Study shows Technology Metals’ Gabanintha vanadium project is worth $1.3b

Date: Jun 21, 2018

A study on Technology Metals Australia’s wholly owned Gabanintha vanadium project has placed a pre-tax net present value (NPV) of $1.3 billion on the project – significantly higher than the company’s current market cap of just $25 million.

Technology Metals is now one of only a few ASX-listed companies to have completed a full pre-feasibility study (PFS) on an Australian vanadium project, placing it ahead of the majority of its peers.

“This is an outstanding result for the technically robust, extremely high-quality Gabanintha project in a vanadium market environment that is desperate for injection of new production,” managing director Ian Prentice said.

The PFS estimates that the 13,000-tonne-per-annum Gabanintha operation will have a pre-tax internal rate of return (IRR) of 55 per cent with a payback on capital of just 3.4 years from first drawdown.

NPV and IRR are metrics used to assess the profitability of a project. The higher the NPV and IRR, the more profitable a project will be.

The mine will have an initial 13-year life and is expected to generate $3.1 billion of total earnings before interest tax, depreciation and amortisation.

The total cost to build the operation is forecast to be around $380 million – much less than the $625 million Neometals (ASX:NMT) indicated in 2015 it would need to build its nearby Barrambie titanium and vanadium project, which is slated to produce 2,000 tonnes per annum of vanadium and 98,000 tonnes per annum of titanium.

TNG’s (ASX:TNG) Mount Peake project and King River Copper’s (ASX:KRC) Speewah project both also require a much bigger capital outlay than the Gabanintha project.

The estimated operating cost, meanwhile, compares favourably to Technology Metals’ global peers at just $US4.27 per pound of vanadium.

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