Neometals has added more grunt to its ore reserve as part of an update to its Barrambie titanium project prefeasibility study (PFS) as it builds the case for a lower-capital development of its Barrambie titanium and vanadium project near Sandstone in Western Australia’s Murchison region.
The probable ore reserve now sits at 27.6 million tonnes at 22.3 per cent titanium oxide, 43.7 per cent iron oxide and 0.57 per cent vanadium oxide.
The PFS update has outlined a $78.1 million capital requirement for the first year of direct shipped ore (DSO) production, with only mining, crushing and screening. A further $137.2m will be required to construct a crushing, milling and beneficiation (CMB) plant for another 12 years of mixed gravity concentrates (MGC) production.
The fresh numbers have pegged the project’s net-present value at $374.9 million before tax and an internal rate of return of 45 percent, while the bean counters tagged the average free cash, before tax, depreciation and amortisation, at $103.3 million each year in the first five years.
Neometals managing director Chris Reed said: “This lower capital, staged development of Barrambie would speed the addition of approximately four per cent to global supply. Our customer Jiuxing, is the largest chloride-grade titanium slag producer in the largest titanium market, China. The market-linked pricing and floor price mechanisms for the DSO and MGC products are evidence of the strong market fundamentals for titanium and emerging structural supply deficit.”
The latest figures follow a recent successful smelting trial and a binding take-or-pay offtake agreement, via Neometals’ wholly-owned subsidiary Australian Titanium, with Chinese partner Jiuxing Titanium Materials for both DSO and titanium-rich MGC.
The off-take deal struck last month is for five years from the date of the first commercial-scale production of DSO. It includes an initial 12 months earmarked for the selling and purchasing of DSO and a subsequent 48 months for the sale and purchase of MGC. Neometals has agreed to supply a minimum one million wet tonnes of DSO each year and 800,000 wet tonnes per annum of MGC.
Management describes its latest economics as “compelling” and it now plans to shift into the definitive feasibility study phase.
Neometals says it has invested $40 million so far on the acquisition, exploration and evaluation of Barrambie since it took the reigns in 2003 and it has mainly focused on delivering a titanium product.
A recent report by Global Market Insights predicted the world’s titanium powder market value will reach US$4.5 billion (AU$6.7 billion) by 2032. The bullish predictions are largely due to the commodity’s growing use in both the automotive and aerospace sectors.
The make-up of global supply is also changing as the aerospace industry seeks alternative suppliers to replace Russia, particularly in the production of titanium sponge - an intermediate product used to make titanium alloys. Demand for titanium sponge slumped during the COVID-19 pandemic as air travel came to a near halt. But it remains an essential commodity and with air travel bouncing back with a vengeance, demand appears unlikely to drop any time soon.
With its healthy numbers pointing to a solid supply link to a hungry global market, things look like they are heading in the right direction at the right time for Neometals.
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By Steve Kaless
