Image via Wikipedia

Perth based TNG Limited has received a further boost to the credentials of the Mount Peak Iron Vanadium Project with a major Chinese engineering and development company extending the non binding MoU.  The extension follows the Chinese company’s positive review of the Mount Peake Scoping Study released earlier in the month. The non binding MoU allows for the establishment of a strategic partnership for Mount Peake financing and development.  Under the terms of the MoU, TNG had granted exclusivity to the group for a period of 45 business days to assess the Scoping Study and other project information.

Image via Wikipedia

Mr Paul Burton MD of TNG said that the extension of the MoU and the approaches from other groups interested in participating in the Mount Peake Project development highlighted the project’s strong credentials.  TNG is currently proceeding with the pilot plant test work and Pre Feasibility Studies on the Mount Peake, which includes additional resource drilling which will kick off next month.  The additional exploration aims to upgrade the current JORC Resource to the higher confidence categories of Indicated and or Measured. Environmental and hydrological studies are also underway.  The Mount Peake Scoping Study, completed by Snowdens, identified that downstream ferrovanadium production could boost forecast net annual cash flows to USD 226 million.

The supplementary positive Scoping Study was completed by Mineral Engineering Technical Services and Snowdens following a February 2011 Scoping Study based on a proposal to divert part or the entire vanadium pentoxide product to a downstream ferrovanadium plant.  The study estimates a net annual cash flow of USD 78 million from the production of ferrovanadium and increases the Mount Peake Project’s total net annual cash flow to USD 226 million or USD 5.34 billion over the estimated mine life of 24 years.

Significantly, this represents a 50% increase over the USD 148 million per annum estimated by the previous Scoping Study and was based on a projected ferrovanadium spot price of USD 50 per kilogram.  METS’ Scoping Study contemplates annual production of 4,703 tonnes of ferrovanadium over an estimated 24 year mine life. This assumption was based on processing of the currently defined Inferred Resource at a rate of 2 million tonnes per annum. The capital cost for constructing the ferrovanadium plant is estimated at AUD 43.8 million.

Ferro vanadium sells for double the price of vanadium pentoxide, confirming the significant potential to add value to the project. Ferro vanadium, which is produced in an electric arc furnace, is an alloy of iron and vanadium and is used to help make specialist steel, particularly for high speed tools which require hardness and strength.  Demand for vanadium products has risen sharply on the back of high technology applications in the medical, electronics and aerospace industries.

In the past decade, China has become both the main producer and main consumer of vanadium. Over the next decade, demand for vanadium is anticipated to be driven by emerging economies as they grow steel output and increase production of high-strength steels which have higher vanadium content.

http://www.dailymotion.com/video/xihu89

View the full TNG chart at Wikinvest