There is no concievable reason for TMT and Atlantic to enter a JV as the risks inherent in both projects would become compounded if the projects were to joint venture to treat Gabanintha ore at WIndimurra.
For example, from TMT's perspective, the risk is that Windimurra's kiln would be inappropriate to treat Gabanintha's ores. There is a risk that Gabanintha ore would not be efficiently processed through the front end of Windimurra; and even if the front end magnetic separation and concnetration was undertaken on-site at Gabanintha, there would still be modifications required to the Windimurra plant to accept pulverised magnetite concentrate produced off-site. Given Atlantic is rebuilding the WIndimurra plant at this time, modifications to the flow sheet to handle outside concentrates would set the project timeline back due to FEED and implementation studies (by about 6-12 months), which would cost Atlantic its first-mover advantage, and possibly cost the price premium it hopes to achieve.
Likewise, if TMT (or AVL, for that matter) were to go down this route, this would be a huge waste of time and money that they are doing on their current DFS's (no comment to be made on either in this post). A 11th hour chicane into a JV and offtake arrangement by either of them would likely annoy investors, and financiers, and the offtakers with which TMT and AVL are doubtless in intense negotiations with over their own products. FOr example, the only way TMT would get funding from a bank over a DFS would be to demonstrate firm and binding offtake commitments over its vanadium.
If TMT threw its ore through Windimurra's plant, it would either need to get the product out of the back end of the plant for itself, to deliver to its offtakers, or Atlantic would have to give it a toll treatment price, and sell to Atlantic's offtakers, and deliver the remaining value back to TMT. This means TMT's offtakers would have zero nett product, and Atlantic's would be sorted; great for Atlantic's offtakers but not Atlantic, which has an ore body sitting around doing nothing.
Toll treatment works well for gold mills with excess capacity they cannot provide from the on-tenement deposits, or for gold mills with bulk low grade which can be displaced by feeding in smaller packages of higher grade ore without materially affecting the local mine's digging and milling schedule. Neither of these conditions would likely be true of Atlantic and WIndimurra which is proposing to dig and process its own ore, and has no spare mill capacity let alone kiln capacity.
Further risks accrue to Atlantic because it is relying on TMT or AVL, or whoever, getting an ML and operating permit granted. TMT has an MLA, but no ML and no permits in place. Atlantic would then have to complete its mill and commissioning, and sit around waiting for TMT to gain approvals, which would then trigger financing of TMT. Without approvals in place, everyone could go down the tubes horribly.
This fantasy of an Atlantic AVL/TMT tie-up is groundless, naive and based on gold toll treating arrangements that work only because gold is a simple process route (cyanidation + gravity), the gold industry is very mature, the product is eminently fungible (vanadium is NOT) and industry milling capacity exceeds, by several times, availability of ores, resulting in dead wood assets that owners want to put to work even if it's to clip tickets on other ores.
None of this is true for the vanadium sector. Further, comingling of ores into one centralised plant with fixed capacity will not address the short-term or long term structural change underway in the vanadium market. This might be good for prices, but offtakers and customers are seeking new supply, not continuance of old supply rates. So none of them would fund TMT just to leave supply capped; they would then go elsewhere and fund new mines, if TMT or AVL were to effectively say "Yo dudez give us $150M so you can suffer from supply constraints for ever and we'll keep $16/lb vanadium pentoxide flake prices going forever".
Seriously, you need to rethink this whole palarver.
TMT Price at posting:
22.5¢ Sentiment: None Disclosure: Not Held
