VANCOUVER — Just under two years ago Vancouver-based American Vanadium (AVC-V) envisioned itself as a specialty metals miner. The company planned to put its wholly-owned Gibellini vanadium deposit into production by the end of 2012 — a decision supported by a feasibility study completed in second-quarter 2011 that boasted solid economics.
Jump forward to late 2012, however; and one finds American Vanadium 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 began to scale-up VFB models, that outlook changed.
“It was there on the backburner, 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.”
The benefits with VFBs relate directly to the inefficiencies experienced with many forms of renewable power today. The intermittent nature of things like wind and solar power requires 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 hydropower stems from the inconsistency in river flows from season to season, which puts stress on turbines and power-flow consistency.
“A Japanese company just installed one in a small natural gas power plant. It was economic in that case because they were dropping the turbine speeds to accommodate peaks and lulls in energy demand,” illustrates director of corporate development Michael Hyslop. “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 those peaks and troughs. The increased efficiency justifies the cost of the battery.”
As the market has evolved American Vanadium has expanded its mine plan to not just include lower-grade vanadium output for the steel industry, but also operate as an off-the-grid battery test facility complete with a solar field, wind generators, and a 2-megawatt VBF facility. The goal is to prove the viability of VBFs for remote mining operations that have operated off of 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 points out. “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 lbs. of vanadium pentoxide (V2O5) annually via a conventional heap-leach circuit. Economics included a US$170 million net present value and a 43% internal rate of return under a 7% discount rate.
According to Radvak, however; the study accounted for only the production of lower-priced ferrovanadium used in the steel industry. American Vanadium has since developed a solvent-extraction and electrowinning process (SX/EW) that is capable of producing an “ultra-pure vanadium product” with applications across multiple industries — including an electrolyte supply conducive to VFB use.
On Sept. 24 the company filed it patent application with the U.S. Patent and Trademark Office for the process, which it believes will be a real game-changer going forward as it negotiates with big-time VBF 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. You know there are these companies that have been working on this for the past twenty years and spent a lot of money,” Radvak explains. “There is a sentiment that vanadium-flow technology is the future for large-scale energy storage. Lithium ion batteries are great for your cell phone 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 VBF technology, as is China’s Rongke Power. Closer to home 3M Innovation is also researching VBF storage.
And American Vanadium has the reserves and resources to keep up with the 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 lbs., as well as 23 million measured-and-indicated tonnes grading 0.29% V2O5 for an additional 131 million contained lbs. And with several other deposits on the property, Radvak says American Vanadium could potentially push its mine life to roughly 20 years if necessary.
“We’re going to these companies and saying ‘let’s cooperate and make these bigger batteries that can dominate the market’,” Radvak declares. “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 Bureau of Land Management in late September and is aiming to be fully permitted within two years. Radvak explains the company may rely on shorter-term off-take agreements during initial years of operation, but the goal is a full joint-venture agreement with a VBF supplier.
American Vanadium has plenty of room for further equity financing with 31 million shares outstanding. The company has a $23 million press-time market capitalization following an 83¢ per share daily close. American Vanadium reported $2 million in working capital to start October, and remains 30% held by management and insiders.
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