TNG Limited - Mount Peake financing under way

Mark Gordon

Independent Investment Research

TNG Limited is one of the more advanced pre-development companies that we follow, which is now moving closer to development of its 100% owned Mount Peake Vanadium-Titanium-Iron Project, located in the Northern Territory.

To reiterate, the Project comprises two parts - the planned mine and concentrator near Alice Springs, and a planned concentrate processing plant and refinery near Darwin - it is planned to rail concentrate from a siding near the mine site to Darwin, to be treated by the proprietary TIVAN® leach and downstream processes, producing vanadium products, titanium pigment and pig iron.

Engineering and development of the processing route has been done in association with the German SMS Group, a major metallurgical engineering group. The alliance with a German group gives the Company access to German export credit agencies ("ECA"), and as such a mandate to structure the total debt package of up to US$600 million (~A$830 million) has been signed with KfW IPEX-Bank to underpin the financing of Mount Peake.

Access to ECA cover can potentially lead to relatively low interest rates, thus reducing the cost of financing when compared with other debt finance options. 

The signing of the financing mandate is the culmination of a year where major advances have been made towards project implementation, with milestones including:

  • Territory and Federal Government environmental approvals for the Mount Peake mine site,
  • Execution of the Mount Peake Project Native Title Agreement with the Central Lands Council and the Eynewantheyne Aboriginal Corporation RNTBC,
  • Signing of a binding titanium products term sheet; and,
  • Grant of the Mining and Ancillary Leases at Mount Peake.

The grant of the Mount Peake site leases is one of the last of the major permitting processes prior to construction and development of the Project - the granting of the leases was contingent upon the environmental approvals and the Native Title Agreement. 

Remaining major permitting activities include environmental approvals for the Darwin plant site, with work on the Environmental Impact Statement (“EIS”) ongoing, and due for completion in early 2019. 

Another significant factor in obtaining finance is having offtake agreements in place, with the titanium products agreement being the final one for the three products to be produced from Mount Peake - the other agreements in place include:

  • A binding life-of-mine offtake agreement with South Korean company WOOJIN Metals for a minimum of 60% of the vanadium output - this includes a technology transfer agreement; and,
  • A binding Term Sheet for a life-of-mine offtake agreement with Gunvor (Singapore) for iron products, with these expected to be largely pig iron.

This titanium binding Term Sheet was signed with the Switzerland based specialty chemicals distributor “DKSH” for the life-of-mine offtake of 100% (up to 150,000 tpa) of titanium products - it is expected that the terms will be settled, and a final binding offtake agreement be executed within six months of the October 30, 2018 execution of the Term Sheet.

In our view this is the most significant of the offtake agreements, with, at current prices, our modelling indicates that titanium products provide over 50% of project revenue.

Also on the titanium front the Company has entered into a binding Heads of Agreement with German technology provider, T-Cons, for the supply of a titanium dioxide pigment production technology package. This package includes the new sulphate-based TiO2 production route, that directly uses feedstock produced by the TIVAN® process without any intermediate upgrading.

This progress on the Project has also come at a time of continuing strong prices for the Project’s products, with these being positive for the already strong project economics.

With ~A$18 million in the bank, the Company is now largely funded through to  the main project development funding, with this expected to be finalised, with all going well, in early to mid 2020.

Our recent company update can be accessed through the link below.

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Mark Gordon
Mark Gordon
Senior Analyst
Independent Investment Research

Mark is a Senior Resources Analyst for Independent Investment Research, with a focus on junior and mid-cap listed resources stocks. With over 10 years as an analyst, following on from 17 years as a geologist, he has a good insight into the sector.

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