Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Yellow Rock Resources Strikes Highest Vanadium Grades Ever At Gabanintha

Yellow Rock Resources (ASX:YRR) has intersected the highest vanadium grades of up to 2.2% V2O5 at its Gabanintha Project near Meekatharra, Western Australia, pointing the way for a resource upgrade.

A resource estimation update is underway along with metallurgical testing as the project advances towards feasibility studies.

The diamond drilling confirmed Gabanintha's status as one of the highest-grade projects being advanced globally with assays from the 8 drillholes confirming the presence of robust widths of the high grade vanadium magnetite layer seen throughout reverse circulation drilling.

This includes up to 14 metres at 1.44% V2O5 from 131 metres including 7 metres at 1.76% from 135 metres in GDH913.

In addition, the top intersection of 2.2% V2O5 exceeds the highest grade previously seen at the project of 1 metre at 2.15% V2O5.

The updated resource estimate is expected before the end of the September Quarter.

This along with a pit optimisation/mining study and metallurgical test results will form the basis for a Scoping Study.

Vincent Algar, chief executive officer, said the results brought added confidence in Gabanintha and set the scene for a positive path to production.

"Armed with high quality diamond core and the exciting results they have generated, our confidence in the project has been boosted yet again.

"The further confirmation of high-grade "sweet spots" such as the 7 metres at 1.76% V2O5 at depth have positive implications for increased scale and grade at Gabanintha as we start the new resource estimation process."

Drilling Highlights

Final assay results have now been received from the recently completed large diameter diamond drilling program at the project.

All 8 holes in the 761 metre program intersected a high grade vanadium magnetite zone, confirming the down-dip continuation of the deposit.

The new results contain 19 significant intersections greater than 0.5% V2O5 and wider than 4 metres.

These include 7 significant intersections greater than 1.0% V2O5 and wider than 4 metres.

Drilling has intersected individual high grades up to 2.20% V2O5, including 6 individual 1 metre assays over 1.50% V2O5 in GDH913.

Intersections greater than 0.5% V2O5 are:

- 30 metres at 0.99% V2O5 from 115 metres in GDH913 including 14 metres at 1.44% V2O5 from 131 metres (this zone includes assays up to 2.20% V2O5 and 7 metres at 1.76% V2O5 from 135 metre);
- 28 metres at 0.99% V2O5 from 132 metres in GDH916 including 18 metres at 1.24% V2O5 from 139 metres (this zone includes 6 metres at 1.35% V2O5 from 139 metres and 6 metres at 1.32% V2O5 from 146 metres);
- 27.2 metres at 0.87% V2O5 from 86 metres in GDH911 including 13.4 metres at 1.12 % V2O5 from 98.9 metres (this zone include 7 metres at 1.29% V2O5 from 104 metres);
- 25 metres at 0.90% V2O5 from 119 metres in GDH912 including 17 metres at 1.07% V2O5 from 124 metres (this includes a zone of 6 metres at 1.21% V2O5 from 128 metres); and
- 21 metres at 0.94% V2O5 from 100 metres in GDH914 including 12 metres at 1.19% V2O5 from 109 metres.
The detailed logging of the close spaced drilling is allowing for an accurate interpretation of the high and low grade mineralised sequence which is being compiled and will form part of the resource estimation process.
Geotechnical logging and metallurgical sample collection which are currently underway and will be used in future mining study work later in 2015.

Work Ahead

With the results from all the 2015 reverse circulation and diamond drilling program now released, Yellow Rock will now rapidly move forward to advance key project milestones in the coming months:

- The large diameter size diamond core has being used for geotechnical logging and rock strength measurements (used in the determination of ground conditions and pit stability estimates). This data is currently being analysed and will be utilised in the mining study;
- The core is also a source for representative samples and data for metallurgical beneficiation and comminution test work set to commence in July 2015;
- Geological and mineralisation domain assessment using the core and RC sample data in 3D modelling packages is nearing completion and outcomes will be used to assist resource estimation consultants; and
- A resource estimation consultant and mining consultant will be engaged during July 2015 to conduct an updated Resource Estimate and a subsequent mining study, which will include pit optimisation estimates.

On completion of the Resource Estimate and mining study, the company will utilise the new results, combined with the metallurgical test results to commence and complete a Scoping Study.

Vanadium market developments

In June 2015, Yellow Rock expanded its contacts in the Vanadium Redox Battery (VRB) market by attending the annual International Flow Battery Forum Conference in the UK.

The meeting was well attended and Yellow Rock was able to have constructive meetings with all the major players in the VRB space including battery makers and electrolyte producers.

From the papers delivered at the conference it is very clear that vanadium batteries dominate the commercial implementation of flow battery technology due to their unique characteristics and safety features.

A dominant theme remains the rapid acceleration in the development of renewable energy projects on a global scale that is being accompanied by rapidly growing interest in the emergence of grid storage technologies.

The uptake of VRB technology along with other grid storage technologies could have a significant effect on the vanadium (V2O5) market as the use of V2O5 electrolyte is a large component (50% of current cost) of the battery units.

VRB's unique characteristics, specifically their scalability, long lifespan cycles and the use of one battery element, make them a strong candidate to earn up to 30% of the growing energy storage market, which is expected to grow from a current 0.4GW to 40GW in just the next 7 years.

Yellow Rock, as a potential vanadium producer, recognises the importance of the steel markets, but is also actively seeking to link the use of its products to the rise of this globally significant use vanadium battery technology.

In the steel market, vanadium supply problems continued to feature after major producer, Evraz Highveld Steel in South Africa, edged closer to voluntary administration in June 2015.

Highveld Steel produces a significant percentage of global vanadium for use in steel markets.

This adds to the ongoing frozen Windimurra Mine production from Australia which remains in administration.

South African producer Vanchem stopped production to its global customers as at 20th May 2015, due to the closing of the Mapochs Mine, its main supplier.

Vanchem produce about 5,000 tonnes per year of vanadium products including ferro vanadium, vanadium pentoxide and vanadium chemicals.

The recent rise in Vanadium pentoxide (V2O5) and Ferrovanadium prices or the first time in two years can be ascribed to these potential supply concerns.

Analysis

The combined diamond and reverse circulation results from the 2015 programs at Gabanintha point strongly to a resource which is comparable to other world class deposits currently in production or in development elsewhere in the world.

This is supported by the intersections of up to 2.2% V2O5 as well as confirming the robust widths of high grade vanadium magnetite.

Share price catalysts:

- Updated resource estimate (3Q 2015);
- Metallurgical test results;
- Mining Study outcomes; and
- Scoping Study.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.