TIDMFAR
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 Nick Bridgen (CEO)/William info@ferro-alloy.com
Limited Callewaert (CFO)
Shore Capital Toby Gibbs/Lucy Bowden
(Joint Corporate Broker) +44 207 408 4090
Liberum Capital Limited Scott Mathieson/Kane
(Joint Corporate Broker) Collings +44 20 3100 2000
St Brides Partners
Limited
(Financial PR & IR Catherine Leftley/Ana
Adviser) Ribeiro +44 207 236 1177
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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END
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