Neometals vanadium resource a ‘massive’ 4x larger
In 2013, Neometals Ltd. (ASX: NMT) (“Neometals”) completed a mineral resource estimate that featured in the company’s 2015 preliminary feasibility study. The block model revealed indicated and inferred tonnages and grades for V2O5, TiO2, Fe2O3, Al2O3, and SiO2 using cut-off grades for vanadium pentoxide (V2O5) as the key constituent. But now, the titanium resource has been revealed as 2.4x larger than first thought, and the vanadium resource a massive 4x larger.
Titanium has been making a gentle and considerable recovery since its lowest-of-lows at the end of 2016, and while we expect this to continue, the real star metal of today is vanadium. We have followed good old V2O5 for years, but last year, vanadium outperformed every battery metal including cobalt and lithium to rise 130%. Chinese vanadium pentoxide increased from $9/lb at the start of December 2017 to $13/lb at the end of January, and by the third week of March registered a whopping $15.5/lb for 98% min vanadium pentoxide.
Get our daily investorintel update
Core Consultants investigated the current rally in order to clarify the cause and ascertain its longevity. We found that the V2O5 price has been supported by a series of increasingly stringent rebar standards introduced in China in response to the 2010 Sichuan earthquake that collapsed several buildings, taking the lives of around 68,000 people.
According to our research, yet more new steel regulations introduced in 2018 will provide further significant improvement to vanadium specific consumption rates. Furthermore, the China Iron and Steel Research institute (CISRI) expect that these new rebar standards should see China’s vanadium metal consumption increase by 30% over 2016 for the next two years.
From the supply side, major projects have been taken offline, particularly in South Africa. Pollution control measures in China have ensured that a number of iron ore producers have had to curb production, and at the same time, poor iron ore prices have stifled the ability of Chinese magnetite producers to ramp up production. Additionally, China is mining more and more iron from hematite ores, and we expect this to decrease the country’s vanadium output.
The new resource estimate records 280.1 million tonnes @ 9.18% titanium dioxide and 0.44% vanadium pentoxide to 80 metres vertical depth. This results in a contained titanium resource exceeding 25 million tonnes and contained vanadium resource exceeding 1.2 million tonnes. Not too many deposits globally can claim to have US$100B contained metal in the first 80 metres of dirt, drilled to over 300m and boasting a government seismic survey demonstrating that the intrusion extends 4km beneath the surface.
Barrambie’s global resource includes high-grade sections of both titanium and vanadium. The titanium subset totals 53.6 million tonnes grading 21.17% titanium and 0.63% vanadium pentoxide, while the vanadium subset totals 64.9 million tonnes grading 0.82% vanadium and 16.9% titanium. While the resource has already been significantly increased, Barrambie’s total Exploration Target shows how much larger this resource could become. The company’s consultant, in accordance with the JORC code, estimated the Exploration Target to be about 470 to 700 million tonnes grading at 6% to 10% titanium dioxide and 0.3% to 0.5% vanadium pentoxide.
In the coming twelve months Neometals intends to drill test the Barrambie Deeps target as deep as 230 metres. Barrambie Deeps is located below the current mineral resource, which extends down only 80 metres (just the first hundred-billion-dollars). Neometals has been a great ASX performer over the last few years, currently trading at the bottom end of a three-year uptrend at around AU$0.33, and the market is yet to react to the newly expanded resource.
Lara Smith has spent over a decade covering commodity markets. She started her career as a buyside analyst in South Africa where she covered soft ... <Read more about Lara Smith>