Prophecy signs binding accord to buy Gibellini vanadium project, Nevada

VANCOUVER (miningweekly.com) – Diversified miner Prophesy Development Corp has entered a binding letter agreement with arm’s-length, private parties to acquire, through lease, the Gibellini vanadium project, in Nevada, with the intent to carry-out mining operations there.

Previously held by American Vanadium, which let the claims lapse after it was unable to raise the required cash to sustain operations, Gibellini is in the permitting stage and has a compliant mineral resource estimate.

Prophecy said it was “very encouraged” by recent news regarding vanadium car battery development, the growing adoption of vanadium redox-flow batteries to increase power availability from renewable energy in the utilities industry, and the doubling of vanadium prices in the last 12 months.

Vanadium prices have risen by around 150% since May 2016, with vanadium pentoxide (V₂O₅) prices jumping another 11% since April 7 alone, spurring increased mergers and acquisitions activity as investors vie to get exposure to the important energy metal.

Under the letter agreement, Prophecy will lease the Gibellini mining claims by paying to the lessor yearly advance royalty payments that will be tied, based on an agreed formula (not to exceed $120 000 a year), to the average vanadium pentoxide price of the prior year.

Until production starts, Prophecy will maintain its acquisition through lease of the Gibellini mining claims by paying to the lessor a 2.5% net smelter return (NSR) until a total of $3-million is paid. Thereafter, the NSR will be reduced to 2% over the remaining life of the mine. All advance royalty payments will be deducted as credits against future production royalty payments.

The lease will be for a term of ten years, which can be extended for a further ten years at Prophecy's option.

By combining the advanced-stage Gibellini project with the company's 100%-owned Titan titanium/vanadium project, in Ontario, Prophecy expects to be well-positioned to the lead North American vanadium production. Prophecy plans to provide investors with exposure and leverage to rising vanadium prices by defining and adding attributable vanadium resources in the ground in politically safe jurisdictions and build the first vanadium mine in North America by steadily advancing mine permitting, project financing and construction.

The Gibellini openpit, heap-leach project has the potential to become the first primary vanadium mine in the US.

The project comprises 40 unpatented lode claims totalling about 312 ha. Opportunities also exist to further expand the project beyond its current definition.

A technical report prepared by AMEC E&C Services for American Vanadium in August 2011, outlined 7.9-million tons at a weighted average grade of 0.32% V₂O₅ in the measured category and 15.16-million tons at a weighted average grade of 0.28% V₂O₅ in the indicated category, making for a total resource of 23.05-million tons at a weighted average grade of 0.29% V₂O₅.

The total metal content of the measured and indicated category resources is 131.37-million pounds of V₂O₅. The inferred resource is 14.23-million tons at a weighted average grade of 0.17% V₂O₅. The total metal content of the inferred resource is 49.42-million pounds V₂O₅.