American Vanadium’s evolution fuelled by technology gains

Just under two years ago, Vancouver-based American Vanadium (AVC-V) envisioned itself as a specialty-metals miner. The company had planned to put its 100%-owned Gibellini vanadium deposit situated 400 km east of Reno in central Nevada into production by the end of 2012 — a decision supported by a feasibility study completed in the second quarter of 2011 that boasted good economics.

But American Vanadium has started thinking much bigger, due to technological advances in the renewable energy sector that are bringing vanadium-flow batteries (VFBs) into the limelight.

According to president and CEO Bill Radvak, the company was always aware of the energy-storage research and development surrounding vanadium, though the technology had a way to go before it could provide a feasible business model. But as major companies in Asia scaled-up their VFB models, the outlook changed.

“It was there on the back burner, but the dynamics for that sort of operation just weren’t there three years ago.” Radvak explains over lunch, noting he didn’t see much demand for the company’s vanadium originating from the battery sector at the time. “You didn’t have the technologies where global companies are building these large-scale vanadium batteries. It was a much smaller show, which has really evolved dramatically. I think that’s a result of the world changing, where the need for this energy storage is becoming fundamental.”

VFB solves many of the inefficiencies experienced with renewable power today. The intermittent nature of wind and solar power necessitates a technology that will allow for safe, large-scale energy storage.

For example, when the sun isn’t shining or the wind isn’t blowing, a power grid could feasibly lean on energy stored in VFBs until the primary power source kicks back into gear. Similarly, a lot of problems with run-of-river hydro power stems from the inconsistency in river flows from season to season, which puts stress on turbines and power-flow consistency.

Director of corporate development Michael Hyslop recounts how a Japanese company just installed one in a small natural gas power plant, and that it was economic in that case because the operators were dropping the turbine speeds to accommodate peaks and lulls in energy demand.

“But the turbines were all optimized for a certain speed, so what they did was keep that level speed and use the battery to accommodate peaks and troughs,” Hyslop says. “The increased efficiency justifies the cost of the battery.” 

As the vanadium market has evolved, American Vanadium has expanded its mine plan to include lower-grade vanadium output for the steel industry, while also operating as an off-the-grid battery-testing facility complete with a solar field, wind generators and a 2-megawatt VFB facility. The goal is to prove the viability of VFBs for remote mining operations that use higher-priced diesel power.

“Our operation will run mainly off of solar power, though we’ll also have wind power, as needed. It fits with what we’re about,” Radvak says. “We want it to be a clear demonstration of the viability of the batteries and off-grid power capabilities in terms of mining. We’re close enough to the main grid that we could potentially be feeding the grid as it moves along, but the initial concept is to demonstrate how the technology works during operations.” 

American Vanadium is operating under a feasibility study completed in 2011. The study modelled a US$96-million operation producing 11.4 million lb. vanadium pentoxide (V2O5) annually using a conventional heap-leach circuit. Highlights include a US$170-million net present value and a 43% internal rate of return using a 7% discount rate.

According to Radvak, however, the study accounts for only the production of lower-priced ferrovanadium used in the steel industry. American Vanadium has since developed a solvent-extraction and electrowinning process that is capable of producing an “ultra-pure vanadium product” with applications across multiple industries — including an electrolyte supply conducive to VFBs.

On Sept. 24, the company filed its patent application with the U.S. Patent and Trademark Office, which it believes will be a game-changer going forward as it negotiates with big-time VFB players in a bid to sign a joint-venture agreement. And the process could also be transferred to other vanadium projects with prohibitive purification costs.

“Our idea is to partner with companies that are interested in going big on the battery side . . . there are companies that have been working on this for the past twenty years, and have spent a lot of money,” Radvak says. “There is a sentiment that vanadium-flow technology is the future for large-scale energy storage. Lithium ion batteries are great for your cellphone or car, but it just isn’t scalable in the same way. The thing you need is a lot of vanadium, because the more you have, the more energy can be stored.”

There is definitely no shortage of major players in the vanadium sphere. Japan’s Sumitomo Electric is working on large-scale VFB technology, as is China’s Rongke Power. Closer to home, 3M Innovation is also researching VFB storage.

And American Vanadium has the reserves and resources to keep up with demand if an eventual joint-partnership takes off. Gibellini Hill hosts 20 million proven and probable tonnes grading 0.3% V2O5 for 120.5 million contained lb., as well as 23 million measured and indicated tonnes grading 0.29% V2O5 for an additional 131 million contained lb. With several other deposits on the property, Radvak says American Vanadium could push its mine life to roughly 20 years, if necessary.

“We’re going to these companies and saying, ‘let’s co-operate and make these bigger batteries that can dominate the market,’” Radvak says. “We take their technology and expertise and combine it with our vanadium supply to work out an economic model where we both benefit.”

In the meantime, American Vanadium submitted its mine plan to the U.S. Bureau of Land Management in late September, and is aiming to be fully permitted within two years. Radvak adds the company may rely on shorter-term offtake agreements during initial years of operation, but the goal is a full joint-venture agreement with a VFB supplier.

American Vanadium has room for further equity financing, with 31 million shares outstanding. It has a $23-million press-time market capitalization following an 83¢ per share close. American Vanadium reported $2 million in working capital to start October, and remains 30% held by management and insiders.