- Vanadium Resources (VR8) announces the further development of its flagship vanadium project in South Africa in its latest quarterly report
- The company increased its interest in the Steelpoortdrift project to 86.49 per cent during the quarter
- A DFS completed in 2022 for the project gives the play a 25-year mine life
- The company expects to see cash flows of more than $200 million a year at a cost of less than $10 per pound of vanadium
- Vanadium shares are down 1.3 per cent, trading at 7.6 cents at 1:53 pm AEST
Vanadium Resources (VR8) has announced the further development of its flagship vanadium project in South Africa in its latest quarterly report.
Of foremost interest to shareholders is that the company increased its interest in Steelpoortdrift to 86.49 per cent during the quarter as part of an agreement with two vendors attached to the acreage; privately held entities named Obeec and Math-Pin Trust respectively.
A cash consideration and 22 million options converting into ordinary VR8 shares were awarded to both parties who, under South African resources law, are Black Empowerment Partners (BEEs).
South African legislation dictates that foreign companies must partner with BEEs to better outcomes for communities impacted by investment developments.
Collectively, those parties held a 12.54 per cent interest, which VanRes consumed. The Steelpoortdrift Development Trust – now the BEE partners – retains a 13.51 per cent interest.
The company paid little over $700 for the interest; it now awaits approval from the South African Reserve Bank and the company’s own satisfaction it is complying with BEE policy minimum ownership clauses.
“This way we are establishing a firm foundation for financing the project within the confines of the prevailing regulatory environment of the South African Government,” VR8 Executive Chair Jurie Wessels said.
“If completed, these transactions will allow VR8 to hold greater leverage towards fulfilling our critical pathways … equally, through this transaction, we have provided an opportunity to Obeec and Math-Pin to contribute to the future capital requirements of the project as shareholders of VR8 instead of as private shareholders in VanRes.”
The company announced it remains on track to execute a final investment decision (FID) in Steelpoortdrift before the start of the 2024 calendar year.
A definitive feasibility study (DFS) completed in 2022 gives the project a 25-year mine life with a US$1.2 billion (A$1.8 billion) dollar value with US$896 million (A$1.3 billion) of that to VanRes.
The company expects yearly cashflows of US$152 million (A$225 million), a 42 per cent rate of return, US$211 million (A$312 million) start-up CapEx and a cost of US$3.24 per pound of vanadium.
Vanadium shares were down 1.3 per cent, trading at 7.6 cents at 1:53 pm AEST.