Glencore in deal to support Vanadium One’s Quebec mine
Vanadium One Iron Corp. [VONE-TSXV; VDMRF-OTC; 9VR1-FSE] said Wednesday May 12 that it has entered into a long-term arrangement with a unit of Glencore Plc [GLEN-LSE] to support development of its 100%-owned Mont Sorcier vanadium-iron-titanium project near Chibougamau, Quebec.
Vanadium One shares advanced on the news, rising 5.1% or $0.015 to 31 cents on volume of 263,480. The shares are trading in a 52-week range of 34 cents and $0.06.
The parties have entered into a financing raising (FR) assistance agreement and a separate offtake agreement to support the ongoing development and eventual construction and production at the Mont Sorcier Project.
Under the terms of the agreement, Glencore will assist Vanadium One in raising at least US$10 million, either directly or indirectly, in project financing to support the completion of a bankable feasibility study.
Such funding is to be secured by the end of 2021. Glencore is expected to facilitate the arrangement of at least US$8 million of this funding requirement. A portion of the proceeds will be dedicated for community agreements, related environmental studies and the initiation of a permitting process.
Upon successful fulfillment of the FR agreement, Vanadium One will grant to Glencore an 8-year offtake agreement for 100% of the annual production from Mont Sorcier.
The initial 8-year terms can be extended by mutual consent for 100% of annual vanadium-rich iron concentrate produced. Glencore will be granted a life-of-mine offtake agreement if it provides equity or debt funding for project construction on terms acceptable to Vanadium One, which retains the right to claw back 50% of the annual offtake, if needed, to secure project development funding.
The two companies also negotiated a price participation agreement in the offtake for any premium secured above the Metal Bulletin 65% iron index price for a given quotational period for the product sold. Glencore is obligated to use commercially reasonable endeavours to secure a value for contained vanadium.
Mont Sorcier is a bulk-tonnage magnetite iron ore and vanadium deposit, with very low titanium content, allowing for the simple extraction of the vanadium metal by a blast furnace. The area is easily accessible by an-all weather gravel road.
A February, 2020, PEA stated current resources are sufficient to support a potential mine life of 37 years. Annual production is targeted at 5 million tonnes of high-grade, low impurity, iron concentrate grading 65% iron with 0.6% V2O5 per tonne of concentrate. Initial capital expenditure was forecast at $475.5 million.