TNG’s project ‘significantly de-risked and nearing development’, says Sydney research house

15th November 2019
Resources Rising Stars

Strategic metals developer TNG Limited (ASX: TNG) is expected to make a final investment decision for its $824 million Mount Peake vanadium-titanium-iron project in the NT by mid-2020, according to a new research note by Sydney-based equities research outfit Independent Investment Research.

IIR has provided an “indicative base case technical valuation” for the company of more than $1 billion, or 36.9c per share, well above its current share price of 9.5c.

The equities researcher says the Mount Peake project includes two components – the Mount Peake mine site located near Alice Springs, and the TIVAN® processing plant in Darwin.

“A key advance, as presented in our December 2018 Flash Note, has been the mandating of the German Government owned KfW IPEX-Bank as the lead debt arranger,” IIR said.

“The mandate commenced in January 2019, and as part of the mandate, KfW IPEX-Bank has been providing input, largely relating to costs, into the ongoing Front-End Engineering and Design (“FEED”) Study being overseen by the company’s German strategic engineering and construction partner, SMS group GmbH.

“The mandating of KfW IPEX-Bank should allow access to export credit agency (“ECA”) debt finance, with this generally having superior terms to traditional sources,” it says.

IIR says the FEED study has resulted in an optimised delivery strategy for Mount Peake, based around a single-stage, 2Mtpa project with a life of 37 years, in contrast to the two stage 3Mtpa project growing to 6Mtpa as presented in the original and updated Definitive Feasibility Study.

“It is expected that the study will be completed by mid-2020, at which stage a Final Investment Decision will be made,” IIR said.

“This has led to a slight decrease in expected up-front CAPEX (and no requirement for expansion CAPEX) and an as- expected incremental increase in operating costs.”

IIR says the Company now has ~80% by value of planned production under binding life-of-mine offtake agreements - this includes 100% of the planned 100,000tpa of titanium dioxide pigment with Swiss-based global group, DKSH, and 60% of the planned vanadium products with WOOJIN Metals of South Korea.

“The Company is currently advancing offtake for the planned 500,000tpa of high-grade iron fines products,” it says.

“Significant progress has also been made on the permitting front, with the Mining and Ancillary Licences/Leases being granted, following formal execution of the Native Title Mining Agreement and environmental approvals – the final key approval is that of the Mining Management Plan (“MMP”), with this document recently being lodged.

“The Project is close to being fully permitted, and thus has been significantly de-risked,” says IIR.

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