Flying Nickel Mining Corp. [FLYN-TSXV, FLYNF-OTCQB] said Tuesday it is proposing to acquire all the issued and outstanding shares of Nevada Vanadium Mining Corp. by way of a court-approved plan of arrangement.
Nevada Vanadium (formerly 1324825 B.C. Ltd.) is aiming to become the first primary vanadium mine producer in the U.S. with its 100%-owned Gibellini vanadium project, a proposed open pit, heap leach operation located in the Battle Mountain district of Nevada.
The Gibellini project includes three separate deposits, Gibellini, Louie Hill, and Bison McKay within a 21-kilometre strike length of the vanadium mineralized Woodruff Formation. The property covers approximately 46.3 square kilometres.
Flying Nickel is a company that was spun out last year by Silver Elephant Mining Corp. [ELEF-TSX, SILEF-OTCQX, 1P2N]. Nevada Vanadium acquired ownership of the Gibellini Vanadium project via a plan of arrangement completed by Silver Elephant in January, 2022. The company was previously a shell unit of Silver Elephant.
In connection with the proposal, Flying Nickel said it has signed a non-binding letter of agreement dated August 22, 2022. Under the terms of the proposed transaction, Nevada Vanadium shareholders are expected to receive one common share of Flying Nickel for each share held immediately prior to the effective date of the transaction, representing the equivalent of $0.155 per Nevada Vanadium share.
The valuation is based on the closing price of Flying Nickel shares on the TSX Venture Exchange on August 19, 2022. The implied equity value for Nevada Vanadium is approximately $8.5 million as of the date of the letter of intent based on the exchange ratio.
Battery Metals Royalties Corp., a unit of Silver Elephant Mining, owns 45.9% of the issued and outstanding shares of Nevada Vanadium and approximately 35.1% of the issued and outstanding shares of Flying Nickel. Battery Metals has pledged to vote its shares in favour of the transaction.
Flying Nickel shares closed at 15.5 cents on August 22, 2022 and currently trade in a 52-week range of $1.39 and 12.5 cents.
The Gibellini project is estimated to host a measured and indicated resource of 131 million pounds of contained V205. On top of that is an inferred resource of 228 million pounds of V205. Gibellini is desiged to be an open pit, heap leach operation with an initial capital cost of US$147 million, average annual production of 10.2 million pounds of V205, at a cash operating cost of US$4.7 per pound.
Vanadium is a ductile and malleable transition metal that is widely used to strengthen steel and titanium. More than 85% of the world’s vanadium is used in steel manufacturing applications. About half of that amount is used to produce steel reinforcement bars (rebar).
In recent years, prices were driven by a change in steel reinforcement standards in China, which sparked an increased in demand.
Its importance to the energy sector is also growing rapidly with more than 10% of vanadium production used in energy storage where its substantial cost and performance benefits make it an alternative choice to lithium-ion in several areas.
“The Gibellini Vanadium Project is an ideal complement to Flying Nickel’s Minago Nickel Project,’’ said Flying Nickel CEO John Lee. Minago is located in the Thompson nickel belt in Manitoba. He said nickel and vanadium are both key ingredients in batteries and classified as critical metals by the U.S. Geological Survey.
Minago and Gibellini are both entering into the final environmental permitting stages.