EXPLORATION & DEVELOPMENT

Vanadium One gains Glencore backing for Mont Sorcier

Vanadium One Iron says it’s enlisted the support of commodities trader and mining giant Glencore via a financing and offtake deal to help develop its high-grade Mont Sorcier iron and vanadium project in Quebec.

 Core at Vanadium One Iron’s Mont Sorcier project in Quebec

Core at Vanadium One Iron’s Mont Sorcier project in Quebec

Under the long-term arrangement, Glencore would assist Vanadium One in raising at least US$10 million this year, to complete a bankable feasibility study on the project, plus initiate permitting, environmental studies and community agreements.

Glencore was expected to facilitate the arrangement of at least $8 million of this funding requirement, Vanadium One said.

Glencore would then be granted an initial eight-year offtake agreement for 100% of Mont Sorcier's concentrate production.

This could increase to a life-of-mine offtake agreement if Glencore provided equity or debt funding for project construction on terms acceptable to Vanadium One.

The junior said it retained the right to claw back 50% of the annual offtake, if needed, to secure project development funding.

"We believe this partnership offers shareholders not only a way to expedite development, but also the best opportunity to maximise the value of future production utilising Glencore's worldwide reach, thus unlocking the robust potential we see at Mont Sorcier as outlined in our preliminary economic assessment," president and CEO Cliff Hale-Sanders said.

The 2020 PEA had put initial capex at C$457.5 million for a 37-year mine producing about 5 million tonnes per annum of iron concentrate grading 65% iron with 0.6% V205 per tonne.

It put the after-tax NPV8 at $1.7 billion and IRR at 33.8%, using a long-term iron price of $92/t.

The iron ore price is currently at record highs, around US$230/t for lower-grade 62% fines.

Vanadium One completed its earn-in to Mont Sorcier, from Chibougamau Independent Mines, in January 2019 and changed its name later in the year from Vanadium One Energy.

Chibougamau Independent Mines (TSXV: CBG), which has a 2% gross metal royalty on all mineral production from the property, shot to a one-year high of C29c yesterday before closing up 43.3% to 21.5c.

Vanadium One shares (TSXV: VONE), which have risen from 6c a year ago to a 34c peak last week, closed up 8.5% to 32c, valuing it at $76 million (US$63 million).

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