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Vanadium Resources (ASX:VR8) has finalised a Memorandum of Understanding (MOU) for production from its Steelpoortdrift and Tweefontein vanadium operations in South Africa.
The non-binding MOU stipulates the supply of 4,000tpa (tonnes per annum) of vanadium pentoxide (V2O5) flake over five years, with the option to be extended by Hexiang for another five years. This amounts to 37% of VR8’s projected annual vanadium flake production capacity of 11,000tpa for Phase 1.
Hexiang is one of China’s largest vanadium-nitrogen alloy manufacturers with an annual production capacity of 3,200 tons of vanadium-nitrogen alloy products. This MOU sets the stage for further discussions on pricing, product quality and other off-take terms.
“Through this strategic MOU, VR8 has provided additional evidence in support of our progress in the project debt and equity markets. VR8 is attracted to Hexiang’s processes to take vanadium pentoxide and produce vanadium-nitrogen alloys for use in the steel industry, which forms the majority of the vanadium market… We are very much looking forward to converting the MOU into an Offtake agreement.” Vanadium’s Chief Executive John Ciganek said.
Vanadium-nitrogen alloys serve as a valuable additive in steel production, enhancing mechanical characteristics such as strength, toughness, and weldability.
Hexiang maintains partnerships with several renowned Chinese steel conglomerates and holds a prominent position in the import and export of vanadium pentoxide within China, possessing all requisite licenses and well-established ties with current producers.
VR8 is in discussions for further offtake MOUs and agreements with Chinese, Japanese, Korean, and European end-users and traders for the balance of its planned production in Phase 1 of 7,000 tonnes per annum.
VR8 shares are up in response to the news, last traded at 4.9c.
