Australian Vanadium Limited, Perth, Australia, (ASX: AVL) has signed a non-binding Memorandum of Understanding (MOU) with U.S. Vanadium LLC (USV), Hot Springs, Arkansas, United States, in relation to offtake from the Australian Vanadium Project (“the Project”). USV produces and sells a range of specialty vanadium chemicals, including the world’s highest-purity vanadium pentoxide (V2O5) at 99.6%, which is produced at its Hot Springs, Arkansas facility. The MOU sets a framework for progression to a possible formal and binding agreement before AVL’s Project Final Investment Decision (FID).
Managing Director, Vincent Algar comments, “One of AVL’s unique attributes is its strong relationships throughout the vanadium market. AVL’s Technical Director Daniel Harris, who is also a director of USV and a US national residing in the United States, has deep vanadium experience within the USA and internationally. Working with the highly experienced team at USV will give AVL the ability to negotiate at the highest level within the vanadium market and leverage the critical mineral narrative with end users.
There is an increased emphasis on security and provenance of supply chains globally and AVL has been fielding significant investor interest from Europe and the US. The relationship with USV also validates AVL’s strong technical capability and the Company’s considered approach to its feasibility studies. We are delighted to be aligned with a company of USV’s calibre.” The MOU outlines an offtake proposal for USV to acquire of 2,000 tonnes of V2O5 per annum from AVL. This represents 20% of AVL’s planned annual production.
USV has a manufacturing facility in Hot Springs, Arkansas which has a role in providing vanadium products as part of the US Defense Industrial Base, contributing to the national security of the United States. Mark A. Smith serves as CEO and Chairman of USV and is the former CEO of vanadium producer Largo Resources. Daniel Harris is a Director of both USV and AVL and has more than 40 years of experience in the vanadium industry.
Terry Perles, a USV Director, is a well-respected global vanadium market expert with over 30 years in the industry. AVL’s offtake strategy is globally diversified. The Company recognises China’s dominant role in vanadium production and consumption, as well as the increasing need for supply chain certainty by non-Chinese consumers of critical metals such as vanadium.
The MOU with USV is non-binding in nature and contemplates commercial agreements to be negotiated on an arms-length basis. Key terms of the agreement are:
• The MOU is non-binding.
• A formal and binding agreement may be finalised by the one-year anniversary of the MOU’s execution on 1 st December 2020.
• The MOU can be terminated or extended by either party with written notice if the binding agreement has not been finalised within one year.
• The Parties agree to use commercially reasonable efforts to negotiate in good faith to enter into an offtake agreement for 2,000 metric tonnes of V2O5.
• Each party must pay its own costs in relation to the MOU and any offtake agreements contemplated by the MOU.
ABOUT AUSTRALIAN VANADIUM LTD
AVL is a resource company focused on vanadium, seeking to offer investors a unique exposure to all aspects of the vanadium value chain – from resource through to steel and energy storage opportunities. AVL is advancing the development of its world-class Australian Vanadium Project. The Australian Vanadium Project is currently one of the highest-grade vanadium projects being advanced globally with 208.2Mt at 0.74% vanadium pentoxide (V₂O₅), containing a high-grade zone of 87.9Mt at 1.06% V2O5, reported in compliance with the JORC Code 2012 (see ASX announcement dated 19 December 2018 ‘Gabanintha Pre-Feasibility Study and Maiden Ore Reserve’ and ASX announcement dated 4 March 2020 ‘Total Vanadium Resource at the Australian Vanadium Project Rises to 208 Million Tonnes’.).
The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.
ABOUT U.S. VANADIUM LLC
U.S. Vanadium LLC produces and sells a range of specialty vanadium chemicals, including the highest-purity V2O5 in the world. The company is comprised of global leaders and investors in the specialty chemicals and strategic materials sectors, including in the mining, processing, purification, and sales and distribution of vanadium specialty chemicals.