Horizon Minerals Ltd (ASX:HRZ) continues to make strides at the 1.8-billion-tonne Richmond Vanadium Project in central north Queensland, where it has just published an updated pre-feasibility study (PFS) and progressed work on a bankable feasibility study (BFS).
The company’s updated PFS is based on an initial 20-year mine life — representing just 18% of the project’s maiden ore reserve — and outlines a financially robust asset that’s poised to produce 12,700 tonnes of vanadium pentoxide every year.
Simultaneously, Horizon’s BFS is moving forward as discussions continue with electrolyte and battery manufacturers while the company prepares to advance to major project status.
Vanadium is in the spotlight this year: it’s an emerging green energy storage mineral and Horizon’s globally significant project was included in the Federal Government’s Critical Minerals Prospectus in 2020.
As the market heats up, Horizon is looking to pool its interest with joint venture partner Richmond Vanadium Technology, creating a dedicated initial public offering (IPO) vehicle that will advance the vanadium asset in a separate ASX listing.
Horizon will provide more details on the IPO structure and timing in the June quarter.
Greater exposure to new energy metals
Commenting on the vanadium project, Horizon managing director Jon Price said: “With sustained increases in vanadium prices, declining supply, increasing demand in grid-scale energy storage markets and strong government focus on critical minerals, it couldn’t be a better time to be advancing this world-class project.
“It’s also a great time to be a Horizon shareholder with our intention to distribute shares back to our supporters and give them a priority offering in the IPO to enable greater exposure to this exciting new energy metal market evolving in Australia.”
PFS details
Horizon’s PFS focused on Richmond’s higher grade Lilyvale deposit after it executed an infill drilling program in late 2019.
The campaign led to an updated, JORC-compliant mineral resource estimate for the deposit, reported at 560 million tonnes of ore grading 0.48% vanadium pentoxide for 2.6 million tonnes of resource.
This update showcased improved mineralisation grades and saw 76% of the mineral resource upgraded to the indicated category ahead of maiden ore reserve estimates.
The maiden open pit ore reserve at Lilyvale is estimated at 459.2 million tonnes of ore, grading 0.49% vanadium pentoxide for 2.25 million tonnes of contained product.
Horizon's PFS considers Richmond will generate 790,000 tonnes of concentrate every year, out of which it will produce 12,701 tonnes of 98% vanadium pentoxide flake annually.
The current vanadium pentoxide spot price stands at A$16.44 per pound, so the project bears a A$1.09 billion net present value (NPV) with a 10% discount rate. The project’s internal rate of return is 62% and it carries a rapid payback period of just 1.9 years.
Operating costs weigh up at A$8.66 per pound, including mining, administration, concentration onsite, transport and offshore refining expenses.
The project will need A$243 million to get off the ground, with the funding to help construct a concentrator, power station, railway siding, bores, administration and accommodation facilities and an offshore refining plant.
Consideration for refining onshore in regional Queensland was examined in the PFS but discounted at the time because the high differential in capital and operating costs impacted the project’s NPV.
As part of the BFS, onshore refining will be re-evaluated, because Horizon prefers to produce the final product in Australia for domestic use in electrolyte and vanadium redox flow battery manufacture.
Further details on the PFS’ considerations are tabled:
BFS details
Horizon’s JV partner Richmond Vanadium Technology has been focused on progressing environmental and statutory approvals for project development as part of its bankable feasibility study.
This includes completing an initial advice statement and an application to consider the Richmond-Julia Creek Vanadium Project as a coordinated project.
The application is currently under consideration, with a decision expected in the June quarter of 2022.
In addition, discussions have been held with potential offtake and alliance partners for the sale of vanadium flake product domestically and overseas.
Despite hosting some of the largest vanadium resources in the world, Australia is not producing flake at present but electrolyte and vanadium redox flow batteries are being manufactured and sold in Australia.
Horizon’s mission is to work with these companies and develop a self-sufficient, new industry from mining ore to battery manufacture that will benefit all stakeholders.
This work will be completed in parallel with the onshore refining assessment as part of the BFS.
Infrastructure evaluation and site locations — together with completion of the final flow sheet design and costing to a BFS level of study — continues, and will ramp up in the coming quarter.
Discussions will also continue with local, regional, state and federal governments to promote and support this new industry.
IPO on the cards
Originally, Horizon held a 100% interest in the Queensland vanadium play, until it entered a joint venture with Richmond Vanadium Technology in 2016.
Richmond completed the initial earn-in period under the JV in 2018 and has since met the second stage of its expenditure commitments, bringing its holding up to 75%.
Now, both parties intend to pool their interest and create a vanadium-centric spinout that will advance the Richmond asset.
Both companies’ initial holdings will reflect their current interest in the Richmond Vanadium Project, so Horizon will get 25% of the vehicle’s shares.
Horizon intends to distribute up to 50% of the company’s shares in the IPO vehicle back to Horizon shareholders, who will get a priority offer to invest in the IPO.
Further details on the intended IPO structure, the record date for the in-specie distribution and timing will be advised early next quarter.