VanadiumCorp Brochure 2015

the

ECONOMIC

review

VOL. 1 • AUGUST 2015

VANADIUMCORP Power to change our world

AUGUST 15 VOL 1 • ISSUE 2

EVOLUTION

BUSINESSMEDIA

I nspi re d by E conom ic Growth

CANADIAN EDITION

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Completed trenching for channel sampling

POWER TO CHANGE OUR WORLD

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By: Djamil Benmehidi - ER Magazine

n the words of VanadiumCorp’s decisive CEO, Adriaan Bakker, Vanadium is a niche metal most people have never heard of that could radically change our way of life. The exponential growth of vanadium use in China recently is a clear indication of the metal’s importance. Chinese rebar alone now represents over 25% of global usage. Vanadium’s application as a steel enhancing agent without rival makes vanadium as valuable as it is enigmatic. Described as “steroids for steel,” by some, as little as 0.1% vanadium, or merely a pound to every ton of untreated steel, doubles its strength. It is due to Vanadium’s unique oxidation states that

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allow it hold electrical charge and increase the strength of steel and alloys meaning less weight, less raw materials, less pollution, and reduced costs all the way down the value chain.

Vanadium could also play a major role in solving the global energy crisis with vanadium batteries. Discovery and usage for new applications for vanadium has exploded globally and North America currently imports 100% of its vanadium needs with zero stockpiles. The

beauty and strength. Today, global demand for vanadium is ravenous, particularly in the developing world where rapid urbanization has led to ever taller skyscrapers appearing on the skyline of so many expansive and highly developed metropolitan centres. Take the case of China, for example, it is less urbanized than its North American and European peers, but has the world’s largest urban population, which stands at over 600 million, a figure which is still

Completed trench for channel sampling

ings in devastating earthquakes such as the 2008 earthquake in Sichuan Province. As the most effective steel and alloy strengthening agent known to man, vanadium is both a prolific and a strategically important metal. While vanadium’s use as a strength enhancing steel additive is crucial, new applications could revolutionize the vanadium industry as we know it. Adriaan Bakker said: “On the steel side alone, the various applications of vanadium are

Near surface mineralization outcrop at Lac Dor

Lac Dore Trenching Completed on East and West Deposits

amazing strength-enhancing trait without alternatives has made vanadium a much sought after material for both commercial and military manufacturing purposes. It was initially used to build armored battleship hulls resistant to shell fire during the late 1800’s. Henry Ford, highlighted the use of vanadium to build the chassis for the Ford Model T in 1908, “a light-weight vehicle of remarkable strength and durability. ” Recent vanadium research has recently solved another great mystery, as long ago vanadium was thought to be an impurity. It was the vanadium contained within legendary Damascus steel swords at the time of the great crusades that resulted in unmatched

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increasing by around 20 million each year. To accommodate this growth, a massive quantity of high strength steel isconsumed as China’s cities grow and modernize. The implementation of the largest urban development strategy the world has ever seen has created an unprecedented demand for vanadium, and is now irreplaceable for stronger and lighter construction materials. First initiated by Chinese government mandate, vanadium reinforced alloys must be utilized in all new building and infrastructure projects. This new mandate is a countermeasure put in place to prevent tragedy and controversy resulting from low strength structural steel collapsing most of the build-

already an extremely compelling story. The emergence of vanadium batteries is going to be a genuine gamechanger.

Vanadium batteries could affect significant change for future generations. An ever growing concern is climate change which also highlights the necessity for a transition to renewable power and sustainable energy storage solutions for the future” Vanadium-based redox flow batteries “VRB’s” are now a proven technology representing a longer life and cleaner energy storage solution. VRB’s are going to revolutionize the world in the same way that oil, coal and nuclear power stations once did. The phasing-out of fossil fuels in favour of clean, renew-

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Completed trenching with visible channel sampling

Near Surface mineralization at Lac Dore

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“POWER TO CHANGE OUR WORLD” able energy sources is now not only possible, but inevitable. As global warming is now a reality, identifying the material needed for renewable power and energy storage solutions is equally important to the technologies themselves. With this in mind, these are exciting times for the vanadium mining sector and there is real blue-sky potential for the industry in the near future; with vanadium deposits unrivaled in North America, secured in two world-class projects and its industry leading specialists from across the globe, VanadiumCorp is ideally positioned to capitalize on this potential.

Currently the company has a lesser market presence than some of its more advanced industry rivals, Vancouverbased VanadiumCorp is a junior miner

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which is on the ascent. As the sole owner of Canada’s world-class vanadium assets, the Lac Dore Vanadium Project and the highlypromising Iron-T Vanadium Project, in addition to a number of copper-gold bearing projects, VanadiumCorp is in an enviable position owning the largest compliant vanadium deposits in North America that appear to be well suited for primary vanadium production. In reference to the Lac Dore Vanadium Project, Adriaan said: “It can be a little intimidating to acquire a project of this size and scope and say, this could be the first vanadium mine of its kind in North America.

New and existing members of our team have a highly specialized skillset in the global vanadium industry which adds significant confidence to our production model and target commodity. Expertise in mine build-

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ing , operation and trade dynamics within the vanadium industry is crucial for our project development and securing strategic partners.” The Lac Dore Vanadium project is world-class –there is nothing in North America like it. To reach production would represent a truely unique market opportunity.

Ending complete reliance of foreign import could open many doors and strengthen our economy. Some main competitive advantages include near-surface mineralization, low strip ratio, grade, positive metallurgy and the absence of superficial oxidation. By comparison, many vanadium projects are highly oxidized, adding significant costs at the production stage. There is also very low silica in the Lac Dore Vanadium Deposit which could save tremendous production costs in contrast to many. The recent release of the first NI 43-101 inferred resource estimate has revealed impressive figures for the Lac Dore project. The inferred resource estimation stands at 99.1 million tonnes at 0.43% V2O5, representing 26.1 million tonnes of magnetite concentrate with a 1.08% grade of vanadium pentoxide. The high-grade vanadium concentrate, recovery, positive metallurgy

and low impurities compare very favourably to the offerings from most global vanadium producers. For Adriaan and his team, there have been many challenges: •the acquisition of the flagship asset whichinvolved ‘ groundstaking’ mining claims against competitors •succeeding in a three year claim contest formining title through various legal methods •the successful fight for the company and itsshareholders by proxy battle •acquisition and validation of historic data toconfirm a world class vanadium resource whichsaved time, capital and associated share dilutionby avoiding an unnecessary drill program The current NI 43-101 technical report vindicates the adversity that they went through to stand where they do today. This technical report was successful in confirming size, grade, quality and compliance of a world class vanadium resource. This is without factoring in Lac Dore’s sister project, the Iron-T deposit, the addition of which could prove to be lucrative for VanadiumCorp. Historically, South Africa was the largest global vanadium producer.

However recently, two of their three vanadium

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producers have recently shutdown completely from depleted resources and adverse economics.

The slowdown in China has also reduced steel production and as vanadium production in China is predominantly a co-product of steel, this in turn creates an additional supply squeeze on vanadium. Despite these supply disruptions, vanadium continues to increase in demand every year and a short supply of vanadium means higher vanadium prices

infrastructure, poor strip ratio, low mine life to experimental processes that can often translate to an unviable or uneconomical project.

As some emerging vanadium companies are also finding out the hard way, import duty, tariffs and shipping is cost prohibitive to transport vanadium internationally. Vanadium Electrolyte adds even more cost as the vanadium is hosted in sulfuric acid and shipped in disposable containers.

Poorly constructed mines and as-

of vanadium electrolyte production in North America to be a very significant value proposition. With vanadium batteries, supply and cost/Kwh are the key concerns. In addition to saving cost on shipping and the advantage of free trade, a partnership/lease model for producing vanadium electrolyte in America could make the VRB extremely competitive to alternative technologies. Consider the possibility of a vanadium producer, to not just produce

in the foreseeable future. Global vanadium production is almost entirely committed to the existing and increasing demand from high strength steel applications. With global demand increasing by 4-6% per year, emerging Vanadium battery producers are concerned as supply is sold at a premium due to lack of availability. VanadiumCorp owns 100% of the largest compliant vanadium resource in North America, the USA imports 100% of its growing vanadium demand from foreign sources, the benefit of free trade and a rapidly growing energy storage market, provides a significant opportunity for VanadiumCorp’s stakeholders. Adriaan continued: “North American competition for VanadiumCorp is virtually non-existent. Other North American based vanadium projects are subject to many fatal issues ranging from low grade supply, poor metallurgy, lack of

sociated financial agreements can also have a profoundly negative effect on the success of many vanadium projects. Forward selling production rights in a premature offtake deal can also be problematic as the producer essentially becomes a contract miner offering little upside for investors. Confirming our domestic resource and the potential for robust economics would allow VanadiumCorp to potentially become the only primary producing vanadium mine in North America. Our stakeholders have been very supportive in growth of the company and we look forward to advancing our projects with their best interests in mind.” To further capitalize on the opportunity which the emergence of vanadium batteries offers, Adriaan envisages a VanadiumCorp which is much more than just a mere vanadium producer.

“We consider the additional value

and sell vanadium to a vanadium battery company, but to make the electrolyte itself. Instead of selling the end product you could lease the electrolyte. About 42% of the capital cost of a VRB is the vanadium itself. Thus, a paradox exists when vanadium prices increase substantially, as commercial viability of the VRB is directly inhibited.

An incredible fact is that Vanadium electrolyte can be reused indefinitely, so it can be leased for up to 20 years at a fraction of the capital value. When re-acquired at the end of the battery’s life or contract you can re-lease or sell it again. This model would solve the VRB paradox, reduce capital cost dramatically, lowering the cost per kilowatt hour and allow payment multiple times for the same vanadium. Stable and secure domestic supply would also decrease costs, stabilize pricing and help make vanadium batteries a reality sooner

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rather than later.”

The construction of a single VRB unit to back up the hoover dam’s electricity production, enough to sustain a city the size of Vancouver, BC would require about 5,000 tonnes of vanadium

electrolyte. This supply represents close to half the amount of vanadium the US imports every year for different applications and could only be met today by increasing direct reduction steel production in places like China.

This is not possible given current production capacities and the outlook of vanadium production rapidly decreasing globally. Such a supply would have to come from domestic primary vanadium production in North America that currently does

not exist. Over the short and medium term, global vanadium suppliers will have their work cut-out to provide adequate supply and the vanadium prices are expected to climb. Ensuring enough is earmarked for both steel production and the rise of the vanadium batteries sector will likely be of great concern.

VanadiumCorp trades on the TSX Venture Exchange under the ticker “VRB” Disclosure: The author and affiliated publisher does not own securities of VanadiumCorp “VRB”

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