PERTH (miningweekly.com) – A definitive feasibility study (DFS) into the Mt Peake vanadium-titanium-iron project, in the Northern Territory, has attached a capital cost of A$970-million to develop the project.

ASX-listed TNG on Friday said the Mt Peake project would generate a pretax internal rate of return of 41%, a total estimated life-of-mine cash flow of A$11.6-billion and operating cash flows of A$13.6-billion over a 17-year mine life.

The project was also expected to have a net present value of A$4.9-billion.

The DFS considered a two-staged development, with Stage 1 comprising a three-million-tonne-a-year operation, expanding to six-million tonnes a year in Stage 2, after four years of production.

The project was expected to have average production of 17 560 t/y of vanadium oxide, 236 000 t/y titanium dioxide and a further 637 000 t/y pig iron.

TNG MD Paul Burton said the results of the Mt Peake DFS were exceptional and had exceeded the company’s expectations.

“Seeing the project come through a DFS at this level of detail and accuracy provided by tier-one engineering, mining and infrastructure groups is a considerable achievement against the backdrop of what can only be described as very challenging commodity market conditions.”

The DFS was based on a maiden reserve of 41.1-million tonnes grading 0.42% vanadium oxide and 7.99% titanium dioxide and 28% iron.

Burton noted that like all projects, the Mt Peake project was inherently sensitive to commodity prices.

“We are, therefore, fortunate to have been able to unlock the maximum value in the resource through the production of three high-value products, which enables us to mitigate our commodity price risk exposure and proactively de-risk the project by producing higher-value marketable end-products.”

TNG has already executed a term sheet with Korean ferrovanadium producer Woojin under which the company would buy 60% of the refined vanadium pentoxide produced at Mt Peake, with the offtake negotiations to be conducted at arm’s length at a price based on a predetermined formula.

Burton noted that, in light of the positive DFS results, TNG would now progress discussions with its network of key strategic partners, and where memorandums of understanding were already in place, the company would finalise binding contractual agreements to underpin financing, construction and offtake arrangements.

“The board will immediately consider the results of the DFS with a view to proceeding to a development decision and project financing in the shortest possible time frame. With the complete DFS at hand, I am looking forward to commencing discussions with our strategic partners and investors in the coming week.”