Development of the Balasausqandiq deposit

The Balasausqandiq deposit is a very large black-shale deposit containing vanadium and valuable by-products - uranium, molybdenum, aluminium, rare earth metals and carbon.  This deposit is unlike the vast majority of other vanadium deposits, either in production or proposed, in that it is not comprised of vanadiferous titano-magnetite and is amenable to a processing method which is much lower in both capital and operating costs.

The current mineral resource estimate of some 34m tonnes covers only the first (of seven known) ore-bodies (“OB1”). Of the others, exploration is now complete, except for some hard-to-access areas, for OB2, 3 and 4, and a mineral resource estimate of these is expected as soon as assaying and resource estimation are complete.

The Balasausqandiq deposit is expected to be large enough to eventually support an operation of up to 10 Mtpa of ore, producing about 55,000 tonnes of vanadium pentoxide per year. However, to avoid oversupply to the market, engineering risks, and to reduce shareholder dilution, the Company plans to develop more slowly, in steps that are more in tune with both the natural expansion of the vanadium market and at a pace which allows the later stages to be substantially financed from earnings of the earlier stages. This relatively slow development plan can be revised if there is a significant increase in demand, for example, for vanadium redox flow batteries for energy storage.

A two step development is currently planned, starting at processing 1 Mtpa of ore (Phase 1) and rising to 4 Mtpa of ore (Phase 2). Vanadium pentoxide production from 1 Mtpa will be about 5,600 tonnes per annum and 4 Mtpa would produce an additional 16,800 tonnes – less than the predicted growth of the market in the meantime.

The 1 Mtpa expansion followed by a 4 Mtpa expansion is an integrated plan aimed at limiting financial, engineering and market risk, whilst still benefiting from the economies of scale of the large deposit size. Further expansions beyond the current plans are highly likely.

A Feasibility Study into the Phase 1 development is now nearing completion. This study involved additional exploration of OB1, resulting in an increase in the estimated resource from 24m tonnes to 34m tonnes, and increase of 17% in contained vanadium.  The Company has already operated a pilot treatment-plant which produced some 20 tonnes of vanadium pentoxide which was sold commercially and the current study has, so far, substantially confirmed these results.