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September 12, 2011

As Value of Vanadium Soars, Mining Is Set to Start in Eureka, Nevada



A soft gray-silver mineral found in large supply, to date, in only four places on Earth – Russia, China, South Africa, and now Nevada – is on the brink of becoming one of the most valuable commodities of the 21st Century. Called vanadium, it is vitally needed by both the renewable energy and steel/construction sectors.

This is good news for American Vanadium Corporation, a five-year-old tier-one metals exploration and development company based in Vancouver, BC, Canada, that is currently positioned to become the continent’s first and only primary producer of vanadium.  

American Vanadium holds a 100 percent interest in the vanadium-rich Gibellini property – which covers about 3,397 acres in aptly named Eureka County, Nevada, about 350 miles north of Las Vegas. Company President Bill Radvak says the mine – which is designed to be an open pit, heap leach operation – will provide both vanadium electrolyte for green energy applications and vanadium pentoxide for the steel industry.

The mine will have the capacity to produce 14 million pounds of vanadium pentoxide, which is about half the total vanadium consumed in North America and about 5 percent of global consumption, according to Michael Hyslop, director of Corporate Development, American Vanadium.

What’s more, a feasibility study just completed on that property by AMEC E&C Services, Inc. (AMEC) of Sparks, Nevada, has just predicted an after- tax cash flow of $275.7 million, an internal rate of return of 43 percent, net present value of $170.1 million at a 7 percent discount rate, and a 2.4 year payback on investment from start-up.

Speaking of the green-energy applications of vanadium, last February, U.S. President Barack Obama championed “multi-megawatt vanadium redox fuel cells” for mass-storage batteries as “one of the coolest things I've ever said out loud.”

Boxcar-sized vanadium-reliant batteries (VRBs) will provide grid-level electricity storage and, thus, are being heralded as a solution to the overriding problem in clean energy production —storage for the electricity generated by wind and solar power installations. Vanadium is also a valuable supercharger for the lithium ion batteries used in electric vehicles, which are expected to be produced in the millions within the next 10 years.

VRBs would help Obama achieve the goal he set in his January 2011 State of the Union address, to generate 80 percent of the nation's electricity from renewable sources by the year 2035.

Other governments and major corporations around the world are also investing vast amounts of money into the electrification of energy supplies – especially China, which is working hard on producing its own clean-energy storage cells and electric vehicles, and therefore is expected to create a shortage of this energy-revolutionizing strategic metal.

In addition, the consumption of vanadium, which is used to improve the strength properties of structural steel sections, may rise in territories vulnerable to seismic events following the recent catastrophe in Japan. Steel specifications could even be raised in the rebuilding of Japan, where large high-strength steel sections are already commonplace. However, it is also likely that other seismic regions, such as the West Coast of the United States, could begin to specify stronger steel grades for their building and construction industries.

The Gibellini Project is expected to start vanadium production by 2013. Worldwide, a handful of other small vanadium developers are also hard at work trying to commercialize their own discoveries. However, American Vanadium appears have the early advantage and is expected to be the first to commercialize its increasingly strategic domestic resource, according to Byron Capital Market’s Hykawy.

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Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.

Edited by Jennifer Russell


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