American Vanadium unveils positive feasability study at Gibellini project

American Vanadium (CVE:AVC)(OTC:RMRCF.PK) Monday announced positive feasibility study results for its 100%-owned Gibellini vanadium project, located in Eureka County, Nevada.

The study reported an after tax cash flow of $275.7 million, an internal rate of return of 43%, a net present value of $170.1 million at a 7% discount rate and a 2.4 year payback on investment from start-up, American Vanadium said.
The feasibility study, based on a 3.5 million ton per year operating rate and a 65.9% average recovery rate, was prepared by AMEC E&C Services of Sparks, Nevada.

According to the report, Gibellini has an operating cost of $4.10 per pound of vanadium pentoxide, with a selling price range of $7.68 to $13.63 per pound.
The project is expected to have average annual production of 11.4 million pounds and capital costs are projected at $95.5 million, including almost $11 million of contingency costs. 

As at 12.16 pm EDT, shares in the Vancouver-headquartered company were up 0.6% at at $1.34.

Speaking to Proactive Investors, President and CEO Bill Radvak, said his company has moved past the exploration stage and into the engineering design stage for the project.

"The feasability study is a very critical milestone which pushes forward the business development process with multiple partners such as steel companies looking for offtakes and battery companies," Radvak said.

Radvak said the operating costs are more controllable and were in line with the industry. He said costs of getting power to the project "were very minimal" as it was located about 10k from a power line.
The study will also give the company more clarity on permitting from the State of Nevada.
In a press release, Radvak said: "Our baseline work has not raised any material environmental issues to date and we are now moving forward with finalizing the plan of operations for review and comment by both the Bureau of Land Management and the State of Nevada."

The Gibellini Project is located in Eureka County, Nevada, about 27.5 miles south of the town of Eureka, and encompasses an area of approximately 2,624 acres. It has been designed to be an open pit, heap leach operation. American Vanadium is currently developing this resource, making it the only primary vanadium producing mine in the US.

According to the Roskill Consulting Group, in a market outlook prepared as part of the feasability study, the global vanadium market in 2012 is estimated to have a surplus which will start to reduce in size over the next few years.

Prices in 2014 are forecast to reach $10 per pound for pentoxide, and $45 per pound for ferrovanadium, as the market prepares for a potential deficit in 2015. Although prices are forecast to increase rapidly, Roskill expects prices to remain below the record highs seen in 2005, it said.

Vanadium is a critical alloying metal used to strengthen steel and is also growing in importance in the emerging uses of mass energy storage and next generation lithium-vanadium batteries. The three largest vanadium producers are China, South Africa and Russia.
As at 3.02 pm EDT, shares in the Vancouver-headquartered company were down 2% at $1.30.