Paydirt article accessible via News & Media section of company...

Paydirt article accessible via News & Media section of company website


Technology Metals Australia Ltd (TMT)managing director Ian Prentice knewa business combination with AustralianVanadium Ltd (AVL) was inevitable, hejust wasn’t sure how it would happen.Prentice revealed what had been on hismind for a “reasonable period of time” afterAustralia’s two most advanced vanadiumdevelopers agreed to join forces via a $217million scheme of arrangement, underwhich AVL is set to acquire 100% of theTMT shares on issue.If the scheme is approved and implemented, TMT shareholders will emergewith 42% of the combined group, pendingany dilution associated with AVL’s concurrent $15 million institution placement.

The merger is likely to be finalised earlynext year following next month’s scheduled scheme meeting.Speaking to Paydirt last month, Prentice confirmed the consolidation of theGabanintha orebody, about 50km south ofMeekatharra, under single ownership hadbeen a long time coming.“We’ve always had that back of yourmind thinking around how do we actuallymaximise the value of this orebody, especially when you’ve got two companies thatown adjacent parts of it,” Prentice said.“The logic has always been there, I thinkthe question has been more about timing than anything else. It’s one of thosecliched things where timing is always rightand timing is always wrong, and you canalways come up with reasons to havedone it 12 months ago or to look at it againin 12 months time. For us, everything nowlines up and this is the time to go and do it.“You also have to put that timing in context. This merger doesn’t mean it detractseach individual project. We’ve still gotcracking projects individually and we’reboth running our own individual races witha clear strategy of how we’re going to develop those projects. But does this createa better project, create more value andsimplify the whole process? Clearly theanswer is yes, and I know Graham [Arvidson, AVL chief executive] would say thesame.”

At the time of print, TMT had receivedwritten support for the merger from at least26% of its shareholding, including Resource Capital Fund which controls about18% of the register.Post the merger, Prentice will join AVL’sexecutive team with an initial focus on theintegration of the two adjoining projects.TMT’s Murchison technology metals project hosts a resource of 153.7mt @ 0.8%V2O5, while AVL’s namesake project contains 239mt @ 0.73% V2O5.TMT’s Dave English (chief operatingofficer), John McDougall (explorationmanager) and Brett Morgan (senior metallurgist) are also part of a working groupwith their AVL counterparts Todd Richardson (chief operating officer), Gemma Lee(principal geologist) and Nigel Dilkes (mining/technical services manager) focusedon delivery of the integrated optimisationstrategy. “One of the things Graham and I havebeen talking about is while we’ve got thesetwo great projects and we’re going to bemerging the best of them together, we’realso bringing together some really greatvanadium industry knowledge into the oneconversation,” Prentice said.

“Bringing all that expertise under the oneroof was really important because vanadium is not a commodity that everyone isdigging up and producing at the moment.”The combined group is expected tohave a pro forma cash position of $52.1million and a resource base representingmore than 25 years of mine life.Prentice insisted almost all of the progress both TMT and AVL have madeindividually, including environmental permitting and engineering design, could becarried forward into the enhanced development strategy.“We don’t think we’re going to lose significant time because we’ve both done alot of work that we think is going to be applicable to the overall merged project,” hesaid.“Things like our last announcementaround infrastructure, the road agreementwe’ve got with the shire, all of that standsregardless. The environmental approvals,there’s a pathway we’re both already on, itall just comes together.“For shareholders on both sides, wedon’t see a material change in timelinescoming from this merger.”

While TMT’s impending exit from theASX is somewhat bittersweet for Prentice, he also believes the merger with AVL isthe right step forward, especially when hereflects on the significant developmentswhich have occurred in the vanadium sector since the company’s IPO in late 2016.“Back then, the market had very littleknowledge of vanadium batteries, it wasall about the steel industry in China,” Prentice recalled.“Obviously that story has evolved dramatically, particularly over the last fewyears. Today it’s something like 10% of vanadium goes into batteries, as opposed tojust 1% when we started.“It’s been pretty phenomenal to see thatgrowth and just the general awarenessaround vanadium. There’s a lot more conversations around long-duration energystorage now, that certainly wasn’t the caseeven just two years ago. Investors nowclearly think vanadium is part of the solution.”



I like the reference to existing infrastructure agreements standing.