Highlights:
- Key permit and environmental monitoring work is ongoing at
Mustavaara
- The European Ferro-vanadium market has seen prices increase
from US$32.55/kg to US$49.75/kg since December
2021, a 53% increase
- The pig iron market has seen prices increase to over
US$600/tonne versus the US$450/tonne used in the 2021 PEA
VANCOUVER, BC, March 7, 2022 /CNW/ - Strategic Resources
Inc. (TSXV: SR) (the "Company" or "Strategic") is
pleased to update shareholders on advances at the Mustavaara
vanadium-iron project (the "Project") and recent activity in the
vanadium and pig iron markets.
Mustavaara Project Advancement
- Exploration permit applications to transition the Project from
reservation status were made in November
2021. This will advance all the concessions at the Project
to the exploration license phase.
- An application to extend the existing water permit allowing for
future construction of mining operations at the Project was
delivered to The Regional State Administrative Agency for
Northern Finland in February 2022. It is Strategic's expectation
that, once approved, this will extend the permit an additional
three years to mid-2025.
- A proposal for an environmental baseline monitoring program was
sent to The Centre for Economic Development, Transport and the
Environment of North Ostrobothnia in November 2021. Strategic has received positive
initial feedback on the program and will commence its monitoring
efforts once formal approval has been received.
Further to the above-noted advancements and robust metal price
environment, the Company is evaluating commencing a Pre-Feasibility
Study ("PFS") and recommencing the permitting work to construct the
smelter that was contemplated in the 2021 Preliminary Economic
Assessment ("PEA"). Initial work on permitting the smelter was
conducted by Ferrovan Oy in 2018/2019 and the city of Raahe has
made allowances for its construction in their land use planning. A
decision on commencing a PFS is expected to be made in Q2 2022.
Mustavaara 2021 Preliminary Economic Assessment Summary
(1)
The 2021 PEA outlined a 20-year mine life project that would
produce 4.6 kt of Ferro-vanadium ("FeV80") and 329 kt of pig iron
per year. The 20% commodity price increase sensitivity case that
used US$38.40/kg FeV80 and
US$540/tonne pig iron for metal
prices showed an after-tax NPV8% of €491 million and a
17.9% internal rate of return (see table below). Spot prices are
US$49.75/kg FeV80 in Europe and US$600 to $750/tonne pig iron depending on geography.
% of Base Case
Prices
|
80%
|
100%
|
120%
|
FeV80 (US$ per
kg)
|
US$25.60
|
US$32.00
|
US$38.40
|
Pig Iron (US$ per
tonne)
|
US$360
|
US$450
|
US$540
|
Pre-Tax NPV (8%)
(€M)
|
€ (88)
|
€286
|
€661
|
Pre-Tax IRR
|
5.8%
|
13.9%
|
20.2%
|
Post-Tax NPV (8%)
(€M)
|
€ (115)
|
€190
|
€491
|
Post-Tax IRR
|
5.0%
|
12.2%
|
17.9%
|
Vanadium and Pig Iron Market Activity
(2) (3)
Prior to the conflict in Ukraine, rising FeV80 prices in China and Europe were driven primarily by new demand for
structural steel. Prices rebounded from the lows of US$21/kg during 2020 back to US$39.25/kg in January
2022. The recent conflict in Ukraine has caused FeV80 prices to increase
further to US$49.75/kg in
Europe. Russian-owned Evraz
represents approximately 17% of global vanadium production from the
reprocessing of vanadium-bearing slag from their steel
furnaces.
Continued adoption of Vanadium Redox Flow batteries ("VRFB") is
also providing new demand for vanadium. Chinese vanadium demand for
energy storage batteries is expected to triple this year as
China looks to bring on new VRFB
battery systems. Western VRFB developers such as Largo Inc. and
Invinity Energy Systems have been making substantial advances on
the production and sale of VRFB systems. Largo Inc. has also
announced the launch of Largo Physical Vanadium Corp., which will
hold physical vanadium that may be leased for long-term use in
VRFBs sold through Largo. The initial financing for the physical
trust is underway and is expected to raise up to C$20 million.
Pig iron prices have been well over the US$450/tonne used in the PEA, with current prices
between US$600 to US$750 per tonne. The Ukrainian conflict has
stopped Black Sea pig iron shipments. Ukrainian pig iron production
has been idled and Russian pig iron producers are not able to get
new supply to market easily. With Russia and Ukraine accounting for 60% of U.S. pig iron
imports, consumers are turning to Brazil, but finding minimal relief given the
lack of additional capacity.
Mustavaara and Finland have
excellent potential to be reliable long-term suppliers of vanadium
and pig iron into European and U.S. markets.
Corporate Matters
The previously announced application to extend Strategic's
currently issued warrants to purchase up to 3,585,000 common shares
at an exercise price of $0.55 per
share by one year, to April 20, 2023,
was approved by the TSX Venture Exchange.
Notes
- For further details on the PEA estimates
for the Project, please see the Company's technical report entitled
"NI 43-101 Technical Report on the Mustavaara Vanadium project,
Finland" with an effective date of May 4, 2021, authored by Afry
Finland Oy. The report can be found on SEDAR or at
https://strategic-res.com/projects/finland/mustavaara/technical-report/.
- Vanadium market commentary sourced from
broker research and public disclosure.
- Pig iron commentary sourced from Argus
Media as of March 2, 2022.
|
About Strategic Resources
Strategic Resources Inc. (TSXV: SR) is a Vancouver, Canada-based mineral exploration
and development company focused on vanadium projects in
Finland. The Company is primarily
focused on its flagship Mustavaara vanadium-iron-titanium project
in Finland. The Company continues
to evaluate new opportunities that are related to the
electrification of the economy.
Further details are available on the Company's website
at https://strategic-res.com/.
To follow future news releases, please sign up
at https://strategic-res.com/contact/.
STRATEGIC RESOURCES INC.
Signed: "Scott
Hicks"
Scott Hicks, CEO
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Cautionary Note Regarding Forward-Looking
Information
Certain statements and information herein, including all
statements that are not historical facts, contain forward-looking
statements and forward-looking information within the meaning of
applicable securities laws. Such forward-looking statements or
information include but are not limited to statements or
information with respect to extending existing environmental
permits, being granted exploration licenses for the Mustavaara
concessions and evaluating commencing a PFS. Often, but not always,
forward-looking statements or information can be identified by the
use of words such as "will" or "projected" or variations of those
words or statements that certain actions, events or results "will",
"could", "are proposed to", "are planned to", "are expected to" or
"are anticipated to" be taken, occur or be achieved.
With respect to forward-looking statements and information
contained herein, the Company has made numerous assumptions
including among other things, assumptions about general business
and economic conditions, the prices of vanadium and pig iron, and
anticipated costs and expenditures. The foregoing list of
assumptions is not exhaustive.
Although management of the Company believes that the
assumptions made and the expectations represented by such
statements or information are reasonable, there can be no assurance
that a forward-looking statement or information herein will prove
to be accurate. Forward-looking statements and information by their
nature are based on assumptions and involve known and unknown
risks, uncertainties and other factors which may cause the
Company's actual results, performance or achievements, or industry
results, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements or information. These factors include,
but are not limited to: risks associated with the business of the
Company; business and economic conditions in the mining industry
generally; the supply and demand for labour and other project
inputs; changes in commodity prices; changes in interest and
currency exchange rates; risks relating to inaccurate geological
and engineering assumptions (including with respect to the tonnage,
grade and recoverability of reserves and resources); risks relating
to unanticipated operational difficulties (including failure of
equipment or processes to operate in accordance with specifications
or expectations, cost escalation, unavailability of materials and
equipment, government action or delays in the receipt of government
approvals, industrial disturbances or other job action, and
unanticipated events related to health, safety and environmental
matters); risks relating to adverse weather conditions; political
risk and social unrest; changes in general economic conditions or
conditions in the financial markets; and other risk factors as
detailed from time to time in the Company's continuous disclosure
documents filed with Canadian securities administrators. The
Company does not undertake to update any forward-looking
information, except in accordance with applicable securities
laws.
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SOURCE Strategic Resources Inc.