TNG’s vanadium project gets a lifeline from German bank

https://www.theaustralian.com.au/bu...k/news-story/5f11f995428e951ebc7c89233e1a5996


TNG’s vanadium project gets a lifeline from German bank

• PAUL GARVEY
  RESOURCES REPORTER
  @PDGarvey
  
• 11:00PM DECEMBER 13, 2018

One of the largest potential new mining projects in the Northern Territory has received a boost after Germany’s KfW IPEX-Bank agreed to arrange up to $US600 million ($828m) in debt for TNG’s Mt Peake vanadium project.
The funding needs of the project have been the weakest link of TNG and Mt Peake, so the commitment by KfW is a major milestone.
KfW’s mandate will maximise the use of funding from export credit agencies (ECAs), which TNG managing director Paul Burton said could reduce interest rates attached to its debt funding.

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“We are aware that the German ECAs can in the current market give us the best interest terms, so overall it’s extremely good for the project,” Mr Burton said. “Interest rates of between 3 and 4 per cent aren’t unusual for German ECAs, and that’s around half of what you could expect from somewhere else.”
The potential debt funding also means TNG would probably need to raise far less equity for the project than previously assumed.
Prices for vanadium, which is used to strengthen steel, have soared this year because of growing tightness of supply.
Previous studies into Mt Peake have suggested the project could generate net annual operating cash flow of $738m and a 44 per cent internal rate of return over a forecast 17-year mine life.
The project’s $853m forecast capex bill, however, has meant there have been plenty of doubts around whether it could ever be funded.
“That’s been the biggest challenge and until today there were a lot of sceptics out there,” Mr Burton said. KfW has a record of bankrolling similar resource projects. It pumped €57m ($90m) into an iron ore project in Mauritania, was the lead arranger to €6.4 billion in lending to the Nord Stream gas pipeline and arranged and underwrote $US794m ($1.01bn) in export finance for the Big River Steel project in Arkansas.
German engineering company SMS Group has already signed a bindingheads of agreement to design the project’s refinery and to manage the project’s engineering, procurement and construction.
PAUL GARVEY

RESOURCES REPORTER
Paul Garvey has been writing about the resources industry for more than 14 years. Prior to joining The Australian's Perth bureau, he spent two years writing for the paper out of Hong Kong. He has also been a mi... Read more