Announcing the joint venture in New York today, Ron MacDonald, Executive Chairman of American Vanadium said a ". . . fully developed and commercialized CellCube energy storage system and American Vanadium's stably priced supply of high purity vanadium electrolyte, the companies together present a unique opportunity to cooperate in the US to rapidly supply the growing energy storage and renewable energy market."

Read the full company news release:

American Vanadium's high purity, stably priced supply of vanadium electrolyte combined with the company’s commercialized energy storage system presents a unique opportunity to cooperate in the US  to rapidly supply the growing energy storage and renewable energy market.

“America's grid is the largest and oldest grid in the world, requiring the most attention, improvement — and money. Mark Johnson of the Department of Energy's ARPA-E agency program commented at a conference that the grid is the ‘world's largest supply chain without a warehouse’ — a simple statement with resounding implications,” wrote Radvak, in his blog post titled, "Planet’s Align to Nurture Grid Storage" for The Huffington Post.

Two phrases that have become common place are “smart grid” and “microgrid” – and the key to both is storage. Smart grid is all about improving the efficiency of the generation, distribution and use of energy, while microgrid is the creation of off-grid generation and distribution of energy using renewable sources such as wind and solar. Neither is efficient unless you have the ability to store the excess electricity being generated so that it can be used later, when it is needed.”

Read more.

Photo: American Vanadium CEO Bill Radvak (source: Bloomberg via YouTube)

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"Renewables have never met their promise," said MacDonald, who was interviewed at MINExpo 2012 in Las Vegas this fall.

"One of the reasons for it is that storage was a problem. How do you store vast amounts of electricity that are coming from wind that is generating the power at night when there is no market or from solar when the demand is down? Old technologies like lead acid pretty much the only way."

MacDonald says there are new technologies out there for storing energy now but they never really met the economic test or could not be commercialized.

"Over the last six to seven years, a lot of activity in China turning up their production of renewable energy," says MacDonald.

"Six years ago China set their first renewable targets and they were at eight percent. They over-achieved. They got 8.9%. They also became the number one producer of solar panels, the number one producer of wind turbines but they increased the efficiency of it and drove the cost down so now solar is a good investment and you can get a good return on it."

But now China is now turning its attention to the problem of storage.

"Between now and 2021 they have set a target to achieve storage of 5% of their total electrical generation, not just on renewables. They are going to be generating 2.4 billion kw of power so if you do the math you see that storage—this is a massive new industry.

"Industry analysts have indicated that it is anywhere between $400 billion and a $1 trillion of investment globally between now and 2021 because these technologies are now commercially feasible.

MacDonald says these industries are now competitive with oil and gas.

"So this is going to be a massive new industry, a trillion dollar industry globally.

MacDonald says this is all great news for his business.

"Because the vanadium we got, the purity, and because of the way the deposit happens we will be able to produce the highest quality vanadium to go in those electrolyte vanadium flow batteries that are solution for renewables. And we are going to do it at a cost that we believe no one will be able to compete with.

Image of Ron MacDonald interviewed at MINExpo 2012

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Read the full report

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The conference featured a keynote address from Berry and 5-minute presentations from some of the key graphite explorers, including Zimtu Capital Corp., Northern Graphite, Lomiko Metals, Strike Graphite, Focus Metals, Graphite One Resources, First Graphite, and Standard Graphite. A similar conference followed in Toronto.

Investor interest in graphite has been growing. Last December saw the first graphite conference in London, UK presented by online journal Industrial Minerals.

The journal has a useful page on graphite and provides the following key facts on the mineral:

• graphite comes in three forms: amorphous, flake and vein/lump. Amorphous graphite contains 70-75% carbon and is the most common. Flake graphite is 85-90% carbon and is used for higher value applications like batteries. Vein/lump graphite is 90-96% carbon and is most valuable because it requires the least processing.
• graphite is used in refractories – used to line high-temperature equipment; pencils; lithium-ion batteries – used in consumer electronics and electric vehicles; fuel cells; and Pebble Bed nuclear reactors. It is used in foundries, lubricants and brake linings. Graphite is also used to produce graphene, a tightly packed single layer of carbon atoms that can be used to make inexpensive solar panels, powerful transistors, and even a wafer-thin tablet that could be the next-generation iPad. Graphene, extremely light and strong, has been called "the world's next wonder material."
• the closure of graphite mines in China, which produces 75% of the world's graphite, has resulted in a fall in global graphite production to 1.3 million tonnes per annum in 2011. Like rare earths, China is restricting the export of graphite to protect its own domestic industries. The second largest producer is India, followed by Brazil, North Korea, Austria and Canada.
• Graphite exploration is focused in Canada, with eight companies exploring properties in Quebec and Ontario. Europe has a number of mothballed mines that could return to production.

Berry, a former Wall Street broker and co-publisher of the Morning Notes investment newsletter, presents the case for graphite as a key solution in solving the global dilemma of how to provide electrification to millions in the developing world, and as a critical metal for developing new battery and nuclear power technology.

What follows below are his key points:

• The United States, Europe and China have included graphite among a short list of critical metals.
• the US Geological Service estimates the graphite market to be 10 times the size of the market for rare earth elements. The graphite market is about the same size as the market for nickel. 60% of the market is amorphous graphite and 40% is flake graphite. Most of the growth is in flake graphite (see bullet point below)
• natural graphite can be processed to make synthetic graphite useful for high-value applications like lithium-ion batteries, but the process is expensive – $10,000 to $20,000/ton versus $3-4,000/t for flake graphite. The result is a race to find the best flake graphite deposits.
• graphite is different from gold, silver, copper, etc because users require a specific carbon purity level. "It's security of supply that keeps you up at night," says Berry.
• 33% of the graphite market produces refractories and crucibles (used in foundries); only 5% is for batteries. But the lithium-ion battery market is expected to grow by 25% a year.
• Three of the largest lithium-ion battery makers in the world, GS Yuasa Corp, LG Chem and Liotech, a consortium between Russia and China, are building the largest lithium-ion battery plant in the world, in Russia. “Just these three heavy hitters in the battery space are making multi-million dollar bets on the future of lithium-ion technology, which cannot push forward without graphite,” says Berry.
• future uses of graphite could include vanadium-redox batteries and hydrogen fuel cells. Graphite could also potentially replace silicon in microchips and silver used in solar panels.
• by 2020 world consumption of graphite will be 1.9m tonnes, which does not include graphite needed for batteries, fuel cells and Pebble Bed nuclear reactors.
• China will require 400,000 tonnes of large flake graphite for Pebble Bed nuclear reactors and lithium-ion batteries will require 327,000 tonnes. The current supply of large flake graphite is 400,000t, so there will be a need to double the supply of large flake graphite used in batteries and nuclear reactors in the next eight years. "The takeaway is if you buy into the electrification thesis, and I’m halfway right, demand should easily outstrip supply," says Berry.

Gary Economo, CEO of Focus Metals, also makes a number of useful points about graphite in his recently penned article in Proactive Investors USA & Canada. A select few appear below:

• If there is any doubt about graphite’s importance as a commodity, one only has to look at the trebling of market prices for 97% graphite concentrate during the last decade.
• Green, off-petroleum technologies are driving demand growth towards a market bubble that even a tsunami of new global production will be unable to deflate by 2020.
• Industrial Minerals reports that graphite prices between mid-2011 and the end of January 2012 appear to have stabilized after dropping through the end of last year.
• A current surplus of product in the world market and end-user depletion of stockpiles contributed to the downturn.
• The United States produces no graphite and is 100% dependent on imports to meet its industrial and technology needs. As a continental neighbor, it makes sense for Canada to look south first, then Europe and Asia as it builds its customer base.

Watch a Youtube video on the future applications of graphene:

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"We are very pleased that these assay results confirm our earlier interpretation of the continuity of the vanadium mineralization between the C Zone and Area One," stated Stewart Wallis, President and CEO of Crosshair, "Our next task will be to continue following this mineralization to the southwest and see just how far it extends."

Down hole gamma logs and hematitic alteration encountered in the upper portions of the holes strongly suggested that the two mineralized zones were continuous. The assay results, as presented in the table above, confirm that the mineralization is, in fact, a single continuous unit. This has enabled the mineralization to be extended approximately 200 metres to the southwest as illustrated in the map below. This map can also be viewed on our website at: http://www.crosshairexploration.com/i/pdf/2011_CMB_DrillPlanMap.pdf.

The true width of the mineralized zone is 60% to 90% of the lengths stated above. Split drill core samples were sent to Activation Laboratories in Ancaster, ON for analyses. Vanadium analyses were performed using Inductively Coupled Plasma Mass Spectrometry (ICP-MS). Samples that exceeded the upper limit for vanadium were re-assayed using fusion ICP. Standards, blanks, and duplicate assays were included at regular intervals in each sample batch submitted from the field as part of Crosshair's ongoing Quality Assurance/Quality Control program.

Drilling on the Blue Star prospect was aimed at following up on widely scattered coincident airborne geophysical and rock geochemical anomalies. Ten holes, totaling 1,404 metres, were completed with four holes intersecting thin uranium mineralized zones including a three metre interval which returned 0.050 U₃O₈%, from drill hole BS-11-006.

Uranium analysis was carried out by Activation Labs of Ancaster, Ontario utilizing the delayed neutron counting (DNC) method, while multi-element analysis was performed using Inductively Coupled Plasma Mass Spectrometry (ICP-MS). Samples that exceeded the upper limit for uranium were re-assayed using X-ray fluorescence (XRF).

Complete assay highlights with drill plan maps and additional information on the CMB Uranium/Vanadium Project can be found on the Crosshair website at:http://www.crosshairenergy.com/s/CMBProperty.asp. Additional information can also be found in the Technical Report on the CMB Uranium-Vanadium Project, Labrador, Canada prepared for Crosshair dated January 20, 2011 (Rev March 10, 2011) and filed on SEDAR atwww.sedar.com.

Stewart Wallis, P.Geo. President and CEO of Crosshair and a Qualified Person as defined by NI 43-101, has reviewed and approved the technical information contained in this news release. Mr. Wallis has verified that the results disclosed in the news release have been accurately summarized from the official assay certificates provided to Crosshair.

About Crosshair

Crosshair is a prominent player in the exploration and development of uranium, vanadium and gold in the US and Canada. Its flagship projects, Bootheel and Juniper Ridge, are both located in uranium mining friendly Wyoming. Bootheel has the potential to be mined using in-situ recovery methods. The CMB Uranium/Vanadium Projects are located in Labrador, Canada and have four currently defined resources – C Zone, Area 1, Armstrong and Two Time Zone. The Crosshair team is comprised of knowledgeable and experienced professionals with both exploration and mining backgrounds.

For more information on Crosshair and its properties, please visit the website atwww.crosshairenergy.com.

ON BEHALF OF THE CROSSHAIR BOARD

Mark J. Morabito, EXECUTIVE CHAIRMAN

Cautionary Note Regarding Forward-Looking Information

Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. Forward-looking statements or information relate to, among other things, the details of the drill program, the exploration potential of the Company's properties and the production potential of Bootheel. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the risks associated with outstanding litigation, if any; risks associated with project development; the need for additional financing; operational risks associated with mining and mineral processing; fluctuations in uranium, gold and other commodity prices; title matters; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters with certain other projects; the absence of dividends; competition; dilution; the volatility of our common share price and volume; tax consequences to U.S. shareholders and other risks and uncertainties, including those described in the Risk Factors section in the Company's Annual Report on Form 20-F for the financial year ended March 31, 2011 filed with the Canadian Securities Administrators and available at www.sedar.com. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by law. Investors are cautioned against attributing undue certainty to forward-looking statements.

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The share tripled on Friday to 21c and 108,200 shares changed hands compared to the usual 1,000. The company is offering 27c to shareholders who turn in their shares over the next month, so some investors appear to be cashing in early. Sino Vanadium owns 100% of a project in China's Shaanxi Province in the feasibility stage which it says could produce 14% of world vanadium supply.

Vanadium is used in steelmaking and together with lithium in car batteries and is concentrated in China, Russia and South Africa. The US Geological Survey predicts demand to increase 6% – 9% per year Vanadium pentoxide (pictured) has been trading in the high singled digits, down from a high of $26.25/pound in 2005. Ferrovanadium has recently hovered at $30 per kilogram, down from above $80 in 2008.

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The Critical Metals Report: At Byron Capital, you look at different battery-related materials as well as rare commodity products. Can you give us a little overview of these lesser-known products, like vanadium and graphite?

Jonathan Lee: About 85%–90% of vanadium usage is as an alloy to increase the tensile strength of steel. It also has other alloying applications such as in titanium alloys. People are trying to commercialize its newer applications in redox batteries and lithium vanadium phosphate batteries.

TCMR: So, at this point, there isn't a big spike in vanadium demand because it's closely tied to steel production?

JL: Yes, but steel production has been increasing approximately 6% per year, so that's still a pretty healthy growth rate, higher than gross domestic product (GDP) growth. We expect continued growth in the vanadium industry as higher amounts of vanadium are produced.

TCMR: Is new technology on the horizon that calls for the use of vanadium?

JL: People are contemplating using the vanadium redox battery as a portion of power grid storage. Whether or not that takes hold is yet to be decided, but one distinct advantage is its long life, given that vanadium is on the anode and cathode side of the battery. It is a fairly unique technology, and if it could be commercialized on a larger scale it would definitely increase demand for vanadium significantly.

TCMR: Who is developing that technology and how close is it to commercialization?

JL: Well, they've done it on a couple of pilot scales operating in Japan and Europe. Some of the companies involved in vanadium redox are Prudent Energy and Cellstrom GmbH and I believe Sumitomo Corp. (8053:TKY; SSUMF:OTCPK ) is looking at it.

TCMR: Is this still in the semi-experimental stage or are they already in use?

JL: It is being used at a couple megawatts, but nothing on large scale.

TCMR: How far is it from commercialization on a larger scale?

JL: We think there is potential, but some of it comes down to government interaction with utility companies regarding energy and grid storage and how those laws and policies develop.

TCMR: Would that involve government subsidies or licensing?

JL: It comes down to a couple of things. The government is mandating that certain percentages of electricity production must be sourced from renewable energy. So it's really determining how those policies will ultimately be implemented because other technologies are competing with vanadium redox. Within the redox, zinc bromide battery and lithium-ion batteries for grid storage are competing for market share. At this point, the biggest storage form is pumped hydro. Determining the scalability of these technologies, and the price differential between peak and off-peak pricing are key concerns. A slew of different government policies will determine whether vanadium redox can actually go forward.

TCMR: What are the main sources of vanadium and who dominates the market?

JL: China has a big piece of production. Russia has a big piece of it, as well as South Africa.

TCMR: Is this somewhat of a negotiated market between supplier and user, or is there a trading market?

JL: Everything is negotiated on a contract basis. It's much like lithium. It's traded over the counter because the market is roughly 60,000–70,000 tons per annum tpa. There is no London Metal Exchange market.

TCMR: So what is it selling for these days?

JL: Roughly $26–$27/kg. vanadium.

TCMR: In about the same range as moly?

JL: More expensive than moly, but cheaper than, say, niobium.

TCMR: The last time you spoke with The Energy Report in April, you talked about several companies that were developing vanadium deposits. Those included Largo Resources Ltd. (LGO:TSX.V), which is in Brazil; and American Vanadium Corp. (AVC:TSX.V), which has a property in Nevada. Can you give us a little update on what's happened with these companies in the past six months?

JL: We have a "Strong Buy" on Largo, and a "Speculative Buy" on American Vanadium. Largo is progressing nicely at its Maracas project, where it already has a significant reserve. It's drilling right now to increase that resource. It's the highest-grade vanadium deposit in the world and even more so after magnetic separation. Right now, it's finishing its financing on the debt side for construction. It has spent some money on construction on the equity side. It's in the midst of finalizing the debt portion and getting an installation license, which is much like a construction license. It still expects to start producing in 2013 and, given that it already has a pay off-take with Glencore International (GLEN:LSX) for all of its production, we think this is a big development story that has a lot of legs in the near future. Once it finalizes that debt, it's on to construction, and it's really just about executing on the plan.

TCMR: You're calling that one a Strong Buy basically because you think it has all the right ingredients here to make it big?

JL: Yes, it has a strong management and technical team. Construction financing is about to be completed. It is also the highest-grade deposit in the world that has expansion potential. Average grade is roughly 1.3%, but with physical upgrading, it goes to about 3%. With vanadium, there is a roasting process involved. When you upgrade it to 3% by doing magnetic separation, you put less material into the kiln and reduce the operating costs. That will definitely make it a low-cost producer in the industry. We look forward to it producing vanadium in 2013.

TCMR: So what's it going to cost to get into production?

JL: The capital costs are roughly about $220M. It recently raised $115M in March through equity financing, and it's finalizing a debt financing of roughly $150M. We think it will close fairly soon. With the capital on the debt side and the equity side, it should have more than enough cash to go to production. Really it's just about execution of the plan right now. Once the debt financing comes in and Glencore is a customer, it's off to the races for them. That's why we have a Strong Buy on the company.

TCMR: It sounds like it has all the right ingredients.

JL: We also cover American Vanadium and classify it as a Speculative Buy. It's a different deposit. It's a sedimentary deposit out in Nevada. It just came out with its feasibility study less than a month ago and showed positive economics. It could potentially be another low-cost producer using a different technology—a solvent-extraction technology without any roasting or grinding. This makes the project economic. It's a simple heap-leach and solvent-extraction process.

TCMR: Like copper.

JL: Exactly—copper or gold. It is still making headway to get to production as well. Because there is less equipment needed for this project, its capital costs are in line around $100M. Obviously, that's significantly lower. It's a smaller deposit but there is potential for expansion on adjacent hills. Its main property is Gibellini Hill, but it also has claims on nearby hills that have shown the same mineralogy. It will be looking at that to expand its resource and mine life. With a low capital cost, low operating cost potential, we think American Vanadium has legs as well.

TCMR: So what would its yearly production be like compared to Largo?

JL: It's going to be producing different material. Largo is going to be producing about 5,000 tpa of ferrovanadium. So on an 80/20 basis, that's roughly 4,000 tons (t.) of vanadium contained. American Vanadium is looking to produce about 11 Mlb. of vanadium pentoxide a year. Those are the numbers that they are targeting right now. They are two different products, both containing vanadium, but one is in the form of vanadium pentoxide, and one is in the form of ferrovanadium.

TCMR: Is the pentoxide more of a chemical-type product vs. the ferrovanadium, which is more of a metal?

JL: Ferrovanadium has the iron. Typically, because it's in a magnetite, there is iron associated with that product and ferro is the iron portion of the vanadium.

TCMR: And the pentoxide is basically an oxide of vanadium—vanadium bonded to oxygen.

JL: Exactly.

TCMR: So, generally, there is ongoing growth and demand for vanadium and the big catalyst here might be a good viable battery application, which might kick the demand up stronger.

JL: Yes. We like to think of the battery applications as a free call option with strong underlying demand from the steel industry.

TCMR: Switching to the other area that you cover—hardly anyone uses pencils anymore and that's probably about the only place people have ever heard of graphite being used. But, obviously, there's a bigger market for it. Where is graphite used these days?

JL: When you felt graphite as a school kid, you noticed it was very slippery. That's just the way it's structured. It is sheets of carbon. That is useful in lubricants, which are actually a big portion of graphite use. Another big portion is refractories. Because the melting temperature of graphite is over 3,000 degrees Celsius, it can be used as a crucible in steelmaking to hold the liquid steel. Those are the main uses. It's also used in various other applications such as brake linings and in batteries. The graphite-to-lithium ratio in lithium-ion batteries is roughly 10:1. There's actually a lot more graphite in a lithium-ion battery than lithium on a mass basis.

TCMR: So, basically, increased graphite demand is going to be relatively proportional to the demand for lithium batteries.

JL: We believe so. You can use synthetic graphite, which is made from petroleum coke, but because the melting temperature is so high and you have to restructure the configuration of the carbon molecules at a higher temperature, it is a more expensive method of producing graphite.

TCMR: How big is the annual market for graphite?

JL: Right now it's about 1.1 Mt./y, and it's been growing significantly over the last couple of years with prices also increasing significantly over the past year. China owns 75% of the market, which is why graphite supply could potentially be critical. During the 1990s, China reduced prices to where other producers could not compete. So a lot of companies went out of business. Because of that, most graphite ended up being produced there. The other big areas for graphite production are Mexico and Brazil. Most of them are privately owned companies.

TCMR: So it would be considered a critical material because of the limited monopoly sourcing of the product. What does it sell for?

JL: It varies. Like all these other critical or minor metals, it's sold over the counter or on a negotiated price basis. Prices range from $800–$2,500/t. The big pricing discrepancy is due to a couple of factors. One is the size of the flakes or powder. If it's in powder form, it's less expensive relative to the larger flakes of graphite, which demand a premium. Then there are also different carbon contents. So a lower carbon-content material, which is a less pure version of graphite, will sell for a cheaper price than a 96%–97% carbon-content graphite. The pricing is variable.

TCMR: You've come out with a Speculative Buy recommendation on Northern Graphite Corporation (NGC:TSX; NGPHF:OTCQX). Can you tell us a little bit about that one and why you like it?

JL: It's an advanced development stage project that already has a large resource, enough for 40,000 t. at 20 years. What we really like about the project is its strong management team. Don Baxter is the president of the company. He previously worked at Ontario Graphite Ltd., which is nearby, and he knows that deposit and its metallurgy very well. When it was developing the project, he had a lot of say on how the metallurgy should work.

Looking at this project, the metallurgy is already known. The company did additional work this year, and it should be doing its pilot study soon, as well. This is really just proving up the process. This is a large-flake deposit. So the metallurgy right now is to crush, grind and float to remove the graphite flakes from the deposit. Sometimes when you crush it and grind it, you reduce the size of the graphite. In this case, their metallurgy maintains that large flake size. 70% of the material that's going to come out is going to be large-flake graphite. Additionally, without chemical upgrading, it's been able to achieve more than 95% graphite content. When we were talking about the pricing difference between all the different types of graphite, most of the material that Northern is going to be producing is high-carbon, large-flake graphite, which will generate a premium on a revenue basis. That's really what we like. A lot of the flow sheet risk is removed because it's been done before.

TCMR: What kind of capital costs is it looking at and how much is it going to be producing once it goes into production?

JL: Capital costs are roughly $70–$80M to produce 20,000 tpa.

TCMR: And it should be getting closer to the $2,000/t. range?

JL: On most of its material, I think it can get somewhere between $2,000–$3,000/t. That's what we like about the story.

TCMR: That sounds like a pretty attractive deal compared to a lot of other metals mining projects you look at that cost five times as much to get into production and forever to get there. Anyway, as far as competition in this business, it's pretty much China and a few smaller producers around the world?

JL: Well, Brazil has a bunch of larger private, family-owned businesses. Of 1.1 Mtpa production globally, if roughly 70% is run by China, that's 770,000 t. The balance of that is in Brazil and Mexico with some smaller operations in North Korea. There is a mine in Sri Lanka, but yes, the bulk of it really is in China.

TCMR: So Northern Graphite has a pretty good chance of establishing itself as a decent-size producer?

JL: We believe so. It has the ability to scale up if the market warrants it, as well. Its deposit is large enough for it to go from 20,000 t. to 40,000 t. if the market is there.

TCMR: That's definitely one to watch if somebody's looking for something a bit more exotic.

JL: Exactly. We're pretty high on that story as well.

TCMR: Do you have any closing thoughts that people should consider in looking at the vanadium and graphite markets?

JL: What we really think is driving the graphite market is the possible explosion of lithium-ion batteries and the use of graphite within them. Demand looks strong for the future.

TCMR: That's a positive note we can leave on. We appreciate your thoughts and your insight. Thanks for joining us today.

JL: Great. I appreciate it.

Jonathan Lee is a battery materials and technologies analyst with Byron Capital Markets in Toronto. As a member of Byron's research department, Lee's primary focus is on the battery materials sectors, which includes lithium, vanadium and cobalt.

Want to read more exclusive Critical Metals Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators and learn more about critical metals companies, visit our Critical Metals Report page.

DISCLOSURE: 
1) Zig Lambo of The Critical Metals Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Critical Metals Report:American Vanadium Corp., Largo Resources Inc. and Northern Graphite Corp.
3) Jonathan Lee: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None.

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The Critical Metals Report: At Byron Capital, you look at different battery-related materials as well as rare commodity products. Can you give us a little overview of these lesser-known products, like vanadium and graphite?

Jonathan Lee: About 85%–90% of vanadium usage is as an alloy to increase the tensile strength of steel. It also has other alloying applications such as in titanium alloys. People are trying to commercialize its newer applications in redox batteries and lithium vanadium phosphate batteries.

TCMR: So, at this point, there isn't a big spike in vanadium demand because it's closely tied to steel production?

JL: Yes, but steel production has been increasing approximately 6% per year, so that's still a pretty healthy growth rate, higher than gross domestic product (GDP) growth. We expect continued growth in the vanadium industry as higher amounts of vanadium are produced.

TCMR: Is new technology on the horizon that calls for the use of vanadium?

JL: People are contemplating using the vanadium redox battery as a portion of power grid storage. Whether or not that takes hold is yet to be decided, but one distinct advantage is its long life, given that vanadium is on the anode and cathode side of the battery. It is a fairly unique technology, and if it could be commercialized on a larger scale it would definitely increase demand for vanadium significantly.

TCMR: Who is developing that technology and how close is it to commercialization?

JL: Well, they've done it on a couple of pilot scales operating in Japan and Europe. Some of the companies involved in vanadium redox are Prudent Energy and Cellstrom GmbH and I believe Sumitomo Corp. (8053:TKY; SSUMF:OTCPK ) is looking at it.

TCMR: Is this still in the semi-experimental stage or are they already in use?

JL: It is being used at a couple megawatts, but nothing on large scale.

TCMR: How far is it from commercialization on a larger scale?

JL: We think there is potential, but some of it comes down to government interaction with utility companies regarding energy and grid storage and how those laws and policies develop.

TCMR: Would that involve government subsidies or licensing?

JL: It comes down to a couple of things. The government is mandating that certain percentages of electricity production must be sourced from renewable energy. So it's really determining how those policies will ultimately be implemented because other technologies are competing with vanadium redox. Within the redox, zinc bromide battery and lithium-ion batteries for grid storage are competing for market share. At this point, the biggest storage form is pumped hydro. Determining the scalability of these technologies, and the price differential between peak and off-peak pricing are key concerns. A slew of different government policies will determine whether vanadium redox can actually go forward.

TCMR: What are the main sources of vanadium and who dominates the market?

JL: China has a big piece of production. Russia has a big piece of it, as well as South Africa.

TCMR: Is this somewhat of a negotiated market between supplier and user, or is there a trading market?

JL: Everything is negotiated on a contract basis. It's much like lithium. It's traded over the counter because the market is roughly 60,000–70,000 tons per annum tpa. There is no London Metal Exchange market.

TCMR: So what is it selling for these days?

JL: Roughly $26–$27/kg. vanadium.

TCMR: In about the same range as moly?

JL: More expensive than moly, but cheaper than, say, niobium.

TCMR: The last time you spoke with The Energy Report in April, you talked about several companies that were developing vanadium deposits. Those included Largo Resources Ltd. (LGO:TSX.V), which is in Brazil; and American Vanadium Corp. (AVC:TSX.V), which has a property in Nevada. Can you give us a little update on what's happened with these companies in the past six months?

JL: We have a "Strong Buy" on Largo, and a "Speculative Buy" on American Vanadium. Largo is progressing nicely at its Maracas project, where it already has a significant reserve. It's drilling right now to increase that resource. It's the highest-grade vanadium deposit in the world and even more so after magnetic separation. Right now, it's finishing its financing on the debt side for construction. It has spent some money on construction on the equity side. It's in the midst of finalizing the debt portion and getting an installation license, which is much like a construction license. It still expects to start producing in 2013 and, given that it already has a pay off-take with Glencore International (GLEN:LSX) for all of its production, we think this is a big development story that has a lot of legs in the near future. Once it finalizes that debt, it's on to construction, and it's really just about executing on the plan.

TCMR: You're calling that one a Strong Buy basically because you think it has all the right ingredients here to make it big?

JL: Yes, it has a strong management and technical team. Construction financing is about to be completed. It is also the highest-grade deposit in the world that has expansion potential. Average grade is roughly 1.3%, but with physical upgrading, it goes to about 3%. With vanadium, there is a roasting process involved. When you upgrade it to 3% by doing magnetic separation, you put less material into the kiln and reduce the operating costs. That will definitely make it a low-cost producer in the industry. We look forward to it producing vanadium in 2013.

TCMR: So what's it going to cost to get into production?

JL: The capital costs are roughly about $220M. It recently raised $115M in March through equity financing, and it's finalizing a debt financing of roughly $150M. We think it will close fairly soon. With the capital on the debt side and the equity side, it should have more than enough cash to go to production. Really it's just about execution of the plan right now. Once the debt financing comes in and Glencore is a customer, it's off to the races for them. That's why we have a Strong Buy on the company.

TCMR: It sounds like it has all the right ingredients.

JL: We also cover American Vanadium and classify it as a Speculative Buy. It's a different deposit. It's a sedimentary deposit out in Nevada. It just came out with its feasibility study less than a month ago and showed positive economics. It could potentially be another low-cost producer using a different technology—a solvent-extraction technology without any roasting or grinding. This makes the project economic. It's a simple heap-leach and solvent-extraction process.

TCMR: Like copper.

JL: Exactly—copper or gold. It is still making headway to get to production as well. Because there is less equipment needed for this project, its capital costs are in line around $100M. Obviously, that's significantly lower. It's a smaller deposit but there is potential for expansion on adjacent hills. Its main property is Gibellini Hill, but it also has claims on nearby hills that have shown the same mineralogy. It will be looking at that to expand its resource and mine life. With a low capital cost, low operating cost potential, we think American Vanadium has legs as well.

TCMR: So what would its yearly production be like compared to Largo?

JL: It's going to be producing different material. Largo is going to be producing about 5,000 tpa of ferrovanadium. So on an 80/20 basis, that's roughly 4,000 tons (t.) of vanadium contained. American Vanadium is looking to produce about 11 Mlb. of vanadium pentoxide a year. Those are the numbers that they are targeting right now. They are two different products, both containing vanadium, but one is in the form of vanadium pentoxide, and one is in the form of ferrovanadium.

TCMR: Is the pentoxide more of a chemical-type product vs. the ferrovanadium, which is more of a metal?

JL: Ferrovanadium has the iron. Typically, because it's in a magnetite, there is iron associated with that product and ferro is the iron portion of the vanadium.

TCMR: And the pentoxide is basically an oxide of vanadium—vanadium bonded to oxygen.

JL: Exactly.

TCMR: So, generally, there is ongoing growth and demand for vanadium and the big catalyst here might be a good viable battery application, which might kick the demand up stronger.

JL: Yes. We like to think of the battery applications as a free call option with strong underlying demand from the steel industry.

TCMR: Switching to the other area that you cover—hardly anyone uses pencils anymore and that's probably about the only place people have ever heard of graphite being used. But, obviously, there's a bigger market for it. Where is graphite used these days?

JL: When you felt graphite as a school kid, you noticed it was very slippery. That's just the way it's structured. It is sheets of carbon. That is useful in lubricants, which are actually a big portion of graphite use. Another big portion is refractories. Because the melting temperature of graphite is over 3,000 degrees Celsius, it can be used as a crucible in steelmaking to hold the liquid steel. Those are the main uses. It's also used in various other applications such as brake linings and in batteries. The graphite-to-lithium ratio in lithium-ion batteries is roughly 10:1. There's actually a lot more graphite in a lithium-ion battery than lithium on a mass basis.

TCMR: So, basically, increased graphite demand is going to be relatively proportional to the demand for lithium batteries.

JL: We believe so. You can use synthetic graphite, which is made from petroleum coke, but because the melting temperature is so high and you have to restructure the configuration of the carbon molecules at a higher temperature, it is a more expensive method of producing graphite.

TCMR: How big is the annual market for graphite?

JL: Right now it's about 1.1 Mt./y, and it's been growing significantly over the last couple of years with prices also increasing significantly over the past year. China owns 75% of the market, which is why graphite supply could potentially be critical. During the 1990s, China reduced prices to where other producers could not compete. So a lot of companies went out of business. Because of that, most graphite ended up being produced there. The other big areas for graphite production are Mexico and Brazil. Most of them are privately owned companies.

TCMR: So it would be considered a critical material because of the limited monopoly sourcing of the product. What does it sell for?

JL: It varies. Like all these other critical or minor metals, it's sold over the counter or on a negotiated price basis. Prices range from $800–$2,500/t. The big pricing discrepancy is due to a couple of factors. One is the size of the flakes or powder. If it's in powder form, it's less expensive relative to the larger flakes of graphite, which demand a premium. Then there are also different carbon contents. So a lower carbon-content material, which is a less pure version of graphite, will sell for a cheaper price than a 96%–97% carbon-content graphite. The pricing is variable.

TCMR: You've come out with a Speculative Buy recommendation on Northern Graphite Corporation (NGC:TSX; NGPHF:OTCQX). Can you tell us a little bit about that one and why you like it?

JL: It's an advanced development stage project that already has a large resource, enough for 40,000 t. at 20 years. What we really like about the project is its strong management team. Don Baxter is the president of the company. He previously worked at Ontario Graphite Ltd., which is nearby, and he knows that deposit and its metallurgy very well. When it was developing the project, he had a lot of say on how the metallurgy should work.

Looking at this project, the metallurgy is already known. The company did additional work this year, and it should be doing its pilot study soon, as well. This is really just proving up the process. This is a large-flake deposit. So the metallurgy right now is to crush, grind and float to remove the graphite flakes from the deposit. Sometimes when you crush it and grind it, you reduce the size of the graphite. In this case, their metallurgy maintains that large flake size. 70% of the material that's going to come out is going to be large-flake graphite. Additionally, without chemical upgrading, it's been able to achieve more than 95% graphite content. When we were talking about the pricing difference between all the different types of graphite, most of the material that Northern is going to be producing is high-carbon, large-flake graphite, which will generate a premium on a revenue basis. That's really what we like. A lot of the flow sheet risk is removed because it's been done before.

TCMR: What kind of capital costs is it looking at and how much is it going to be producing once it goes into production?

JL: Capital costs are roughly $70–$80M to produce 20,000 tpa.

TCMR: And it should be getting closer to the $2,000/t. range?

JL: On most of its material, I think it can get somewhere between $2,000–$3,000/t. That's what we like about the story.

TCMR: That sounds like a pretty attractive deal compared to a lot of other metals mining projects you look at that cost five times as much to get into production and forever to get there. Anyway, as far as competition in this business, it's pretty much China and a few smaller producers around the world?

JL: Well, Brazil has a bunch of larger private, family-owned businesses. Of 1.1 Mtpa production globally, if roughly 70% is run by China, that's 770,000 t. The balance of that is in Brazil and Mexico with some smaller operations in North Korea. There is a mine in Sri Lanka, but yes, the bulk of it really is in China.

TCMR: So Northern Graphite has a pretty good chance of establishing itself as a decent-size producer?

JL: We believe so. It has the ability to scale up if the market warrants it, as well. Its deposit is large enough for it to go from 20,000 t. to 40,000 t. if the market is there.

TCMR: That's definitely one to watch if somebody's looking for something a bit more exotic.

JL: Exactly. We're pretty high on that story as well.

TCMR: Do you have any closing thoughts that people should consider in looking at the vanadium and graphite markets?

JL: What we really think is driving the graphite market is the possible explosion of lithium-ion batteries and the use of graphite within them. Demand looks strong for the future.

TCMR: That's a positive note we can leave on. We appreciate your thoughts and your insight. Thanks for joining us today.

JL: Great. I appreciate it.

Jonathan Lee is a battery materials and technologies analyst with Byron Capital Markets in Toronto. As a member of Byron's research department, Lee's primary focus is on the battery materials sectors, which includes lithium, vanadium and cobalt.

Want to read more exclusive Critical Metals Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators and learn more about critical metals companies, visit our Critical Metals Report page.

DISCLOSURE:
1) Zig Lambo of The Critical Metals Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Critical Metals Report: American Vanadium Corp., Largo Resources Inc. and Northern Graphite Corp.
3) Jonathan Lee: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None.

Streetwise – The Gold Report is Copyright © 2011 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

The Gold Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.

From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

The post Jonathan Lee: Graphite and Vanadium to benefit from battery market growth appeared first on MINING.com.

WINNIPEG, MANITOBA–(Marketwire – Oct. 24, 2011) - Gossan Resources Limited (TSX VENTURE:GSS)(FRANKFURT/FREIVERKEHR & XETRA:WKN 904435) has signed a Letter of Intent (LOI) with East Mining Company SA ("EMC") of Athens, Greece, to investigate and examine the possibilities of acquiring mineral projects within Europe, on a non-exclusive basis, and initially to assess three potential projects in Greece. Additional projects may be pursued.

Under the terms of the LOI, Gossan will invest Euro 300,000, currently about CDN $420,000, and provide certain expertise for a 40% equity interest in EMC, a private company in registration, subject to due diligence and receipt by EMC of one or more mineral resource licenses by no later than March 31, 2012, or such other agreeable date, and the approval of the TSX Venture Exchange.

Douglas Reeson, CEO of Gossan, commented, "An investment in East Mining Company provides Gossan with the opportunity to participate in a material re-valuation of mineral assets and potentially support Gossan in broadening its magnesium strategy into Europe."

Gossan is also undertaking a non-brokered private placement of up to $860,000 of units (the "Units"), subject to the approval of the TSX Venture Exchange. Each Unit consists of one common share and one common share purchase warrant at a price of $0.16 per Unit. Each warrant entitles the holder thereof to purchase one additional common share of Gossan at an exercise price of $0.24 per share during the period ending November 29, 2013.

All securities issued in the course of the Offering will be subject to a regulatory hold period of four months and one day, and a voluntary hold period for a further 8 months or one year in total. Insiders of the Company may subscribe for in excess of 25% of the aggregate proceeds of the contemplated private placement. The principals of EMC may also subscribe to the contemplated private placement. No fees are anticipated to be paid in regard to the placement of the issue. Proceeds of the Units may be used to complete the proposed investment in East Mining Company and will be used for general working capital purposes. The private placement may be closed in two or more tranches.

On September 23, 2011, Gossan received an offer for the sale of its equity interest in The Claims Network Inc. (TCN), a service provider to the property and casualty insurance industry of claims-related services, for a net sale price of $1.4 million. TCN has declared a dividend, in accord with the terms of the agreement, and Gossan has received a payment of $115,030. The transaction is subject to a first right of refusal by existing TCN shareholders, the execution of a definitive agreement with the offeror and the approval of the TSX Venture Exchange, if necessary. The transaction is expected to close in early December 2011 however no assurance can be provided that the transaction will close (see NR-11-04 dated September 23, 2011).

Gossan Resources Limited is engaged in mineral exploration and development in Manitoba and northwestern Ontario. It has a well-diversified portfolio of properties hosting gold, platinum group and base metals, as well as the specialty and minor metals, vanadium, titanium, tantalum, lithium, and chromium. The Company also has a large deposit of magnesium-rich dolomite, the world-wide rights to the Zuliani magnesium production process, and a silica frac sand deposit. Gossan trades on the TSX Venture Exchange and has 29,277,900 common shares outstanding.

For further information, please bookmark www.gossan.ca.

The post Manitoba's Gossan Resources investing in Greece, undertaking private placement appeared first on MINING.com.

The Critical Metals Report: Chris, could you discuss the uses of vanadium?

Chris Berry: Vanadium is an element that is pervasive, but a lot of people haven't realized just how pervasive it is. Vanadium is used in varying degrees in several applications. One is as a strengthener of steel and an alloy with titanium. It is also used in the emerging field of lithium-ion batteries (LIBs) for electric vehicles (EVs), both the four-wheel or two-wheel type. I think this usage is one that shouldn't be relied upon in the near term. Vanadium has also come to be used in what's known as the vanadium redox battery (VRB)—a large-scale battery used for alternative energy storage.

Over 90% of vanadium produced today is used as a steel strengthener. In 2010, according to the U.S. Geological Survey (USGS), 56,000 tons of vanadium were produced globally (U.S. figures are not reported), so obviously the majority of this is used in the buildout of infrastructure that is occurring disproportionately in countries such as China. One company in particular, Denison Mines Corp. (TSX:DML; NYSE.A:DNN), which is thought of as a uranium producer, produced about 1,000 tons of vanadium last year as a coproduct of its uranium mining in the western United States. Aside from that, vanadium is mined mainly in China, Russia and South Africa.

The use of vanadium in LIBs for EVs is not significant yet, but could eventually become important as the transportation sector electrifies. One of the real challenges surrounding LIBs is settling on the most effective battery chemistry. In other words, what battery chemistry allows for the greatest number of charge recycles, depletes its charge the slowest and allows us to recharge the fastest? Today, based on my research, lithium-vanadium-phosphate batteries appear to offer the highest charge and the fastest recharge cycle. It seems that the lithium-vanadium-phosphate battery holds a great deal of promise, offering a blend of substantial power and reliability. I am watching for advances in battery chemistry here with great interest.

I am actually reading a book now titled "Bottled Lightning: Superbatteries, Electric Cars, and the New Lithium Economy" by Seth Fletcher. The debate over the "best" or "optimal" battery is not a new one and the book discusses the history of this argument well.

In our research at House Mountain, we focus on several macro themes, one being accessibility to cheap and reliable energy. It's no secret that increasing GDP and access to cheap energy go hand-in-hand. Energy storage is going to become more and more important and this is where the VRB can play a significant role. I wouldn't call VRBs an emerging technology because they were actually developed in the late 1980s, so the idea of using vanadium to store electricity has been around for a number of years. VRBs just haven't been in mass, widespread use. Growing economies in countries like China and India and even in continents like South America are becoming accustomed to an increase in the quality of life. In my opinion, to maintain and increase that quality of life, you need access to energy—cheap and reliable energy. The electricity grid has been described as the only supply chain without storage capacity. VRBs can address this.

TCMR: To alleviate the stress on baseload power.

CB: Exactly. Baseload power from utilities will be generated from a number of different sources—renewables, coal, oil and gas, for example. VRBs allow for the smooth transition of electricity into the grid at times of peak demand. Renewable sources of energy such as wind turbines generate electricity that can be stored by a VRB and released at peak times. This ability to effectively store electricity and manage the flow of this electricity into the grid as the demand for electricity ebbs and flows promises to become critical and offers an additional avenue for future vanadium demand.

TCMR: You said VRB technology has been around for a while. Is this market going to grow?

CB: I think it will, based on my comments above. VRBs are being used commercially in a couple of different places, though they have not been adopted widely on a commercial scale. As demand for electricity increases, VRBs will definitely play a role. You can't have countries like China with its emerging middle class even approach Western living standards (and the electricity demand that comes along with that) without the ability to put affordable electricity into the grid on demand. You can't have a global population of 7 billion citizens many who want a higher quality of life—a population projected to grow to 10 billion by the year 2085 based on estimates in The Economist—without that ability. It just can't happen.

TCMR: In a research report, you referenced Byron Capital Markets' estimate of how much storage would be required for 1 megawatt of energy. You wrote that it would require 50,000 liters of electrolyte which equates to 10.1 tons of vanadium. But as you said, in 2010 only 57,000 tons of vanadium were produced globally. So looking at numbers like that, I'm thinking that even a small amount of growth could exponentially increase the amount of vanadium needed.

CB: That's exactly right, and that's the key. One of the things that I like about vanadium is that you have a couple of different, but potentially significant, demand drivers. You have the fact that vanadium is used as a steel strengthener. So that's a play on emerging market growth. I don't think that China is going to continue to grow at 9–10% indefinitely, but there are other countries that are experiencing significant growth rates themselves that are behind the curve. India is an example. It has a huge need for infrastructure, and increases in vanadium-based steel production will be a part of that. As another avenue of demand, renewable energy will continue to be a minority of the energy produced globally, but, again, even if a fraction of the vanadium produced had to be diverted to energy storage, you are looking at a potentially significant supply-demand imbalance.

Another significance of vanadium is that it is very rarely mined alone; it's typically mined as a byproduct of other metals, uranium being one of them. Two of the three largest producers of vanadium in the world right now are Evraz Highveld Steel and Vanadium Ltd. (JSE:EHS), based in Russia, and Panzhihua New Steel & Vanadium Co. Ltd. (SZSE: 000629) in China. At both of these companies, vanadium is a byproduct of steel slag production. If, for whatever reason, they cannot increase capacity to produce more steel, or if steel demand slows, they would be looking at producing less vanadium. There appears to be a direct relationship between the amount of steel they produce and the amount of vanadium they produce. If there is any sort of a hiccup there, again, you could potentially be looking at an interesting supply-demand imbalance in the vanadium market. I'm not predicting that this will happen. I am just pointing out that much of the vanadium produced is dependent on production of other metals.

TCMR: Are there any producing vanadium mines in Canada or in the U.S.?

CB: The only one that I know is Denison's White Mesa project in Utah. It is mining uranium in the U.S. and is producing about 1,000 tons of vanadium per year as a coproduct. After this, however, the question becomes, where are the near-term producers? In other words, who is next? In North and South America, there are several. The one that I have focused on most closely is American Vanadium Corp. (TSX.V:AVC). It owns the Gibellini deposit in eastern Nevada and has an NI 43-101 resource estimate of 18 million tons (Mt.) of vanadium pentoxide, grading 0.33% on the deposit. There are several other properties the company owns in the immediate vicinity of Gibellini that are not included in this resource estimate, so there exists the potential for expansion of this resource based on additional discovery. The company has a stated plan to be in production of vanadium pentoxide by 2013 and also has the potential to produce vanadium electrolyte which is used in VRBs. Producing two products provides potentially two revenue streams, which I like to see in a project.

This project is unique in that it will be an open-pit, heap-leach operation with a low capital expenditure. As I mentioned before, vanadium is usually found with other minerals, which requires metallurgical and separation expertise and can complicate the mining process and drive up costs. According to the company, only trace amounts of uranium appear in this deposit. It seems to be pretty clean. If vanadium pentoxide currently trades in the market for $7/lb., American Vanadium believes that it will be able to produce at a cost of $2.96/lb. based on an independent preliminary economic assessment the company had completed. When production really ramps up, the goal is to be producing 14 million pounds of vanadium pentoxide per year. The grade of the deposit is low, but you can do the math. If you are selling at $7/lb. and mining and producing at a cash cost of $3/lb., that is a $4/lb. margin on a resource that is growing in size.

TCMR: Any near-term catalysts?

CB: The immediate catalyst for this company will be to release an updated resource estimate and also a prefeasibility study, which I anticipate before the end of the year. They also recently announced that they have produced both vanadium pentoxide and vanadium electrolyte on a pilot scale.

TCMR: The size of the vanadium market is not easy to discern currently, is it?

CB: It's really not and this is a challenge for all junior vanadium exploration companies. Most people default to what the USGS says on the size of the vanadium market, so we say it is 56,000 tons currently. There are a number of different end products created from vanadium ore like vanadium pentoxide, electrolyte or ferrovanadium, which cloud the true demand in this market in my opinion. The market for vanadium is currently in balance from a supply and demand perspective, but this could change on the back of increased demand from the applications we mentioned above.

Many of these minor metals like vanadium and lithium have a real issue with price transparency and hence volatility. It's easy to look at a metal like copper or gold—where there is a futures market and a spot market—and get an accurate price, but it's not the same with vanadium or lithium. These are all negotiated contracts between supplier and end-user. Vanadium pentoxide is worth $7/lb. currently, but this is can change more drastically than other metals based on the relatively small size of the market, fluctuations in demand from end-users and supply restrictions from other countries.

TCMR: It could be $10/lb. in one transaction and $5/lb. in another.

CB: And the price volatility, in particular with vanadium, is one thing that I think has kept more people away from the metal. Vanadium is definitely about as good as it gets as a strengthener of steel. But there are substitutes. For example, niobium has very similar qualities when alloyed with steel, but is only a viable substitute for vanadium when vanadium is at a much higher price per pound. Vanadium at $7–$8/lb. is economic, and you really get a lot of bang for the buck. However, if that spikes, then as an end-user you start looking at substitutes.

TCMR: Sounds like you are very positive on American Vanadium.

CB: I think it has a chance. For a lot of these juniors, that is all you can ask for in the tough markets we're seeing these days. I have visited the Gibellini deposit, met with management and can see how the project could succeed. Despite the fact that the vanadium market is roughly in balance from a supply-demand perspective, and, based on my projections, it looks like for the next year or two it's going to stay that way, I still think there is room for a company like American Vanadium as much of the supply of vanadium used in the United States comes from overseas. Based on work we're doing in Washington D.C., it appears that our political leaders are waking up to the issues surrounding resource dependence on metals such as lithium and vanadium. American Vanadium is positioning itself to benefit from this newfound concern regarding domestic supply chains.

TCMR: Chris, are there any other vanadium companies that you are talking about?

CB: The vanadium space, such that it exists, is quite small in terms of the companies that are producing. You have Evraz, Panzhihua New Steel and Vanadium Co. and Xstrata PLC (LSE:XTA), and they control production in the vanadium market. They produce the overwhelming majority of the 57,000 tons. Another company that is particularly interesting is Largo Resources Ltd. (TSX.V:LGO). This is a Canadian company that has two different vanadium deposits in Brazil. The company's Maracas project contains the highest grades of vanadium I've seen in North or South America at roughly 1.27%. It's also a deposit of size with ample potential to expand, so here you're combining good grades with tonnage. Another important factor I haven't mentioned is an offtake agreement. Largo negotiated an offtake agreement with Glencore International for a term of six years. This is a huge credibility boost for Largo, in my opinion. The fact that Largo has a high-grade vanadium deposit as well as other metal deposits in the Americas makes the potential for this company quite strong going forward.

TCMR: Another one?

CB: Another one I follow is EMC Metals Corp. (TSX:EMC). It is not a pure play on vanadium. This is a company that has a couple of different assets. Its main asset is actually a scandium deposit hosted in laterite located in New South Wales, Australia. EMC is engaged in a 50/50 joint venture on the scandium deposit (called Nyngan Gilgai) with an Australian company called Jervois Mining. EMC also has a prospective vanadium deposit not terribly far from American Vanadium's asset in Nevada called the Carlin deposit which has a resource of 25 Mt. grading 0.51% vanadium pentoxide. To be sure, there are other companies with vanadium deposits, but these are three that I'm really focused on.

So there are a number of near-term producers of vanadium, and while the market is currently balanced, I like the prospects for the metal going forward based on forecast global steel demand and potential for vanadium's critical use in energy storage applications—two diverse sources of demand.

TCMR: I have enjoyed speaking with you very much.

CB: Thank you very much.

With a lifelong interest in geopolitics and the financial issues that emerge from these relationships, Chris Berry founded House Mountain Partners in 2010. House Mountain firmly believes that the emerging quality-of-life cycle emanating from Asia is a "game-changer" that will affect everyone throughout the world for decades. With that in mind, the firm focuses on the intersection of three topics: 1) The evolving geopolitical relationship between emerging and developed economies; 2) The commodity space; and 3) Junior mining and resource stocks are positioned to benefit from this phenomenon. Chris spent 14 years working across various roles in sales and brokerage on Wall Street before founding House Mountain Partners. He holds an MBA in finance with an international focus from Fordham University and a BA in international studies from the Virginia Military Institute. Chris is also a member of the Canadian American Business Council. He invites readers to receive a complimentary subscription to Morning Notes, which provides analyses of emerging geopolitical, technological and economic trends. Go to www.discoveryinvesting.com.

Want to read more exclusive Critical Metals Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators and learn more about critical metals companies, visit our Critical Metals Report page.

DISCLOSURE:
1) George Mack of The Critical Metals Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Critical Metals Report: American Vanadium Corp. and Largo Resources Ltd.
3) Chris Berry: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None.

Streetwise – The Gold Report is Copyright © 2011 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

The Gold Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.

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The post Can electric vehicles drive vanadium demand? appeared first on MINING.com.

The company's future product, vanadium, is well-used ingredient in steel alloy that has widespread application for making items stronger and lighter. But the company also sees vanadium as solving a key problem with renewables—finding a place to store energy.

The sun doesn't always shine, and the wind doesn't always blow; the energy must be stored until its needed. Vanadium in solution, in the form of vanadium flow batteries, is one technology that may be able to store a lot of energy on a mass scale.

American Vanadium is touting the technology in front of analysts and investors, and the company is making its battery drive the centerpiece of the company's efforts.

It also is another hat for the company to wear in a tough market for junior miners. In the last year the TSX Venture has slid 28% to 1,251.88, nearing its 52-week low of 1,244.

"This is exactly where you need to go. A mine does not excite anyone anymore in these markets," says Ron MacDonald, the company's executive chairman and director.

Vanadium flow batteries are large tanks of vanadium in solution as electrolytes. The batteries are big, best for fixed installations. The advantages are that storage capacity can be added by just by increasing the amount of solution. Vanadium flow batteries can also be completely discharged for long periods of time without suffering damage.

Some disadvantages are size. The battery has a poor energy-to-volume ratio, and it can be relatively complex, requiring pumps or gravity-fed options to move the electrolyte through the system to release stored energy.

Vanadium is mostly associated with steel. It is an important alloy, commonly known as ferrovanadium, and used to make bike frames and wrenches—anyplace where the strength to weight ratio is important.

On its own the element is hard and silvery gray. The oxidized ore American Vanadium plans to mine is yellow.

Current vanadium production is mostly as a by-product, generated through steel production, oil and gas refining and uranium mining. Over 95% of the world's vanadium production comes from China, Russia and South Africa.

China's rapid industrialization points to an eventual need for more vanadium. Rebar in the West is often contains vanadium which increases the strength relative to the weight. China will eventually start introducing its own standards, which will encourage the use of high-strength low-alloy steels.

By 2025 analysts forecast that worldwide vanadium demand for use in steel will double.

Vanadium demand will always be there, says the company, which is a nice advantage as it touts the renewable energy aspect of its business. American Vanadium will be one of the few companies in the renewable energy space with revenues.

Most junior renewable energy companies rely on investment money until they make something marketable.

"If the battery thing doesn't work out, [we] still make money from the steel side," says Bill Radvak, the company's president and CEO.

American Vanadium at a Glance

Stock symbol: CVE:AVC
Range: 0.61 – 0.66
Mkt Cap: 19.42M
Shares: 27.74M
52 Week: 0.35 – 1.41
Company Summary: American Vanadium Corp. (formerly Rocky Mountain Resources Corp.) is a metals exploration and development company focused on developing environmentally favorable projects within politically stable regions with the potential to host large deposits of industrial metals or minerals. American Vanadium is currently developing the Gibellini Project, a world-class vanadium resource in the state of Nevada, U.S.A.

American Vanadium hosted a tour of its mine with a large media group, which MINING.com attended, in Nevada in February 2012

The post American Vanadium: Beyond a mine appeared first on MINING.com.