REG - Ferro-Alloy Resrcs. - Strategic Focus on Carbon Black Substitute

Ferro-Alloy ResourcesAnnouncement

02/12/2024 07:00

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RNS Number : 3045O  Ferro-Alloy Resources Limited  02 December 2024

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").

 

2 December 2024

Ferro-Alloy Resources Limited

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

 

Strategic Focus on Carbon Black Substitute Marketing and Sales

Kazakhstan Exempt Offer Bond Programme - Fourth Tranche

 

Ferro-Alloy Resources Limited (LSE:FAR), the vanadium producer and developer
of the large Balasausqandiq vanadium deposit in Southern Kazakhstan, is
pleased to announce a strategic update following the successful carbon black
substitute ("CBS") product marketing study and the sale of a fourth tranche of
the Company's Kazakhstan Exempt Offer Bond Programme (the "Programme") with a
nominal value of US$5 million.

 

Summary

·    In order to pursue the commercial opportunities in CBS revealed by
the Smithers Study, the focus of the Company's operating plant will be
switched to research and development ("R&D") to complete and optimise the
ongoing feasibility study, including the development of markets for the
Company's CBS product.

·    The Smithers Study (see announcement dated 21 November 2024)
estimated the price of the Company's CBS product at US$500 per tonne in the
tyre market and between US$550 - US$600 per tonne in the non-tyre market
(excluding any value attributable to the product's strong sustainability
credentials).

·    As previously announced on 27 July 2023, the Company launched a new
Exempt Offer Bond Programme where all bonds issued under the Programme will be
listed on the Astana International Exchange ("AIX") in Kazakhstan.

·    The first three tranches of bonds have already been sold for US$13
million and the Company has now sold a fourth tranche of bonds (the "Fourth
Tranche") with a nominal value of US$5 million, issued at par.

·    Under the terms of the Programme, US$2 million of headroom remains
for the issue of future tranches by the Company.

 

Research and Development

The focus of the current production facilities will be moved to R&D that
will expedite and optimise the feasibility study and increase marketing
opportunities. The main R&D projects will be:

·    Completion and commissioning of the carbon concentrator, directly
treating ore from the Balasausqandiq deposit, aimed at finalising the
technology and providing materials for the development of markets for the
Company's CBS product

·    Development of processes to achieve high-purity vanadium oxides which
will open marketing opportunities to access higher market prices for future
vanadium production

·    Completion of the process changes and commissioning of the production
of special vanadium oxides needed for the production of battery electrolyte

·    Optimisation of leaching technology, including the patented process
for the sorption and desorption of low-grade vanadium solutions and enhanced
leaching of Balasausqandiq ore to further improve the existing processes
already successfully tested in the current feasibility study work

 

Plant Operations

With the focus now on completion and optimisation of the feasibility study,
the process plant operations will be conducted only when suitably profitable
raw materials are available. Ongoing operating costs are being reduced to
enable the facilities to be operated principally as an expanded R&D
centre. Consequently, quarterly production figures will not be published going
forwards.

 

Commenting on the new strategy and the bond sale, Nick Bridgen, CEO of
Ferro-Alloy Resources said:

"The successful raising of US$5m by the issue of bonds enables us to refocus
all our efforts on expediting and optimising the feasibility study, including
the piloting of the carbon black substitute we announced on 21 November. The
bulk of the feasibility study is now complete and we expect to be able to
announce several updates over the next few months before completion during
 the second quarter of 2025."

 

Fourth Bond Tranche

·    On 29 November 2024, the Company listed and sold the Fourth Tranche
issued under the Programme on the AIX.

·    The net proceeds of $4.7 million from the sale of the Fourth Tranche
will be used to complete the ongoing feasibility study for the Balasausqandiq
project.

·    A summary of the salient terms and conditions of the Fourth Tranche
is as follows:

 

-      ISIN: KZ000003348

-      Specified currency: US Dollars

-      Face value: US$100 (one hundred US dollars)

-      Number of bonds: 50,000 (fifty thousand) units

-      Aggregate principal amount: US$5,000,000 (five million US dollars)

-      Issue date: 29 November 2024

-      Maturity date: 29 November 2027

-      Coupon rate: 13.5% fixed of the nominal value of the bonds issued

-      Frequency of interest payments:  quarterly, 28 February, 29 May,
29 August and 29 November of each year during the circulation period,
commencing on 28 February 2025

-      Coupon basis: 30/360

-      Issue price: 100%

-      Put option: within seven calendar days starting from 29 November
2026 the Company shall, at the option of a bondholder, upon the bondholder
giving relevant notice to the Company within 30 calendar days starting from 29
September 2026, repurchase such bonds at 100% of their nominal value together
with the interest accrued on the date of actual repurchase.

 

·    Trading of the Fourth Tranche will commence on 2 December 2024.

 

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/Will Jones                          +44 20 7138 3204

 Freedom Finance Global PLC     Renat Syzdykov                                 +7 701 766 4865 / ib@ffin.kz

 (Bond Underwriter)

 

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 carbon black substitute ("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 203,364 contained tonnes of vanadium pentoxide
("V(2)O(5)"). In the system of reserve estimation used in Kazakhstan the
reserves are estimated to be over 70m 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.

The Project will be developed in two phases, Phase 1 and Phase 2, with Phase 1
treating 1.65m 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.

 

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