Yellow Rock Resources (ASX:YRR) will carry out 6,325 metres of reverse circulation and diamond drilling at its Gabanintha Vanadium Project in Western Australia to upgrade parts of the resource to Indicated and Measured status.
The program was approved by the Department of Mines and Petroleum and is expected to begin in the first quarter of 2015.
Besides providing an initial inventory of vanadium ore in the Measured category at about 1% V2O5, which is enough to underpin the first five years of high grade ore feed, the program will also provide samples for metallurgical testing and allow open pit optimisation and ore characterisation to begin.
Gabanintha has one of the highest grade vanadium deposits in the world with a current Indicated and Inferred Resource of 60.4 million tonnes grading 0.98% V2O5, 11.4% TiO2 and 42.15% iron.
Other recent activity includes the awarding the stage metallurgical testing studies to Battery Limits Pty Ltd and the Gabanintha Level 1 Survey and Baseline Environmental Study to Biologic Environmental Pty Ltd.
"I am pleased with the path that YRR is taking, and I have great faith in the team that is now in place to lead Gabanintha into vanadium production. I believe there is a bright future for the company," newly appoint chairman Brian Davis said.
The company continues to engage with the broader financial and strategic investment community to improve awareness about the project.
YRR is drilling 54 reverse circulation holes totalling 5,425 metres and six diamond holes totalling 900 metres.
This is designed to upgrade parts of the Gabanintha resource to Indicated and Measured Mineral Resource status over 2 kilometres of strike (about 16% of the total resource on the tenement).
Drilling will improve drill spacing and provide additional grade, lithology, oxidation and density information to support a JORC 2012 Resource containing Measured, Indicated and Inferred Resources.
It is expected that the planned drilling will allow the identification of at least 5 million tonnes of vanadium ore in the Measured category at about 1% V2O5.
This is enough to support at least first five years of high grade ore feed under one of the scenarios outlined in the company's Concept Engineering Study, which had estimated C1 cash operating costs of A$7.26 per kilogram of vanadium pentoxide.
Metallurgical Testing and Environmental Survey
As part of the ongoing metallurgical studies required to develop the Gabanintha orebody, YRR has selected Battery Limits Pty Ltd (NASDAQ:BL) to conduct the first stage of metallurgical test work as part of the ongoing development and feasibility program.
BL has previously completed testing on the Gabanintha ore and is familiar with vanadium extraction processes.
The Level 1 Fauna & Flora Survey and Baseline Study, which are required as an essential component of a development application, has been awarded to Biologic Environmental Pty Ltd.
The fieldwork component is expected to be conducted in the early part of 2015 to tie in with the Mining Lease application and prior to the planned Mining Proposal.
Gabanintha Vanadium Deposit
The wholly-owned Gabanintha Vanadium Project is located in Western Australia's Murchison District about 600 kilometres from the port of Geraldton and 200 kilometres from the Windimurra Vanadium Mine.
It is also located just 40 kilometres form the mining town of Meekatharra.
In August, the company completed a concept engineering study (CES) that indicated the Gabanintha had significant production and competitive costs.
This includes estimated C1 cash operating cost of A$7.26/kg vanadium pentoxide that could position Yellow Rock as a competitive open pit producer.
Other takeaways include:
- Estimated capital cost to first production of A$230 million including A$18.5 million of contingency to direct costs;
- Average vanadium production of 10,000 tonnes per annum from a 2.1 million tonne per annum throughput plant;
- Production of high-purity (+98.5% V2O5 Flake) via open pit mining, feed preparation/beneficiation and a salt roast-leach extraction process is well understood and commonly available technology. Higher purity at >99% V2O5 is also expected to be achievable.
The estimated C1 cash operating cost of A$7.26/kg compares favourably with the average operating cost of vanadium mining producers globally, which is estimated at A$9.72/kg.
The drill program to define a Measured resource at the Gabanintha Vanadium Project will underpin the attractive C1 cash operating cost of A$7.26/kg outlined in the concept engineering study.
Yellow Rock Resources is also well funded to progress the project with $3.8 million in cash and deposits at call as at 30th September 2014.
Recent developments in vanadium redox battery technology for grid-scale energy storage coincide with improved vanadium demand fundamentals.
TNG has a market cap of $48 million while Bushveld has a market cap £13 million (A$24.7 million).
In comparison, YRR has a market cap of circa $7 million yet capex for the Gabanintha Project in Western Australia is similar to Bushveld's iron titanium vanadium project in South Africa.
Which implies, given the market rating of (TNG) and Bushveld, that Yellow Rock Resources offers investors a tantalisingly cheaper entry into the titanium-iron space with its Gabanintha project.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.