Australian Vanadium and Technology Metals Australia have signed off on a $217 million merger which will put their individual projects southwest of Wiluna under one roof and speed up development of the Gabanintha ore body.
Under a scheme of arrangement, Australian Vanadium will acquire all shares in Technology Metals.
In a joint statement, the companies said the consolidation of the two West Australian projects located on one orebody provides a “unique” opportunity to realise operational and corporate synergies by creating a single integrated project.
World class asset
The companies say the merger will create a company that can become a leading Australian vanadium developer with a world class asset of scale, located in a Tier 1 mining jurisdiction.
Once merged, Australian Vanadium at the Gabanintha project will have a resource of 239 million tonnes at 0.7% vanadium oxide.
It is planned to mine by open pit for 25 years with a recovery rate of 74.2%.
Annual production is projected to be at a rate of 11,200 tonnes of high purity vanadium pentoxide along with iron ore as a by-product.
Investor sentiment to vanadium is improving
The companies believe that investor sentiment toward vanadium is on the rise, based on the expected demand growth for vanadium flow batteries.
In addition, demand for high purity vanadium for aerospace and defence application has refocused the West on supply chain security.
Moreover, vanadium markets are underpinned by global steel growth, while adding on the upside from fully commercialised vanadium flow battery technology being ideal for energy storage.
At present, the vanadium market is dominated by China, Russia and South Africa.
Placement of $15m
Technology Metals shareholders will receive 12 Australian Vanadium shares for every TMT share held.
This implies an offer price of $0.324 per one Technology Metals share, based on Australian Vanadium’s last closing price of $0.027.
The merger is being recommended unanimously by Technology Metals directors in the absence of a superior offer.
Australian Vanadium will conduct an institutional placement to raise $15 million, with provision for a further $5 million in over-subscriptions.
Australian Vanadium shareholders will own 58% of the merged vehicle.
