June 06, 2012 Speewah Metals Has Its Foot Firmly On A Multi-Billion Dollar Resource, But Will Play A Waiting Game For The Time Being By Our Man in Oz
The geology has been kind to Speewah Metals. The markets have not. So, even thought the company has its foot on a world-class titanium and vanadium deposit, it has opted for a go-slow development approach. “There’s no point in rushing to raise finance if Europe has shut up shop”, says Speewah chairman Tony Barton. “We’ve got plenty of preliminary studies to get on with, such as fine-tuning the processing technology, and looking at development options.”
The project in question is what geology students of some years ago, including Minesite’s Man in Oz, referred to as the Speewah Dome, a massive but complex structure containing a variety of minerals, including titanium, vanadium, fluorite and platinum group metals. The challenge, since the initial discovery of fluorite was made way back in 1905, has been to work out which mix of minerals will make the maximum profits for whoever owns the structure at any given time.
And, given that Speewah has geological similarities to the fabulously-rich Bushveld complex of South Africa, which hosts a prolific ring of platinum and chromite mines, it’s easy to understand why generations of explorers have tried to unlock its secrets.
Fluorite, the early target, never offered the depth of market It serves as a flux in steel-making, and can be used in speciality ceramics, but other uses are limited. The platinum metals tantalised for a while, but there simply isn’t the grade. Copper, gold and iron ore have also been found in the massive structure, which is estimated to contain billions of tonnes of potential mineralised material overall. But the commercialisation process that Speewah Metals will take will focus on the titanium and vanadium, with fluorite and iron ore as potentially useful by-products.
“We know we’re sitting on a world-class orebody”, says Tony, speaking from his car phone while driving to his farm in the south-west of Western Australia. “The challenge is getting the process and market-timing right.” There’s not a lot Tony can do to overcome uncertainty in the markets. Even BHP Billiton and Rio Tinto are putting some of their proposed developments on hold until a clearer picture emerges in Europe and China. But what can be done at is a fine-tuning of the proprietary acid-leach process which the company has developed with partners. It’s designed to produce a suite of three commodities: titanium, vanadium and iron ore.
As it currently stands, there’s not much point in drilling out much more of the resource, since the potential mine life is already measured at more than 100 years. Officially, the Speewah project contains 4.7 billion tonnes of material grading 0.3% vanadium pentoxide, and 2% per cent titanium dioxide, plus iron ore. When upgraded in concentrate the material assays 54% iron, 2.3% vanadium and 14.9% titanium dioxide. Fluorite remains on the Speewah menu too, with the latest resource estimate showing 6.7 million tonnes of calcium fluorite, which could be enough for a 10 year fluorite mine.
But the real value that’s being brought to the Speewah Dome by the company Tony heads is the customised process that will produce saleable products. Initially a titanium/vanadium/magnetite concentrate will be produced. That material then passes to a mixed chloride leach and solvent extraction stage, which the company has successfully tested at a small scale, and which is now being scaled up. The precise dimensions of the leach and solvent stage are likely to be determined by market demand for the end products.
One of the financial challenges confronting Speewah is that the development as proposed, before markets turned wobbly, has a capital cost estimate of around US$900 million. For that outlay, a world-class titanium/vanadium project will be created, mining an estimated 6.3 million tonnes of material from a pit with a very modest 0.5 strip ratio, to yield 4.2 million tonnes of ore. The first stage of processing would reduce that to 550,000 tonnes of concentrate, which would then pass through the chloride acid leach.
Financial models show that annual revenue from the mix of metals produced would be around A$569 million. With costs estimated to be around A$359 million, that would leave annual cash flow of around A$210 million and allow for a payback period of between four and five years. On those parameters the project has a notional value at an eight per cent discount rate of A$1.4 billion. Enticing as those numbers look, the reality is that Speewah faces a heavy lift to achieve them, especially as it is a small company currently valued on the ASX at A$20 million.
“I think we’re being realistic about what we can achieve in current conditions,” Tony says. “Right now, the lift is so heavy that we’re not even trying. Fortunately, the process we’ve chosen is modular, which means we do have the option of starting small and growing, which is what we’re looking at doing, perhaps with a major partner keen to get access to a supply of premium products.” In the meantime, the lull in world markets has allowed for a return to the financial and ore-processing drawing boards, to be sure that the company is ready for a rapid return when conditions improve.
Source >> www.minesite.com
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