TNG Limited poised to begin construction of pilot plant at Mount Peak

Monday, 30 January 2012

TNG Limited (ASX: TNG) is moving to the next key phase of the metallurgical testwork program for its flagship Mount Peake Iron-Vanadium-Titanium Project in the Northern Territory with construction of a pilot plant scheduled to start at the end of January.

The modular pilot plant will be assembled to test the proprietary TIVAN™ solvent extraction process, developed jointly by TNG and its partner METS.

The pilot plant will be assembled at the ALS-AMMTEC laboratory in Perth using existing solvent extraction equipment.

Operation and testing of the pilot plant is scheduled to begin in March, providing a definitive test of the commercial potential of the TIVAN™ process to produce a high purity aqueous vanadium solution leading to a vanadium pentoxide product of commercial grade.

Final results are expected by the end of the June quarter of 2012.

Further testwork to confirm the iron and titanium grade products is scheduled for early in the June quarter.

The TIVAN™ process can extract commercial high grade quantities of vanadium and iron from the Mount Peake mineralisation and also, importantly, has the potential to be applied to other vanadium deposits globally.

The upcoming testwork programs represent key inputs to the Mount Peake Project’s Definitive Feasibility Study (DFS), which is scheduled to begin in the current March quarter.

*Metallurgical Testwork*

Optimisation testwork has been completed for the High Pressure Grinding Rolls (HPGR), providing encouraging results and indicating lower than expected specific power requirements.

Dry and wet Low Intensity Magnetic Separation (LIMS) magnetic concentrate option testing on the HPGR fines has been completed indicating lower mass pull but higher grades on the preferred wet LIMS magnetic concentrate option.

Leach tests on the magnetic concentrate are on track with ore zone, acid concentration and temperature tests completed, and confirming expected extractions.

Bulk leach test work on a 90 kilogram magnetic concentrate sample is scheduled for February and will be used as feed solution for the pilot plant operational and testing phase.

*De-Risking Mount Peake *

The testwork programs and DFS for Mount Peake form part of TNG’s strategic alliance with the East China Mineral Exploration & Development Bureau (ECE).

TNG last week completed the first stage of its previously announced A$13.4 million transaction with ECE, which attracted an initial $6.6 million capital injection from Ao-Zhong International Mineral Resources, a subsidiary of the privately owned Chinese company.

With a JORC Resource inventory of more than 70% in the Indicated category, and moving from a Scoping Study accuracy of +/-50% to a Pre-Feasibility Study of +/-25% accuracy, and securing ECE to support and develop the project, TNG has significantly de-risked the project moving forward.

Interim PFS results demonstrate the potential for net annual cash flows of $151.3 million over a mine life of more than 17 years and an internal rate of return of 25.7% from the proposed world-scale Mount Peake Iron-Vanadium-Titanium Project.

The PFS points to a 2.5 million tonne per annum operation expanding to 5 million tonnes per annum after four years and an average annual production of 14,200 tonnes per annum vanadium oxide, 379,000 tonnes per annum titanium dioxide and 1.2 million tonnes iron.

TNG is valued at five times its current share price by a U.K. broker. Earlier this month the company attracted a target price of A$0.45, well above its last traded share price of $0.085.

The broker maintained its buy recommendation for TNG given the company’s strong financial position and momentum at key projects. The current discount in TNG shares is considered to be excessive.

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