- 01Study supports V-Iron DFS (funding pending).
- 02Base: US$842m NPV, 36% IRR; US$400m capex.
- 03Output: 603ktpa pig iron, 65ktpa slag; term sheet covers slag.
Vanadium Resources (ASX: VR8) has completed a scoping study on an integrated vanadium and iron co-production operation based on its Steelpoortdrift project in South Africa, supporting progression to a V-Iron Definitive Feasibility Study subject to funding.
The base case generated a post-tax net present value of about US$842 million and an internal rate of return of about 36% over a 30-year evaluation period, alongside average annual free cash flow of about US$164m and EBITDA of about US$226m.
Pre-production capital is estimated at about US$400m including contingency, with the proposed operation targeting approximately 603,000 tonnes per annum of pig iron and 65,000tpa of vanadium-rich slag grading about 26.7% vanadium pentoxide.
All production targets and financial forecasts are presented on a 100% project basis, while Vanadium Resources holds an 86.49% interest in the Steelpoortdrift project and 100% of the proposed V-Iron Plant through VR8 Highveld.
Vanadium Resources has a non-binding term sheet with US Vanadium Holding Company LLC covering 100% of planned slag production, while the base case assumes domestic pig iron sales using an import-parity pricing approach.
Two-Product Revenue Strategy
The V-Iron pathway would combine open-pit mining and concentration at Steelpoortdrift with downstream processing at Highveld Industrial Park, approximately 190 kilometres away by road, where concentrate would be pre-treated and smelted before vanadium recovery.
The proposed process is designed to create two saleable products, with pig iron targeted at South African steelmaking and foundry customers and vanadium-rich slag intended for downstream refining into commercially usable vanadium products.
At current pricing used in the study, the estimated post-tax NPV was about US$665m and the IRR about 31%, compared with about US$53m and 13% in the low case and about US$2.01 billion and 63% in the high case.
“Our developing US vanadium offtake partnership anchors 100% of planned vanadium-slag production in Western critical-mineral supply chains, with a usable intermediate product moving directly from South Africa to a US refinery without passing through, or depending on, any adversarial jurisdiction,” chief executive officer Nick Diack said.
“That secure and transparent route to market enhances the strategic value of Steelpoortdrift and, in our view, makes financing considerably more achievable with development finance institutions and partners holding critical-minerals mandates.”
Funding and Feasibility Path
Advancing the V-Iron DFS toward a final investment decision is expected to cost about US$3m before owner’s costs, environmental studies, contingencies, front-end engineering design, and other costs.
Vanadium Resources expects at least US$400m of pre-production funding will likely be required to reach FID and anticipates most development funding would comprise project debt, supplemented by development finance institution funding and grants, with equity forming a smaller component.
The base case produced an estimated minimum debt service coverage ratio (DSCR) of about 3.5 times under the study’s indicative financing construct, although the low-price case reduced DSCR to about 0.96 times and would not support the assumed debt structure without mitigation.
Vanadium Resources has appointed RMB as exclusive financial adviser and capital sourcing agent while continuing discussions with development finance institutions, strategic investors, and prospective offtake partners.
Further work including metallurgical testing, process optimisation, detailed engineering, site tenure, utilities, permitting, and offtake will be conducted as the V-Iron DFS refines the mine schedule and supports any V-Iron-specific Ore Reserve estimate.
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