ASX / MEDIA ANNOUNCEMENT 22 April 2008
Market Update
Construction on Schedule for Completion in 2008
Key points
·
On target for mechanical completion later
this year
·
Project fully funded to end of
construction and commissioning
·
Financing completed to bring forward
commencement of mining to September 2008
·
Strong vanadium prices driven by world
supply shortages
Windimurra is
pleased to provide an update on the development of its world class vanadium
project near Mount
Magnet, where it
continues to make excellent progress with construction and is on schedule for
completion later this year.
Procurement and Construction
At the end of
March, 52% of the total budget had been spent or committed and the project was
50% complete in terms of its overall timeframe. “We are on track for
completion by the end of 2008” the managing director, Dr Iain Scott
commented.
Construction
activity levels on site continue to increase as planned. There are currently
more than 180 people on site and this will rise further following the recent
award of the $30m structural, mechanical and piping (SMP) package. The SMP
contractor mobilized to site in early April.
Significant
volumes of concrete have been poured with approximately 800m3 of concrete,
representing 50% of the total requirement, now complete. Other areas are also
showing good progress. Last week Windimurra took another step forward with the
recommendation for award of the electrical and instrumentation package at below
budget.
All critical
long lead items have been procured. The South African equipment suppliers
responsible for the supply of the kiln off gas equipment, the reduction furnace
and the electric arc furnace are performing well and remain on time and on
budget.
Mineral
Resources Limited, the beneficiation plant BOOT contractor, is currently ahead
of schedule. The crusher and stockpile conveyor footings are complete and work
is underway on the crusher structures and stockpile tunnel. The fixed price
nature of the beneficiation plant contract assists in containing any budget
price pressures in this area.
Finance
The company is in a very strong cash
position, with $220m in the bank. Based on the latest cost to complete
forecast, this funding is sufficient to complete construction and
commissioning.
In March the
Company raised an additional $25.2 million through a share placement, following
successfully completing a US$127.5 million debt funding facility and a $54.8
million entitlement issue earlier in the year.
Project Improvements
As a result
of the successful raising of additional capital through the placement,
Windimurra has been able to bring forward mining by three months to September
2008. The earlier start will ensure the optimal ore blend is available for the
start of process commissioning. This will improve vanadium recoveries through
the beneficiation plant circuit during the critical early stages of production
and enhance overall profitability.
Vanadium Market
Project
economics have also been boosted by the strength of vanadium prices. During
2008, vanadium prices have been trading at 20 year highs, following
interruptions to global supply. The power shortages that have disrupted
production in South Africa
and have lead to the cancellation of some growth projects, look set to continue
for a number of years. Robust vanadium market fundamentals have resulted in the
current historically high price levels of US$60/kg.
“We are looking forward to
completing the project later this year so that we can capitalise on the current
strong prices,” Dr Scott said
Background
Windimurra Vanadium Limited (WVL) is a mining
company based in Perth, Western
Australia and is listed on the Australian Stock
Exchange (ASX:WVL). The Company’s focus is the development of the world
class Windimurra Vanadium Mine, located 600km north east of Perth in WA’s Mid-West region.
WVL has a strategic alliance and off-take
agreement with leading global supply chain manager, Noble Group Limited, based
in Hong Kong. Noble has agreed to purchase the
total vanadium output of the Windimurra mine, at prevailing market prices for
the life of the mine.
Windimurra contains one of the largest reported
proven vanadium Ore Reserves in the world with current mineable reserves of
79.0 million tonnes at a bulk grade of 0.47% V205 (vanadium pentoxide), which will underpin an
initial mine life of 20 years at the proposed mining rate of 3.9mtpa. A total
of 148 million tonnes of resources have been modelled at a bulk grade of 0.46%.
The quality of the ore body, the opportunity to
use the latest proven technology and the scale of the project, that will
produce 8% of the worlds’ vanadium, combine to ensure that Windimurra
will be a low cost producer.
The Windimurra mine was originally built by the
Company with a joint venture partner in 1999, and, whilst operating, was the
world’s largest primary vanadium mine, gaining recognition as one of the
highest-quality sources of vanadium in the world market.
Since 2003, world demand for vanadium and the
price of the commodity have increased strongly, largely driven by growth in
Chinese steel production. Marketing studies commissioned by WVL forecast that
vanadium demand will continue to increase through 2015 at a compound annual
growth rate of 7.8%.
For
more information, please visit www.windimurra.com.au
For further enquiries call:
Dr Iain Scott Warrick
Hazeldine
Managing Director Purple
Communications
Tel: +61 (0) 8 9423 1900 Tel
+61 (0) 89485 1254
0417 944 616
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