REG - Ferro-Alloy Rsrcs - Balasausqandiq Feasibility Study Update

Ferro-Alloy ResourcesAnnouncement

01/07/2022 07:00

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RNS Number : 9289Q  Ferro-Alloy Resources Limited  01 July 2022

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018.

 

1 July 2022

Ferro-Alloy Resources Limited ('FAR' or the 'Company' or the 'Group')

Balasausqandiq Feasibility Study Update

 

Ferro-Alloy Resources Limited (LSE:FAR), the vanadium producer and developer
of the large Balasausqandiq vanadium deposit in Southern Kazakhstan, is
pleased to announce an update on the progress of the expanded feasibility
study (the 'Feasibility Study' or 'Study') for the large Balasausqandiq
vanadium deposit ('Balasausqandiq') .

 

Highlights

 

·    Drilling programme 50% complete

·    Early results of an 800m section of OB1 show a 75% increase in volume
and tonnes

·    Metallurgical recovery into leach of 93% confirmed

·    Acid consumptions of 200 kg per tonne or less indicated.

·    Test results show a 40% carbon product can be recovered at 25% mass
recovery

·    Tests show this product can be used as a substitute for carbon black
in tyre manufacture

 

As previously announced, the scope of the Feasibility Study has expanded
considerably since its inception.  The original study was designed to confirm
the results of previous studies and the operations of the 15,000 tonnes per
year experimental pilot plant from which some 20 tonnes of vanadium pentoxide
(in ammonium metavanadate) was produced. Those studies, described in the
Competent Persons Report of 2018, envisaged project development in two stages,
Phase 1 with an output of 5,600 tonnes of vanadium pentoxide per year,
followed by Phase 2, with output rising to 22,400 tonnes per year. Combined
NPV was estimated at over US$2 billion. Following the investment from Vision
Blue Resources in early 2021, the decision was taken to upgrade and expand the
Study to include Phase 2 and the more significant by-products.

Consequently, the drilling programme has been expanded to cover ore bodies
(OB) 2, 3 and 4 as well as OB1 in order to provide enough reserve to feed the
Phase 2 expansion for a targeted 20 year mine-life.  The Study is now
including all aspects of Phase 2 although the second phase will be announced
later than Phase 1. The Phase 1 study is expected to be completed on the
previously announced timetable by around the middle of 2023.

 

Exploration

 

With support from SRK Consulting (Kazakhstan) Limited, around 10,000m of
drilling has been completed out of an expected total programme of 20,000m.
Confirmation and infill drilling of OB1 has been completed and full analyses
are awaited.

An initial semi-quantitative assessment from field X-Ray
fluorescence measurement has substantially confirmed the previous modelling
for OB1 but a comparison of the results of the new infill drilling over a 600
m strike length using drill sections 200m apart with the previous resource
showed similar geometry but with some thicker mineralised intersections. Based
on this highly positive result, the decision was taken to increase the
drilling density to 200m sections for the remainder of the drilling programme,
leading to the substantial increase in the estimated programme meterage.

 

Sample preparation is being carried out by SGS in Kazakhstan and the first
batches of prepared samples have already been sent to Intertek Genanalysis in
Perth, Australia, for sample analysis. The results are expected in the coming
weeks. Most of the resource drilling is expected to be completed by the end of
Q3 2022 and full sample analyses and modelling should be completed by the end
of the year. However, approximately 25% of OB2 is inaccessible to the
currently operating drill-rigs. The results from this area will be delayed
until more suitable mobile rigs can be mobilised.

Processing

 

The process design and test work is being carried out by SGS Canada Inc. (SGS)
under the direction of Coffey - A TetraTech Company. Under their control, a
test programme has been carried out by SGS to confirm recoveries and other
process parameters originally achieved by the company at its test-plant in
Kazakhstan.  Test work has confirmed leach extraction of vanadium as 93%,
which is consistent with previous results. Acid consumption, subject to
optimisation, was indicated at 200 kg per tonne treated. The very high level
of extraction is possible from the ore at Balasausqandiq because it is
sedimentary in origin, with little iron content, compared with the more
commonly occurring vanadiferrous titano-magnetites from which much lower
recoveries are obtained. Moreover, the extraction is achieved from a low-cost
process involving whole-ore pressure acid leaching in sulphuric acid media,
with no pre-concentration or roasting required.

Sulphuric acid is available at low cost in Kazakhstan as processors use the
substantial amounts of sulphur available from desulphurisation of Kazakhstan's
oil production.  A study is ongoing into whether it is worthwhile to build a
sulphuric acid plant, which would enable the operation to benefit from the
exothermic heat to produce steam and power. This was originally envisaged for
Phase 2.

 

Carbon

 

Two test-programmes are being carried out into the recovery and use of the
carbon which makes up around 14% of the ore at Balasausqandiq.  This carbon
is in a form similar to carbon black. Two main uses have been identified, both
of which make use of the silica that forms the bulk of the tailings
material.  One use is as a flux in smelting of ferro-silicon, and the other
is as a carbon black filler substitute in making rubber - principally tyres.

The programme of test work into the use as a flux in smelting is following and
extending the previous work done by the Company.  Laboratory work on 700kg of
material has been completed by the Karaganda Chemical Metallurgical Institute,
Kazakhstan, and has demonstrated the suitability of this material for
smelting.  A bulk test-programme using two tonnes of material is now being
carried out by the National Centre for Complex Treatment of Mineral Resources
to test the production of ferro-silicon at industrial scale.  Previous work
has indicated that the material replaces around 50% of the carbon required for
making ferro-silicon and 100% of the silica.

The second programme is already largely complete and has demonstrated that a
product of 40% carbon can be made by simple flotation, with a mass recovery of
around 25%. The production of rubber has shown that when the carbon product is
substituted for 20% of the carbon black (grade N550), used as a filler in
making tyres, performance is the same as using 100% carbon black.  Different
types of tyres are made by different manufacturers using different
constituents so the suitability of this material for different types of tyres
from different manufacturers is a matter for those companies to assess. One
tyre manufacturer is currently testing samples as a prelude to commercial
negotiations. Other manufacturers will be approached when the test work is
completed.

The potential output of this concentrate is potentially over 200,000 tonnes
per year from Phase 1, or 800,000 tonnes per year from Phase 1 and 2.  N550
grade of carbon black is a relatively high value form of carbon although as
the Company's concentrate will be a non-standard product it is difficult to
forecast what discount to the N550 carbon black price might result from
commercial negotiations, what level of offtake might be obtained and what
transport costs might be incurred.

The Carbon Black market was estimated to be worth some $19 billion in 2020
worldwide, around 70% of which was used for tyres. The market is estimated to
be growing by some 4.5% per year, driven by increasing applications in various
end-use industries.

 

Carbon Black is usually made by the incomplete combustion of oil or gas, with
only some 40% recovery into product, so the Company's carbon black substitute
will greatly reduce the CO2 associated with carbon black production, and hence
tyre production. This opportunity to reduce emissions using FAR's product is
likely to add to the value, either as a means of allowing tyre producers to
meet stated carbon reduction targets or, more directly, in reducing carbon
emissions payments of our customers.

 

Other

 

By-product studies are ongoing into the recovery of uranium, molybdenum and
potassium alum in accordance with earlier work. Test-work has indicated a low
recovery of rare earth minerals into leach and this aspect of the study has
been discontinued.

A tailings study has commenced, with evaluation of design options and
potential facility locations.  Tailings are comprised principally of the
carbon and silica remaining after leaching, so are subject to recoveries as
carbon products described above, but even the remaining tailings have
potential commercial uses.  The tailings design therefore needs to
accommodate the various revenue-producing options.

A geotechnical programme is due to commence later this month and contractor
proposals are being considered for the open pit hydrogeology work. Geophysical
fieldwork for the process water supply borefield is also due to commence
shortly.

 

 

**ENDS**

For further information, visit   www.ferro-alloy.com
(http://www.ferro-alloy.com/)    or   contact:

 

 Ferro-Alloy Resources Limited     Nick Bridgen (CEO)                info@ferro-alloy.com (mailto:bridgen@ferro-alloy.com)

 Shore Capital                     Toby Gibbs/John More              +44 207 408 4090

 (Joint Corporate Broker)

 Liberum Capital Limited           Scott Mathieson/Lydia Zychowska

 (Joint Corporate Broker)                                            +44 20 3100 2000

 St Brides Partners Limited        Catherine Leftley/Ana Ribeiro     +44 207 236 1177

 (Financial PR & IR Adviser)

 

About Ferro Alloy Resources Limited:

The Company's operations are all located at the Balasausqandiq deposit in
Kyzylordinskoye Oblast in the South of Kazakhstan. Currently the Company has
two main business activities:

a) the high grade Balasausqandiq vanadium project (the "Project"); and

b) an existing vanadium concentrate processing operation (the "Existing
Operation")

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

A reserve on the JORC 2012 basis has been estimated only for the first
ore-body (of five) which amounts to 23 million tonnes, not including the small
amounts of near-surface oxidised material which is in the Inferred resource
category. 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.

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 adapted to treat
concentrates and expanded. Further expansion is being undertaken which is
expected to result in annualised production capacity of around 1,500 tonnes of
contained vanadium pentoxide plus significant by-product molybdenum.

The strategy of the Company is to develop both the Project and the Existing
Operation in parallel. Although they are located on the same site and use some
of the same infrastructure, they are separate operations.

 

 

 

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