Energizer ups Green Giant

With vanadium demand increasing for new battery technologies, London’s Objective Capital Research says Energizer Resources (egz-v) and its Green Giant vanadium project in Madagascar is undervalued.
Objective Capital, which states in its 40-page report on Energizer released in December 2010, that its research is sponsored by the companies it covers and that it is “unconflicted by corporate finance and public/investor relations agendas,” says it values Energizer’s stock at 52¢ per share “with significant potential for appreciation with development success.”
Shares of Energizer closed in Toronto at 41¢ apiece on Dec. 31, within a 52-week range of 15¢-53¢.
“Continued development suggests valuations as high as $2.65 per share in the post-permitting environment under more optimistic scenarios,” Objective’s analysts Will Purcell and Richard Thompson write.
Energizer, known as Uranium Star Corp. until December 2009, holds a 100% interest in the 3,600-sq.-km Green Giant property.
Late November, Energizer released an updated NI43-101 resource estimate on Green Giant that outlined an indicated resource of 49.5 million tonnes at an average grade of 0.693% vanadium pentoxide (V2O5) for 756.3 million lbs. V2O5 and inferred resources of 9.7 million tonnes averaging 0.632% V2O5 for 134.5 million lbs. V2O5.
The company says its new resource “now places the Green Giant deposit as one of the largest known vanadium deposits in the world.”
Vanadium has been traced over a strike length of 21 km at the project.
Green Giant’s deposit “appears to be ideal for low-cost mining and processing,” the report notes, which will put the company low on the vanadium cost curve and give it strong leverage in future markets.
A key reason for Objective Capital’s positive outlook on the company is the redox storage battery (entirely dependent on vanadium) shows enormous potential as an energy storage solution. “With the expected commercialization of vanadium redox energy storage systems,” the analysts write, “vanadium industry experts predict a shortage of the high purity vanadium supply required for VRBs (vanadium redox batteries).”
VRBs can be used to store large amounts of electricity. They are being employed at wind farms and small hydropower installations and in solar panels, and are being tested for use in conventional power grid systems.
Vanadium is also used as a cathode material in rechargeable lithium batteries that are made for automotive applications. Other uses include an alloy with titanium and aluminium to make strong and lightweight metals for the aviation, defence and space industries, Objective Capital states.
As proof of the potential the technology holds, Objective Capital points to Cellstrom GmbH, a vanadium redox battery manufacturer based in Austria, that was acquired in 2010 by a subsidiary of Germany-based conglomerate Gildemeister GmbH. Gildemeister makes a range of redox batteries that are used in power grid storage and applications for emergency supply during power cuts, and Cellstrom has been selling VRBs since 2008 throughout Europe and most recently into India under the product name CellCube.
“Demand (for redox batteries) is expected to rise quickly from industrial and private users in areas with unreliable power supply systems as the advantages of Redox power storage become more well known,” Objective Capital says.
Energizer says the Green Giant project can also “be easily adapted to supply another form of vanadium, called ferrovanadium, to the steel market where vanadium demand is growing at 7% year-over-year and is well-established as a strengthening agent for steel.”
Production of vanadium in 2007 reached 60,000 tonnes, according to figures from Objective Capital, most of it came from China, South Africa and Russia. It forecasts demand for vanadium steel, automotive batteries and redox batteries will increase at an average rate of 11.9% a year from 2010 to 2015.