korean ferrovanadium group. The agreement will see Woojin purchase a minimum of 60 percent of the vanadium from Mount Peake.
At the same time, the two companies signed a binding life-of-mine technology transfer agreement, allowing TNG the right to Woojin’s proprietary technology. That will allow TNG to convert vanadium pentoxide into high-value ferrovanadium at its TIVAN® refinery site.
Another Australia-based company, Yellow Rock Resources (ASX:YRR), saw recent success when it announced a new high-grade vanadium discovery at its Gabanintha project in Western Australia.
The reverse-circulation drill program returned intersections of up to 2.15 percent V2O5, the highest grade ever seen at the project. Drilling also returned large widths of mineralization greater than 1.35 percent V2O5, which Yellow Rock said confirms the project’s world-class status and makes it one of the highest-grade projects being advanced globally. The company is currently working to develop a mineral resource estimate and a mining study for the project, among other things.
Not long ago Yellow Rock also announced that it has initiated a vertical integration strategy to further cement its position in the emerging energy storage market. According to a press release, the company has created a subsidiary to develop distribution opportunities for vanadium-redox flow batteries. Yellow Rock has also secured distribution rights with two German vanadium battery makers and is in negotiations with other companies in the vanadium battery market.
Bushveld Minerals (LSE:BMN) is focused on developing projects in South Africa, including its Bushveld vanadium project in Limpopo. The company gained 100-percent ownership of the project after Lemur Resources accepted its off-market takeover offer. The deal, which Lemur considered “not fair but reasonable,” saw Bushveld pay AU$0.06 for each ordinary Lemur share for a total company valuation of AU$10.87 million.
The project is based on three mineralized layers: the main magnetite layer (MML), the MML wall and the AB zone. The MML is the only mineralized unit that was considered for the current scoping study on the project, and it consists of two VTM-rich intervals or layers. They show an initial resource of 52 million tonnes.
Do you have a junior vanadium mining stock tip? Let us know in the comments!
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: VanadiumCorp Resource is a client of the Investing News Network. This article is not paid-for content.
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