'Game changer' to bring huge savings

An innovative processing solution is expected to slash development and processing costs for TNG Ltd (ASX: TNG) at its flagship Mt Peake vanadium-titanium-iron project. NGAIRE McDIARMID reports

'Game changer' to bring huge savings 'Game changer' to bring huge savings 'Game changer' to bring huge savings 'Game changer' to bring huge savings 'Game changer' to bring huge savings

Drilling at Mt Peake

A key partnership with German metallurgical and engineering giant SMS group GmbH is set to pay off in spades for emerging strategic metals developer TNG Ltd. 

The companies’ pooled expertise in developing the TIVAN metallurgical process, and further optimisation by SMS, has resulted in an innovative discovery that’s expected to substantially reduce both operating and capital costs for TNG’s 100%-owned Mt Peake vanadium-titanium-iron project.

The David and Goliath-style team joined forces in May to commercialise the technology underpinning TIVAN and they believe the new development could also pave the way for economically processing different commodities in future.

The Perth-based junior already expected to be one of the lowest cost vanadium producers in the world when it released Mt Peake’s Definitive Feasibility Study in 2015, thanks to the TIVAN process.

“With this new innovation in the TIVAN process, we can confidently say we could be the lowest cost producer of these strategic metals,” TNG managing director Paul Burton told Mining Journal.

He announced the innovation and likely cost savings at the annual Diggers & Dealers mining forum in Kalgoorlie in early August, with SMS managing director Herbert Weissenbaeck making the trip from Germany in support of the significant news. 

TNG is developing the Mt Peake project, 230km north of Alice Springs in the Northern Territory, to capitalise on the growing market for long-life power storage using vanadium redox batteries.

According to the DFS, Mt Peake has a pre-production capital cost estimate of A$970 million, a mine life of 17 years and a 160 million ton resource which will produce high quality vanadium pent-oxide, titanium dioxide (pigment) and iron oxide using the TIVAN process.

The company hopes to be in production in 2019 and has recently signed binding off-take agreements covering 60% of projected vanadium output and iron products.

It has also appointed leading consulting firm TiPMC Solutions LLC to progress marketing and off-take strategies for Mt Peake’s titanium products. 

Now the newly refined TIVAN process has been comprehensively tested, Burton expects a “very large reduction” in both operating costs and the capital expenditure to build the TIVAN refinery at Darwin.

But he would not be drawn on the exact figures until a new financial model was finalised.

“It’s a potentially huge game-changer,” he said.

Aside from the expected cost savings, the new development in TIVAN could also bring wider benefits, Burton said. 

“Importantly the metallurgical process could be used to process an array of mineral deposit types in the future and the costs are very appealing,” he said.

“To summarise what TIVAN does: we’ve taken what is a fairly low-grade moderate type of mineralisation in a titanomagnetite at Mt Peake and turned it into a polymetallic deposit by using an innovative metallurgical process.

“We believe this innovative type of processing will be the way of the future, when low to mid-grade deposits need to be mined – because the higher-grade, easier mines will already be exploited.”

TNG will now firm up the expected lower costs as it seeks financing options in the coming months.

Its partnership with SMS has grown substantially, with SMS becoming a cornerstone investor in the company as part of an A$4 million share placement in June.

The companies had already signed a binding Heads of Agreement for the engineering, design and construction of the TIVAN refinery in Darwin earlier in the year and SMS has also agreed to assist with securing funding to build it.

Senior representatives from SMS, including vice president Marc Hoffmann and member of the managing board Harald Rackel, recently visited the Mount Peake project site and the SMS finance team is due in Australia later in August.

Burton said SMS’s involvement was a huge vote of confidence in Mt Peake by one of the world’s largest metallurgical, engineering and construction companies.

TNG has put the development of Mt Peake firmly at the top of its agenda, deciding in July to seek shareholder approval to push ahead with a planned demerger of its non-core assets base and precious metal exploration assets in the Northern Territory via its subsidiary Todd River Resources, to realise further value for shareholders.

Burton said TNG could have spun out the Mt Peake project but opted to put together what it believes to be the largest base metals exploration footprint in the NT with nine very prospective projects.

TNG acquired a new zinc and precious metals project in the NT as recently as June 30, which will be included in the planned spin-off for its potential debut on the ASX. 

The base metals projects include TNG’s previous flagship project Manbarrum, which contains two separate zinc-lead-silver JORC resources, and the McArthur River project, where assay results have revealed high-grade copper and zinc mineralisation.

Burton said TNG and its shareholders would retain significant exposure to the potential upside from a spin-out and he was keen to see the assets’ full potential realised, pointing out that he’s “still an exploration geologist at heart.”

The company is expected to organise a shareholder meeting for late August/early September to reapprove the spin-out, which was given the green light a year ago but put on hold due to poorer market conditions at the time.

Meanwhile, TNG continues to push forward with the permitting process for Mt Peake and has also recently involved leading global services provider Downer EDI Ltd in the project’s development.

“We’re continuing to work very closely with Downer on the overall camp layout, mine design and transport logistics,” Burton said.

The company is also in talks with the Darwin Port in anticipation of commencing exports, and is in negotiations with the NT government to select a final site for the TIVAN refinery.

TNG is also keen to make Mt Peake a “smart mine”, powered in part by vanadium redox batteries made using some of the resource’s own vanadium.

Burton said TNG was in discussions with vanadium redox battery manufacturers and Perth-based Energy Made Clean to examine efficient energy solutions.

“We see vanadium redox batteries as a very large growth sector for the use of vanadium,” Burton said.

“The beauty of the TIVAN process is that we produce a very pure vanadium pentoxide and what vanadium batteries need is a vanadium electrolyte with as few impurities as possible.

“By definition, our vanadium product will therefore be ideal.”

Burton said the outlook for both vanadium and titanium products was strong, noting supply concerns and falling inventories.

“We’re starting to see an uptick in the demand and pricing for ferro-vanadium,” he said.

“There’s been a sharp rise since the start of this year and we’re starting to see the same in titanium pigment.”

The company will crunch the numbers for Mt Peake in light of the improved processing development when all results are completed.  

“This innovation from SMS has opened up an opportunity for us to come out with a revised capital expenditure and perhaps revise the mix of how the project’s finances can be covered,” Burton said.

TNG – at a glance

HEAD OFFICE: Level 1, 282 Rokeby Rd, Subiaco WA 6008. Ph: +61 8 9327 0900. Fax: +61 8 9327 0901

Email: corporate@tngltd.com.au

Web: www.tngltd.com.au

DIRECTORS: Paul Burton, Rex Turkington, Stuart Crow

QUOTED SHARES ON ISSUE: 751.8 million

MAJOR SHAREHOLDERS: WWB Investments (10.56%), Aosu Investment and Development Co Pty Ltd (7.49%), Ao-Zhong International Mineral Resources Pty Ltd (5.06%), Citicorp Nominees Pty Ltd (2.38%), SMS Investments SA (1.86%)

 

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