REG - Ferro-Alloy Resrcs. - Project Finance Expression of Interest

Ferro-Alloy ResourcesAnnouncement

Today 07:20

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20251104:nRSD0886Ga&default-theme=true

RNS Number : 0886G  Ferro-Alloy Resources Limited  04 November 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) NO. 596/2014 (INCLUDING AS IT FORMS PART OF THE LAWS OF
ENGLAND AND WALES BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
("MAR").

 

4 November 2025

Ferro-Alloy Resources Limited

("Ferro-Alloy", the "Group" or the "Company")

 

Project Finance Expression of Interest, Front End Engineering and Design Terms
Agreed and Substantial Capital Cost Savings Identified

 

Ferro-Alloy Resources Limited (LSE:FAR), the vanadium producer and developer
of the large Balasausqandiq vanadium project (the "Project") in Southern
Kazakhstan, is pleased to announce significant progress following the
completion of the Project's Feasibility Study.

 

Highlights

·    Terms agreed for front-end engineering and design ("FEED") with China
National Chemical Engineering Sixth Construction Co., Ltd ("CC6")

·    CC6 have provided an indicative construction cost estimate of US$261m
(excluding the relatively minor costs of the equipment relating to uranium and
molybdenum sorption), that cuts the funding required to get into production to
US$311.9m, a 40% reduction compared to the Feasibility Study

·    Corresponding enhanced Project internal rate of return ("IRR") of 31%
(unlevered, post-tax) and net present value ("NPV") of US$931.6m

·    CC6 has received a US$221.8m non-binding conditional loan offer from
the Bank of Communication (Hubei) Branch ("BOC Bank"), equating to 85% of the
CC6 scope of work

·    Potential access to Sinosure, the Chinese insurance and export credit
scheme, substantially lowering financing costs

 

Nick Bridgen, CEO of Ferro-Alloy Resources, said:

"As previously indicated, we have identified substantial capital cost savings
that demonstrate the potential to significantly enhance the Project's
financial returns. In addition CC6, a company that has vast experience in
building plants all over the world with particular expertise in vanadium
processing technology, has secured an attractive conditional offer of
construction financing for the Project with BOC Bank."

 

Overview

The Company has agreed terms for the Project's FEED with CC6. CC6 is one of
the largest and most experienced engineering and construction companies in the
global vanadium industry.

Furthermore, CC6 has provided an indicative construction cost estimate of
US$261m ("EPC Cost Estimate") for the engineering, procurement and
construction ("EPC") for the Project. In comparison with the equivalent costs
included in the Feasibility Study (announced on 13 October 2025) this
demonstrates the potential to reduce capital costs by up to US$177m, and would
enhance the Project's IRR to 31% (unlevered, post-tax) and NPV to US$931.6m.

The EPC Cost Estimate received from CC6 excludes the relatively minor costs of
the equipment relating to uranium and molybdenum sorption, and certain other
costs that are not usually included in an EPC estimate such as first-fill
consumables, strategic spare parts and other working capital items. The EPC
Cost Estimate is a result of 18 months of continuous engagement between CC6
and the Company. These robust indicative returns highlight the compelling
economics of the Project, and the opportunity to reduce capital costs
significantly utilising the experience of one of the largest EPC contractors
in China.

As part of this initiative, CC6 has received a non-binding conditional offer
of finance from the Bank of Communication (Hubei) Branch ("BOC Bank") to
provide up to US$221.8m of loan finance, equating to 85% of the CC6 scope of
work for the EPC.  Initial discussions have been held with Sinosure, the
Chinese state-owned insurance company which commonly provides loan guarantees
for overseas engineering and construction contracts. In the event that a
Sinosure guarantee is received, the interest rate on the BOC Bank loan is
expected to be relatively low, giving a very much enhanced rate of return to
equity investors.

Concurrently, the Company is engaging with strategic investors for equity
financing and has received interest from several potential providers.

 

Financial impact

Although the CC6 EPC Cost Estimate is subject to confirmation after the
completion of FEED, the financial impact of using the CC6 EPC Cost Estimate,
while leaving all other cash flows as quoted in the Feasibility Study
announced on 13 October 2025, would result in the following changes:

 

                                                                            Feasibility Study  CAPEX incorporating

                                                                            US$m                CC6 EPC estimate

                                                                                               US$m
 Capital expenditure (including working capital, strategic spares, owner's  490.2              313.2
 costs, insurance etc.)
 Contingency                                                                73.5               42.4
 Pre-production income, less costs                                          (43.7)             (43.7)
 Funding required to get into production                                    520.0              311.9
 Net Present Value (after tax, discount rate of 8%)                         748                931.6
 Project IRR                                                                22%                31%

 

The above figures do not include the potential optimisations referred to in
the announcement of 13 October 2025 except as to capital cost reductions.  In
particular, they do not include the new carbon black substitute product
announced on 27 June 2025, nor the potential Phase 2 expansion based on
ore-bodies 2, 3 and 4, expected to increase production by over 300% and to
increase the NPV of the overall project proportionately.

 

Next Steps

·    CC6 will undertake the FEED contract for the whole project, with the
exception of equipment relating to the uranium and molybdenum sorption which
is relatively minor in cost and uses technology well-known to the Company

·    The agreed cost of FEED will be US$4.1m for the specification on
which the Feasibility Study, announced on 13 October 2025, was based. The
estimated period to complete FEED is six months

·    The Company and CC6 are currently negotiating to slightly extend the
scope of FEED to include those changes necessary to make the oxides of
vanadium suitable for making electrolyte for vanadium redox flow batteries, at
higher than standard purity, suitable for bulk storage of renewable energy

·    The total cost estimated by CC6 for the EPC is US$261m. On this
basis, after adding the anticipated cost of items outside the scope of CC6 and
essential non-capex expenditure such as working capital, owner's costs and
insurance, the total projected funding requirement for the Project including a
15% contingency could be expected to be around US$356m

·    At the conclusion of FEED, CC6 will confirm their EPC Cost Estimate.
If this confirmed cost is acceptable to the Company, a binding fixed cost EPC
contract will be entered into

·    CC6 has received a conditional offer from BOC Bank to provide funding
for the Project in the amount of US$221.8m, being 85% of the estimated cost of
US$261m, subject to full project funding and receipt of appropriate guarantees

·    CC6 and the Company are working with Sinosure, the Chinese
state-owned insurance company which commonly provides loan guarantees for
overseas engineering and construction contracts to procure the necessary
financial guarantees

 

 

ENDS

For further information, visit www.ferro-alloy.com or contact:

 

 Ferro-Alloy Resources Limited  Nick Bridgen (CEO) / William Callewaert (CFO)  info@ferro-alloy.com

 Shore Capital                  Toby Gibbs / Lucy Bowden                       +44 207 408 4090

 (Joint Corporate Broker)

 Panmure Liberum Limited        Scott Mathieson / John More                    +44 20 3100 2000

 (Joint Corporate Broker)

 BlytheRay (Financial PR)       Tim Blythe / Megan Ray / Will Jones            +44 20 7138 3204

                                                                               Ferro-Alloy@blytheray.com

 

Notes to Editors

About Ferro-Alloy Resources Limited:

The Company's operations are all located at the Balasausqandiq deposit in
Kyzylordinskoye Oblast in the South of Kazakhstan.

Balasausqandiq is a very large deposit, with vanadium as the principal product
together with the CBS and several by-products. Owing to the nature of the ore,
the capital and operating costs are very much lower than for other vanadium
projects.

The most recent mineral resource estimate for ore-body one (of seven) provided
an Indicated Mineral Resource of 32.9 million tonnes at a mean grade of 0.62%
V(2)O(5) equating to 203,634 contained tonnes of V(2)O(5). In the system of
reserve estimation used in Kazakhstan the resources are estimated to be over
70 million tonnes in ore-bodies 1 to 5, but this does not include the full
depth of ore-bodies 2 to 5, or the remaining ore-bodies which remain
substantially unexplored.

The grade of carbon in the deposit is over 8%. The carbon flows through to the
tailings from where it is concentrated, in a simple low-cost operation, into a
40% carbon product, the CBS, that can be used in place of carbon black as a
reinforcing filler in the making of rubber. A further CBS product has been
identified based on the high-carbon but low-vanadium material within open-pit
the waste material.

The Project will be developed in at least two phases, Phase 1 and Phase 2,
with Phase 1 treating 1.65 million tonnes per year.

There is an existing concentrate processing operation at the site of the
Balasausqandiq deposit. The production facilities were originally created from
a 15,000 tonnes per year pilot plant, which was then expanded and adapted to
recover vanadium, molybdenum and nickel from purchased concentrates.
Alongside this operation, there is a well-equipped laboratory and highly
skilled technical team, who have already developed the technology that is
being built into the Feasibility Study and is further developing and
optimising processes needed for future vanadium and carbon operations. The
plant will operate only when profitable concentrates are available and, when
not operating as a production facility, will operate on an expanded basis as
an R&D centre.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDMZMGMNDDGKZG



            Copyright 2019 Regulatory News Service, all rights reserved