Could items like the solar tent dramatically increase the demand for technology metals like tellurium and gallium?

2011 has been a coming out party for rare earth elements and, more recently, a broader category of strategic raw materials.

Strategic minerals constitute a variety of minerals and elements, most of which are minor metals, that are deemed critical to certain supply chains. Many minor metals are consumed in relatively small quantities, when compared to the likes of iron and copper, and they are often produced by just a few suppliers in limited geographical areas.

Rare earth elements, for example, are considered strategic by almost every country in the world with the exception of China. The Chinese control approximately 97% of current global production. For the related article entitled, “Rare Earths under Chinese Control” – CLICK HERE.

The U.S. Geological Survey reported in its “Mineral Commodity Summaries 2011” that in 2010 the U.S. imported more than 50 percent of its consumption of 43 minerals and 100 percent of 18 minerals. This is the continuation of a 30-year trend of growing reliance by the United States on foreign sources of these commodities. Of late, this issue has been gaining significant political attention in the U.S. culminating in the House Natural Resources Committee’s unanimously approval of the “National Strategic and Critical Minerals Policy Act of 2011.”

Although three of the technology metals (tellurium, indium and selenium) often make critical mineral lists around the world there are, somewhat surprisingly, no primary mines for these raw materials. Instead, they are extracted in small amounts as byproducts from the mining of gold, copper or zinc. Tellurium, for example, is a technology metal critical in solar power applications. And despite being as rare as gold, it is relatively cheap because it falls out during the refining of copper, explains Robert Jaffe, professor of physics at Massachusetts Institute of Technology (MIT). Gallium, another element used in solar energy, is also a co-product of copper mining. The annual global production of gallium is estimated at just 78 tonnes. Historically, co-production has kept the price of many of these scarce elements quite low.

Weeding through the long list of critical minerals we found a few interesting ones. Connecting these minerals with Canadian listed mining companies resulted in this month’s feature article, “5 Strategic Mineral Stocks to Watch” which we present in no particular order.

1. North American Palladium Ltd. (TSX: PDL)

In 2001, fearing that palladium supply could be cut off at any time from Russia, Ford began stockpiling palladium. This decision helped drive the price up to over $1,100 per ounce. By 2002, Ford’s stockpile was so large that it represented 38 percent of the total U.S. imports of the metal in a good year. Then the price dropped by 75% and Ford ultimately reported losing $1 billion on their holdings.

What’s interesting is that automobile manufacturers like Ford aren’t necessarily dependent on palladium in order to manufacture catalytic converters. Other metals can be substituted, namely platinum and rhodium. And, in 2001 during their stockpiling foray, Ford actually produced catalytic converters with no palladium.

But collectively, the platinum group metals (PGMs) are a strategic resource as they have excellent catalytic properties. Other distinctive properties include resistance to chemical attack, excellent high-temperature characteristics, and stable electrical properties. All these properties have been exploited for industrial applications and, not to mention, platinum (and to a lesser extent palladium) are also used in jewelry manufacturing.

With China now emerging as a major force in automobile manufacturing some think that palladium could be a good place to park your money. Analysts from Barclay’s Capital are of the opinion that palladium demand continues to be supported by China’s bias towards gasoline-powered vehicles and the growing preference towards larger vehicles; plus, another wave of emission standards scheduled to be implemented this year. The spot price for palladium is currently $824 per ounce.

One TSX listed company hopes to benefit from palladium’s strong comeback from lows of just under $200 per ounce in early 2009. North American Palladium’s Lac Des Iles mine in northern Ontario is one of only two primary palladium mines in the world. Palladium is typically mined as a byproduct often found with gold in Russia, PGM complexes in South Africa and within nickle/copper deposits North America. Despite the strong price performance of palladium some analysts are not bullish on the company’s stock, equities research analysts at Stifel Nicolaus downgraded shares of North American Palladium to a “Hold” rating in a research note released earlier this year. Since the downgrade on April 11th, the company’s shares have fallen from $6.28 to $4.04 today.

In addition to palladium the company also has a focus on another precious metal, namely gold. On May 26, 2009, the company acquired the Sleeping Giant gold mine in the Abitibi region of Quebec through the acquisition of Cadiscor Resources and continues to develop that project.

Formation Metals recently announced the start of earthworks construction at its Idaho cobalt project.

2. Formation Metals Inc. (TSX: FCO)

Cobalt is classified as a strategic metal by the United States Government and a critical metal by the European Union. Highly purified cobalt, a technology metal, has applications in the aerospace industry because it is very resistant to corrosion and damage, even at high temperature. It is also used in the manufacturing of rechargeable batteries and in medicine.

Although cobalt’s use is varied, only about 77,000 tonnes of refined cobalt was produced globally in 2010. With cobalt trading on the London Metals Exchange for $35,000 per tonne, this represents an estimated market value of US$2.7 billion. The main source of the element is as a by-product of copper and nickel mining. The copper belt that runs across the Democratic Republic of the Congo and the Republic of Zambia yields most of the cobalt mined worldwide. But one company is looking to break tradition.

Formation Metals is well on their way to becoming North America’s next cobalt producer having raised over $170 million in equity financing. Based on a NI 43-101 technical report released by the company in 2007, the Idaho cobalt project’s projected output will be equivalent to 3.3% of global cobalt supply which translates into 14.9% of North American’s annual demand. With ongoing political issues in the Congo which have, since 1998, chronically threatened to disrupt global cobalt supply, Cobalt’s recent status as a strategic metal and proximity to local markets in the U.S., some think Formation Metals is a good bet.

Jennings Capital analyst, Ken Chernin, issued a speculative buy recommendation on May 26th, 2011 with a 12 month target of $2.60, more than double today’s current price of $1.24. Chernin sites low costs of production, few impurities, the mine’s U.S. location and the company’s hydrometallurgical facility as reasons for his recommendation.

MiningFeeds.com recently connected with the President & CEO of Formation Metals, Mari-Ann Green, to find out more about cobalt and the company’s progress in Idaho – CLICK HERE – for the exclusive interview.

For 5 Strategic Mineral Stocks to Watch – Part 2CLICK HERE.

President Obama made renewable energy a key part of his presidential mandate

3. American Vanadium Corp. (TSX-V: AVC)

President Obama likes vanadium; or rather, he likes to say the word vanadium. Last February Obama joked that “Vanadium redox fuel cells is one of the coolest things I’ve ever said out loud“. Obama also said this “next generation energy storage system will help families and businesses cut down on energy waste, save money and reduce dangerous carbon emissions”. So what is vanadium and, more importantly, what is a vanadium redox fuel cell?

Vanadium is the 23 element on the periodic table and is a soft silver-grey ductile transition metal. It is primarily produced in Russia and China from steel smelter slag and in a few other countries around the world as a flue dust of heavy oil or a byproduct of uranium mining. Most vanadium, approximately 85%, is used as an alloy called ferrovanadium as an additive to improve steels. But recently its vanadium’s status as a strategic metal and its green energy applications that have people, including President Obama, talking. Although, the more correct terminology is the vanadium redox flow battery.

Vanadium redox flow batteries are distinguished from fuel cells by the fact that the chemical reaction involved is reversible meaning that they can be recharged without replacing the electroactive material. Also, an important factor in the redox flow battery is that the power and energy density of the batteries are independent of each other in contrast to rechargeable secondary batteries which avoids cross contamination. These special characteristics make the vanadium redox flow battery uniquely applicable for energy storage applications including transportation and utilities.

Although vanadium has only recently been grabbing media headlines, one TSX-V listed company decided to pursue vanadium as an emerging opportunity when they fortuitously discovered the critical element in Nevada while drilling for base metals back in November, 2007. That company was American Vanadium which, at the time, was operating as Rocky Mountain Resources.

American Vanadium recently reported they are on track at the Gibellini vanadium project in Nevada to delivery of Feasibility Study in Q3, 2011 and is looking to start of production by 2013. This will position the company to have the only vanadium mine in the US, which is by some accounts, an enviable position.

Chris Barry, an analyst at House Mountain Partners, notes in a recent report, “With its low-cost project economics, AVC presents a unique opportunity to join the ranks of vanadium producers and contribute to the growing demand for this little-known metal. This is where we think AVC can create value for shareholders, near-term production of a strategic metal in a stable geopolitical jurisdiction.” Mr. Barry went on to say that, “Vanadium is most exciting because there is an increasing potential demand for the metal in the energy storage and battery spaces.”

MiningFeeds.com interviewed Bill Radvak, President & CEO of American Vanadium, to get to the bottom of vanadium and to find out what’s in store for the company – CLICK HERE – for the interview.

4. Noventa Ltd. (TSX: NTA)

Get ready for a crash course in tantalum. Tantalum is a rare, hard, blue-gray, lustrous transition metal that is highly resistant to corrosion. The chemical inertness of tantalum makes it a valuable substance for laboratory equipment and a substitute for platinum, but its main use today is in tantalum capacitors in electronic equipment such as mobile phones, DVD players, video game systems and computers. Tantalum, always found together together with the chemically similar niobium, is also widely used as minor component in alloys.

Investors who were interested in tantalum and were attracted to Noventa were in store for another type of crash course. On December 14, 2010, Noventa sold 160 million shares at $0.15 ($3.00 on a post consolidated basis) in an offering led by Canaccord Genuity and Religare Capital Markets, raising $24-million in an effort to expand its tantalum mining operations in southeast Africa. Past issues with the project were not sufficient to ward off investors looking for the next “hot rare sector”. Noventa’s annual information form noted the company’s main Marropino mine had been a losing venture since at least 2007 until it was put into care and maintenance in May, 2009.

Cashed up, the AIM-listed tantalum producer began trading on the TSX on December 21st, 2010. Then after a few months, on June 2, 2011, shareholders were informed that poor production processes spawned the need for a substantial cash infusion in order to hit production targets. That day Noventa’s stock was hit hard falling from $2.64  to close the day at $1.13. A staggering loss of 57.2%. Since then, unfortunately for Noventa shareholders, things haven’t been getting any better and the company’s shares are currently trading at $0.60.

So is there a glimmer of hope for this beaten down tantalum miner? In June the company released its strategic plan to stabilize the company. On July 18th, in accordance with their plan, Noventa negotiated improved terms to its tantalum offtake agreements with H C Starck.   Under the revised agreement, H C Stark agreed to pay between 27% and 36% higher prices per pound of tantalum throughout 2013.

A step in the right direction? One brokerage firm thinks so. On July 19th the company appointed Jacob Securities as their agent in Canada for their required funding. Jacob Securities has been developing a focus on critical minerals, including rare earth elements, and may be in a position to help Noventa attract the capital required to keep moving forward. For the related MiningFeeds.com article, “Valuation of Rare Earth Stocks” by Jacob Securities analyst Luisa Morena – CLICK HERE.

Graphene is an atomic-scale chicken wire made of carbon atoms and their bonds.

5. Northern Graphite Corp. (TSX-V: NGC)

Northern Graphite is the only miner on our list that isn’t in the element business. Rather, the company is focused on mining graphite. Graphite is one of fourteen critical minerals that were identified by a recent report by the European Commission as being under “supply risk”.

According to the United States Geological Survey (USGS), world production of natural graphite in 2008 was 1,110 thousand tonnes (kt), of which the following major exporters are: China (800 kt), India (130 kt), Brazil (76 kt), North Korea (30 kt) and Canada (28 kt). The mineral graphite is one of the eight allotropes of carbon. The most common allotrope being diamonds. While diamonds are a girl’s best friend could graphite become an investor’s best friend? Greg Bowes, President and CEO of Northern Graphite certainly thinks so and points to graphene, a next-generation material made from graphite.

Graphene is a one-atom-thick planar sheet of carbon atoms that are densely packed in a honeycomb crystal lattice. It can be thought of as an atomic-scale chicken wire made of carbon atoms and their bonds. Scientists around the world believe that graphene is a strong candidate to replace semiconductor chips. Moore’s Law observes that the density of transistors on an integrated circuit doubles every two years. But silicon and other existing transistor materials are thought to be close to the minimum size where they can remain effective. Graphene transistors can potentially run at faster speeds and cope with higher temperatures. Graphene could be the solution that will allow computing technology to continue to grow in power whilst shrinking in size, extending the life of Moore’s law by many years.

Northern Graphite, based in Ottawa, recently closed a $4 million initial public offering at $0.50 per unit and began trading on the TSX-V Exchange on April 20th, 2011. And so far so good. The company’s shares took-off and hit a high of $1.55 in early June and have since settled back to the $1.20 range. Northern Graphite’s principal asset is the Bissett Creek graphite project located 100km east of North Bay, Ontario. The Company has completed an NI 43-101 preliminary assessment report on the project and anticipates that it will be in a position to begin construction of the mine early in 2012, subject to positive results from the bankable final feasibility study and the availability of financing.

MiningFeeds.com recently sat down with Northern Graphite’s top executive Greg Bowes to talk about the company’s future prospects and to learn more about the project – CLICK HERE – for the interview.

For 5 Strategic Mineral Stocks to Watch – Part 1CLICK HERE.

While at the helm of Formation Metals, President & CEO Mari-Ann Green has raised over $170 million.

Cobalt is classified as a strategic metal by the United States Government and a critical metal by the European Union. Highly purified cobalt, a technology metal, has applications in the aerospace industry because it is very resistant to corrosion and damage, even at high temperature. It is also used in the manufacturing of rechargeable batteries and in medicine.

Although cobalt’s use is varied, only about 76,000 tons of refined cobalt was produced globally in 2010. With cobalt trading on the London Metals Exchange for$35,000 per tonne, this represents an estimated market value of US$2.7 billion. The main source of the element is as a by-product of copper and nickel mining. The copper belt that runs across the Democratic Republic of the Congo and the Republic of Zambia yields most of the cobalt mined worldwide. But one company is looking to break tradition.

Formation Metals is well on their way to becoming North America’s next cobalt producer having raised over $170 million in equity financing. Based on a NI 43-101 technical report released by the company in 2007, the Idaho cobalt project’s projected output will be equivalent to 3.3% of global cobalt supply which translates into 14.9% of North American’s annual demand. With political issues in the Congo which have, since 1998, chronically threatened to disrupt global cobalt supply, Cobalt’s recent status as a strategic metal and proximity to local markets in the U.S., some think Formation Metals is a good bet.

Jennings Capital analyst, Ken Chernin, issued a speculative buy recommendation on May 26th, 2011 with a 12 month target of $2.60, more than double today’s current price of $1.24. Chernin sites low costs of production, few impurities, the mine’s U.S. location and the company’s hydrometallurgical facility as reasons for his recommendation.

MiningFeeds.com recently connected with the President & CEO of Formation Metals, Mari-Ann Green, to find out more about cobalt and the company’s progress in Idaho.

Cobalt is a minor metal, one that many of our readers may not be familiar with, could you please provide some background on pricing and production?

Cobalt is a metal that many readers may not be familiar with, but they come across it every day in items from re-chargeable batteries to jet aircraft. It is also used in a number of green energy technologies including hybrid cars, fuel cell and wind turbine technologies, and as a catalysts in oil de-sulfurization and in Gas to Liquids technologies. Because of its use in jet turbine engines, cobalt is alloyed with steel to form high strength critical components of the moving parts of these engines. The U.S. government considers cobalt a strategic metal and yet they have no domestic source. We plan on providing the U.S. with a stable domestic source of this critical metal.

The price of cobalt has averaged around $22/lb over the past couple of decades, and high purity super-alloy grade material, 99.9% purity or better, the variety that Formation plans to produce, goes for about $20/lb today. Last year in February, the London Metal Exchange started trading “Grade B” material, which ranges in purity from 99.3% – 99.8%. This “low grade” cobalt trades at around $16.00 lb at the moment.

The copper belt in the Congo and Zambia yields most of the cobalt metal mined worldwide; however, your lead project is based in Idaho in the United States. Please tell us about the project.

That’s correct. Western Africa accounts for about 65% of the world’s production. Historically, the price of cobalt has risen sharply in response to political developments in the region that led to uncertainty of future supplies. Our project, on the other hand, is located in the heartland of the United States, who accounts for 58% of the world’s consumption of superalloy grade cobalt. We also own and operate a hydrometallurgical refining facility, which will be capable of producing the high purity cobalt metal right here in the U.S. – and we will be the only company in the country doing that.

What are the key differences between your deposit and those found in Africa?

There are a number of differences. Firstly, as was pointed out already, the project is located in the United States which is a big consumer of cobalt but does not have a domestic source of the metal. Secondly, it is the only primary cobalt deposit in the country. Just as importantly, we know from metallurgical test work that it will be capable of producing high purity cobalt suitable for critical applications in the superalloy sector. Lastly, being able to refine the metal ourselves offers the great advantage of producing value added end products that meet the high standards and specifications for domestic end users.

We hear about cobalt being a “conflict metal” but cobalt production in the Congo is produced in the Katanga province, hundreds of miles away from the conflict zones in the eastern part of the country. What is your take on this status?

Cobalt from the Congo is not defined as a conflict mineral, unlike coltan from the eastern provinces where niobium and tantalum are extracted. However, cobalt produced from the Congo often ends up being comingled with ore from other areas and refined out of the country. This produces end products with uncertain supply chains. End users, like large electronic companies, are being held to task more and more about where the raw materials used in their products originate from. Being able to clearly demonstrate a continuous supply chain of ethically sourced raw materials is becoming more and more important in today’s emerging socially responsible corporate world.

Formation Metals also has gold/silver projects and uranium projects, to what degree are you focused on developing your other projects and what are your long term plans in these other areas?

Yes, we have several satellite projects that we expect to do more work on as the cobalt project nears production. We have a number of gold projects in Idaho that have been on care and maintenance while we moved the cobalt project towards construction. Strong precious metal prices has resulted in renewed interest in these projects, which are likely to see more work done on them by ourselves, or through joint venture opportunities.

In the state of Tamaulipas in Mexico, we own a high grade silver-lead zinc project where grab samples have returned silver values near 2kg/ton. We recently announced we had acquired additional central ground on the project, and we expect to do more exploration work to define drill targets in the fall and winter of this year.

Lastly, we have two uranium projects in the Athabasca basin of Northern Saskatchewan joint ventured with Cameco and AREVA. One of the projects, the Virgin River project, where Cameco is acting as operator, has discovered the Centennial Deposit, a high grade uranium deposit that has been traced for over 650 metres. Cameco has indicated they are looking for a McArthur River style deposit, the largest and highest grade deposit on the planet, and to date they have spent over $26 million dollars developing the Centennial deposit. The project has returned results as high as 8.8% U3O8 over 34 metres – that’s 8.8% over 110 feet! They are currently drilling the project with a budget of $3 million for this year. We have a vested 2% interest in the project with the first right of offer to earn up to 10%. Time will tell how that project develops, but at this stage the future looks promising with continued excellent results coming from the project.

On July 26th Formation announced that mine site earthworks construction commenced on your Idaho Cobalt Project, what does the timeline look like going forward and when do you hope to be in production?

We actually completed Stage I construction last year with timber clearing and site preparation, and this Stage II of construction will see the development of the portal bench and the construction of the mine site structures. If all goes according to plan, it is expected to take about a year to construct, so conceivably, we could be in production by this time next year.

This interview is featured in the article 5 Critical Mineral Stocks to Watch – CLICK HERE – to read more.

Northern Graphite's President & CEO Greg Bowes believes that graphite is the place to be.

Graphite is one of fourteen critical minerals that were identified by a recent report by the European Commission as being under “supply risk”.

According to the United States Geological Survey (USGS), world production of natural graphite in 2008 was 1,110 thousand tonnes (kt), of which the following major exporters are: China (800 kt), India (130 kt), Brazil (76 kt), North Korea (30 kt) and Canada (28 kt). The mineral graphite is one of the eight allotropes of carbon. The most common allotrope being diamonds. While diamonds are a girl’s best friend could graphite become an investor’s best friend? Greg Bowes, President and CEO of Northern Graphite certainly thinks so and points to graphene, a next-generation material made from graphite.

Graphene is a one-atom-thick planar sheet of carbon atoms that are densely packed in a honeycomb crystal lattice. It can be thought of as an atomic-scale chicken wire made of carbon atoms and their bonds. Scientists around the world believe that graphene is a strong candidate to replace semiconductor chips. Moore’s Law observes that the density of transistors on an integrated circuit doubles every two years. But silicon and other existing transistor materials are thought to be close to the minimum size where they can remain effective. Graphene transistors can potentially run at faster speeds and cope with higher temperatures. Graphene could be the solution that will allow computing technology to continue to grow in power whilst shrinking in size, extending the life of Moore’s law by many years.

Northern Graphite, based in Ottawa, recently closed a $4 million initial public offering at $0.50 per unit and began trading on the TSX-V Exchange on April 20th, 2011. And so far so good. The company’s shares took-off and hit a high of $1.55 in early June and have since settled back to the $1.20 range. Northern Graphite’s principal asset is the Bissett Creek graphite project located 100km east of North Bay, Ontario. The Company has completed an NI 43-101 preliminary assessment report on the project and anticipates that it will be in a position to begin construction of the mine early in 2012, subject to positive results from the bankable final feasibility study and the availability of financing.

MiningFeeds.com recently sat down with Northern Graphite’s top executive Greg Bowes to talk about the company’s future prospects and to learn more about the project.

To provide some context for our readers, why should an investor be looking at graphite mining as an opportunity?

Lithium and rare earths have demonstrated that it is possible to make money with minerals other than precious and base metals. Now investors are looking for other strategic minerals that are undervalued and, in our opinion, graphite is one of them. Graphite industrial demand is growing 5% per year due to the effect of growing demand in China and India for traditional steel and auto markets. Since 2005, the price of graphite has increased by almost three times. New uses like lithium ion batteries, fuel cells, nuclear and solar are all big graphite users and will create more demand as these technologies become more widely adopted. Currently, China produces 70% of the world’s graphite and its production and exports are expected to decline like in the situation of the rare earth elements.

Please tell us about your project?

Northern Graphite has a large resource, located in Canada close to infrastructure, with simple open pit mining and metallurgy. The deposit will produce high value, high growth, flake graphite. The company expects to have a bankable feasibility and permitting done and start construction in the first part of 2012.

What are some of the challenges associated with developing and mining graphite?

In our case, not many. Our project involves simple mining methodologies and metallurgy. As mentioned before, our project is close to infrastructure and with no environmental issues.

Who are the dominate players in the industry and, once mined, how is graphite bought and sold?

China, in general terms is the dominant player since they produce 70% of the world’s supply. Most other mines outside of China are owned by large private industrial companies. There are only two public companies in North America with graphite development projects. There is no spot market for graphite, prices are negotiated between buyers and sellers but it is a very large and efficient market. Prices for the most common grades are published in industrial minerals magazine.

In 2010, scientists at the University of Manchester won the Noble Prize in Physics for isolating graphene. Please tell our readers about graphene and what applications it might be used for.

Graphene is transparent in infra-red and visible light, flexible, and stronger than steel. It conducts heat 10 times faster than copper and can carry 1,000 times the density of electrical current of copper wire. Graphene is expected to be a revolutionary material that could change the technology of semiconductors and LCD touch screens and monitors, create super small transistors and super dense data storage, increase energy storage and solar cell efficiency, and will transform many other applications. According to a professor at Georgia Tech University, there are nearly 200 companies, including Intel and IBM, currently involved in graphene research. In 2010 graphene was the subject of approximately 3,000 research papers and the European Union and South Korea have each recently started $1.5 billion efforts to build industrial scale, next generation display materials using graphene.

Having just listed on the TSX-V Exchange in April of this year, what are your plans for the balance of 2011 and beyond?

We are working towards a new resource estimate for next month; and, a bankable feasibility study and hopefully a strategic partnership by the end of the year. Next year, we would like to have our permitting completed in early 2012 and construction start-up shortly thereafter.

This interview is featured in the article 5 Critical Mineral Stocks to Watch – CLICK HERE – to read more.

American Vanadium Presdient & CEO Bill Radvak is putting his mining and technology experience to work.

President Obama likes vanadium; or rather, he likes to say the word vanadium. Last February Obama joked that “Vanadium redox fuel cells is one of the coolest things I’ve ever said out loud“. Obama also said this “next generation energy storage system will help families and businesses cut down on energy waste, save money and reduce dangerous carbon emissions”. So what is vanadium and, more importantly, what is a vanadium redox fuel cell?

Vanadium is the 23 element on the periodic table and is a soft silver-grey ductile transition metal. It is primarily produced in Russia and China from steel smelter slag and in a few other countries around the world as a flue dust of heavy oil or a byproduct of uranium mining. Most vanadium, approximately 85%, is used as an alloy called ferrovanadium as an additive to improve steels. But recently its vanadium’s status as a strategic metal and its green energy applications that have people, including President Obama, talking. Although, the more correct terminology is the vanadium redox flow battery.

Vanadium redox flow batteries are distinguished from fuel cells by the fact that the chemical reaction involved is reversible meaning that they can be recharged without replacing the electroactive material. Also, an important factor in the redox flow battery is that the power and energy density of the batteries are independent of each other in contrast to rechargeable secondary batteries which avoids cross contamination. These special characteristics make the vanadium redox flow battery uniquely applicable for energy storage applications including transportation and utilities.

Although vanadium has only recently been grabbing media headlines, one TSX-V listed company decided to pursue vanadium as an emerging opportunity when they fortuitously discovered the critical element in Nevada while drilling for base metals back in November, 2007. That company was American Vanadium which, at the time, was operating as Rocky Mountain Resources.

American Vanadium recently reported they are on track at the Gibellini vanadium project in Nevada to delivery of Feasibility Study in Q3, 2011 and is looking to start of production by 2013. This will position the company to have the only vanadium mine in the US, which is by some accounts, an enviable position.

Chris Barry, an analyst at House Mountain Partners, notes in a recent report, “With its low-cost project economics, AVC presents a unique opportunity to join the ranks of vanadium producers and contribute to the growing demand for this little-known metal. This is where we think AVC can create value for shareholders, near-term production of a strategic metal in a stable geopolitical jurisdiction.” Mr. Barry went on to say that, “Vanadium is most exciting because there is an increasing potential demand for the metal in the energy storage and battery spaces.”

MiningFeeds.com interviewed Bill Radvak, President & CEO of American Vanadium, to get to the bottom of vanadium and to find out what’s in store for the company.

Vanadium is certainly not a house-hold name, please tell our readers about vanadium, its uses and why you were attracted to this particular transition metal.

I volunteered for this job eighteen months ago because it is was perfect mix for me as a start-up where I could use my education and experience as a mining engineer and also leverage my fifteen year stint in the technology industry. And that is what the American Vanadium opportunity is about: an advanced vanadium resource which truly gives us the capability to lead the creation of the mass storage industry in the US using vanadium flow batteries.

The street knowledge of Vanadium has jumped tremendously in the time I have been with AVC and that is only going to continue to increase due to its growing importance and new critical uses that will affect everyday life.  Historically, vanadium is all about being a premiere steel strengthener which was first used in the Model T Ford and since then has become increasingly critical to the steel industry. A great example is that on July 1 of this year, China implemented a new regulation for their rebar grade that will result in an additional 27,000 Metric tons of Vanadium consumed in China which is a 40% increase in global vanadium consumption in the next few years. As well, Vanadium is absolutely critical and irreplaceable in the production of titanium alloys for aircraft and the defense industry, catalytic converters and important chemical production.

A great statement we heard recently from the US Department of Energy was “the electric grid is the world’s largest supply chain without a warehouse”.  Their biggest urgency is to build these “warehouses” and the most advanced mass storage battery technology is the vanadium flow battery.  Essentially these are massive vats of vanadium in sulphuric acid that allow the continual storing and discharging of electrical energy.  The key is that these vanadium flow batteries are scalable to meet any needs and will last for decades and that is why there is a huge effort to commercialize these batteries worldwide.

Vanadium is on the Critical Element list in America, how might this help shape American Vanadium?

Given that the US government has recognized it is in a terrible spot trying to secure supplies of rare earth metals, it taking a very serious look at all their supply chains.  We have helped them further recognize that the US only domestically produces 5% of its raw vanadium needs as a by-product of a uranium mine while 80% of its needs are met by the Venezuela, China, Russia and South Africa.  One hundred percent of the supply for the vanadium flow battery industry will come from these same countries. And 100% of the vanadium required for their titanium alloys used in the aircraft and defense industries comes from a single source in Russia.

When key industries and national defense rely on a critical element primarily from Venezuela, China, Russian and South Africa, the US has to look for domestic supply.  And there is no other domestic US option on the table or being considered other than American Vanadium.  As we are driving fast on our timetable to begin production by the end of 2012, we are being taken seriously by the US Government agencies as the key domestic source of vanadium for current and future needs.  Importantly, this gives us tremendous leverage in partnering with vanadium flow battery companies as anyone seriously wanting to capitalize on the huge need in the US logically has to have access to our production which could easily be turned 100% to meet this premium need.

Please tell us a bit about the background of the company and, specifically, some background on your flag-ship Gibellini project in Nevada?

American Vanadium was built around the Gibellini Project which was historically drilled up by Union Carbide, Noranda and Atlas mining.  What has made this project economic is we have recognized that the unique geology enables us to use simple and cost-effective heap leach processing to extract the vanadium. Being located in the middle of Nevada, the unique sedimentary hosted deposit is essentially a ridge of exposed, heavily oxidized, crumbled rock with a strip ratio of a remarkable 0.2.

A Scoping Study was completed by AMEC in 2008 and the operation they designed had an after tax IRR of 40% with a capital cost of less than $100 million.  AMEC has been engaged to complete a Feasibility Study and we expect this to be delivered in this quarter.

The Gibellini project has a defined 43-101 resources estimate of 122 million pounds of indicated vanadium (i.e., vanadium pentoxide or V205) grading at 0.339%, where does this put American Vanadium in terms of size and grade of other known deposits?

At 3 million tons per year mined, our mining project could be considered small relative in the mining industry, but this production rate would represent about 50% of the United States annual vanadium demand or about 5% of the world supply this year.  This makes our operation very important to the vanadium industry, particularly the US consumers. We are fortunate that we are in a very friendly mining jurisdiction where we can control costs on an already inexpensive mining and processing operation.  Therefore, while our grade is relative low, we expect it to be very economic as most other mines have a magnetite that requires stages of crushing, grinding, magnetic separation and roasting.

We also have a very expandable resource potential. We focused on getting to production base on the historic drilling on the main occurrence. Now that the Feasibility Study on this occurrence is nearing completion, we are turning our immediate attention on building the resource on expanding this main occurrence and upgrading the already drilled Louie Hill that is adjacent to the Gibellini. After that there are a handful of other occurrences on the property we will be exploring as well as looking regionally.

What does the end-user market look like for Vanadium and how is Vanadium sold into that market?

The vanadium market has been in a state of oversupply for the past decade and is now transitioning into an extended period of undersupply; coincidentally, this is anticipated around the time we expect to reach production. This bodes well for the producers as the price of vanadium is forecast to climb for the next 5 – 10 years.  And this does not take into account any demand at all from the vanadium redox battery so obviously we are thrilled with market timing and the vanadium outlook.

The consumers are now becoming worried about surety of supply.  Our priority, while the vanadium flow battery market grows, is to pursue the US consumers beginning with the handful of steel companies that rely on foreign sources. We can offer a longer term, domestic supply to satisfy their surety of supply concerns.  Additionally, we will be focussing on the titanium market where vanadium sells for a premium.  While on a global scale only 4% of world vanadium is consumed in titanium alloys, in the US almost 20% of the vanadium is consumed in titanium alloys due to the significant aircraft and defense industries which rely on a sole source of vanadium from Russia.

What milestones do you hope to reach before the end of 2011?

We have a number of very important milestones we expect to deliver in the coming months including the completion of our bankable Feasibility Study by AMEC in Q3, issuing a revised NI43-101 within 45 days of the Feasibility Study and testing of our vanadium electrolyte for the mass storage industry. We will leverage these near term milestones to pursue a number of key initiatives such as joint ventures and partnerships with international leaders in the Vanadium Flow Battery space and off-takes with steel producers for our early production.  Project wise, we are going to put a lot of energy towards increasing the resource thereby extending the mine life. All in all, there is lots going on and lots to look forward to for the remainder of this year and next.

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