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LONDON (Alliance News) - Bushveld Minerals Ltd Thursday published the pre-feasibility study for the Mokopane vanadium project in South Africa, confirming the project is one of the lowest cost operations of its type in the world, as Bushveld aims to start production as currently subdued vanadium prices begin to rise.
Bushveld shares were trading flat at 3.25 pence per share on Thursday morning.
Bushveld, which holds a 64% stake in the asset, said Mokopane has the potential to be a market-leading vanadium project that compares favourably on all measures with other vanadium deposits around the world.
One of the major conclusions from the study is the potential life-span of the project. An ore reserve of 28.6 million tonnes would support an initial mine life of over 30 years, and that ore reserve is only 10% of the project's total resource of 298.0 million tonnes - providing a huge amount of exploration upside that could see the project run for decades.
Bushveld aims to treat 1.0 million tonnes of ore per year to produce around 9,525 tonnes of vanadium pentoxide flakes with a purity of around 99.5%. The company will use a well-established and proven salt roast processing method at the project which will lower the risk of the operation.
The study was based on a vanadium price of USD7.50 per pound. The vanadium that Bushveld will be mining is used in ceramics and as a catalyst to produce sulphuric acid.
"While we are mindful of the recent low commodity price environment including sub-USD3.50 per pound vanadium pentoxide prices, an analysis of the fundamentals of the market, backed by independent research, suggests that a significant proportion of the current global vanadium production is unsustainable at these levels," said Chief Executive Fortune Mojapelo.
"Significant reductions in vanadium supply during the past 6-12 months, coupled with a robust demand outlook, present a compelling argument for sustainable vanadium price recovery in the medium to long term," he added.
The pretax net present value of the project currently stands at USD418.0 million with an internal rate of return of 24.8%, leading to a four-year payback period. Bushveld will need to spend around USD298.1 million in capital expenditure to get production up to 9,525 tonnes per year.
Moving forward, Bushveld is waiting for the mining right application to be awarded, which would give the company the authority to conduct mining operations. The next step will be completing a definitive feasibility study.
In tandem, the miner said it will continue to explore nearby brownfield opportunities in the hope that it can reduce the "already very modest levels" of capital expenditure and bring forward the start of production and cashflow generation.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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