🕐17.02.11 - 15:54 Uhr
Apella Resources featured in Northern Miner
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Vanadium:
metal of future and present
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The Northern Miner - The Global Mining Newspaper
DAILY NEWS Feb 16, 2011 5:02 PM
Lithium has grabbed much of the headlines over the last few years when the subject
of key metals of the future comes up.
But more and more investors are paying attention to vanadium for the metals unique
attribute of fitting
in with two future growth stories.
First there is the metals application as a steel strengthener.
Currently experts
estimate that anywhere between 85% and 95% of vanadium demand comes from the steel
industry.
So if the global economy continues on its comeback trail, vanadium offers
a good way to play increased steel production.
But looking into the not so distant
future, the demand story could begin to shift from steel to the battery.
Thats
because vanadium is increasingly being used in different forms of batteries which
experts expect to be taking a more prominent role in our electric storage needs.
Currently, the larger size of the vanadium redox batteries makes them less favourable
to car applications than lithium ion, but the technology has been proving itself
on the larger-scale energy storage front.
With faster recharge times, and significantly
longer cycle lives vanadium redox batteries are being used as storage units for
power generated by renewable energy sources such as wind and solar.
"On the grid
storage front -- for large scale applications - vanadium is making more than name
for itself," Jon Hykawy, head of global research at Byron Capital Markets.
"We could
see applications such as a sub-station in a downtown area that is augmenting power
for a few hours a day in the not so distant future."
Another application Hykawy is keeping an eye on is a battery that pairs vanadium
with lithium which would have some advantages for batteries in hybrid cars.
But
there are notes of caution in the air around the metal as well - one of which emanates
from one of the worlds foremost experts on vanadium batteries.
Dr.
Maria Skyllas-Kazacos,
a professor at the University of New South Wales, was part of the team that invented
the vanadium redox battery.
Skyllas-Kazacos says, however, that the price of vanadium
is critical to its long term usage in the battery industry.
Because the cost of
vanadium currently makes up a large portion of the cost to produce vanadium batteries,
she argues, pricing in the US$5 to US$8 per lb range would be ideal.
Vanadium pentoxide
(V2O5) is currently trading in the US$7 per lb range.
But in order for the battery
technology to really take off, greater amounts of secure supply will have to start
coming on-stream.
Currently the bulk of supply comes from three areas: South Africa, north-western
China, and eastern Russia.
In 2007, the three countries mined more than 95% of
the 58,600 tonnes of produced vanadium.
Of the three, China is the biggest player
as it is both the largest supplier and consumer of the metal, accounting for 50%
of global production.
But much of Chinas production goes into domestic consumption,
leaving the rest of the world vulnerable.
And that is where Russian steelmaker Evraz,
which is part-owned by billionaire Roman Abramovich, steps in.
The company is already
one of the largest vanadium producers, and was looking to get even larger with some
key vanadium acquisitions before it was deemed to be trying to corner the market
but was thwarted by the European Union trade commission.
It should come as little
surprised that a growing list of Canadian junior miners have stepped in and are
looking to develop the worlds next generation of vanadium mines.Their projects
range in geographies from Quebec to South America to Africa.
The Northern Miner
will take a closer look at three names that investors could well be hearing more
from in the
coming months.
Apella Resources (APA-V)
While Canada is currently a marginal producer of vanadium, that could soon be changing
thanks to Quebecs significant stores of the metal.
Apella has emerged as the key way to play vanadium in Quebec by virtue of its two
significant projects in the province.
Ironically, perhaps, it is the less developed
of the two, Lac Dore that has gained more attention.
The deposit was discovered
in 1955 and while no compliant resource has been released, it has been labeled as
potentially the second largest vanadium deposit behind Xstratas Rhovan mine in
South Africa based on historical drilling.
Despite that prospectiveness Apella has
had to hold off on exploration due to a legal dispute with Quebecs crown corporation,
Soquem.
While Apella currently has nine claims to Soquems two, there are a further
ten key claims in limbo.
Apella is looking to secure nine of the ten and hopes that
a court ruling on the matter slated to come down in March, will go in its favor.
The claims it already has account for 65% of the prospective area, and the extra
nine claims would give it control over 95% of the ground.
If it wins, Apella will
have won for itself the rights to a zone that stretches over 10-km and is roughly
100 metres wide.
Over that distance there are three key zones of interest, with
the P2 zone considered to be the richest.
And while the company waits for a verdict,
it is not sitting on its hands.
Around the same time that it was meeting with Soquem
over the Lac Dore claims, another project came into
managements focus.
In January of 2008 it acquired the Bell River project, which
it since re-named Iron-T.
Free of legal hassles, Apella has been able to prove
up an inferred resource of 11.6 million tonnes grading 26.5% Fe, 6.33 Ti02%, 0.40%
V205 or 0.73% V205 equivalent.
Apellas president and chief executive, Patrick OBrien,
says one of the key attributes of the deposit is the iron content.
"Chinese steel
manufacturers blend vanadium with iron anyway, so to make a ship ready ore we would
only have to separate out the titanium," he says.
Early cost estimates put production
of a ship ready vanadium-iron product at US$48 a tonne with a selling value of US$78
per tonne.
As for future plans at the site, the company plans to spend $5.7 million
on infill drilling and step out holes that will test targets as far away as 3-km
from the known deposit.
It also plans to do geophysics over a western extension
anomaly.
"From Apellas perspective, we want to get two projects off the ground and into
production." OBrien says.
"The power and water, the rail is there and well be
producing ship ready ore."
Largo Resources (LGO-V)
Another emerging player in the story is Largo Resources, which is developing the
Maracas project in Brazil.
Acquired in 2006 the project has a measured and indicated
resource of 23.2 million tonnes grading 1.27% V2O5, and reserves of 13.1 million
tonnes grading 1.34% V2O5.
The current resource would be enough to run a mine for
22 year mine life at 10 million tonnes of ferro vanadium
per year with capex of $212 million.
And Largos president and chief executive Mark
Brennan believes those numbers could all be in for a significant
shift upwards.
Thats because the deposit has an aeromagnetic strike length of 8-km
by 2.5-km and is made up of three distinct trends each of which is roughly 3 km
long.
"Our expectation is that we could double the resource with drilling by early
in the second quarter," Brennan says.
His confidence is born out of the fact that early-on the companys objective was
not to find a huge resource, but to set out to define a reserve and bring the project
into production quickly as one of the lowest cost vanadium producers.
That development
story is unfolding nicely as the company has progressed further than any other junior
on the
financing front.
In December of last year Largo announced it had signed a letter
of Intent with Brazilian-based Vinci Partners that
would see Vinci acquire the remaining 20% of maracas for US$120 million in funding.
The company also has an off-take agreement in place with Glencore that covers 6
years of 100% of production for six years based on prices from the metal bulletin.
As for where Brennan sees future production going? "Largo has not focused on the
battery market," he says.
"Thats not to say that we dont like what we see, we
do, and it gives us lots of hope about the future.
But our focus is the steel market.
Since 95% of vanadium production
goes into steel thats all were concerned with."
Energizer Resources (EGZ-V)
Further afield, Energizer Resources is looking to push its Green Giant project in
Madagascar into production.
The company released an estimate in January that outlined
an indicated resource of 49.5 million tonnes at an average grade of 0.693% vanadium
pentoxide (V205) and an inferred resource of 9.7 million tonnes at an average grade
of 0.632% V205.
The deposit sits on a 21-km vanadium trend, of which Energizer has
only drilled only 25%.
Unlike the magnetite deposits at Apellas Lac Dore, Largos Maracas, and Xstratas
Rhovan, Green Giant is a sediment-hosted vanadium deposit - a fact that has ignited
some conversation around the project.
Energizer says the deposit gives the company
a distinct edge over its rivals in that it can more easily produce a high quality
end product.
"Our natural end product is a high purity vanadium pentoxide," Julie Lee Harrs,
president and chief operating officer of Energizer says.
"A large deposit like this
can provide the security of supply that the battery industry needs to bring new
technologies into production." Since the kind of high purity vanadium product that
Energizer hopes to be producing by 2014 is difficult to come by right now, Energizer
will enjoy a distinct advantage.
Higher purity V2O5 is currently being sold for
anywhere between US$10 to $30 per lb.
The range is price is due to Evraz controlling
the market under the Stratcor banner.
"Right now battery manufacturers are prisoner to high quality producers and theres
not that many of them," she says.
Green Giant, however, is not without its detractors.
Byron Capital Markets currently has a sell recommendation on
the stock because of concerns on the metallurgy side.
Jonathan Lee, a battery material
analyst at Byron, isnt convinced that the company has found a way to separate out
non-vanadium materials from the vanadium due in a cost effective way.
With alkaline roasting being the most expensive of part of producing vanadium it
is important to have a high grade and easily separable ore, Lee says.
Harrs disputes such conclusions.
"Its a different metallurgical process than what
others are doing," she says.
"People are not comparing apples to
apples.
They are saying magnetites need a certain process and that sediment-hosted
deposits are not following that process so they must be having problems.
But it
doesnt mean theres a problem.
It just means its a different rock so the process
will be different." Harrs contends the company has had metallurgical success, with
up to 82% vanadium recovery.
The company plans to do additional work metallurgical
work within six months.
1915 - 2011The Northern Miner.
All Rights Reserved.
For more information please contact,
W.
Adrian Bakker
Vice President of Corporate Communications
Apella Resources Inc.
APA - TSX-V
Suite 1600, The Bower Building
543 Granville Street
Vancouver, BC V6C 1X8
Ph: 604-683-8990
Direct: 604-641-4474
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Apella slideshow
Video
of the
Iron-T Vanadium Deposit
Subscribe to Apellas Video Channel
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