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QEM Limited (ASX:QEM) Gets Boost from Queensland Budget

Summary

  • Queensland state budget outlined long-term economic response towards COVID-19 pandemic, with enhanced focus on enabling mineral explorers to develop mining projects
  • Rent waiver for mineral explorers extended until March 2021; North West Minerals Province to be connected to Port of Townsville via rail
  • These announcements greatly benefit QEM, as it develops Julia Creek vanadium and oil shale project in north western Queensland
  • QEM currently optimising the processing route at Julia Creek; Pre-feasibility study targeted for 2021.

The Queensland resources industry faced an unprecedented challenge with the onset of the COVID-19 pandemic in the first half of 2020.

The proactive measures aimed at containing the COVID-19 virus spread intertwined with volatility in commodity prices, which led to a decline in the exploration activity across Australia.

Impact of the Pandemic on the Queensland Mining Exploration

The exploration expenditure for minerals (except petroleum) decreased by 19% during the March quarter to $610.6 million against the previous quarter. Queensland registered a decline of ~26% to only $81.2 million.

However, the federal and state governments were proactive to take the preventive measures to mitigate the spread of the virus, while also managing the effects on the economy. Australia was one of the first countries to announce a stimulus package and further successive plans to boost mining and other important industries.

Following such moves, exploration expenditure has surged by ~42% to $115 million in Queensland and $744.9 million across Australia from the March to September quarters.

Rent Waiver for Mineral Explorers, North West Minerals Province Infrastructure Upgrade

On 1 December 2020, the Queensland budget was presented, outlining the Economic Recovery Plan to combat the economic repercussions of the pandemic.

The state government took prompt action to implement a rent waiver for exploration permits and following the budget it has decided to extend it until March 2021 to better facilitate the exploration and development of future operating mines.  

Additionally, the state government has committed to investing in the rail link from the North West Minerals Province to the Port of Townsville, which will significantly benefit mining companies in the North West Minerals Province.

QEM is an aspiring vanadium and shale oil developer progressing its high-potential Julia Creek project in the North West Minerals Province.

Julia Creek:  The World’s Only Oil Shale and Vanadium Combination Project

Vanadium and shale oil explorer, QEM Limited (ASX:QEM), is strategically progressing  one of the largest vanadium deposits globally, its flagship Julia Creek project. This project is an exceptional opportunity located within the North West Minerals Province, hosting the only oil shale and vanadium combination project in the world, which enhances the project economics and significantly widens the market opportunities.

QEM is committed to delivering innovative energy solutions, with the potential to produce vanadium pentoxide and energy fuels.

Following its most recent exploration program, QEM upgraded the JORC-compliant vanadium resources to 2,760 million tonnes, with a grade of 0.3% V2O5, along with a 3C oil resource of 783 million barrels within the same orebody.

Kalkine Image 2020 Source: QEM Limited AGM Presentation

QEM recently completed vanadium and oil extraction tests, and continues to finalise the favourable beneficiation route for the optimal extraction yield. QEM is progressing further on the test programs with HRL Technologies to:

  • Optimise test work parameters, including temperature, and capacity for the vanadium extraction
  • Alkaline leaching test work and the potential for cement by-product
  • Economic evaluation and engineering studies to follow

The project is advancing towards the targeted pre-feasibility study in 2021.

While the anticipation for demand of vanadium for the high-grade steel and alloy remains high, especially after China upgraded to new domestic rebar standards in 2018 , a trending market for vanadium may also be expected for the energy storage market with the Vanadium Redox Flow Batteries. Furthermore, the advancement in the extraction technology places QEM in an attractive spot to produce commercially-viable-and-profitable oil from shale at the project.

QEM traded at $0.08 a share on 2 December 2020, with a market capitalisation of $8.40 million.

All financial information pertains to Australian Dollars unless stated otherwise.

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