THE assets from collapsed Windimurra Vanadium's namesake mine in the Mid West could prove to be a boon for Reed Resources.
West Perth-based Reed says it is looking closely at the assets, located 100 kilometres away from its Barrambie vanadium mine, which has an estimated capital cost of $629 million.
Windimurra fell into receivership in February after delays in approvals and the supply of equipment forced it to increase capital costs by $81 million, which it could not cover.
Windimurra was due to start production at its namesake mine this quarter.
"We're looking very closely at that [Windimurra's assets], it's one possibility," Reed investor relations manager Simon Hicks said.
"There's one plant there that's just about completed which would cost us almost $600 million to replicate."
Windimurra receiver KordaMentha is currently developing a plan to move the assets.
The Barrambie mine is projected to have a mine life of 12 years with an annual production rate of 7,700 tonnes of vanadium, which is used to make high-grade steel.
Reed said the project has potential to generate earnings before interest, tax, depreciation and amortisation of $105 million each year at a vanadium price of $US30 a kilogram.
Mr Hicks said the five-year average vanadium price is at $US50/kg.
Total operating costs have been estimated at just below $US20/kg.
Mr Hicks said Reed was investigating financing opportunities for Barrambie, but was not in desperate need of cash and therefore could scout for the best deal possible.
The company already generates cash flow from its Comet Vale operation north of Kalgoorlie.
Should Reed secure project financing immediately, Barrambie could start production late in 2011, Mr Hicks said.
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