Name of the Project
Steelpoortdrift vanadium project.

Location
Bushveld Complex, in Limpopo, South Africa.

Project Owner/s
Vanadium Resources Limited (VR8), 86.49%.

Project Description
Steelpoortdrift is VR8’s flagship vanadium project and has the potential to be a large-scale, long-life and low-cost vanadium operation. 

The project has a mineral resource of 680-million tonnes at an average in situ grade of 0.70% vanadium pentoxide (V₂O₅), equivalent to 4.74-million tonnes of contained metal, and a proved and probable ore reserve of 77-million tonnes at an average in situ grade of 0.72% V₂O₅, equivalent to 0.55-million tonnes of contained metal. The size of the Joint Ore Reserves Committee-compliant resource could support an estimated mine life of about 180 years at the proposed mining rates.

The 2022 definitive feasibility study (DFS) proposes the openpit mining of titaniferous vanadium ore, the primary treatment of run-of-mine (RoM) ore through an on-site concentrator using magnetic separation, and secondary treatment of concentrate through a salt roast leach (SRL) plant to produce more than 98% V₂O₅ flake. 

The DFS envisages production of 484 000 t of V₂O₅ flake over an initial 25-year life-of-mine (LoM), with total concentrate production estimated at 29.08-million tonnes. Total RoM ore and waste over the LoM are estimated at 80.32-million tonnes and 70.54-million tonnes respectively, resulting in a strip ratio of 0.88.

The DFS illustrates a two-phase development. 

Phase 1, covering years 1 to 4, is based on mining 1.6-million tonnes a year of vanadium ore at an average in situ grade of 0.83% V₂O₅ and processing this through the concentrator and SRL plant to produce about 11 000 t/y of 98% V₂O₅ flake. 

Phase 2 entails an expansion of the plant and an increase in the mining rate to 3.5-million tonnes a year of ore at an average grade of 0.71% V₂O₅, almost doubling production to about 21 000 t/y of 98% V₂O₅ flake.

VR8 is also progressing a revised production strategy centred on an envisaged V-Iron plant, a next-generation critical minerals smelter associated with Steelpoortdrift. The plant will be designed to process Steelpoortdrift’s high-grade vanadium titanomagnetite (VTM) ore and co-produce vanadium-rich slag and pig iron. The approach will be investigated through upcoming scoping and feasibility studies, and is intended to diversify the project’s revenue base by monetising the vanadium and iron content of the ore while preserving the potential for future titanium slag monetisation.

Under the proposed V-Iron route, RoM ore from Steelpoortdrift will be processed through the concentrator to produce a high-grade concentrate targeted at 2.08% to 2.16% V₂O₅ and 55% iron. The concentrate will then be reduced, either by rotary kiln reduction or fluidised bed technology, with the preferred reduction route to be determined during the feasibility study process. The reduced concentrate will be smelted using open-bath furnace technology, after which oxygen will be injected into the molten metal to oxidise the vanadium and tap it as vanadium-bearing slag. Pig iron will be sold into domestic and international steelmaking markets, while the vanadium slag is expected to be supplied to US Vanadium Holding Company (USV) under an offtake arrangement, subject to a binding agreement being concluded.

Net Present Value/Internal Rate of Return
The 2022 DFS estimates an after-tax net present value (NPV), at a 7.5% discount rate, of $1.21-billion and an internal rate of return of 42%, with a payback of 27 months. 

Since completion of the DFS, VR8 has increased its ownership in Steelpoortdrift to 86.49%, resulting in an attributable NPV of $1.05-billion. 

No updated economics have yet been published for the proposed V-Iron co-production route.

Capital Expenditure
The 2022 DFS has estimated preproduction capital expenditure (capex) for Phase 1 at $211-million and Phase 2 capital expenditure, to be funded from free cash flow, at $188-million. 

VR8 has not yet published updated capex estimates for the proposed V-Iron plant. The company is, however, in active discussions to secure a brownfield pyrometallurgical site with existing utilities, logistics infrastructure and an environmental footprint, which it believes could reduce capital intensity and shorten development timelines.

Potential Job Creation
Once the project has been funded, it will create a range of job opportunities through the construction stages and then into production. 

Planned Start/End Date
VR8 has not published an updated construction start or completion date for the revised V-Iron plant development route. 

Latest Developments
VR8 has executed a nonbinding offtake term sheet with USV for 100% of the vanadium-bearing slag to be produced from the proposed V-Iron plant. USV is a US-based integrated producer of high-purity vanadium specialty chemicals and a majority-owned portfolio company of TechMet. Recent metallurgical testing by USV has confirmed that high-grade slags derived from Bushveld Complex ores are well suited to USV’s production facility.

The proposed offtake agreement provides a potential commercial pathway for the sale of high-grade vanadium slag into the US market and supports the potential development of a large-scale brownfield V-Iron smelting facility in South Africa. The V-Iron plant will be designed to process Steelpoortdrift’s high-grade VTM ore and co-produce vanadium-rich slag and pig iron, drawing on metallurgical practices used at Highveld Steel and Vanadium, in South Africa, Chengde and Panzhihua, in China, and Kachkanar, in Russia.

The term sheet contemplates USV's requiring, on a yearly basis, up to 13.6-million kilograms of V₂O₅ metal contained in vanadium slag. The pricing structure has not yet been finalised and may be based on a percentage of the value of the contained V₂O₅ with reference to a recognised index, a fixed price per tonne of feedstock or a combination of both. The parties have agreed that feasibility studies and other investigations will be undertaken to negotiate an optimal pricing structure and formula.

The term sheet provides that a binding offtake agreement be negotiated after completion of the V-Iron plant feasibility study. If no binding offtake is concluded within that period, VR8 has granted USV a right to match to enter into an offtake agreement for 20% of the vanadium slag produced by the V-Iron plant. Conditions precedent include, to VR8’s satisfaction, a final investment decision and construction funding for the V-Iron plant, as well as confirmatory technical work on the suitability of the product for USV’s facilities; and to both parties’ satisfaction, positive findings on logistics, insurance, tax, duties and other costs, as well as all the required regulatory approvals.

VR8 has said the 2022 DFS resource, reserve and mine-planning work remains a foundation for the revised development strategy. The concentrator design and costings from the DFS remain relevant to the V-Iron process, although they will need to be updated rather than redone. 

Upcoming scoping and feasibility studies will determine the optimised production metrics of the envisaged V-Iron plant, including trade-off studies on the preferred concentrate reduction technology and the applicability of next-generation furnace technology.

The company is also aiming to obtain project financing from US government-aligned strategic investors and other potential funding sources, including senior debt, equity, grants, guarantees and political risk insurance. 

VR8 has appointed Rand Merchant Bank (RMB) as exclusive financial adviser and capital sourcing agent to support the financing process.

Key Contracts, Suppliers and Consultants
RMB (exclusive financial adviser and capital sourcing agent).

Contact Details for Project Information
Vanadium Resources Limited, tel +61 8 6158 9990 or email contact@vr8.global.