The following article is from Edition 23 (May 2024) of The Pick Magazine, Australasia’s premier investor-focused magazine covering the resources sector. The magazine is edited by experienced resources journalist Kristie Batten. Download your copy of the magazine today.
Viking Mines (ASX: VKA) believes its Canegrass vanadium project in Western Australia is perfectly positioned to serve the world’s growing demand for vanadium and with it a big opportunity for investors.
Canegrass is 600km northeast of Perth and 60km from the town of Mount Magnet in the Murchison region of WA.
The project sits just 22km from a bitumen road and gas pipeline, and419km to Geraldton Port.
Importantly, it sits in the heart of vanadium country, with other advanced projects owned by Australian Vanadium, Surefire Resources and Venus Metals Corporation nearby.
Canegrass is also next door to Windimurra, owned by private company Atlantic, a former mine with the process plant on care and maintenance.
Viking secured an interest in the Canegrass project in late 2022, via a farm-in, and has made rapid progress since then with the project consistently delivering above expectations.
When Viking first became involved in the project, it had an inferred resource of 79 million tonnes at 0.64% vanadium pentoxide, 29.7%iron and 6% titanium dioxide with 1.1 billion pounds of contained vanadium.
Work completed by Viking over the first nine months of 2023 led to a hefty jump in the resource (MRE) to 146Mt at 0.7% vanadium pentoxide, 31.8% iron and 6.6% titanium dioxide, using a 0.5% vanadium oxide cut-off.
The updated MRE now contains over 2.2 billion pounds of contained vanadium pentoxide, which is double the contained vanadium when compared to the previous MRE.
“As a geologist, I recognise it doesn’t matter what resource is in the ground – it’s what you can extract,” Viking managing director Julian Woodcock told The Pick Magazine.
“So, the step we took after updating the MRE was to undertake a pit optimisation study on the project.”
The pit optimisation study considered revenue from both vanadium and iron, and even with the depressed vanadium price the project remains robust. The study started with a strategic objective to define a high-grade open pit resource of at least 30Mt which would give 20years mine life at 1.5Mtpa.
That objective was blown out of the water with the pit-constrained mineral resource estimate coming in at 61Mt at 0.81% vanadium pentoxide and 35.9% iron across three pits, giving a conceptual mine life of more than 40 years.
The Fold Nose deposit hosts the largest resource of the project’s three deposits at 39Mt.
“That’s where we’re going to continue our work focus at this stage,” Woodcock said.
“There’s more than enough tonnes around for an extremely long mine life but we’re focused on highest value.”
Viking has already completed initial metallurgical test work, sending around 80 kilograms of samples for testing last year.
That work produced a concentrate grading 59% iron via magnetic separation, opening the door to an additional and important revenue stream. The concentrate also contained 1.43% vanadium and 11%titanium. Initial roasting and leaching recovered more than 93% of the vanadium from the concentrates with a total recovery of almost 87%.
“We’re now at the final steps where we take that material after it’s been leached and we have to precipitate the vanadium out,” Woodcock said.
“We’re going through that part of test work at the moment but we don’t see any issue with that – it’s a pretty standard process.”
Base metal sweetener
In November’s mineral resource update, Viking reported a resource estimate for copper, nickel and cobalt for the first time.
The inferred resource is 146Mt at 0.066% copper, 0.062% nickel and0.016% cobalt for contained metal of 97,000t of copper, 90,000t of nickel and 23,000t of cobalt.
“At the moment, we’re only considering the iron and the vanadium as revenue sources,” Woodcock said.
“There’s all the potential additional revenue from the copper, nickel and cobalt, and the titanium, which we haven’t factored in yet and are seeking to benefit from with more metallurgical testwork.
“All of this translates to what’s looking like a very robust project.”
The company is aiming to conduct a further round of drilling this year with the aim of converting the inferred resource to indicated.“
Combining the next round of resource drilling and further metallurgical testwork, we’ll look at delivering on a scoping study that will attempt to confirm the economic proposition,” Woodcock said.
“I think we’ll see a substantial value add for the project through those steps.”
Viking has a market capitalisation of around A$10 million and cash at the end of March of A$4.4 million for an enterprise value of approximately A$5 million. It should also be noted that the Company’s last capital raise was completed in April 2021.“We’re fully funded to continue our work,” Woodcock said.
“We’re not looking to raise money at the current share price.”
Viking also holds the First Hit lithium and gold project in WA, which it will look to drill later this year.
Vanadium market
While vanadium has a relatively low profile, it is an essential critical mineral to the energy transition.
In fact, it sits on eight of the world’s nine critical minerals lists.
While 90% of current vanadium supply goes to the steel sector, demand from the battery sector is set to grow.
The vanadium redox flow battery is an alternative to the lithium-ion battery and has multiple advantages.
“One of the key things is that it can be recharged and discharged multiple times, having a lifetime of more than double that of a lithium-ion battery and importantly, it stays at 100% recharge capacity over that timeframe,” Woodcock said.
“It’s very easily expandable – you can just increase the tank storage.
“They’re non-flammable, which is a key thing. We’ve seen some of the lithium-ion batteries have fire issues.”
Another important factor is that vanadium redox flow batteries are fully recyclable.
A significant amount of vanadium redox flow battery capacity has already been installed in China, with the largest installation being a 100megawatt battery which services 100,000 homes and is expected to grow substantially.
Major battery industry players, including LG and Sumitomo, are already manufacturing vanadium redox flow batteries.
“This is commercially proven technology,” Woodcock said.
“It’s just a bit behind in what we’ve seen in lithium-ion batteries.”
Woodcock said the demand from the battery sector was growing rapidly, with about 1% of global vanadium production used in batteries several years ago to 10% last year.
“There are forecasts out there that, essentially, vanadium supply needs to increase by anywhere from 50% to 100% within the decade in order to meet the forecast future demand for redox flow batteries,” he said.
“In order to meet that, there’s going to be a substantial number of new supply required which translates in to new mines.”
The global vanadium market is still small, with annual production sitting at around 120,000t.
According to US-based vanadium specialist TTP Squared Inc, vanadium deficits are expected to ramp up from this year, reaching an estimated demand of 312,000t resulting in a 137,000t shortfall by2030.
At present, 91% of global vanadium production comes from BRICS jurisdictions. China accounts for about 61% of production, followed by Russia with 17%.
It’s a key reason why it’s deemed critical and why governments are working to diversify the supply chain.
“The jurisdictional diversification really sets a very positive scene for the outlook for vanadium, and for these reasons we see a very strong investment case for Viking,” Woodcock said.
