Charming the media?

The most recent ASX announcement of ScandiVanadium of December 18 has made headlines in several regional newspapers and in Swedish TV. What is the whole thing about and why does it create such an interest?

The only thing that ScandiVanadium now did was to provide an update of their results from the drill core investigation at Lybymosse. This update is basically the same as what has been stated in the ASX Announcement of November 29. The only difference is that the media has suddenly picked up the ‘new’ information, probably as a result of ScandiVanadium’s intensified charm offensive towards media and local population.

What ScandiVanadium writes in the most recent ASX Announcement is that the target area (Lyby close to Hörby) contains 116.9 million tonnes @ 0.39% V₂O₅ (vanadium pentoxide). At first sight the 116.9 million tonnes sound much, but on what are these estimates actually based upon?

First of all, the percentages of V₂O₅ (vanadium pentoxide) found in the Lybymosse Alum shale are far below those that had been earlier suggested by the company, which was on average 0.5-0.8% V₂O₅ (vanadium pentoxide). Moreover, only four out of six Lybymosse drill cores show that vandium-bearing layers have been reached. In these four drill cores (HDD001, HDD001B, HDD002, HDD003B, HDD005), the vanadium-rich layers are at depths of 36-52 m (HDD001, HDD1B), 50-66 m (HDD002), 80-94 m (HDD3b) and 74-90 m (HDD005). In HDD004, the vanadium-rich layers are probably in much further depth and in HDD003 the layers have been eroded and are no longer present.

Indicated and inferred vanadium resources according to ScandiVanadium’s latest ASX Announcement of December 18, 2019. Indicated resources are based on actual measurements on rock samples from the drill cores, while inferred resources are based on extrapolating the results using 3D modelling.

The indicated resources, which are shown in yellow color in the figure above, amount to 61.8 million tonnes @ 0.39% V₂O₅ (vanadium pentoxide), while the indicated (yellow) plus inferred (red) resources together make up the total of 116.9 million tonnes @ 0.39% V₂O₅ (vanadium pentoxide). Note – it is indicated and inferred resources that make up the number of 116.9 million tonnes and it was these values that have made headlines and not the actual numbers obtained from drill core analyses.

Estimations of an inferred resource relate however to basically nothing, and are only based on 3D modeling. There are no drill cores and analyses to support these values. And using the results of HDD004 as an indication, it is clear that the vanadium-bearing layers are at depths of below 100 m and were not even reached in the drill core. This can also be seen in another of ScandiVanadium‘s figures shown below.

ScandiVanadium further write that 75% of the indicated mineral resource occurs within 100 m of surface. We can translate this statement simply to that vanadium-rich layers were found in cores HDD001/HDD1B, HDD002, HDD003B and HDD005 within what the company terms ‘top seam’ and bottom seam’.

This transect shows that the so-called ‘top seam’ and ‘bottom seam’ was reached in the two drill cores HDD001B and HDD003B, but is probably far below 100 m depth in core HDD004.

But what exactly is meant with the terms ‘top seam’ and ‘bottom seam’? This means that vanadium-rich layers were found in two distinct horizons that are separated by rock layers with an average vanadium pentoxide grade of 0.24%. Looking in more detail at what is written in the ASX Announcement, it becomes clear that calculation of the average grades were made in different ways. One Table details the average grades for each seam and each drill core, another Table provides calculations for the average indicated and average inferred vanadium pentoxide grade in all top and bottom seams, respectively.

Averaged indicated V₂O₅ (vanadium pentoxide) grades as measured in the top seams of all cores range between 0.39% and 0.42% and in the bottom seams between 0.37% and 0.39% (Table 1). From these values ScandiVanadium calculated a total indicated value of 0.39% V₂O₅ for the top and bottom seams.

Now the same values were used to obtain inferred values, i.e. 0.39% V₂O₅ for the top and bottom seams. Indicated and inferred values together are thus the same: 0.39% V₂O₅ (Table 2). But what is different, is the amount in tonnes: indicated amounts are 61.8 million tonnes @ 0.39% V₂O₅ and inferred amounts are 116.9 million tonnes @ 0.39% V₂O₅.

In section 2 of the ASX Announcement, where more details are given, I found slightly different values however. Here it is stated that the top seam in all five drill holes has an average grade of 0.41% V₂O₅ (vanadium pentoxide) and the bottom seam of 0.38% V₂O₅ (vanadium pentoxide). Further reading shows that additional factors contribute to the various calculations.

What is not mentioned in the current media hype is that the vanadium-rich layers also contain a feature, which is typical for the Alum shale and called ‘nodules’ by ScandiVanadium. These nodules are nothing else but ‘Orsten‘ or in Swedish ‘stinkkalk’, which are fossil-rich concretions poor in vanadium. The values measured by ScandiVanadium for these Orsten concretions are below 0.1% V₂O₅ (vanadium pentoxide).

However, to estimate the overall V₂O₅ (vanadium pentoxide) resources in the top and bottom seams, the low values measured in the nodules were excluded. To account for the occurrences of Orsten, ScandiVanadium instead assumed a geological loss of 7% for the indicated mineral resource tonnage and a geological loss of 10% for the inferred mineral resource tonnage.

An inclusion of the Orsten’s low vanadium values in the calculations arrived at an average grade of 0.37% V₂O₅ (vanadium pentoxide) for the top seam. Excluding the Orsten’s low vanadium values, however, gave an average grade of 0.40% V₂O₅ (vanadium pentoxide). Despite these various and slightly diverging calculations and estimations it is evident that V₂O₅ (vanadium pentoxide) grades are much lower in Lybymosse than earlier anticipated by the company. Values of the anticipated 0.5-0.8% V₂O₅ (vanadium pentoxide) are nowhere seen in the Lybymosse drill cores.

I also found interesting what the company’s CEO told the media: parts of the vanadium resource is too close to buildings to being able to be mined (my free translation). But when I read the ASX Announcement of December 18, I find the following text: It is assumed that the vanadium resource at Hörby will be likely mined using conventional open cast extraction methods, but that underground methods may be applicable for the deeper part of the resource. The resources have been extended to a maximum of 1,500 m from the last known point of observation and the maximum depth at this point is 260 m which is considered appropriate for potential extraction. I leave it up to my readers to draw their own conclusions!

So all in all the latest ASX Announcement and the resulting media coverage are a nice way of presenting results in a better way than what they actually are.