1. Executive Summary
The Vanadium Titanium Iron (VTI) Project is a mine development project owned by VTI Resources in xxx that entails the development of a titaniferous, vanadiferous magnetite deposit with a mining licence, market and a completed feasibility study. The project forms part of VTI Resources mission to become a significant vanadium, titanium and pig iron producer by 20xx.
The project is strategically located with direct access to the main export port of xxx, via rail. The project has been extensively explored since the 1980s, and several exploration campaigns have been conducted, totaling 10,000 m and 2000 assays. VTI Resources has secured all the necessary permits to begin with mining operations.
The project is based on a single 20 m thick titaniferous magnetite seam that contains vanadium (V
2O 5), titanium (TiO 2) and iron (Fe). The seam extends over an 8 km strike length. Weathering has occurred on surface, where a titanium bearing sand deposit has formed. The VTI Project has 50 Mt of measured and inferred resources of grading 18% TiO 2, 35% Fe and 1% V 2O 5.
The project entails an opencast mining operation, a mineral concentrator and a smelter to produce vanadium slag, titanium slag and pig iron. Mining operations will produce 0.6 Mtpa of ROM for the mineral concentrator and will be conducted by a reputable mining contractor. The mineral concentrator will produce 0.24 Mtpa of heavy mineral concentrate (45% TiO
2). The heavy mineral concentrate will be transported via road and rail to a smelter, where the concentrate will be smelted to produce titanium slag (85% TiO 2), pig iron and vanadium slag. VTI Resources has concluded a 10-year toll smelting agreement with an existing smelter which eliminates the need to build a new smelter.
VTI Resources has further concluded an offtake agreement with metals trading company xxx, which will purchase all the titanium slag, vanadium slag and pig iron for the first 5 years of production at an agreed offtake price. This will significantly lower the risk of the VTI Project, as the market is secured for 5 years.
The VTI Project will employ 200 employees, the majority of whom will be employees of the appointed mining and processing contractors. An expert mine development team has been appointed by VTI Resources into production.
Key contracts have been concluded with the mining contractor, processing contractor, logistics, metals trading company and service providers.
The Environmental Management Plan has been approved by the authorities and VTI Resources has been lodged the rehabilitation bond. The local economic development initiative is centred around the development of technical skills to create opportunities for the community.
The project’s economic parameters are based on mining, processing and smelting of 5.7 Mt of magnetites ore over 10 years, at a rate of 50,000 tpm to produce 1,21,500 tpa of titanium slag, 81,000 tpa of pig iron and 1080 tpa of vanadium slag. The CAPEX requirement is $34 million and the OPEX is $341/ton. The project has a NPV of $35 million at a discount rate of 10%, an IRR of 31% and the payback period is 4 years.
The shareholders of VTI Resources have spent to date $2.5 million on the acquisition and development of project. The CAPEX requirement of $34 million and has a gearing ratio of 60% debt and 40% equity. VTI Resources is exploring various types of funding to bring the VTI Project into production including contractor financing, development finance, offtake finance and equity finance.
2. Vision and Mission 2.1. Vision
The vision of VTI Resources is to establish a sustainable, profitable high-grade vanadium titanium iron mining project by 20xx, returning maximum benefit to all stakeholders. The project presents an ideal investment opportunity for investors in a mine with strategic future commodities.
By 20xx, VTI Resources will produce 1,21,500 tpa of titanium slag, 81,000 tpa of pig iron and 1080 tpa of vanadium slag from the VTI Project.
The VTI Project is located in xxx, 150 km from a main minerals port. The nearest town is xxx, 5 km from the site.
VTI Mine is accessible via the main tar road xxx and a 10 km gravel road.
GPS coordinates: X° Y′Z″ S, X° Y′Z″ E
4. Ownership Structure and Shareholders 4.1. Ownership Structure
The Vanadium Titanium Iron (VTI) Project has the following ownership structure:
Vanadium Titanium Iron (VTI) Resources the 100% shareholder of Vanadium Titanium Iron Project (Project SPV).
The shareholders of VTI Resources are the investment company (85%) and community trust (15%).
4.2. Shareholders of VTI Resources Investment Company
The Investment Trust is the investment vehicle of three mining entrepreneurs that have spent to date $2.5 million on exploration, permitting and the feasibility study of the VTI Project.
The Community Trust is a trust that holds the shareholding in VTI Resources on behalf of the local community, on the land wherein the project is located.
The VTI Project was initiated by a major metals mining company in 1980. The company undertook geological mapping, magnetic surveys, soil sampling, drilling and laboratory testwork on the titaniferous, vanadiferous magnetite seams. The metals mining company shelved the mining project due to prevailing market conditions.
VTI Resources acquired the VTI Project in 20xx and commenced with confirmation drilling and the feasibility study.
VTI Resources has secured all the necessary permits to conduct mining operations. The relevant State Departments are all keen to see the development of the VTI Project.
6.1. Mining Licence
VTI Resources has been granted Mining Licence No. xxxx. The licence grants VTI Resources the exclusive right to prospect and mine the vanadium-rich magnetite seams of a 25 km
2 area. The mining licence is attached. 6.2. Environmental Licence
VTI Resources was granted the environmental licence after approval of the Environmental Management Report.
6.3. Water Licence
VTI Resources has secured Water Licence xxx to extract 3,00,000 m
3 of water per annum from the xxx river. 6.4. Surface Agreement
VTI Resources has an agreement with the community, the owner of the property, to conduct mining operations on the tenement area in perpetuity for a royalty.
7. Geology and Exploration 7.1. Geology
The vanadium-rich magnetite seams of the VTI Project are hosted within the xxx complex. The seam strikes at 80° south at an average dip of 85°.
The 20 m thick vanadium-rich magnetite seams contains vanadium (V
), titanium (TiO
) and iron (Fe).
Vanadium-rich magnetite seam outcrop (Source: The author)
The following exploration has been conducted on the VTI project:
Geological Mapping and Field Reconnaissance Ground geophysical survey: 8. Resources and Reserves 8.1. Resource and Reserve Statement 8.2. Competent Person
The competent person that compiled this statement is xxxx, an experienced and well-respected vanadium geologist.
9. Project Development Strategy 9.1. Business Process
The business process from mining to product is outlined below:
Mining operations will entail opencast drill and blast operations at a 3:1 stripping ratio, conducted by a mining contractor, to produce 0.6 Mtpa of vanadium-rich magnetite ore.
The ore will be fed into a mineral concentrator. The mineral concentrator entails crushing and milling circuits, a spiral plant and magnetic separation circuits to produce 0.24 Mtpa of heavy mineral concentrate.
The heavy mineral will be transported 400 km to a smelter, which will produce vanadium (V
2O 5) slag (2.4 ktpa), titanium (TiO 2) slag (106 ktpa) and pig iron (71 ktpa).
Metals trading company xxx will purchase the three mineral products ex smelter gate, for further railage to the export harbour and shipping to their end customers.
9.2. Implementation Strategy
The VTI Project will be implemented in three phases:
Phase 1 entails completing the mine design. For this purpose, a small, 2 tph pilot plant will be commissioned, where the mining, processing and smelting processes are tested over a 3-month period to confirm the project design parameters, generate heavy mineral feedstock for a smelt campaign and finalise the long-term customer offtake.
Phase 2 entails commencing with the construction, commissioning and operations of the mining, processing and toll smelt operations to produce vanadium slag, titanium slag and pig iron.
Phase 3 entails an expansion of operations. This could entail the construction of their own in-house smelter.
10. Mining 10.1. Mining Method
The mining operation entails a conventional hard rock opencast mine. Vegetation is removed and topsoil placed on a stockpile to be used later for rehabilitation. The exposed ore will be drilled by a hydraulic drill at a spacing of 3 m × 3 m and blasted. The blasted ore will be loaded and transported to the mineral concentrator. The waste rock will be stockpiled. The average strip ratio is 4:1. The waste product from the mineral concentrator will be loaded onto the trucks and transported back to the pit. Mining is to a depth of 120 m. The mining operations follow along the strike of the seam.
10.2. Mining Equipment
The mining operations will be outsourced to a reputable mining contractor. All mining and related support equipment will be provided and capitalised by the mining contractor. The planned mining equipment will entail:
10.3. Production Plan
The mining operation will produce 0.6 Mtpa of ore and 2.4 Mtpa of waste.
A mine plan has been developed for the first 10 years of the Life of Mine.
Rehabilitation will be carried out continuously over the life of mine.
10.4. Life of Mine
The mineable reserves are 20 Mt. At a production rate of 50,000 tpm, the Life of Mine of VTI Project is 33 years.
11. Mineral Processing 11.1. Mineral Concentrator
The Mineral Concentrator will produce heavy mineral concentrate via a series of mineral processing circuits for the smelter:
Crushing and Milling Circuit
The crushing and milling plant will be used to size the ore from the hard rock seam. It entails a series of crushing and milling circuits, including a grizzly and impact crusher, a jaw crusher, a cone crusher and a ball mill.
Primary Wet Circuit
The primary wet circuit entails a series of spirals to produce heavy mineral concentrate from the crushed and milled hard rock.
Mineral Separation Circuit
The heavy mineral concentrate will be upgraded in the mineral separation circuit to produce heavy mineral concentrate suitable for smelter feedstock. The mineral separation circuit uses a series of magnetic separation processes, including light intensity magnetic separation and wet high intensity magnetic separation processes to produce crude heavy mineral. The crude heavy mineral will then be roasted. Dry magnetic separation will recover heavy mineral from the roaster product.
The mineral concentrator will produce a 2,40,000 tpa of heavy mineral concentrate of 45% TiO
The mineral concentrator will be built on site. The heavy mineral product will be conveyed to product bunker to be erected at the nearby rail siding.
The smelter will smelt the heavy mineral to produce vanadium slag, titanium slag and pig iron in two stages.
In stage 1, the heavy mineral concentrate is molten to produce titanium slag and crude iron.
In stage 2, the crude iron is processed further to produce vanadium slag and pig iron.
VTI Resources has concluded a Toll Smelt Agreement with an existing smelter 400 km from the VTI mine site. This eliminates the capital cost to develop a new smelter.
The toll smelt agreement will last for a period of 10 years and is renewable for 5-year periods thereafter.
11.3. Pilot Plant
A pilot plant will be established to confirm the mine design parameters and the metallurgical processes. The pilot plant is a small-scale mineral concentrator which will produce heavy mineral concentrate for a smelt campaign, at 2 tons per hour.
12. Mine Infrastructure
The mine surface infrastructure at the VTI Project entails the following:
The mine infrastructure forms part of the scope of work for the mining, processing, infrastructure and logistics contractors.
13. Market 13.1. Product and Prices
The VTI Project will produce vanadium slag, titanium slag and pig iron single metal trading company with whom an offtake agreement has been concluded.
VTI Resources has secured an offtake agreement from reputable metals trading company xxx, who will purchase all the vanadium slag, titanium slag, and pig iron for the first 5 years of production at the agreed offtake price. This will significantly de-risk the VTI Project as the market is secured for 5 years. After 5 years, VTI Resources has the option to renew the contract or may elect to approach the end consumers directly.
VTI Resources has the following primary competitor in the region:
Company xxx. A listed resources company which is developing a ferro-vanadium project which will produce of 1200 tpa of vanadium slag, 50,000 tpa of TiO
2 slag and 80,000 tpa of pig iron, located in xxx. 14. Logistics 14.1. Distance to Market
The VTI Project is located 400 km from the export port, from where the vanadium slag, titanium slag and pig iron will be shipped to the customers.
14.2. Mode of Transport
The heavy mineral concentrate will be transported from the mineral concentrator to the rail siding 10 km via road haulers. From there, the heavy mineral concentrate is transported 390 km via rail, to the toll smelter. The vanadium slag, titanium slag, and pig iron product produced from the smelter will be transported via rail from the smelter to the export harbour (30 km) on account of the metals trading company, for onward shipping to their customers.
14.3. Logistics Management
VTI Resources has appointed logistics contracting company xxx to manage the logistics scope of work of the VTI Project.
15. Human Resources 15.1. Organogram
The VTI Project will employ 236 employees. The majority (216) are the employees of the mining, processing and logistics contractors and will be sourced from the local region. VTI Resources will have 20 direct employees.
A project development team, ranging from 5 to 50 consultants and contractors, will be engaged during the mine design and construction phase by VTI Resources.
15.2. Mine Development Team
The mine development team will be responsible for the development and implementation of the VTI Project. The team includes experts in geology, mining, processing, smelting, engineering, operations management, mineral sales, logistics and contracting. The team has successfully developed titanium mines. The team members are:
Mine infrastructure: xxx
Once the VTI Project is developed, the development team will hand over the project to the operations team.
16. Contracting 16.1. Contracting Structure
VTI Resources will have the following key contracts with the following entities:
16.2. Key Suppliers and Contracts 17. Environmental Management Plan 17.1. Environmental Setting
The VTI project is situated in a bushveld setting. There are rare indigenous trees on the property. There is an informal settlement on the project area with several small subsistence farmers.
17.2. Environmental Management Plan (EMP)
The EMP has been completed by environmental consultancy xxx, who have engaged various specialists to conduct the fauna, flora, archaeological and geohydrological studies. Three consultative forums were held with affected parties.
The EMP was approved on xxx by the Department of Environmental Affairs. The environmental management plan entails:
Removal and storage of topsoil in the mining pit, prior to mining
No mining where rare indigenous trees and large trees have been identified
Cultivation of seedlings for replanting
Contouring, top soiling and re-grassing the mined mine out areas and waste stockpiles
Water conservation and recirculation of industrial water
Storm water management
Waste management procedures
17.3. Rehabilitation Cost
The cost of rehabilitation has been calculated at $10 million. VTI Resources has lodged a rehabilitation bond with insurance company xxx. An allowance of $0.7/ton has been made for the rehabilitation of the mine and processing site.
18. Social and Labour Plan 18.1. Community
The community in which the VTI Project is located belongs to the regional xxx indigenous tribe. Several large-scale industrial farms are in close proximity to the mine site. There are approximately 30,000 people within a radius of 20 km from the project. The level of unemployment is high at 60%.
18.2. Local Economic Development
The local economic development initiatives selected by VTI Resources and approved in a series of consultations with community representatives are centred around development of technical skills to create employment opportunities.
A commitment by VTI Resources to skill and employ a minimum of 70% of the employees from the community. This obligation is imposed on the mining and processing contractors.
Identification of candidates from the community to skill in mining, engineering and mineral processing. A bursary scheme will be launched to enable five identified community members to go to university or technikons per annum.
The installation of school IT facilities to enable the community to access online courses.
The funding of off-grid solar installation for the community centre.
19. Financial Analysis 19.1. Input Parameters
The economic model was developed around the case of mining, processing and toll smelting of titaniferous ore to produce titanium slag, vanadium slag and pig iron for a metals trading company. The input parameters are as follows:
The economic model was developed for the first 10 years of the Life of Mine.
19.2. CAPEX Requirements
The CAPEX to develop the VTI Project is as follows:
19.3. Operating Costs
The operating costs have been calculated as follows:
19.4. Project Cash Flow
The VTI Project cash flow is depicted below:
19.5. Financial Indicators
The VTI Project will generate a cumulative cash flow after tax of US$87.7 million over 10 years. The financial indicators Net Present Value (NPV) at a discount rate of 10% per annum, Internal Rate of Return (IRR) and Payback Period are:
19.6. Funding Requirements
VTI Resources is seeking funding of $34.11 million.
The gearing is 60%, resulting in the following debt and equity funding targets.
19.7. Expenditure to Date by VTI Resources
VTI Resources has spent to date $2.5 million on the development of the project, which is broken down as follows.
20. Risk Management Plan
VTI Resources is identified and ranked according to the technical, human and economic risks of the VTI Project and compiled the following to risk management plan for investors:
21. Project Plan
The activities and timelines to implement the VTI Project are outlined below. The duration from Prospecting Permit to operations is 3.5 years. Activities completed and those outstanding are outlined below in the Gantt bar chart below.
The feasibility study has been completed and the mining licence has been awarded.
The development of the VTI Project is based on the following key considerations that make the project an attractive investment proposition:
A well-explored, high-grade orebody
An offtake agreement concluded with a metal’s trader for the commodities vanadium slag, titanium slag, and pig iron where there is a strong demand
Approved licences that enable mining to commence
A strong mine development and operations management team
All these requirements can be met given a chance to implement this business plan. The team tasked to implement this plan has successfully developed and operated several titanium mining projects.
The VTI Project is a highly attractive project. It will generate a cumulative cash flow after tax of US$87 million over 10 years. The Net Present Value (NPV) of the project is $35 million and the Internal Rate of Return is 31%. The capital payback period is 4 years.