Australian Vanadium Limited (ASX: AVL, 'the Company' or 'AVL') is pleased to announce that it has signed a Joint Venture agreement with private company Ultra Power Systems Limited ('UPS') to develop the Coates Vanadium Project near Perth.

The Coates deposit is situated approximately 35km east of the Perth metropolitan area in the Shire of Wundowie.

The agreement allows UPS the exclusive right to earn a 49% legal and beneficial interest in the tenement on a $5,000 signing fee, followed by $50,000 being spent on exploration on the tenement within the first 12 months of the agreement and $150,000 being spent during the first 24 months. When the obligations outlined above have been fulfilled, the agreement allows for UPS to acquire AVL's Joint Venture interest for a sum of $500,000 or shares in UPS, at the election of AVL.

The geology of the Coates deposit is unique and shows that vanadiferous magnetite is developed from the weathering profile of an underlying gabbro in a laterite outcrop on a ridge. The Coates Gabbro is about 1 km long and up to 600 m wide.

Exploration at Coates was undertaken in the 1970s after its discovery in the early 1960s.

Previous metallurgical test results indicate that a 58% recovery of vanadium at an approximate grade of 1.4% V2O5, 3% TiO2, 67% Fe grade with 8% SiO2 is achievable from an ore assaying 0.54% V2O5, 4.75% TiO2, 25% Fe and 29% SiO2.Due to the historical nature of the resources stated above they are not reported in compliance with the 2012 JORC Code.

Metallurgical testwork was completed by AMDEL laboratories in 1975 on samples from the Coates deposit with favourable results. Mining plans had also previously been produced by Agnew Clough Ltd on the Coates vanadium deposit, although no significant mining was undertaken.

UPS is a private company which has secured a licence to Pacific Northwest National Laboratory's (PNNL) generation 3 vanadium electrolyte production. UPS is the only company outside the United States to obtain this licence, which is the third and final licence in the world. The generation 3 electrolyte has a higher density than the standard generation 1 used by most VRFB manufacturers. This allows the product to have a smaller footprint and operate in a wider temperature range without the need for heating and cooling, from -40-degreeC to +50-degreeC.

In addition, UPS holds the exclusive Australian option to license the VanadiumCorp Electrochem Processing Technology (VEPT). VEPT enables the recovery of valuable by-products during the vanadium processing route with minimal carbon production and minimal waste.

UPS will test material from the Coates Vanadium Project and if that proves successful, will test the low grade

• [Editor:tianyawei]