Yellow Rock Resources (ASX:YRR) has released the results of a concept study on its Gabanintha Vanadium project in Western Australia. For an estimated A$230M, the company could build a plant with a throughput of 2.1 million tonnes per year which would result in an annual vanadium pentoxide production of 22 million pounds at an industry-leading C1 cashcost of less than US$3/lbs.
The cost structure is very attractive but even with the low cost basis, it looks like the project will have a 5 or 6 year payback at the current vanadium price. On top of that, this is a low-level concept study with an accuracy rate of -+50% and the final results might look very different from the concept study. This means this study should only be seen as a rough indication of what the project could be, and we hope further optimization work isn’t only possible but also very likely, as we prefer to see an after-tax IRR of 20-25%.
Disclosure: The author holds no position in Yellow Rock and still prefers Largo Resources as Vanadium exposure. Please see our disclaimer for current positions.