Australian Vanadium Limited (ASX: AVL)

Positive leach test results: AVL stock has surged up 35% on January 15, 2018 and touched high levels following the latest update on leach test results from its initial Neomet hydrometallurgical process test work and some favourable movement in commodity prices. AVL was engaged with Neomet and Sedgman to conduct its first pass testing for extraction of vanadium, iron and titanium from Gabanintha oxide samples and high-grade oxide samples showed extraction of 96% of vanadium and 87% of iron and 1% of titanium. Titanium upgraded from 8.8% to 23.4% in its residue. Low grade oxide samples showed extraction of 88% of vanadium and 97% of iron and 33% of titanium. The Company is also planning for a test work programme with Sedgman on the Neomet process during Gabanintha PFS. AVL is currently undertaking a detailed communication, a magnetic separation and also a desalination test work at Bureau Veritas Metallurgical Laboratories under the management of Wood Group Consultants and an AVL engineer. There is still some portion left in testing which is scheduled to be completed by the end of January 2018 and the main aim for this test work is to provide inputs at a pre-feasibility level for the development of a concentrator plant flowsheet for the Gabanintha project. The Company’s previous test work also demonstrated that there is an excellent concentrate recovery and they also anticipate that the work which is currently on-going will improve it further. Mastermines (consultancy firm) on behalf of AVL also completed its first trip to China and the main purpose was to meet with the key participants in the Vanadium market in order to understand its customer requirements. The Company will undertake a follow-up trip to China in early 2018. It received $158,659 from the Federal Government Research and Development Tax Incentive Scheme and its R&D work is focussed on its new mining and processing techniques for the Company’s Gabanintha vanadium project and the Company also received a cash refund for up to 45 cents of each dollar spent on its R&D. As a consequence of this refund the Company holds over $2.9 million of cash.

The Company also completed a placement in two tranches to its sophisticated investors and raised $1,005,000 before the cost and the securities were issued under the Company’s available placement capacity under the ASX Listing Rules; and under Tranche 2, a further 67,000,000 options were exercisable at $0.02 each on or before 31 December 2018 and are subject to shareholders approval. Looking at the financials, the consolidated loss after income tax increased to $2,077,633 from FY16 figure of $1,285,100, while cash reserves were $1,524,171 for FY17 against $3,196,659 for FY16. The Company’s net assets increased by $1,261,428 and it was mainly due to advancement of the vanadium in energy storage strategy and also due to the ongoing exploration and evaluation of the Gabanintha Vanadium and Blesberg Projects. Meanwhile, the stock price increased by about 118% in the past one month and by 54% in the past one week. By looking at the trading scenario while the potential can yield good results going forward along with a view on financials, we give an “Expensive” recommendation at the current price of $0.05, and would review the stock at a later date.



Gabanintha Vanadium Project (Source: Company Reports)
 

Vital Metals Limited (ASX: VML)

Tracking well on Bouli Gold Project: Vital commenced a 3,000 m RC drill program at the Bella Tondi which is a part of Bouli Gold Project in Niger. There has been an intensive hard work of artisanal mining over a strike length of +1.5 km with up to 20,000 miners working on it; and the working stopped at an approximate depth of 50m due to the hitting of the water table. Also, Vital’s drilling at Bella Tondi is a part of an exploration agreement with a private Turkish Company SUMMA over the Bouli Project. VML is planning to spend $1 million on the exploration at Bouli over the six months after which it can elect to proceed or withdraw from the agreement. The Company can earn a 50% interest in the project by spending an additional $5 million on exploration over the two years and on establishing a 50/50 joint venture, Vital can acquire SUMMA’s stake for a 2.5% gross revenue royalty. There are high prospects for VMS style mineral deposit. The group is currently working on metallurgy, project capex and also in arranging off take and project financing. It also raised over $2 million to accelerate its development of Watershed Tungsten Project and continued its exploration of Burkina Faso. Vital has identified two new targets from the Burkina Faso exploration. One was Tangassogo and other was Boungou South. While the potential of the group seems to be good, the return on equity and return on capital seem to be moving downward and the group is yet to use its capital efficiently. With the recent gold price movement, the stock moved up 16.67% on January 15, 2018. In view of the statistics and recent developments, we give a “Hold” at the current price of $0.014
 

Niger- Bouli Project (Source: Company Reports)

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