Australian exploration and development company TNG has awarded a contract to German metallurgical engineering firm SMS group to begin the front-end engineering and design (FEED) process for the Mount Peake vanadium-titanium-iron project in the Northern Territory.

The FEED contract comes with an expanded scope which comprises all project components, including concentrator, the TIVAN processing plant, and all associated plant and equipment.

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SMS group is also required to provide a fixed-price engineering, procurement and construction (EPC) proposal for the development and construction of the entire Mount Peake project.

In addition, SMS group has agreed to provide TNG production quantity, production rate and product quality guarantees.

“This is the logical next step in the development of TIVAN and Mount Peake, which together have the potential to essentially disrupt the TiO2 pigment and vanadium space.”

TNG managing director Paul Burton said: “We are extremely pleased to have achieved this outcome with SMS group, including a comprehensive mandate to produce a fixed-price EPC proposal for the development and construction of the entire Mount Peake project.

“Having SMS also assume technical and product guarantees under the resulting fixed-price EPC arrangement significantly de-risks the project and marks one of the most significant milestones its development history.”

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Pursuant to the terms of the contract, SMS group will deliver designing and engineering of the entire processing flow sheet for the project, including the mine site concentrator and the downstream processing plant.

The concentrator will produce magnetite concentrate, while the processing plant will produce vanadium pentoxide, titanium dioxide and iron oxide.

SMS group managing director Herbert Weissenbaeck said: “This is the logical next step in the development of TIVAN and Mount Peake, which together have the potential to essentially disrupt the TiO2 pigment and vanadium space.

“This keeps TNG on a clearly structured path and timeline towards incorporating its first TIVAN project in a technically and commercially convincing package, largely de-risked from a customer perspective, and provided by one single, fully responsible contractor.”

TNG already entered life-of-mine off-take deals for titanium oxide, pig iron and vanadium products developed from the mine, including an agreement reached earlier this week with Swiss speciality chemicals distributor DKSH for titanium dioxide pigment off-take.

A definitive feasibility study (DFS) for the Mount Peake project, updated in November last year, indicated life-of-mine net cash flow of A$11.7bn ($8.38bn), a pre-tax internal rate of revenue (IRR) of 44% and an net present value (NPV) of A$4.7bn ($3.36bn).

The 100%-owned project involves pre-production capital expenditure of A$853m ($609m).