VANADIUM RESOURCES LIMITED HIGHLIGHTS
- Environmental authorisations and water use licence applications progressing well with approval expected H1 CY2024
- Social and Labour Plan amendments submitted to regulators for review after receiving clear community encouragement and support
- Front-end engineering design ("FEED") commenced with designs and tender packages to be finalised ahead of Final Investment Decision ("FID")
- Both VR8 and Matrix have reaffirmed their commitment to enter into agency and offtake agreements to achieve the outcomes envisioned in the memorandum of understanding concluded in
- Agreements to increase the Company's interest in the project to 86.49% remain conditional with one awaiting
- Environmental Impact Assessment for construction of Rope Conveyor between Steelpoortdrift and Tweefontein operations initiated
- VR8's engineering and support team to be expanded to include a Concentrate Manager, Salt Roast Leach ("SRL") Manager, Infrastructure (Power & Water) Manager, Contracts Manager, Mine Manager and HR Manager
- Various power and water solutions under investigation for provision to both the Steelpoortdrift and Tweefontein operations
- To mitigate construction risks, Project delivery model expected to lean on multiple Engineering, Procurement and Construction ("EPC") contracts over core elements of the operation, with oversight by experienced project managers to mitigate interface risks
- Updated project implementation plan includes a revised target for FID to be targeted for H2 CY2024 with first production in H1 CY2026
- Negotiations continue with potential financing and offtake parties as the Company seeks to conclude binding offtake agreements and engage lead arrangers of construction funding solutions
Mr
ENVIRONMENTAL AUTHORISATION & WATER USE LICENCE APPLICATIONS
Following the completion of the DFS, the Company has worked closely with
The current focus of the Company and Red Kite is preparing and finalising the Environmental Impact Assessment and Environmental Management Program for each site. These are both well progressed and will be distributed for public comment in
Integrated Water Use Licence Applications for both sites have been significantly progressed and are in the final phase of the application process with the
SOCIAL AND LABOUR PLAN, COMMUNITY ENGAGEMENT & RE-ZONING APPLICATIONS
A key component of obtaining and maintaining the Mining Right is to have a Social and Labour Plan ("SLP") approved by the DMRE.
The additional work undertaken on the SLP by Sound Mining and the Company has included an assessment of the impact of the proposed activities on the local communities, including both the social and economic impacts and benefits. It also includes significant planning and development of procedures around employment, training, procurement and potential infrastructure to ensure that the Project has a positive socio-economic impact.
Significant engagement and consultation with the local communities is a key part of this work to ensure a full understanding of the matters of importance to each community and that the best solutions are implemented to achieve beneficial long-term development. The Company has built strong relationships with the local communities and has had productive engagement and discussions throughout this process.
The revised SLP has been completed and provided to the DMRE for review, with approval expected to take approximately three to four months following submission.
In parallel with the SLP, the Company has also progressed re-zoning applications to ensure the relevant zoning is in place for the land on which the mining and concentrating activities will take place. While the Mining Right has been granted over the whole property, Steelpoortdrift 365-KT, it is important that the individual areas are zoned appropriately for the activities that will take place including mining, concentrating and installing the photovoltaic ("PV") solar plant. The appropriate applications have all been prepared and were recently submitted to the Municipality for their review and approval.
ENGINEERING - DESIGN, TENDERING & AWARDING CONTRACTS
As previously announced, the Company appointed Mr
The Company has now commenced work on the front-end engineering design ("FEED"), working with the key engineering firms for the Concentrator and SRL plants to make the Project construction ready. The current focus is on locking down the final detailed designs of the plants and drafting maps to show the position of equipment and plant in relation to each other. These maps, one for each site, include waste disposal sites, buildings, roads and various other relevant plant. The FEED work will also include schedule optimisation and the development of the Project Execution and Operational Readiness plans.
As the detailed designs are completed, a tender will be drawn up for each specific piece of plant/equipment by the appropriate technical experts and reviewed from a legal/contract perspective. Finalisation of these tenders is expected by the end of CY2023, at which point they will be issued to pre-identified suppliers. The Company expects to receive responses to the tenders in H1 CY2024, and once received, the Company will aim to award tenders and finalise contracts in early H2 CY2024.
CONTRACTOR DELIVERY AND PROJECT MANAGEMENT
In preparation for FID and construction, the Company has been finalising the delivery strategy for the Project. The Company plans to implement a series of Engineering, Procurement and Construction ("EPC") contracts across the Project with a view to ensuring that the appropriate engineering firm and/or equipment manufacturer has the necessary expertise, experience and ability to provide relevant performance guarantees and liquidated damages for that part of the plant. Given the specialised nature of key pieces of equipment, the variety of suppliers required and the experience of local engineering firms, the delivery will be split into a series of EPC contracts instead of one individual contract.
The Company has identified several suppliers for the key pieces of plant and equipment, with many of these having specific experience in the vanadium industry. To reduce the number of construction packages, several sections of the equipment will be combined into packages to be managed as a mini-project within the wider construction scope.
To assist in coordinating the vendors and individual EPC contracts, a Project Manager will be appointed for each site who will be tasked with managing the interface risks, together with a further Project Manager who will oversee the entire development and construction of the Project. While the costs of adopting this EPC delivery model are potentially higher than the Engineering, Procurement and Construction Management model, the fixed price contracts will provide greater certainty and reduce overall project risk. All contracts, including project management, will include incentives around delivering the project on time and on budget as well as liquidated damages where relevant.
On this basis, the Company has identified relevant engineering firms with appropriate experience in the construction and operation of vanadium projects to develop detailed designs and tender packages with a view to ensuring that the Company maintains close control of the flowsheet, equipment selection and preferred engineering firm and/or supplier.
STEELPOORTDRIFT AND TWEEFONTEIN PROJECT UPDATE
In addition to the above workstreams, the Company is progressing the following key areas around the project:
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Kadoma has also been recently engaged to assist in designing the 10MW PV solar farm at the mining and concentrator site at Steelpoortdrift.
- Rope Conveyor: Discussions with potential suppliers and initial analysis show a rope conveyor transporting the concentrate to the SRL site would be a more economic and efficient way than by trucks as proposed in the DFS. The Company plans to mandate a group to complete a Pre-Feasibility Study on the Rope Conveyor to better understand the economics, timing and environmental impact.
- Project Management Team: The Company has commenced recruitment of additional engineers and staff to assist with the management of the Project and preparing for Construction.
- Acquisition of SRL Site: The Company remains in discussions with Kadoma with respect to an extension of the timing for the option to acquire the proposed SRL site from Kadoma (currently set to expire on
- Increased Project Interest: Having concluded agreements to increase the Company's interest in the project to 86.49%, one transaction remains conditional upon
A revised Project timeline is set out below in line with the updated project implementation plan with FID targeted by H2 CY2024. While the revised timeline is a delay to the original FID target, the Board and Management are confident in the implementation plan and are focused on delivering a high-quality project that is robust, efficient and will maximise the potential value of the Steelpoortdrift deposit.
OFFTAKE PROCESS
Following the completion of the strategic placement to Matrix in
Significant interest has been shown in the remaining agency and offtake available, with multiple indicative term sheets and expressions of interest provided to the Company over the last six months from North American and European groups. Following evaluation of the available options, the Company has progressed discussions and entered into negotiations with a view to securing an agency and/or offtake agreement and strategic equity investment. While the Company is pleased to have progressed negotiations on securing further agency and/or offtake, there is no guarantee that these discussions will culminate in a completed transaction.
FUNDING PROCESS
As previously reported, the Company is pleased to have several potential funding pathways available to finance the Project having received a number of non-binding indicative term sheets from debt financiers. Discussions with potential debt financiers have continued as the Company aims to progress to obtaining credit approved term sheets and ensure that the Project is ready for a due diligence process. With the engineering and technical side of the Project progressing well and the preparation of binding offtake agreements taking place, the Company will aim to proceed to mandating debt financiers during the next few months.
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About
The Steelpoortdrift project is titaniferous magnetite deposit and is located in the prolific
Contact:
Managing Director and CEO
contact@VR8.global
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