Vanadium Resources Limited

Release Highlights:

• Vanadium Resources Limited (ASX: VR8, DAX: TR3) provides an update on its Steelpoortdrift Vanadium Project in South Africa. The roadshow in China concluded on 24 May 2024, included meetings with potential offtake partners, strategic equity investors, EPC firms, and financiers. MOUs signed with Hexiang, Enerflow, and Zhongxin represent over 100% of planned production from Phase 1. Discussions are ongoing with parties in China, Japan, Korea, North America, and Europe to secure binding agreements for offtake, EPC, and financing.
• In response to the significant demand for high-quality Vanadium Pentoxide for grid-scale Vanadium Flow Battery (VFB) systems, the Company will modify its SRL processing plant to produce two product streams: 98% V2O5 for steel markets and 99.5% V2O5 for the VFB market. This modification aims to enhance sales pricing and post-tax NPV, with the FEED process now forming the basis of the project implementation plan and contracting strategy.
• VR8 is considering producing ammonium metavanadate (AMV) and other products such as vanadium electrolyte, vanadium nitride, and ferrovanadium. This exploration is in response to requests from Chinese parties during the Roadshow. Commenting on the update, VR8’s leadership highlighted the strategic advantages and market demand for high-purity Vanadium Pentoxide, positioning Steelpoortdrift favorably for long-term development and shareholder benefits.

Roadshow Highlights:

• Strong financial indicators highlight the project’s viability, including an attributable Net Present Value (NPV) of US$1.05 billion, an Internal Rate of Return (IRR) of 42%, and a payback period of 27 months.
• The project boasts competitive capital expenditure (US$211 million) and operates with low operating expenses (Cash cost US$3.24/lb). Additionally, it offers a long mine life of 25 years based on the Definitive Feasibility Study (DFS) and Ore Reserves, with Mineral Resources suggesting a potential lifespan of 180 years.
• Vanadium Resources is actively building a strong project development and execution team while progressing off-take and strategic equity processes for Phase 1. With off-take Memoranda of Understanding (MOUs) already signed with Hexiang, Enerflow, and Zhongxin, totaling 12ktpa, the project aims to target first concentrate and flake production in H2 CY2026, tapping into vanadium’s potential across energy storage and infrastructure. Additionally, Vanadium Resources is exploring debt funding options with non-bank lenders.

Release Highlights:

• Vanadium Resources Limited (VR8) has signed a Memorandum of Understanding (MOU) with Hunan Zhongxin New Materials Technology Co., Ltd. (Zhongxin), a vanadium-based high-end alloy material processing enterprise with a global customer base and an annual production capacity of 13kt of vanadium-based high-end alloy materials.
• Similar to previously announced MOUs with Panjin Hexiang New Materials Technology Co., Ltd. (Hexiang) and Enerflow Technology Co., Ltd. (Enerflow), the MOU with Zhongxin involves the sale of 4ktpa of vanadium pentoxide (V2O5) for an initial 5-year term, extendable for another 5 years.
• The combined MOUs signed so far exceed the planned ~11ktpa V2O5 production for Steelpoortdrift’s Phase 1 operations, showcasing the ongoing strong demand from China for reliable vanadium supply sources. Additionally, VR8 continues discussions with various Chinese, Japanese, Korean, and European end-users and traders to secure binding offtake agreements to support project financing.

Release Highlights:

• Vanadium Resources Limited (VR8) has entered into a Memorandum of Understanding (MOU) with Enerflow Technology Co., Ltd., a subsidiary of Tian’en Energy Co., Ltd. This MOU signifies a source of vanadium demand from the global energy storage market, particularly for Vanadium Flow Batteries (VFBs), in addition to the steel and alloy market.
• The MOU with Enerflow involves the sale of 4ktpa of vanadium pentoxide (V2O5) for an initial 5-year term, with an option to extend for another 5 years. This is similar to a recently announced MOU with Panjin Hexiang New Materials Technology Co., Ltd, which also covers 4ktpa of V2O5.
• Together, the MOUs with Hexiang and Enerflow represent 8ktpa, or approximately 73%, of the planned 11ktpa V2O5 production for Steelpoortdrift’s Phase 1 operations. VR8 continues discussions with various Chinese, Japanese, Korean, and European end-users and traders for additional offtake MOUs and agreements.

Report Highlights:

• Vanadium Resources is pleased to announce that significant offtake interest from Chinese, Japanese, Korean, and European end-users and traders has been received this quarter. Discussions with several groups regarding offtake MOUs and agreements will take effect.
• FEED workstreams have continued with focus on redesigning parts of the plant, reassessing Capex, preparing overall site plans, and developing engineering documentation and technical specifications for tender packages on EPC basis.
• Environmental and project readiness progress includes the granting of Environmental Authorisation for the Tweefontein SRL site, receiving feedback on the Social and Labour Plan from the DMRE, advancing remaining environmental and water applications, commencing fencing work at Steelpoortdrift, completing the Rope Conveyor PFS, progressing the ESKOM application, and conducting interface risk assessments and power solution investigations.

Release Highlights:

• Vanadium Resources (ASX:VR8) will hold its General Meeting (AGM) on Wednesday, 29 May 2024, at 3:00pm (AWST) at 108 Outram Street, West Perth, 6005.
• Shareholders can view and download the Notice of Meeting from the Company’s website or from the ASX market announcements page under the code “VR8”. Those shareholders who receive their company communications in the post will therefore receive a printed copy of this announcement and their personalized proxy form.
• Conversely, shareholders who receive their communications electronically will, as they have on previous occasions, receive an email from the Company’s share registry, Automic Group, with links directing them to this notice and the online voting portal.

• Vanadium Resources Limited (VR8) has signed an MOU with Panjin Hexiang New Materials Technology Co., Ltd. for the supply of 4,000 tonnes per annum of vanadium pentoxide (V2O5) for an initial five-year term, with an option to extend for another five years, representing approximately 37% of VR8’s planned V2O5 production in Phase 1.
• Hexiang, one of China’s largest vanadium nitride producers, utilizes V2O5 to create vanadium-nitrogen alloys, which enhance steel’s mechanical properties and are a cost-effective substitute for ferro-vanadium.
• This MOU underscores the strong demand for vanadium products in China and supports VR8’s efforts in securing project financing, while allowing VR8 to pursue additional offtake agreements with end-users and traders in China, Japan, Korea, and Europe for the remaining production capacity.

Highlights:

• Arrowhead is initiating its coverage on Vanadium Resources Limited (Vanadium Resources, VR8 or the company) with a fair value bracket of AUD 0.16 per share to AUD 0.46 per share (Share Price on January 22, 2024: AUD 0.047) based on Relative valuation methodology.
• Vanadium Resources is an Australian company based in South Africa and Australia, specializing in the production and processing of vanadium. The company is currently focused on developing its flagship project – the Steelpoortdrift Project (Steelpoortdrift) and the Tweefontein Project (Tweefontein), located 15 km apart within the Eastern Bushveld Igneous Complex, Limpopo Province, South Africa.
• Steelpoortdrift is a Tier 1 project that is 86.49% owned by Vanadium Resources (Pty) Limited, a wholly owned subsidiary of Vanadium Resources. It is located in the Eastern Limb Bushveld Igneous Complex, Limpopo Province, South Africa, which is rich in advanced titaniferous magnetite deposits. Most of the technical work related to the project such as drilling, metallurgy, hydrogeology, and plant design has been completed and necessary development permits have already been secured.
• In April 2022, the Project’s mineral resource estimate (MRE) was updated to 680 million tonnes (Mt) at an average in-situ grade of 0.70% V2O5 at a cut-off grade of 0.45% V2O5, including measured mineral resources of 145 Mt, at an average of 0.72% V2O5. Additionally, the indicated and inferred resource amount to 327 Mt, averaging 0.70% V2O5, and 207Mt, averaging 0.68% V2O5 respectively.
• The ore reserves for Steelpoortdrift stand at 77Mt at an average grade of 0.72% V2O5. Of this, 30Mt are proved ore reserves at an average grade of 0.70% V2O5 and 47Mt are probable ore reserves at an average grade of 0.72% V2O5. The project will be executed in two phases:
  • Phase-1 (Years 1-4): It will be operational for the first four years at a mining rate of 1.6Mt of vanadium ore per year at an average in situ grade of 0.83% V2O5 which will be processed in the concentrator and SRL plant to produce c. 12ktpa of V2O5 flake. Pre-production capex will be around USD 211 mn.
  • Phase-2 (Years 5-25): It will include expansion and increment of mining rate 3.5Mtpa of ore at an average grade of 0.71% V2O5, increasing production to 3.5Mtpa of ore by an additional USD 188 mn, funded through a combination of free cash flows and available cash.
• The project is expected to produce a vanadium concentrate of 2.1% V2O5, which is one of the highest-grade vanadium available globally. The project’s definitive feasibility study (DFS), conducted in October 2022, showed strong economic results with Net Present Value (NPV) of USD 1.05 bn (at 86.49%) at a 7.5% rate, an Internal Rate of Return (IRR) of 42%, the life of mine (LOM) EBITDA of USD 5.2 bn, 27-month payback and an initial 25-year mine life.
• VR8 aims to become one of the world’s leading producers of vanadium pentoxide. It is targeting annual production of 10,700-21,000 tons of V2O5 flake per annum. The company is in discussions with several potential offtake parties and strategic equity investors for the project. Moreover, the company has also received several non-binding indicative term sheets from commercial banks, export credit agencies (ECAs), development banks, and non-bank financiers.
• The company is focusing on Steelpoortdrift development activities intending to commence production in H2 2026. The aim is to develop the project till the final investment decision (FID) (with an H2 CY2024 target) on the construction of a mine and concentrator facility at Steelpoortdrift and an SRL facility at Tweefontein.
• In May 2023, VR8 completed an AUD 5.91 mn strategic placement and agreement with Matrix Resources (Zhejiang) Co., Ltd (Matrix), allowing Matrix to negotiate an offtake, aimed at the Asian markets, of 40% of vanadium products produced from the Phase 1 operations of the Steelpoortdrift Project over a 10-year term.
• The company is listed on the Australian Securities Exchange (ASX) under the ticker VR8 and on the Frankfurt Stock Exchange under the ticker TR3.