Why the stocks of Vanadium Resources (ASX:VR8) are flying high?

Summary

  • Pit optimisation during the Pre-Feasibility Study (PFS) indicated high-grade V2O5 could be mined based on the Scoping Study 2020 assumptions (1.6Mtpa) and with potential to increase the study outcomes significantly.
  • PFS is running on schedule and within budget and is expected to conclude by May 2021.
  • To reduce the carbon footprint of the project, the Company is analysing the scope of renewable energy in the project.
  • The shares of the Company soared 12% during the day’s trade on announcement.

The ASX-listed mineral explorer Vanadium Resources Limited (ASX:VR8) has shared an important update from the ongoing Pre-Feasibility Study (PFS) on its flagship Steelpoortdrift Project in South Africa.

Having concluded the Scoping Study in 2020, VR8 commenced the Pre-Feasibility Study on the project in January 2021. The study was primarily focused on the design and costing of the project. The pit-shell optimisation study took into consideration the existing Resource base and geological data. The study was conducted with the objective of identifying the most profitable pit shell, which can have Life of Mine (LOM) of minimum 25 years and an annual throughput of 1.6 Mt. This will also lead to potentially increased output of V2O5 flake product from processing operation.

Mineralised zone widths (Image source: Company update, 22 April 2021)

Recent update: Vanadium Resources Ltd to acquire a proprietary ESG technology which compliments its World Class Vanadium Project

Vanadium Resources has put the medium-grade ore in the waste stripping category. If the medium-grades are brought into the production cycle, the overall stripping ratio will be slashed, lowering the cost of overall stripping significantly.

The cost will be reduced as the stripping costs of the medium-grades are already included in the processing of high-grade ores. This will render the medium-grades almost at zero cost. The Company is optimistic that the processing of the medium grades will become economical in the future.

The medium-grade ore, thus, provides a significant opportunity to bolster LOM of the project and further expands production.

The pit-shell optimisation study will form the basis of the mine and plant design for the PFS. To analyse the CAPEX requirement and project fundamentals, the ongoing economic evaluations or Trade-off studies will be included in the PFS.

Mr Eugene Nel, the CEO of Vanadium Resources Limited, shared his views on the pit-shell optimisation and commented:-

 

Copyright © 2021 Kalkine Media Pty Ltd. (Data source: Company update, 22 April 2021)

Further progress of PFS and plan to reduce carbon footprint

The PFS is advancing towards a conclusion, which is expected to be over by May 2021. To assist in the PFS, VR8 has appointed several consultants and engineering firms. The first draft of the report, including the concentrator, mining and SRL, has been received by the Company and is under review.

The Company is also planning to include a mix of renewable energy in the project to reduce the overall carbon footprint. The acquisition of the ESG process technology by VR8 will supplement in reducing carbon emission as the technology will optimise the overall processing operation, making it more energy-efficient and lesser tailings and wastages.

Vanadium Resources, in its announcement of 1 April 2021, informed about the capital raising scheme to support the development activities on the project. Since funds are now available, the Company will advance towards DFS for the project, which is estimated to cost it around US$3-4 million. Once the PFS is over, the Company can move to strategic marketing and off-take decisions. The process of engagement is currently underway.

Share Price Movement

Copyright © 2021 Kalkine Media Pty Ltd.

Good Read: ASX All-Ordinaries Index hits a New All-Time High, Will It Continue to Shine?

The shares of VR8 jumped 12% on the encouraging news of pit optimisation. VR8 has yielded an excellent return of 250% in the last one year to its shareholders.  VR8 is trading at A$0.050 with a market cap of A$20.50 million on 27 April 2021 at 10:47 AM AEST.

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