Vanadium magnetite concentrate from Surefire Resources Victory Bore project will potentially be shipped to Saudi Arabia where it will be processed into vanadium-titanium-magnetite end products under a new agreement to be thrashed out between Surefire and Saudi based Ajlan & Bros Mining and Metals Company. The deal will also likely involve Ajlan investing directly into Victory Bore.
Ajlan’s parent company, Ajlan & Bros Holding, has mining, processing, manufacturing and development capabilities across Saudi and internationally.
The parties recently signed an MOU that is a pre-curser to a broader joint venture agreement envisaged that will see both parties jointly develop the project after an investment by Ajlan with the concentrate shipped off to Saudi Arabia and broken down into multiple saleable products.
The memorandum of understanding (MOU) provides a framework for establishing the new joint-venture which would see Surefire managing the WA mining operations and Ajlan looking after the downstream processing side of the business on its home turf.
Surefire also says the MOU provides the opportunity for Ajlan to invest in the Victory Bore project with a view to both the mine and Saudi based processing facility coming under the auspices of the combined JV.
Surefire’s choice of partner in this case is a tactical decision to enter the Kingdon of Saudi Arabia (KSA), where the cost of power is low, commercial buyers for magnetite are nearby and there are significant funding incentives available – up to a staggering 75 per cent of capital expenditure according to Surefire.
Management says it’s mining operation at Victory Bore, which sits about 400km east of the port of Geraldton, will dig up the orebody at a rate of about 4 million tonnes per year to produce about 1.25 million tonnes of high-grade vanadium-titanium magnetite concentrate at site.
That concentrate will then be trucked west to Geraldton and shipped to the Port of Damman in Saudi for further refining into saleable products.
From the magnetite concentrate Surefire says it’s Saudi operations will produce six additional products including high purity vanadium, ferrovanadium, titanium slag, pig iron, high purity iron oxide pigment and high-grade iron ore.
The Victory Bore deposit has a total mineral resource of 465 million tonnes grading 0.30 per cent vanadium pentoxide, 5.1 per cent titanium dioxide and 17.7per cent iron.
Surefire Resources managing director Paul Burton said: “This is another milestone for the Company in its approach to develop the Victory Bore Project and follows the outstanding Pre-Feasibility Study results that establish Victory Bore as a world class asset with a feasible development plan. We welcome this agreement with Ajlan, a highly regarded and prestigious company in KSA, and thank the Ministry of Investment for the introduction. We look forward to working closely with both to achieve our mutually beneficial development plans”.
Today’s announcement carries on momentum generated in August last year when Surefire announced the completion of a memorandum of understanding with the Ministry of Investment Saudi Arabia (MISA) for the downstream processing of concentrate from Victory Bore.
That news was followed up by Surefire tabling a mammoth Victory Bore prefeasibility study in December last year, which quoted a pre-tax net present value (NPV) of $1.7 billion and a 42.2 per cent pre-tax internal rate of return over a mine life of 24 years with a payback of 2.4 years and a capital cost of $767 million.
After entering a trading halt last Thursday and alluding to today’s MOU in its letter to the ASX, Surefire hit the boards running this morning with a share price increase of 11 per cent on the news.
The company says it is working with Ajlan to flesh-out the terms of the new joint venture and investment plans and expects to enter into a binding agreement by July this year.
The steel industry in Saudi Arabia accounts for about 90 per cent of the kingdom’s total vanadium demand, where the metal is added to steel construction alloys to increase strength and resistance to overheating.
In addition to traditional structural steel applications, the emerging middle eastern vanadium redox battery market is also hungry for the element. Vanadium batteries offer more charge cycles, are easily expandable at little extra cost, are safer and have a lower decay rate than lithium-ion batteries, making them ideal for large-scale storage applications.
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By Andrew Duffy
