Australian Vanadium has confirmed the viability of its namesake project in Western Australia with the release of its Bankable Feasibility Study (BFS).

Based on a price of US$10.50 ($13.90) per pound of vanadium pentoxide (V₂O₅), the BFS demonstrated that the project had a pre-tax net present value (NPV) of $833 million and an internal rate of return on equity (IRR) of 20.6%.

Australia Vanadium ore reserve updated to 30.9 million tonnes (Mt) at 1.09% V₂O₅ including a proven reserve of 10.5 Mt at 1.11% V₂O₅ and a probable reserve of 20.4Mt at 1.07% V₂O₅.

The Prefeasibility Study (PFS) for the project, published in December 2020, indicated an ore reserve of 32.1 Mt at 1.05% V₂O₅.

Australian Vanadium expects the project to produce 24.7 million pounds of V₂O₅ per year as 99.5% high purity flakes and 900,000 dry tons per year of iron-titanium (FeTi) by-product.

With an expected mine life of 25 years, Australian Vanadium will generate an estimated annual EBITDA of $175 million (earnings before interest, tax, depreciation and amortization) for a total EBITDA of $4.4 billion.

The payback period of the project after first production is estimated at 7.3 years.

On the way to first production, Australian Vanadium also has a $49 million Australian government grant, which was awarded under the Modern Manufacturing Initiative collaboration stream.

Vanadium’s Australian managing director, Vincent Algar, said now was the perfect time to launch a vanadium project.

“We are in a period of increasing demand for vanadium from the steel and energy storage markets,” he said.

“The robust designs and financials presented in this work set the course for new vanadium production and distinguish the project as the most advanced new primary vanadium project in the world.

“The thorough study process has reduced risk and therefore increased confidence for parties looking to invest in the future of vanadium from a stable mining region.”

To support a final investment decision (FID) expected in Q4 2022, Australian Vanadium is currently working with debt advisers to structure and secure debt financing. An equity strategy is also being finalized.

Following the FID, Australian Vanadium will select Engineering, Procurement and Construction Management (EPCM) and Engineering, Procurement and Construction (EPC) contractors, and complete the Initial Engineering Design (FEED).

If the relevant approvals and financing are obtained, Australian Vanadium expects to begin construction in the fourth quarter of 2023.