Energy Minerals Investor Hub: TNG has confirmed its long-awaited demerger of base metals assets into Todd River Resources, which is expected to debut on the ASX in March. What is the expected impact of this separation?
Paul Burton: TNG took the decision with shareholder approval to demerge and IPO its strong portfolio of predominantly base-metal assets in the Northern Territory for two reasons. Firstly because of the focus on the company’s flagship project – the Mount Peake project which is now going into pre-development – no resources could be spared to advance any of these projects and there is no value attributed to the projects in the company’s share price as a result. Secondly as TNG moves into project finance it requires a clean single project company for this to occur. TNG will remain a major shareholder of the new listed company, with Todd River operating under a shared resources agreement with TNG. In addition, TNG shareholders will get an in-specie distribution and priority to take up new shares in the new company.
Energy Minerals Investor Hub: TNG is in the final permitting stages and pre-engineering stages for the Mount Peake mine and its proprietary Tivan hydrometallurgical processing plant in the Northern Territory. What is the significance of the Tivan technology and what is your construction timeline?
Paul Burton: Tivan is the proprietary process that allows us to extract the vanadium, titanium and iron in high purities from a titano-magnetite ore. This provides a strong multi-commodity revenue stream and low operating costs allowing TNG to become the lowest cost producer of these products. Construction of the Tivan facility should commence following permitting.
Energy Minerals Investor Hub: Stage 1 of the project was expected to cost A$970 (US$739) million in 2015 but there has been downward pressure on industry costs since then and you’ve also identified at least A$50 (US$38) million in operating cost savings. Is further optimisation likely?
Paul Burton: We are very optimistic that this is the case and do not expect our capex to increase.
Energy Minerals Investor Hub: Timing-wise, the commodities market is improving – how does this impact Mount Peake’s development?
Paul Burton: Yes we feel the market is improving for bringing this type of deposit on stream. Prices for Mount Peake’s strategic metals recovered from historical lows and increased significantly in 2016, thus greatly improving the economics of our project. After a period of under-investment, we should be well placed in the industry cycle to benefit from future supply tightness.
Energy Minerals Investor Hub: TNG now has agreements covering the sales and marketing of Mount Peake’s three product suites (vanadium, titanium and iron), important factors for financing. How do you rate the current financing environment and how is finance for the project progressing?
Paul Burton: The project finance is expected to be a consortium and Gresham have been appointed to drive this through.
Energy Minerals Investor Hub: You’ve proved you can produce battery-grade vanadium electrolyte using vanadium pentoxide from Mount Peake; and secured a deal to promote the development of Australia’s vanadium redox flow battery market. What opportunity does this market represent to TNG?
Paul Burton: The vanadium storage battery market is expected to grow significantly on a global basis. Because of its size, aging power infrastructure and focus on green energy, Australia represents a prime opportunity for this industry. With our industry leading partners, we expect this to be a significant business for TNG in the future, both for the sale of our Mount Peake’s vanadium product as well as the deployment of VRBs across the country.
Energy Minerals Investor Hub: TNG has a few changes occurring at board level – you recently appointed renewable energy executive John Davidson as non-executive director and are still on the hunt for a chairman. What will Davidson’s appointment bring to Mount Peake’s development and how is the evaluation process going for the chairman’s role?
Paul Burton: This is a strategic appointment related to my answer above. JD brings a wealth of experience and contacts in this important area and also provides a solid independence as a Non-Executive Director.
Energy Minerals Investor Hub: On another note, TNG has identified mineralisation including graphite at Mount Peake, where does this sit in terms of the company’s priorities?
Paul Burton: The graphite discovery is only 5km from Mount Peake. It is high grade but at about 100m depth. We consider this to be worth evaluating once the Mount Peake is developed.
