New Energy, which used to be a ruby hunter called Mustang Resources, said it had been told a successful pilot plant operation would have greater benefit to it when it comes to seeking the funding for a full-scale operation than a bankable feasibility study "given its ultimate ‘proof of concept nature' and its capacity to create saleable graphite concentrate and saleable vanadium concentrate".

The pilot plant will produce 10,000-15,000t per annum of graphite concentrate and 14,000-18,000tpa of vanadium concentrates from 120,000tpa of mine ore for two years and is expected to generate total earnings of $22 million over that period (EBITDA).

A full scale operation will cost nearly US$160 million and will process 1.5 million tonnes pa for annual output of 120,000t of graphite concentrates and 204,000t of vanadium concentrates.

Earnings over the duration of the 24-year project are put at $3.4 billion.

New Energy is capitalised at a little over A$10 million.

New Energy's Caula vanadium deposit is hosted predominantly within roscoelite a mica mineral associated with the graphitic schist.

The company believes its potentially simpler (and cheaper) to extract vanadium products from a mica mineral than traditional titano-magnetite vanadium deposits, and it's said to have developed an integrated vanadium-graphite flowsheet utilising flotation and WHIMS (wet high intensity magnetic separation) in order to extract vanadium and graphite concentrates.

The current resource at Caula is 22Mt grading 0.37% vanadium oxide and 13.4% graphite, and is near-surface.

Vanadium's main current use is as a steel strengthening alloy, with China calling for increased use in its steel sector from the start of next month.

Increased demand is also expected from the increased use of vanadium redox flow batteries, which are suitable for large scale renewable energy storage.

"(New Energy Minerals) has the goal for Caula to become one of a handful of global primary vanadium supply sources of high purity, battery grade vanadium pentoxide," the company recently said.

Shares in New Energy were up 8% to 9.7c in afternoon trade, capitalising the company at $11 million.