Technology Metals Australia Limited (ASX: TMT) has executed a binding vanadium pentoxide Offtake Agreement with China’s CNMC (Ningxia) Orient Group Company Ltd (CNMNC) over vanadium production from its large scale Gabanintha Vanadium Project in Western Australia
CNMNC’s vanadium alloy production business produces vanadium nitrogen alloys (VN) and ferrovanadium (FeV) for use in the Chinese steel industry.
Managing Director Ian Prentice said his company has also held discussions with CNMNC’s parent entity China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC) on Project support, including scope for financing and EPC arrangements.
“We are very pleased to have executed our first binding Offtake Agreement with CNMNC and look forward to a long, mutually beneficial partnership,” Mr Prentice said.
“The collaborative and co-operative approach of the negotiations bodes very well for the companies’ future relationship. This Agreement is a key milestone for progressing the development of GVP, including EPC and financing discussions, and underscores the importance of delivering a very high quality DFS and a very high purity vanadium pentoxide (V2O5) product.”
Mr Prentice said the binding Agreement is a key step in delivering certainty on volume and pricing of product sales, creating a strong foundation for GVP’s financing and development.
“The minimum annual sales quantity of 2,000Tpa (4.4 Mlb pa) on a take-or-pay basis equates to about 16% of the GVP’s forecast annual average production.
“These sales would generate annual revenue of approximately A$50 million, or A$300 million over the full six year term of the agreement, based on the current European V2O5 price of US$7.18/lb1 as quoted on FerroAlloyNet.com and a 0.64 AUD / USD exchange rate.
“Executing this Agreement with a high quality counterparty such as CNMNC is a strong endorsement of the company’s strategy to develop the world class large scale, low cost, long life Gabanintha Vanadium Project and underscores TMT’s intention to become a high purity vanadium pentoxide producer of choice.”
Yi Junping, General Manager of CNMNC Special Materials Co., Ltd said the offtake relationship with Technology Metals Australia secures ma high quality product from a Tier 1 mining jurisdiction.
CNMNC is a top ten producer of vanadium alloys in China, producing for the Chinese domestic steel industry. In 2018 CNMNC produced approximately 2,000 tonnes of VN and 1,500 tonnes of FeV based on consumption of approximately 4,000 tonnes of V2O5. Existing expansion plans would see VN production increasing to approximately 3,000 tonnes per annum and overall V2O5 consumption increasing to approximately 6,000 tonnes per annum.
CNMNC is engaged in research, development and production of vanadium, tantalum, niobium, and high-tech alloy products, and has won more than 100 national, provincial and ministerial level scientific and technological awards in mainland China.