HDY expedites due diligence at Nelly Vanadium Mine

Published at Jul 13, 2018, in Small Caps

The Board of Hardey Resources Limited (ASX:HDY) has announced a decision to expedite the due diligence process for the Nelly Vanadium Mine (NVM), due to “several favourable dynamics concurrently in play”. These reasons include:

- The comparably solid financial case for re-opening the Nelly Vanadium Mine;

- A straightforward regulatory process to reactivate a legacy mining licence; and

- The potential to monetise legacy stockpiles as a direct shipping ore (DSO) vanadium product.

HDY has appointed two geology firms, both in Australia and Argentina, to jointly facilitate the due diligence review. At the same time, the company is engaging a global mining and engineering consultancy to conduct the site visit followed by a thorough assessment.

The initial due diligence completed by the small cap highlights legacy stockpiles around NVM’s historic mineralised workings, as well as significant exploration upside across the site’s unexplored areas.

As part of the due diligence process, the geology team will confirm the veracity of legacy information, with an emphasis on historic mineralised working areas given they are highly prospective for vanadium.

One of the first tasks HDY hopes to undertake is to bulk sample the historic stockpiles to verify if they can be sold to third parties to secure early cash flow for the company.

Following the due diligence process, the company’s activities will be tailored towards proving up a JORC 2012-compliant Resource, and then securing potential off-take partners for legacy stockpiles and re-opening the mine.

There is still a lot of work to do here, so investors should seek professional financial advice for further information before making an investment decision.

HDY Executive Chairman, Terence Clee commented on today’s announcement: “Since announcing the proposed acquisition of Nelly Vanadium Mine, the Board has moved quickly to line up a highly capable due diligence team.

“Notably, the discovery of legacy stockpiles, which could be monetised as a direct shipping ore product, is very encouraging. With the favourable outlook for vanadium demand globally and relative simplicity to reactivate a mining licence in Argentina, the Board has decided to expedite due diligence.”

HDY says high price of vanadium a good case for acting now

With the high price of vanadium and an uptick in demand for the metal, HDY see the compelling opportunity and ample reason to re-open NVM.

In addition, the company views the process to reactivate a legacy mining licence in Argentina as straightforward, giving a clear pathway to monetise legacy stockpiles of ore and maximise on current high prices relatively quickly.

It was through the company’s early due diligence that it discovered substantial legacy stockpiles from NVM’s historic mineralised workings, which it now plans to bulk sample to determine if they are viable as a DSO product. If so, they could provide early cash flow from the project.

NVM legacy stockpiles around open pit and processing plant.

Moreover, HDY’s due diligence has uncovered significant exploration upside for the unexplored areas in and around the historic workings, which the company is keen to investigate.

HDY has wasted no time in mobilising local geology teams in Australia and Argentina to work collaboratively on preparing the due diligence work. An international mining and engineering consultancy will be appointed to conduct an inaugural site visit and put together a thorough assessment of the project.

As part of the preliminary due diligence, the team will commence reviewing legacy information to garner a greater understanding of NVM’s underlying geology, as well as learning more about historic metallurgy and mining processes, which are believed to have comprised a significant manual component.

With this in mind, HDY views prior inefficient processing, and the potential for high rates of wasted mineralised material, as reasons to theorise that the stockpiles contain valuable vanadium.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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