Highlights

  • Marketing and investment mandate granted to Pelagic Resources Group, a global commodity merchant that holds customer relationships with Chinese state-owned enterprises, global asset allocators and large international commodity merchants
  • Mandate is aimed at introducing clients to VR8, to promote and conclude strategic partnerships and investment transactions to develop the Steelpoortdrift Vanadium Project
  • Pelagic’s success fee will include marketing rights for a period of 5 years of 50% of V2O5 products and/or concentrate produced at Steelpoortdrift, demonstrating confidence in the quality of the Company’s products

The management of Vanadium Resources Limited (ASX:VR8) (VR8 or the Company) is pleased to announce that it has concluded a marketing mandate with Pelagic Resources Group Ltd (“Pelagic”). Pelagic will introduce the Company to it’s existing customer base in China, Europe, Russia, India and the USA aiming to bring about a transaction whereby end-user capital is strategically deployed in developing the Company’s Steelpoortdrift Vanadium Project and the production of V2O5 products.

Pelagic is an established global physical commodity merchant, headquartered in Singapore with offices in South Africa, Zimbabwe and China with a core focus on metal ores used in the stainless and speciality steel industries. Pelagic was founded in 2016 and has since marketed over 1 million tonnes of metal concentrates to China, Europe, Russia, India and the USA. Pelagic currently works strategically with a number of large International Physical Commodity Merchants, Chinese State-Owned Enterprises and Global Asset Allocators, and is well positioned to strategically align development capital with resource projects in Africa.

Pelagic Resources was founded by Thomas Baring, an English entrepreneur with a family history in banking, finance and natural resources. Thomas has lived and worked in emerging markets for the past 15 years, having started his career with the Fleming Family in their London and Moscow offices. He has further extended his experience in commodity trading thereafter, to working in the Democratic Republic of the Congo, Zimbabwe and South Africa.
Further details of Pelagic can be found on their website www.pelagicresources.com.

Pelagic will receive a once-off success fee equal to 2% of the total investment made by a strategic investor introduced by Pelagic, at completion and performance of the investment. In addition, should an investment be concluded, Pelagic will receive marketing rights for a period of 5 years of not less than 50% of the products, including titaniferous magnetite concentrate and/or V2O5 products produced from VR8’s Steelpoortdrift project ore, and which VR8 resolves to sell from time to time in the open market or to a strategic investor.

In addition to introducing VR8 to Pelagic’s existing customer base, the services Pelagic is to render includes assisting the Company in all communications in so far as it may be necessary to conclude a strategic investment transaction and to faciliate, manage and co-ordinate the completion and due diligence processes of any potential transaction.
This announcement has been authorised for release by the directors of Vanadium Resources Ltd.

Background on vanadium

Current day demand for vanadium arises from its established use in strengthening steel via various alloys. Consumption is currently increasing with the recent implementation of stricter standards on the strength of steel to be used in construction (specifically rebar). The use of vanadium in steel making accounts for over 90% of current vanadium demand in today’s market.

The most commonly traded vanadium product is 98% V2O5 flake, as it can be used directly in steel making or converted to ferrovanadium for additional uses in steel making. Higher purity vanadium products are either produced by a modern plant (such as being planned by VR8) or are further processed from 98% V2O5 flake for speciality uses in chemical industries, energy storage and high-performance alloying technologies.

Such speciality uses are expected to provide additional longer-term demand for vanadium. Vanadium redox flow battery (VRFB) technology was developed in Australia and has a number of advantages in industrial and small-town sized energy storage requirements. The global move towards renewable energy solutions will require a vast increase in energy storage installations, which in turn is forecast to result in an increase in the amount of VRFBs being manufactured and installed around the world.
Another emerging use of vanadium is in high-performance light weight alloys. Supply of such alloys is increasing in the aerospace industry, with aeroplanes such as the Boeing Dreamliner 787 and the Airbus A350 now incorporating up to 100 tons of vanadium per aircraft.
This month 98% V2O5 flake product has traded around $7.00/lb (US$15,420/tonne; Fastmarkets Metal Bulletin), although a price differential has opened up between European and Chinese markets. Trade remains quiet globally with supply of product largely restored and buyers having re stocked in recent weeks.

Background on the steelpoortdrift vanadium project

The Steelpoortdrift titaniferous magnetite deposit is located in the prolific Bushveld Geological Complex surrounded by known mineral and vanadium production facilities within reach of proven processing plants, railway and road options and ports.