BMO, Bank of Montreal, has recently issued a “BUY” recommendation for vanadium. BMO was founded in 1817 and is one of the largest banks in Canada with worldwide operations. The key points of the BMO’s recommendation are highlighted below:
Vanadium was very much the commodity story of 2018. We believe that 2019 will be a very telling one for the vanadium market as supply continues to struggle to respond to the demand shock originating from new Chinese rebar standards. We anticipate vanadium demand growth remaining strong for the next five years, with the supply response to this inhibited by stagnant Chinese output.
Vanadium co-product dependence inhibits supply growth. Vanadium pricing doesn’t drive its own supply response. Roughly 75% of vanadium supply in the market originates as a co-product during the production of steel, and is thus inelastic. When steel price decreases, steel production decreases and so does vanadium production irrespective of the vanadium price.
While not fully implemented, higher Chinese rebar standards have created a demand shock. Vanadium has undoubtedly been the preferred strengthening agent for Chinese steel rebar producers in recent times, and the push towards Grade 3 rebar has provided further impetus. The intensity of vanadium use in steel that is likely to be the major demand driver. Full implementation of higher Chinese rebar standards is a ‘when’ rather than an ‘if’ scenario.
A good indication of the tightness of the Chinese vanadium market will be the trade balance. China has historically been a net exporter of vanadium units. However, given the elevated base level for domestic demand owing to greater penetration per tonne, we expect net exports to reduce and China to potentially become a net importer on a five-year view.
|Vanadium pentoxide is currently trading at $13/lb up from 2016 low of $2.5/lb and has outperformed all other metals in 2018;
Vanadium is key in the current ‘green revolution’ – Vanadium batteries are far superior than lithium in grid scale deployment and is the crucial mineral powering a “breakthrough” energy storage technology;
China has raised rebar standards in 2018 – a PARADIGM SHIFT which increases global vanadium demand by up to 20%;
Chinese major Vanadium supply is constrained due to environmental crackdown;
Prophecy Development Corp. (TSX: PCY, OTC: PRPCF) has recently submitted the requisite baseline studies for its Gibellini Vanadium Project located in Eureka County, Nevada, USA to both the Bureau of Land Management (BLM) and the Nevada Division of Environmental Protection (NDEP).
And the latest breaking news, last week in April, Prophecy met with regulators whereby parties agreed to cooperate and streamline Gibellini permitting process to target publish date of EIS Notice of Intent (the “NOI”) by Q1 2020. Simply put, this means mine construction could start in 2021 making Gibellini the first primary vanadium mine in North America in 2022 (About 3 years from now).
|Why Prophecy’s Gibellini?|
|Prophecy Development Corp (TSX: PCY, OTC: PRPCF) owns the Gibellini project – the only large-scale, open-pit, heap-leach vanadium project of its kind in North America;
Located in Nevada, premium location for mining- Ranked #1 for North America mining investment in the world (Fraser Institute);
The Gibellini Vanadium Project is Low Capex, Low Opex and High IRR Project based on independent preliminary economic study*;
Clear path to permitting in 2021;
Prophecy has only 95 million shares outstanding.
Click Here To Find Out More About Gibellini Vanadium Project
“We are on track to initiate the EIS process after the Notice of Intent is published in Q1 2020, which will be a milestone in permitting the Gibellini Project,” notes Ron Espell, Prophecy’s VP Environment. “It will represent the starting point of a well-defined 12-month process under the Department of the Interior’s Secretarial Order No. 3355 that shareholders will be able to mark on their calendars.” Ron is a highly regarded permitting specialist with 30 years of past experience with Barrick and McEwen Mining.
Michael Doolin, Prophecy’s CEO and COO, observes, “The State of Nevada is the best jurisdiction for mining investment in the world, according to Fraser Institute. The deposit is critical as Gibellini’s annual production profile of 9.75 million lb. of V2O5 outlined in the independent preliminary economic assessment is sufficient to meet United States current vanadium consumption requirement.” Mr. Doolin joined Prophecy in 2019 after Klondex (where he was COO) was purchased by mining giant Hecla for $460million in 2018.
|Check The Latest Prophecy News|
Prophecy Submits Enhanced Baseline Studies for Gibellini Vanadium Project in Nevada – April 16, 2019
Prophecy Discovers Multiple Vanadium Surface Mineralization At Gibellini – March 26, 2019
Michael Doolin Appointed as Prophecy Chief Operating Officer and Interim Chief Executive Officer – March 7, 2019
In May 2018, Prophecy reported results of a positive preliminary economic assessment study (PEA) for its Gibellini vanadium project*. The independent report demonstrated an after-tax cumulative cash flow of $601.5 million, an internal rate of return of 50.8%, a net present value of $338.3 million at a 7% discount rate and a 1.72 years payback on investment from start-up assuming an average vanadium pentoxide price (V2O5) of $12.73 per pound. Current vanadium price at date of this article is $13 per pound. The PEA was prepared by world renowned engineering firm, Amec Foster Wheeler E&C Services Inc., part of the Wood Group of companies.
Nick Hodge of Outsider club in late 2018 stated:
“An updated, 2018 PEA pegged Gibellini the after-tax NPV at US$338.3 million and the IRR at 50.8%. Gibellini contains 129.28 million pounds of vanadium pentoxide (V205) grading 0.294%. The current mine plan envisions producing 9.65 million pounds annually for over 13 years, paying back its capital cost of US$116.8 million in 1.72 years. Prophecy is trading at a significant discount to its project value*.”
With global vanadium supply declining and demand increasing, now is the right time to discover Gibellini and Prophecy Development, which trades at the Toronto stock exchange main board, and 1st tier of OTC in the US (TSX: PCY, OTCQX: PRPCF)
Prophecy is listed on the Toronto Stock Exchange with a stock symbol PCY and trades over the counter in the USA with a stock symbol PRPCF. Please call you broker and ask that you would like to buy PCY if you are in Canada or PRPCF, over the counter, if you are in the USA.
|Watch Gibellini Project Summary
The only large-scale, open-pit, heap-leach vanadium project of its kind in North America
Watch Independent Speculator Interview Prophecy’s
Chairman John Lee
Louis James, long-time Doug Casey Independent Speculator team member interviews Prophecy’s Chairman John Lee about Prophecy’s flagship Gilbellini Vanadium Project, its progress, vanadium prices, and plans for the future. It has gathered over fifty thousand views and is a can’t miss.
Cautionary Note Regarding Forward-Looking Statements
*The Gibellini project attributes are taken from its May 29, 2018 PEA, which includes inferred resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. And there is no certainty that the PEA will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
Certain statements contained in this news release (including statements which may contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, and similar expressions) and statements related to matters which are not historical facts are forward-looking information within the meaning of applicable securities laws. Such forward-looking statements, which reflect management’s expectations regarding Prophecy’s future growth, results of operations, performance, business prospects and opportunities, are based on certain factors and assumptions. They involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by such forward-looking statements.