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13TH JULY 2017
BY: HENRY LAZENBY
VANCOUVER (miningweekly.com) – Canadian project developer Prophecy Development Corp has secured a third vanadium-focused project in 2017, announcing on Thursday that it has signed a lease on the Louie Hill vanadium project, in Nevada.
With the acquisition of the Louie Hill project, together with the previously acquired Gibellini (Nevada) and Titan (Ontario) projects, Prophecy is positioning itself as an important vanadium explorer in North American.
Spurred by hawkish comments earlier this year by miningmogul and financier Robert Friedland Prophecy chairperson John Lee has been driving the company’s aggressive expansion into vanadium. Prophecy has miningand energy projects in Mongolia, Bolivia and Canada.
“A company managed by mining financier and founder of Ivanhoe Capital, Robert Friedland, has invested a total of $90-million thus far in a vanadium battery manufacturer. A vanadium exploration company in Quebec, Canada secured a C40-million equity financing led by Orion Mine Finance Group in June.
“We believe the unique merits (location, low mining strip ratio, and proven metallurgy) of the Gibellini–Louie Hilldistrict project will be further appreciated as more investment is made in this strategic sector,” Lee stated.
The deal with arms-length, private parties, is based on yearly royalty payments that will be tied, based on an agreed formula and not to exceed $28 000/y, to the average vanadium pentoxide price for the prior year.
Once in production, Prophecy will maintain its acquisition through lease of the Louie Hill mining claims by paying to the lessors, a 2.5% net smelter return (NSR) royalty. The company will be able to buy back 1.5% of the NSR at any time for $1-million, leaving the remaining 1% NSR for the life of the mine.
Prophecy will be able to write off all advance royalty payments against these future production royalty payments.
The lease will be over a term of ten years, which can be extended for a further ten years at Prophecy’s option.
The Louie Hill Project lies about 500 m south of the Gibelliniproject, is easily accessed by a graded gravel road extending south from US Highway 50, and is about 40 km south of the town of Eureka, Nevada.
The Louie Hill project is located in the same formation and lithologic units as the Gibellini project. The general geology in this area is like the Gibellini project.
Former owner American Vanadium has completed a compliant resource estimate on Louie Hill, outlining a resource of 7.67-million tons at a weighted average grade of 0.27% vanadium pentoxide in the inferred category, for total metal content of 41.87-million pounds vanadium pentoxide.
With a full feasibility in hand on the Gibellini project, Prophecy believes that The Gibellini–Louie Hill district has the potential to become the first primary vanadium mine in the US.
Surging vanadium prices so far this year are underpinned by structural supply side changes and stable, growing demand from most end-users, analysis by independent market intelligence firm Roskill has found.
Since falling to a 12-year low of $13.5/kg of ferrovanadium in the fourth quarter of 2015, prices have seen a slow but steady turnaround to end 2016 at $22/kg. The New Year 2017 saw price recovery gather momentum, with the first-quarter average exceeding $25/kg, and with prices reaching above $28/kg in April and May, according to the recent fifteenth edition of Roskill’s ‘Vanadium: Market Outlook to 2026’ report.