Posts December 13, 2014, and January 15, 2015 on TNG Limited focused on technical analysis.
The share-price was then languishing just above support at 7.5 cents, below the 10 cent issue price of a $5.5 million capital raising.
Since floating in 1991 TNG Limited, from the code of the former Tennant Creek Gold (one of the three largest Australian gold producers in the 1930s, and onwards, closing in 1985), has been a perennial cellar dweller, as an explorer, and is yet to transition to profitable production.
This post attempts to take an overview of the company’s present prospects as far as one is able to find out. TNG has accumulated significant mining assets in the NT and adjacent WA (SEE MAP). TNG’s NT & WA operations
Mount Peake Vanadium- Titanium-Iron Oxide mine project
The most promising of its projects is at Mount Peake nearly 235 kms north of Alice Springs. TNG signed a letter of agreement with the global commodity trading house Gunvor in June 2014, to develop and market the Mount Peake Vanadium- Titanium-Iron Oxide mine project.
TNG first completed a Pre-Feasibility Study showing it has one of the largest undeveloped vanadium deposits in the world and 99.9% purity iron oxide capable of producing 900,000 tonnes over the initial 20 years of life of the mine. It is now completing the Definitive Feasibility Study for further development.
The company is just completing an EIS (Environmental Impact Statement) with the environmental consulting group GHD, for submission to the NT environmental authorities by the end of 2Q 2015.
The hydrometallurgical process known as TIVAN allows three not just one product to be processed simultaneously from the raw material:
- Premium battery grade (>96%) vanadium pentoxide. 85% of vanadium now produced is used as an alloy in the manufacture of steel. Research by the University of NSW and overseas has however been developing the Vanadium redox flow battery. These batteries have almost unlimited capacity but are bulky limiting their use to large power storage applications from wind and solar electricity generation. They can also be used to smooth out imbalances in large power grids, but are not at present suitable for vehicle batteries (as far as I know).
- The Mount Peake iron oxide product is of high-purity for which the Gunvor Group can expect strong and continuing overseas demand. It is unfortunate however that the price of iron ore has fallen from the record highs (with gold) after the GFC. The price peaked at just under US$200 in 2011, but has now collapsed to under US$70, with reduced demand from China, and competition from Brazil particularly. Negotiations are in hand for marketing this valuable ore.
- The third product Titanium dioxide (China is the main producer) is used in watch and mobile phone batteries, in sunscreens, and for colouring of foods, paints, and in make-up. When incorporated into the lithium-ion batteries for electric cars, the speed of recharging is greatly accelerated. GPP – Global Pacific Partners, based in Melbourne, have agreed to aid in the production and marketing of titanium dioxide.
“Head Winds” for TNG Limited
- TNG is still “burning cash”. At the end of the December 2014 Quarter the cash in hand was $7.198 million with a negative operating and investing cash flow for the YTD of $2.36 million.
- The lower oil price of under $60 per barrel is increasing the financial advantage of using fossil fuels over electricity generation from renewable energy sources
- Titanium greatly speeds the recharging of the lithium-ion batteries at Supercharging facilities, to as short as 2 minutes. The Mount Peake mine is in a position to meet the increasing demand for titanium but has no agreement to my knowledge to supply Tesla Motors.
- The Vanadium-Redox being developed by the University of NSW, is bulky and more suitable for use in storing electricity from wind farms, solar panels. and to even-out fluctuations within power grids. Markets will need to be developed for these promising batteries.
- The price of iron oxide has also fallen from just under $200 to under $70 but encouragingly TNG still has proposals from Steel Makers to supply magnetite iron ore. (Sinometal of China, while Posco has suggested building an iron-ore processing plant in Malaysia).
This company has been the major mover in building the market for electric powered vehicles, and in the process is enabling the generation of renewable energy to compete for domestic power.
Its progress has been slowed by the fall in the price of crude oil, in part due to coal seam oil and gas production in the US sky-rocketing since the introduction of “fracking”.
The production of Tesla’s electric vehicles has fallen in the US to 350,000 vehicles from an estimated 500,000.
In the 4Q, Tesla’s loss widened to US$107.6 million and the share price of Tesla (TSLA) on the NASDAQ fell. (from $275 to $202 per share).
To reduce production costs Tesla is now building a $5 billion “gigafactory” with Panasonic on State provided land near Remo in Nevada to be completed by 2017.
It will not only supply lithium-ion batteries for electric cars. but it will also produce batteries for drones, toys, and Grid energy sources. In addition CEO Elon Musk has a plan to produce battery packs strong enough to power whole houses or businesses. These will be able to store energy from renewable energy sources. Might Vanadium batteries become a contender for this market?
The prospects for TNG Limited are rosy. Further progress to production will be contingent on support from existing partners. Managing Director
TNG considers its options
PNG will need more funding to continue carry its many projects forwards. An option Managing Director Paul Burton is considering is a the float of inactive projects in the NT as Todd River Resources. This would raise between $5 and $7 million with the assistance of a cornerstone investor.
Otherwise in my opinion a capital raising of a similar amount would be needed sooner or later.