Richmond – V-Mo JV Project

Richmond– V-Mo JV Project

The project lies on the Flinders Highway and Great Northern railway, 500km west of the Townsville port and 250km east of Mt Isa (Figure 2). The project comprises four main prospects (Figure 1) in the Richmond and Julia Creek districts covering an area of 1,520km2.

Figure 1: Richmond Vanadium Project tenement locations

Figure 2: Richmond Vanadium Project location and surrounding infrastructure

Intermin owns 100% in five Mineral Exploration Permits (EPM25163, EPM25164, EPM25258, EPM26425 and EPM26426) covering 481 Blocks near Richmond and 100% of the metal rights to Global Oil Shale Plc’s Julia Creek (Burwood) MDL 522 (Figure 1).

As announced to the ASX on 9 September 2017, Intermin has completed a formal Joint Venture agreement with AXF over the Richmond project. AXF brings considerable technical expertise to the project and has extensive business relationships throughout Southeast Asia.

Details of the agreement between the parties include:

  • An earn-in Joint Venture whereby AXF can earn 25% of the project area by spending A$1m within a one year period and maintaining the project in good standing
  • AXF to solely contribute to further expenditure of A$5m on the projects to earn a further 50% over a three year period, inclusive of the completion of a Feasibility Study on part or all of the project area
  • AXF to invest A$430,000 in equity in Intermin at 12c per share with 1:2 option with a strike of 17c and expiry of 31 August 2018 (completed)
  • During the sole funding period, AXF will manage the exploration program and tenure with direction from the JV committee comprising representatives from both parties
  • Upon AXF satisfying the earn-in terms, each party will contribute to ongoing expenditure in accordance with its respective percentages
  • AXF has now notified Intermin of its intent to move to the A$5m second stage commitment

Richmond Project Mineral Resource

An updated Mineral Resource has now been compiled to take into account changes to tenement boundaries and to ensure compliance with the JORC Code (2012). Table 1 below summarises the updated Mineral Resource and should be read in conjunction with the Competent Persons Statement and the JORC Tables in Appendix 1 on Page 10 of Intermin’s ASX Announcement dated 20 March 2018.

The Mineral Resource for the Richmond Project area now stands at:

2,579Mt at 0.32% V2O5 at a 0.29% lower cut-off grade

Table 1: Richmond Project – Summary of Mineral Resources > 0.29% 

% V2O5
g/t MoO3
Inferred (1) 1,764 0.31 253 (1) Rothbury prospect
Inferred (2) 671 0.35 274 (2) Lilyvale prospect
Inferred (3) 96 0.33 358 (2) Manfred prospect
Inferred (4) 48 0.31 264 (2) Burwood prospect (100% metal rights)
TOTAL 2,579 0.32 262

The information in this table that relates to Mineral Resources is based on information compiled by Messrs David O’Farrell and Andrew Hawker. Both are Members of the Australasian Institute of Mining and Metallurgy and are consultants to Intermin Resources Limited. The information was prepared and first disclosed under the JORC Code 2004 and has been updated to comply with the JORC Code 2012. Messrs O’Farrell and Hawker have sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity that they are undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves’. Messrs O’Farrell and Hawker consent to the inclusion in this report of the matters based on their information in the form and context in which they appear.

Richmond Project vs Current Global Resource Peers

The scale of the project places it as one of the largest undeveloped vanadium resources in the world (Figure 3), is close to surface and remains open in all directions.  Historic metallurgical testwork has demonstrated the ability to pre-concentrate and increase the processed grade of the resource to ~1% V2O5 and testwork is ongoing1. The Richmond Mineral Resource is hosted in soft oxidised marine sediments as opposed to many hard rock resources around the world.

 Figure 3: Peer comparison of Vanadium Resources globally (sourced from company announcements)

Bar denotes resource tonnage and blue point denotes grade. The arrow indicates the grade increase achieved in historic testwork.

1 As announced to the ASX on 30 July 2007 and 20 September 2017

Lilyvale Prospect

Lilyvale is located 20km north west of the Richmond Township and in close proximity to the Flinders Highway and Great Northern Railway line. The current resource totals 671Mt grading 0.35% vanadium pentoxide, 274g/t molybdic oxide1 and commercially significant copper and nickel mineralisation (Figure 4). The deposit is 10-12m thick, up to 5km wide and over 6km long and is open in all directions.

The mineralisation commences 5m from the surface and, as with all the prospects, occurs in two different facies:

  1. Oxidised coarse limestone rich clay unit from surface to 15m depth where the oil has been leached out and enrichment of vanadium and other metals has occurred (Figure 4). Previous test work has shown that over 90% of the contained metal lies in the -38µm size fraction2
  2. Fresh fine grained carbonate – clay – oil shale unit containing vanadium, molybdenum, nickel, copper and significant oil content of 65-75 litres of oil per tonne of shale2

Initial development work will focus on the upper coquina at Lilyvale as it:

  • Is the highest grade based on the drilling to date with the mineralisation 4-5m from surface
  • Can be mined simply by free dig open cut mining at very low strip ratios
  • Is amenable to low cost removal of the coarse fraction via scrubbing, trommelling, screening, cycloning and potentially flotation to produce a high grade intermediate feedstock ~1% V2O5. Metallurgical testwork is underway at two research Laboratories in China to further assess the potential upgrade ratios3
  • Has been subject to extensive downstream processing testwork for metal extraction. Further metallurgical test work is planned on completion of the pre-treatment work to determine the optimal processing pathway in terms of metal recoveries, capital and operating costs and product specification
  • Is close to road and rail infrastructure
  • Has a potential mine life of over 40 years at 10-15Mtpa mining rate

 Figure 4: Lilyvale prospect area drill hole section showing average thickness and metal grades 

1 See Table 1 and 2, Competent Persons statement and JORC tables on Page 3, 8 and 9 as announced on ASX on 20 March 2018
2 As announced to the ASX on 30 July 2007
3 As announced to the ASX on 20 September 2017

Project Geology

The Richmond project is located within marine sediments of the Early Cretaceous Toolebuc Formation which is a stratigraphic unit that occurs throughout the Eromanga Basin central-northern Queensland. The Toolebuc sediments that consist predominantly of black carbonaceous and bituminous shale and minor siltstone, with limestone lenses and coquinites (mixed limestone and clays). It is composed of two distinct units representing two different facies; an upper coarse limestone-rich-clay-oil shale unit (coquina) and a lower fine grained carbonate-clay-oil shale unit.

The limestone within the Toolebuc Formation has an abundant fossil assemblage which has been extensively studied. Two main faunal assemblages have been recognised, corresponding to the upper coquina facies (shelly limestone and clay) and a lower fine grained carbonate shale facies. The organic matter in the fresh shale is predominantly lamellar and referred to by Hutton et al (1980) as ‘lamosite’ (lamellar oil shale). The organic compounds are described as Alginite B in order to distinguish them from the more generally recognised Alginite A, in which clear evidence of algal morphology can be observed.

Alginite B comprises elongate anastomosing films derived from benthonic algae that are referable to the Cyanophyceae genera of blue-green algae (Ozimic, 1986). High magnification scanning electron microscopy reveals the oil shale contains abundant micro fossils, dominated by small planktonic foraminifera and coccoliths (algal plates) believed to be derived from Cyanophta / blue- green algae. Average grain size of the lower oil shale calcareous nanofossils and clays are less than 5 to 7 microns.

The blue-green algae are interpreted to have formed extensive algal mats on the sea floor. The preservation of dead algal matter can be related to an oxidising-reducing boundary probably situated immediately below the base of the living algal mat layer and keeping pace with its upward growth. The clays and kerogen are derived from planktonic algae and blue-green benthonic algae with the calcite representing the inorganic component of the organisms.

Within fresh Toolebuc Formation the oil grade of the coquina based on Modified Fischer Assay varies between 7-45 litres/tonne, averaging approximately 24 litres/tonne. The formation is strongly oxidised down to 15-20m and negligible oil exists in the oxidised portions of the oil shale. In the Richmond project area outcrops of both the upper coquina and lower oil shale are strongly oxidised to approximately 15m deep.

The lower unit is the main oil shale horizon which, in the fresh rock, contains the majority of the oil. This fine-grained oil shale averages 5-10m thick and is principally composed of calcite, clays and kerogen. Pyritic sediments (1-2cm thick) may comprise approximately 5% of the rock mass. Oil grade within the fresh rock based on Modified Fischer Assay varies from 55-100 litres per tonne and averages between 65-75 litres/tonne. The oil is contained within the kerogen, which comprises approximately 18wt% of the fresh oil shale.  The composition of the kerogen is about 75% carbon, 8% hydrogen, 5% sulphur, 2% nitrogen and 10% oxygen (Tolmie, 1987).

Background on the Richmond – Julia Creek Project1

Exploration in the Richmond – Julia Creek area has been extensive and widespread over the last 40-50 years predominantly looking for oil within the unoxidised kerogen rich oil shale and limestone layers below 15m depth. Companies including CSR, CRA, ESSO and Fimiston Mining also identified significant vanadium and molybdenum mineralisation in the upper oxide zone from surface where the oil shale had been leached of the oil and enriched by vanadium, molybdenum, copper, nickel and other metals.

Intermin acquired the project areas in 2004 and added to the project area in 2005 and 2006 and owned 100% interest in over 4,100km2 at that time. The Company conducted several RC and diamond drilling programs with over 12,200m of drilling, to prove up the mineralisation and commence extensive metallurgical test work focussed on both ore pre-treatment and metal extraction.

In total, over 220,000m has been drilled in the Project area and a number of metallurgical testwork programmes completed on both oil and metal extraction.

1 Sourced from previous ASX releases by Intermin and publicly available information information 

Previous metallurgical test work on the coarse upper oxide zone from surface to 15m depth showed that the ore can be beneficiated into a high grade concentrate via wet scrubbing, trommelling and cycloning. Coarse shelly limestone, containing negligible vanadium and comprising up to 85% of the total mass, is removed by this process leaving a fine grained clay and iron oxide product (<10 microns) containing 85-90% of the original vanadium and other metals. Metal extraction by leaching of this concentrate dissolved up to 90% but with relatively high reagent consumption. Methods of separating the respective metals were also developed to recover vanadium as vanadium pentoxide, molybdenum as molybdite and nickel and copper as sulphide concentrates1.

The deeper fresh oil shale from 15m below surface contains significant quantities of oil with previous work estimating between 60-70 litres of oil per ton of ore and significant quantities of vanadium, molybdenum, nickel and copper. Previous work by Intermin on the project has focused on upgrading of the fresh oil shale by mineral dressing procedures that aim to produce a high grade Kerogen concentrate which can be further processed to release its oil content leaving an ash containing high levels of vanadium and molybdenum for metal recovery. Results to date warrant further test work to improve the selectivity of various mineral dressing approaches available.

Between 2006 and 2014, the tenement area was progressively rationalised with the vanadium prices of the day made further work prohibitive. The historic JORC 2004 Mineral Resource Estimate after this rationalisation was 3.3Bt grading 0.40% V2O5 and 295g/t MoO3 (as announced to the ASX on 12 November and 10, 11 December 2013).

In 2016, Intermin embarked on a new business model, made changes to the Board and management and focussed on building a gold business in the Western Australian goldfields. The Company entered into a number of gold and multi commodity joint ventures whereby third parties could earn in to certain projects and take management control. In December 2016, Intermin entered into an earn in JV with AXF Resources Pty Ltd, a wholly owned subsidiary of the AXF Group, who have a highly credentialed technical team and commercial networks in China.

Next Steps

With the release of the global resource, work by the Joint Venture will now focus on the shallow higher grade Lilyvale prospect with work to include:

  • Completion of the initial metallurgical test work on ore pre-treatment (due June Quarter 2018)
  • Infill drilling at Lilyvale to define a JORC 2012 Measured Mineral Resource and to provide additional metallurgical samples for further pre-treatment tests and optimal downstream processing for metal extraction
  • Completion of a concept / scoping study for Lilyvale including flowsheet development, capital and operating cost estimates and options for end product development including bulk concentrate, 98% vanadium pentoxide and vanadium electrolyte for vanadium redox flow batteries
  • Market analysis for vanadium, molybdenum, nickel and copper
  • Preliminary discussions with potential third party off-take partners
  • Statutory approvals and stakeholder engagement 
1 Sourced from previous ASX releases by Intermin and publicly available information information 

About Vanadium

Vanadium is used globally as an industrial element with a variety of common applications and its demand is growing due to the advancement of new technologies such as the energy storage industry whereby vanadium is a key player in the grid scale storage of solar and wind energy.

Vanadium is ductile with good structural strength, has a natural resistance to corrosion and stability against alkalis, acids and salt water. The most common uses for vanadium today are:

  • Steel Alloys – high strength low alloy steel (HSLA), high carbon steel alloys (HSS), rebar and structured beams and high speed tools and surgical instruments;
  • Chemicals – catalysts for sulphuric acid and synthetic rubber production, catalytic converters to remove sulphur dioxide and NOx catalysts;
  • Titanium Alloys – Ti-6Al-4V in airframes, jet engines, personal transports and dental implants; and
  • Energy Storage – vanadium electrolyte, grid scale vanadium redox flow batteries (VRFB), lithium-vanadium based batteries for electric vehicles.

Vanadium Supply and Demand1

Traditionally the main uses for vanadium by volume is the steel industry because when alloyed with other metals it provides unrivalled hardness and strength. In recent decades with the development of VRFB’s consumption of vanadium is forecast to increase significantly into the future to meet renewable energy sector demands. Lower vanadium prices in the last decade has contributed to supply falling below demand with the deficit leading to a rise in vanadium prices in recent times.

Currently, over 80% of the world’s vanadium production (~90,000tpa) comes from China (55%), Russia (20%) and South Africa (15%) whether mined or as a by-product of steel making1. Recent changes in Chinese policy include the banning of imported metal slag containing vanadium and stricter environmental regulations on Chinese steel mills has seen a dramatic decline in production. This, together with further industry rationalisation has resulted in a significant tightening of supply.

Australia has a number of large scale vanadium resources predominantly hosted in titaniferous magnetite deposits in Western Australia and the Northern Territory. Intermin’s Richmond project in Queensland differs from these deposits given its hosted in soft marine sediments. Australia has a significant opportunity to become globally relevant in the supply of vanadium and has the geographical advantage given its close proximity to Chinese and other Asian markets.

Against a backdrop of tightening supply, demand is forecast to grow significantly in the next 10-20 years from steel making and, in particular, renewable energy storage systems. In China alone, multiple 100MW scale VRFB’s are being developed as part of the move away from coal fired power stations. Improving technology to deliver large grid scale systems for industrial, commercial and residential use is moving rapidly leading to improved efficiency and lower costs per kilowatt hour. Micro grid applications in the US are also predicted to transform the electricity industry to over 720MW by 2020.

Energy storage applications have the potential to increase global vanadium demand by more than 30,000t p.a. or more than 30% of the current market by 2020. As lithium has changed the world in terms of powering small devices and electric cars, larger scale vanadium redox flow batteries can revolutionise electricity grids and provide sustainable environmentally friendly power for future generations around the world.

The key factors for an emerging Australian market are competitors to supply (China, Russia, and South Africa), surety of demand, stability of pricing over the long term and capital and operating costs for developing a profitable vanadium business. A lot more work is required within the domestic vanadium sector, from all levels of government and from our world class research institutions to fully benefit from Australia’s vanadium endowment, not only from a production perspective, but to lead the world in renewable energy generation and storage to the benefit of all Australians.

1 Source – Australian Geoscience, Australian vanadium, renewable energy world, Value and vanadium company websites

Vanadium Pricing

Vanadium is sold as vanadium pentoxide (V2O5) and less commonly as vanadium trioxide (V2O3) for non-steel applications and as the alloy ferrovanadium (FeV) for steel making. The most common FeV alloy is FeV80, but FeV40, FeV50 and FeV60 are also sold. In the future, we see vanadium electrolyte as a key commercial commodity in the energy storage market.

On the back of tightening supply and increased demand, vanadium prices have reached eight year record highs as shown in Figure 5 below for 98% vanadium pentoxide. The consensus view is a continuing strengthening in price amid short supply and the fact that a majority of available supply is tied up in long term contracts.

Figure 5: Vanadium pentoxide (98%) US$/lb

Vanadium Redox Flow Battery Works

A VRFB is a type of rechargeable flow battery where rechargeability is provided by vanadium electrolyte dissolved in solution. Vanadium is both the cathode (-) and anode (+) in VRFB technology.

Schematic VRFB

Two tanks of vanadium electrolyte, one side containing V2+ and V3+ions, the other side containing V4+and V5+ ions, are separated by a thin proton exchange membrane. Pumps on both sides circulate the electrolyte.

The electron differential between the two cells generates electric power.

There is no cross contamination in VRFB’s like most batteries as electrolyte in the catholyte and the anolyte consists of 100% vanadium ions. The ion sensitive membrane separating both sides of the electrolyte tank allows only protons to pass.

The advantages of the VRFB for these applications include:

  • High energy efficiency, short response time and independently tune-able power rating and energy capacity
  • Scalable due to the modular design of the tank based battery system for grid scale applications
  • Completely non-flammable with no danger of thermal reactions
  • Environmentally friendly, easy to manufacture and recyclable
  • VRFB’s can operate for decades and do not lose efficiency over time
  • Improved costs with expected costs per kilowatt hour to reduce to US$150

While the focus is on vanadium as the primary product, the Richmond project also contains significant quantities of molybdenum, nickel and copper. Prices for all these commodities have risen in the last 12 months and projected to remain strong into the future. These by-product metals have the potential to generate significant revenue in their own right to add value to the project. Metallurgical testing to extract and recover all metal types and produce saleable products will form part of the next phase of work on completion of the ore pre-treatment assessment.

In addition, the deeper fresh zone from 15-40m depth contained significant oil resources together with the above metals. Further test work on this zone will be completed in 2019 to assess optimal processing pathways and commercial viability.