TNG is not your average commodity company. The emerging strategic metals developer is positioning its 100%-owned Mount Peake project to take its place in the disruptive energy market thanks to its high-value vanadium-titanium-iron resource and its customised TIVANTM metallurgical process.
Managing director Paul Burton believes like lithium, vanadium will have its day, as more people embrace the long life and large energy storage made possible by vanadium redox batteries (VRBs).
In recent months, TNG has notched up a series of significant agreements covering TIVANTM, pre-development at Mount Peake, life-of-mine offtake agreements – and Burton hopes to keep signing on the dotted line as the company advances financing arrangements and a potential base metals spin-off to realise value for shareholders.
Mount Peake has taken its place as the company’s flagship project, thanks to its high-value resource and promising project metrics.
“Mount Peake is a major project for Australia,” Burton said.
“TNG is on track now to become the first vanadium, titanium and iron producer from this type of magnetite deposit in Australia.”
Mount Peake’s current ore reserve is 41.1 million tonnes at 0.42% vanadium pentoxide (V2O5), 7.99% titanium dioxide (TiO2) and 28% iron out of a total measured resource of approximately 160Mt, with plenty of additional scope to expand this.
The project, which lies 230km north of Alice Springs in the Northern Territory, has a projected pre-tax IRR of 41% and an initial 17-year minelife according to its 2015 definitive feasibility study.
“It has a very long mine-life of almost 20 years, plus it has very high returns and a Net Present Value of almost AUD$5 billion – not many current projects in the world have that,” Burton said.
“The reason we can get those high value returns is because of the TIVANTM metallurgical process we’ve developed with (German company) SMS Group GmbH, METS and the CSIRO, which gives us a significant advantage over other producers and potential producers.”
TIVANTM pilot testwork at CSIRO’s Hydrometallurgical facility in Perth exceeded expectations, producing vanadium assays greater than 99% purity and greater than 90% titanium recovery at up to 65% purity, ideal for refining to high-value pigment grade.
Following that success, TNG has now signed a number of agreements with the global metallurgical engineering and construction company SMS, a move akin to David teaming up with Goliath.
Under the latest agreement, SMS and TNG have agreed to pool their TIVANTM patents and technologies and join forces to commercialise the technology.
SMS had already signed a Heads of Agreement in February to help progress TNG’s TIVANTM refinery in Darwin through the design and construction phase, and assist in arranging funding, potentially through Export Credit Agencies.
Burton said SMS, which had a Euro 3 billion turnover last year, had emerged as a powerful strategic partner for the world-class Mount Peake project.
“The string of recent agreements between TNG and SMS represent a substantial vote of confidence by a major global player in the metallurgical plant building industry, in the potential of the TIVANTM process, the quality of the Mount Peake project and our ability to secure financing on attractive terms,” he said.
TNG has already explored a number of financing options and Burton is confident funding for Mount Peake will be forthcoming before the end of the year.
“There’s no question about whether we’ll get the project away, it’s just how we’ll put it together and who will facilitate in an advisory capacity to bring a finance consortium together,” he told MiningNews.net.
TNG was paving the way to derisk the project’s development by involving Tier 1 companies, such as SMS and Downer EDI, which was secured as a potential development partner in February.
TNG also appointed McMahon Services as interim project manager in October 2015 to coordinate the pre-development activities at Mount Peake.
“From my perspective, I want to get as many agreements and alliances in place so that when we get into finance and construction, we have a lot of our groundwork in place,” Burton said.
TNG has already teed up off-take agreements for 60% of its vanadium and iron products and but Burton doesn’t want to rush into a contract for Mount Peake’s third product, titanium pigment.
“That is our highest value product, so it is important for us to get that locked away in an offtake agreement but we’re not in a great rush,” he said.
“The price is due to rise the closer we get to production, so we’re being careful not to lock it away too early.”
With 40% of the company’s planned vanadium production still up for grabs, Burton said TNG was in talks with battery producers and the company was keen to be part of the emerging alternative energy market.
TNG has signed an MOU with a leading VRB manufacturer as a potential off-take customer and is examining installing a VRB unit at Mount Peake to slash potential power costs, reduce TNG’s carbon footprint and showcase the use of VRBs.
TNG has also asked Perth-based company Energy Made Clean to evaluate efficient energy supply options for Mount Peake including a solar power system to run with a VRB.
Burton foresees a huge future for redox batteries and said the rise and rise of lithium had helped focus people’s attention on energy alternatives.
“Vanadium will come to the fore because VRBs are very large storage cells and vanadium could go exactly the same way as lithium,” he said.
“We’re going to be one of few suppliers of high purity vanadium, and that’s our competitive advantage.”
He said the company’s target of being in production near the end of 2018 was achievable and TNG was moving progressively towards that goal.
Meanwhile, the company is reviewing options including potential acquisitions, and the possible demerger of its NT base metals assets into Todd River Resources, which was mooted then put on hold last year.
Burton was TNG’s exploration manager prior to his current role and he strongly values the base metals projects, particularly with the zinc price heading north.
“We’re expecting to make a decision soon about any spin-out of Todd River – we have some terrific projects there,” he said.
He pointed to TNG’s McArthur River project, which lies within the Batten Fault Zone which hosts other base metal resources, including the recently-announced high grade 58 million tonne zinc and lead resource at Teena, jointly owned by Rox Resources and Teck Resources.
TNG has found high-grade mineralisation at McArthur and assays from sampling have included results up to 47.8% copper and 68gpt silver.
“It highlights our view that this is a highly prospective area with a very large zinc and copper trend and there is huge potential there – and that is just one of our projects,” Burton said.
Other projects for the potential demerger include TNG’s previous flagship zinc project Manbarrum, containing two separate zinc-lead-silver JORC resources, and Mt Hardy with drill-ready copper and gold targets.
He said while TNG had chosen to focus on Mt Peake, it was still assessing new projects which could bring value to shareholders.
“We’re still explorers at heart,” he said.
As TNG transitions towards development at Mount Peake, Burton said investors could expect to see a series of announcements in the coming months.
“We’ve got a lot happening,” he acknowledged.
“There’ll be a number of project development announcements and we’re looking at adding to the board composition and key executive personnel.
“And the key items are the remaining offtake agreement, finalising the finance consortium, and the future of our non-core assets.”
AT A GLANCE
HEAD OFFICE
Level 1, 282 Rokeby Road
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
714.5 million
MARKET CAP
$96.46M
MAJOR SHAREHOLDERS
WWB Investments 11.11%
Aosu Investment and Development Co Pty Ltd 7.88%
Ao-Zhong International Mineral Resources Pty Ltd 5.33%
P. Burton 1.85%
T. Brouwer 1.4%
