THE BOURSE WHISPERER: TNG Limited (ASX: TNG) gave the market something to think about with the announcement of a binding off-take agreement for the company’s 100 per cent-owned Mount Peake vanadium-titanium-iron project in the Northern Territory, along with a technology transfer agreement for the TIVAN refinery.
These agreements have been reached with major Korea-based ferro-vanadium group WOOJIN IND., CO., LTD., (WJN).
The life-of-mine off-take agreement encompasses binding commitments for WJN to take or pay a minimum of 60 per cent of the vanadium pentoxide (V2O5) and other vanadium products from Mount Peake with a minimum guaranteed price which is, based on the cost of production estimates determined under the project’s Definitive Feasibility Study, 20 per cent above TNG’s forecast cost of production.
The company said the off-take agreement will allow more accurate forecasts of project’s revenue and profitability and creates a strong foundation for the projects financing and development.
“The significance of this historic agreement should not be underestimated, with WJN’s commitment to purchase at least 60 per cent of our vanadium production, on a take-or pay basis with a guaranteed minimum price and opening the way to securing investment from Korean and other international companies towards financing and development,” TNG limited managing director Paul Burton said in the company’s announcement to the Australian Securities Exchange.
TNG has also struck a binding agreement for the transfer of ferro-vanadium (FeV) production technology from WJN.
A FeV conversion plant will be installed at TNG’s TIVAN refinery site, which the company said will allow further diversification of its product portfolio, as well as moving it up the vanadium value chain with a product that is directly saleable to major steel mills on a global basis and take advantage from any price advantage of one product over the other (V2O5 vs FeV).
TNG said WJN’s proprietary technology has the world’s highest vanadium recovery rate and TNG expects this to be most beneficial to the company providing additional profitability over the project’s life.
“In addition the technology that TNG will access via the technology transfer agreement from WJN provides TNG with an additional competitive advantage to produce a high value product with proven highest vanadium recoveries in the world, which is in line with our corporate aim to be the lowest cost producer of the highest purity products,” Burton said.
“These agreements crystallise a very close and strong relationship developed over the past year from a nonbinding Memorandum of Understanding to a commercial agreement for the life of the project.
“WJN are one of the world’s leaders in ferro-vanadium production, with a strong Research and Development capability and a considerable depth of marketing expertise in the global vanadium industry and as a result a tier one partner for TNG.
“This will spearhead TNG to become a potentially world leader in the vanadium sector