REG - Ferro-Alloy Rsrcs - Trading Update

Ferro-Alloy ResourcesAnnouncement

21/08/2023 07:00

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RNS Number : 8354J  Ferro-Alloy Resources Limited  21 August 2023

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").

 

21 August 2023

Ferro-Alloy Resources Limited

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

 

Trading update

 

Ferro-Alloy Resources Limited (LSE:FAR), the vanadium producer and developer
of the large Balasausqandiq vanadium deposit in Southern Kazakhstan today
provides a trading update in respect of recent developments at the Company's
existing operations.

Trading Update

With all factory upgrades complete, the Company is focussed on increasing
production and recovering more value from each tonne treated, as demonstrated
by Q2 2023's best production quarter to date (announced 17 July 2023), in
terms of both volumes of concentrate treated and tonnes of metal recovered
across all product lines.

As previously announced, the Company had entered into a number of contracts
for the supply of vanadium-bearing concentrates to the Company's existing
processing operation. In order for there to be a constant pipeline of
concentrate available to process, the Company is dependent on the suppliers of
the concentrates fulfilling their contractual obligations, including timely
delivery and quality of concentrate, and on the efficient operation of
transport routes for delivery to Kazakhstan.

In the year to date, one of the Company's major suppliers defaulted on its
monthly supply commitments. Although deliveries from this supplier were still
expected, albeit with a long-delayed start date, the Company responded by
entering into further contracts with other suppliers, both long term and on a
spot basis. The Company was previously satisfied that sufficient deliveries
were scheduled to enable the Company to run at full operating capacity from
mid-July 2023 onwards. However, further unanticipated supplier and transport
delays have been experienced and have impacted output across the first two
months of Q3 2023.

Concentrate supplies already in transit and ready for shipment are sufficient
to allow the resumption of full operations from around the beginning of
September. However, there is a possibility of further delays in the Southern,
trans-Caspian Sea transport routes, caused by Ukraine-related disruption to
other import routes and exacerbated by winter conditions in the Caspian Sea.
There is, therefore, a possibility of some more limited shortfalls affecting
production in Q4 2023. Subject to this, the Company expects the processing and
output of the plant for Q4 2023 to be at or close to planned capacity.

Vanadium prices have remained depressed compared with prices earlier this
year, attributed to the economic slow-down in China resulting in net exports
of vanadium from China, although this is likely to be offset by significant
demand for vanadium for energy storage batteries.

As a result, the Company anticipates that the concentrate supply delays
experienced in Q3 2023, and continuing low vanadium prices, will have a
material impact on the Company's financial results for Q3 2023.

Feasibility study

The feasibility study into the Balasausqandiq deposit, the main value driver
of the Company, is ongoing and reaching the final stages.

The previous Competent Person's Report issued in 2018 showed a combined
(Phases 1 and 2) Net Present Value of US$2 billion. Since then, as previously
announced, the ore resource estimated for the first ore body (OB1) showed an
increase of 23% in contained vanadium compared with the previous estimate and
the ongoing investigation of the possibility to use a concentrate of the
carbon content of the ore as carbon black has produced exciting results. Other
results have been in line with previous expectations.

The Company announced on 27 July 2023 the launch of an exempt offer bond
programme on the Astana International Exchange. So far, a total of US$1.3m has
been raised out of the first US$3m tranche of the programme. The US$1.3m, and
all subsequent funds raised under the first tranche of the programme, will be
used to fund the ongoing feasibility study to completion.

Outlook

The Company believes that both the production and financial results for 2023
are still likely to be significantly better than those achieved during 2022
notwithstanding the concentrate supply issues incurred to date.

The main activity for the remainder of 2023 will continue to be the completion
of the Balasausqandiq feasibility study. Current schedules indicate that the
study will be completed before the end of the year but indications of possible
delays have been received from our consultants which might extend the delivery
of the study into the first quarter of 2024.

 

Nick Bridgen, CEO, commented: "With all plant modifications now complete and
operating efficiently, these supply chain issues are disappointing. That said,
the progress in the feasibility study, the main driver of the Company's value,
is very encouraging and I look forward to updating shareholders on its
results."

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)

 Liberum Capital Limited           Scott Mathieson/Kane Collings                +44 20 3100 2000

 (Joint Corporate Broker)
 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.

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 Project will be developed in two phases, Phase 1 and Phase 2, treating 1m
tonnes per year and an additional 3m tonnes per year. Production will be some
5,600 tonnes of V(2)O(5) from Phase 1, rising to 22,400 tonnes V(2)O(5) after
Phase 2 is commissioned.

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.

The existing operation is located on the same site and uses some of the same
infrastructure as the Project, but is a separate operation which will continue
in parallel with the development and operation of the Project.

 

 

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