Home' Australian Resources and Investment : March 2016 Contents 76 • Australian Resources and Investment • Volume 10 Number 1
X • Australian Resources and Investment • Volume 10 Number 1
ustralian vanadium developer
TNG Limited (ASX: TNG) has
kicked off the new year in an
upbeat fashion, signing another major
development agreement for its flagship
Mount Peake vanadium-titanium-iron
project in the Northern Territory.
The company signed a binding heads
of agreement in early February with
one of the world’s largest metallurgical
engineering and construction
companies, SMS Group GmbH, for
the implementation of the TIVAN®
downstream refinery that forms part of
the Mount Peake development.
SMS is a world leader in metallurgical
plant design and construction, and has
already played a key role in the planning
and testwork for the TIVAN® plant as
part of the July 2015 Mount Peake
definitive feasibility study.
Under the new heads of agreement,
SMS will now also provide detailed
engineering, design and final costing
for tender for the refinery, and has also
agreed to assist with arranging the funding
required for the refinery construction.
The agreement with SMS Group
adds to an impressive suite of strategic
agreements and partnerships already
established by TNG to underpin project
development, funding and off-take.
A binding vanadium off-take agreement
is in place with Korean-based Woojin
Metal Co., and preliminary agreements
are also in place with major international
groups including Hyundai Steel,
POSCO Engineering & Construction,
Gunvor Group, Global Pacific Partners
and Caterpillar Finance on potential
participation in the project development.
TNG Managing Director Paul Burton
says that the strong interest shown by
these major international groups in
the Mount Peake project reflected its
outstanding development credentials.
‘We expect Mount Peake to be a
long-term, high-margin mining
operation delivering a high-quality
vanadium product. With these
impressive credentials, Mount Peake
will continue to be a highly attractive
investment opportunity for global
development partners,’ he says.
The definitive feasibility study
completed in July 2015 demonstrated
that Mount Peake would generate a
pre-tax internal rate of return (IRR) of
41 per cent based on a pre-production
capital cost of A$970 million; total
estimated life-of-mine net cash flow of
A$11.6 billion; and operating cash flows
of A$13.6 billion over an initial 17-year
The development momentum being
generated at Mount Peake is also
reflected in the growing coverage of the
company by international brokers and
The most recent report, by
United Kingdom-based broker
VSA Capital, has valued the stock at
73 cents a share, almost six times
the share price at the time of writing.
Another Sydney-based research group,
Breakaway Research, last year valued
TNG at 97 cents a share.
VSA Capital has also predicted a
recovery in both the vanadium and
titanium markets by the time
Mount Peake comes on stream.
‘Despite recent weak performance
for pricing in both the vanadium and
titanium markets, the outlook for both
markets is positive, in our view,’ says
VSA mining analyst Oliver O’Donnell
in an initiation report on the company
released in late January.
‘Indeed, by the time of commissioning
for Mount Peake, according to the current
schedule, we expect prices for both
vanadium and titanium to have recovered.
‘There is also a significant upside
scenario whereby battery technology, which
relies on vanadium, could drive major price
outperformance,’ the analyst continued.
VSA says that TNG has significantly
de-risked the Mount Peake Project, with
the company now entering the final stages
of permitting and environmental approvals
following the highly successful feasibility
study that was delivered last year.
TNG secures another major
global development partner for
Mount Peake as strategic metals
Global engineering giant SMS Group throws its weight behind
development of world-scale Australian vanadium project, signing up a new
development agreement for the TIVAN® refinery.
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