26 September 2024
Ferro-Alloy Resources
Limited
("Ferro-Alloy" or "the
Company" or "the Group")
Interim Results for the six
months ended 30 June 2024
and
Carbon concentrate and
feasibility study update
Ferro-Alloy Resources Limited
(LSE:FAR), the vanadium producer and developer of the large
Balasausqandiq vanadium deposit in Southern Kazakhstan, announces
its unaudited interim results for the six months ended 30 June 2024
and provides an update on the results from the testing completed on
its carbon concentrate and the Balasausqandiq feasibility
study.
Overview
Carbon
Concentrate
·
Results from the testing of the Company's carbon
concentrate to be produced from the tailings of the Balasausqandiq
ore have confirmed the suitability of the concentrate for use in
tyre rubber manufacture and other carbon black based rubber
applications.
·
The testing has shown that the carbon concentrate
can be successfully used as a partial substitute for conventional
carbon black filler in a passenger car tyre sidewall compound
formulation.
·
A marketing report quantifying the value
proposition of the concentrate is being finalised.
Feasibility
Study
·
Feasibility study for Phase 1 is
ongoing:
o Current focus of the study is on the optimisation of the
planned tailings storage facility. Site selection is in progress
and preliminary capital estimates have been completed on a staged
construction basis to refine initial capital spend.
o Design capacity of the of the Phase 1 process plant has been
increased to 1.65m tonnes throughput per year and the comminution
circuit design work has been completed.
o Reagent optimisation programme commenced to quantify
improvements to the project's expected operational
expenditure.
o In order to accommodate the increased design capacity of the
Phase 1 process plant and the reagent optimisation programme, the
Company now expects the feasibility study to be published during Q2
2025.
Operations
·
The Plant operated well during the period.
Production in H1 2024 was slightly lower than H1 2023 due to lower
overall grades of vanadium and molybdenum contained within the
catalysts processed.
·
Commissioned two new drying ovens which allow the
conversion of ammonium metavanadate by disassociation into vanadium
pentoxide which commands better pricing. The Company is evaluating
plans to acquire the equipment to produce vanadium pentoxide flake
to access a larger market.
·
Test processing of the nickel-rich residues held
at the plant site on a commercial scale did not sufficiently
replicate the results achieved in the laboratory and consequently
the plant will revert to processing bought-in catalysts during Q4
2024. This decision is partly driven by low metal prices. The Plant
may resume treating the residues if metal product prices
recover.
·
Research and development are ongoing to determine
the suitability of the nickel-rich residues for the production of
ferro-nickel.
Financial
·
Total revenues of US$2.1m for the period (H1
2023: US$3.3m) reflect the significant decrease in the price of
vanadium pentoxide between the two reporting periods.
·
Overall loss for the period of US$3.99m (H1 2023:
loss of US$1.53m).
·
Cash balance of US$2.5m at the period end and
US$1.1m as at 20 September 2024.
Corporate
·
During the period, the Company listed and sold a
third tranche of bonds with a nominal value of US$5m under the
terms of the Kazakhstan Bond Programme on the AIX.
Nick Bridgen, CEO of Ferro-Alloy Resources
said:
"The success of the carbon test work programme has confirmed
the tremendous value of this product in the manufacture of tyres
and in the rubber industry generally. This will be factored into
the feasibility study which will also include the increased
throughput and reagent optimisation programme.
The current vanadium price is exceptionally low, principally
caused by the slow-down of construction in China. This is affecting
current results, but the long-term forecasts continue to show a
deficit of world production as vanadium redox flow batteries ramp
up and China recovers. Historically, when a deficit arises, the
price moves up strongly."
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
(Joint Corporate
Broker)
Panmure Liberum Limited
(Joint Corporate
Broker)
|
Toby Gibbs/Lucy Bowden
Scott Mathieson/John
More
|
+44 207 408 4090
+44 20 3100 2000
|
|
St Brides Partners Limited
(Financial PR & IR
Adviser)
|
Ana Ribeiro / Charlotte
Page
|
+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%
V2O5 equating to 203,364 contained tonnes of
vanadium pentoxide ("V2O5"). 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, 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.
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.
Interim Management
Report
The Company is engaged primarily
in carrying out a feasibility study into the giant Balasausqandiq
vanadium project which is now entering the final stages.
Concurrently, the Company
continues to operate a small-scale process plant to produce
vanadium, molybdenum and nickel from purchased
concentrates.
Balasausqandiq feasibility study
Carbon black substitute
concentrate
The Company's specialist rubber
consultants in the UK have completed testing on the carbon black
substitute concentrate and the results have confirmed the
suitability of the concentrate for use in tyre rubber manufacture
and other carbon black based rubber applications.
The testing undertaken has shown
that the carbon concentrate to be produced by the Company from the
Balasausqandiq ore tailings can be successfully used as a partial
substitute for conventional carbon black filler in a passenger car
tyre sidewall compound formulation. The results show that with a
substitution of up to 10% it was possible to produce compounds with
similar physical properties to that made with a control formulation
using 100% N660 carbon black, the most commonly used grade of
carbon black for tyre sidewalls. Tyres made with this blended
material would, therefore, be expected to deliver similar
performance.
Whilst the data did show that the
carbon concentrate, when substituted at levels greater than 10%,
produced slightly less of a reinforcing effect in the rubber
compound than conventional carbon black, some potential advantages
in physical properties were identified which could lead to
improvements in tyre rolling resistance and sidewall damage
resistance.
Specialist marketing consultants
are finalising their report which will advise on marketing and the
appropriate pricing of the Company's material.
Processing
The feasibility study has
progressed with a primary focus on the optimisation of the tailings
storage facility by SRK Consulting (Kazakhstan) Limited. Site
selection has continued and a final geophysical survey is
underway. Preliminary capital estimates have been completed
with a focus on staging the construction of the facility to
optimise the initial capital spend.
As soon as the final carbon
concentrate and vanadium market reports have been received, SRK
will commence the mine planning study.
As communicated last year, the
2023 ore reserve that was estimated for Ore-Body 1 of the
Balasausqandiq deposit was 35.4% larger than previously estimated,
which lead to a review of the appropriate size of the Phase 1
development plan. The Company has now applied to the Ministry of
Industry and Construction of the Republic of Kazakhstan for an
amendment to the Company's Subsoil Use Agreement which will have
the effect of increasing the annual tonnage to be mined during the
life of Phase 1 of the project to 1.65 million tonnes per year
(including mining dilution) and to defer certain amounts to be
mined prior to and during commissioning. Ongoing discussions with a
Working Committee of the Ministry have required re-submission of
certain documents relating to environmental provisions, future site
restoration plans and industrial safety, prior to
approval.
In anticipation of approval, the
Company has increased the design capacity of Phase 1 of the process
plant to 1.65 million tonnes throughput per year. The upgraded
design is being progressed by Tetra Tech Limited and the
comminution circuit aspects of the design have been
completed.
Concurrently, the Company has
engaged SGS Canada Inc to conduct a reagent optimisation programme
to identify potential improvements to the metallurgical regimes
identified in the previously completed metallurgical programme to
take account of current reagent prices and delivery
costs.
In addition to these items, the
main components of the study currently underway include the
ecological study, estimate of capital costs and financial
evaluation.
In order to accommodate the
increased design capacity of the Phase 1 process plant and the
reagent optimisation programme, the Company now expects the
feasibility study to be published during Q2
2025.
Operations review
The existing
operation
The Company's existing process
plant operated well during the period. However, production was
slightly lower than the same period in 2023 due to lower overall
grades of vanadium and molybdenum contained within the concentrates
processed.
During the period, two new drying
ovens were commissioned which allow the Company to convert a
proportion of its production into vanadium pentoxide by
disassociation of ammonium metavanadate ("AMV"). Currently, the
vanadium pentoxide produced by the plant is in the form of powder
but the Company plans to acquire equipment for the production of
vanadium pentoxide flakes, opening up a larger and slightly higher
priced market. The Company has also started to expand the
wet-tailings pond to increase pond capacity by almost 50%,
potentially allowing an increase in secondary vanadium and
molybdenum production from the solutions held in the pond as well
as improving product purity.
The Company has previously sold
the residues from the treatment of catalysts as a low grade nickel
concentrate but, owing to low nickel prices and high transport
costs, the Company has chosen to stockpile this material while a
process for its further treatment could be developed by the
Company's technical department. This process has since been
developed allowing a significant amount of the remaining vanadium
and molybdenum to be extracted from the residues, raising the
overall extraction of these metals from catalysts to very high
levels, as well as enriching the nickel content in the remaining
residues so that they can be more cost-effectively transported and
achieve a higher price. Following good laboratory test results,
test processing at a commercial scale during Q3 2024 did not
sufficiently replicate the results achieved in the laboratory and
consequently the plant will revert to processing bought-in
catalysts during Q4 2024. In the event that global metal prices
recover to levels that would make the commercial processing of the
nickel residues profitable the plant may resume treating the
residues either instead of or concurrently with bought-in
catalysts.
Research and development work by
our technical department is ongoing to determine whether the
Company can process the upgraded nickel concentrates to produce
ferro-nickel.
Research and
development
The Company is participating in
three grant-funded research and development projects in Kazakhstan
after competitively tendering projects for awards for the most
promising opportunities for commercialisation of scientific and
scientific-technical activities.
As previously announced, one
project is aimed at producing and commercialising mixed vanadium
oxides suitable for the production of electrolyte for vanadium
redox flow batteries. This project is in conjunction with the
Satbayev University in Almaty, Kazakhstan where the electrolytes
are produced from Company oxides and tested in a vanadium redox
flow battery, following which the agreed plan is for the commercial
sale of three tonnes of mixed oxides. The Company plans to position
itself to be able to continue supplying into this market on a fully
commercial basis according to demand.
A second project is in association
with the Kazakhstan National Engineering Academy to build a
pilot-scale plant at the existing plant site, in advance of the
construction of the mine, to produce a carbon concentrate direct
from the Balasausqandiq ore, rather than from the tailings as noted
above, and to develop commercial applications.
A third project is working with
the Satbayev University on an improved analytical-chemical process
in the treatment of ore.
The Company also cooperates with
the Satbayev University to offer work experience to promising
students, with opportunities for continuing work with the
Company. Not only does this enrich the student experience at
the Satbayev University but it also gives the Company a pathway to
finding high-quality recruits.
Production
During the period the plant
processed 19.4% more tonnes of catalyst compared to the prior year.
However, as noted above, the overall metal grades of the catalysts
treated were less than those during 2023 resulting in 2% and 32%
less vanadium and molybdenum production, respectively. The plant
produced 11.7 tonnes more nickel during the period in comparison to
2023, representing a 19.3% increase.
|
|
2024
|
2023
|
2024
|
2023
|
2024
|
2023
|
|
Quarter
|
Tonnes of vanadium pentoxide*
|
Tonnes of vanadium
pentoxide*
|
Tonnes of molybdenum**
|
Tonnes of molybdenum**
|
Tonnes of nickel***
|
Tonnes of nickel***
|
|
Q1
|
81.6
|
31.3
|
7.1
|
6.5
|
33.4
|
9.7
|
|
Q2
|
87.6
|
141.4
|
6.9
|
14.1
|
38.8
|
50.8
|
|
H1
|
169.2
|
172.7
|
14.0
|
20.6
|
72.2
|
60.5
|
* partly
contained in AMV
** contained in
ferro-molybdenum
*** contained in nickel
concentrate
Outlook
Current vanadium prices, as
detailed below, are exceptionally low and at a level where it is
difficult to forecast overall Group profitability notwithstanding
the successful operation of the current process plant and the
developments that are being achieved in new processes and improved
operations. Nevertheless, the plant is capable of generating a
significant contribution to the Group's current overheads which
would be incurred as it completes the feasibility study in any
case.
Recent monthly average prices of
vanadium pentoxide have been in the bottom 4% of such monthly
averages, adjusted for inflation, over the last 24 years. Vanadium
prices have been impacted by the slow-down in Chinese construction
and the sale of Russian product into China at discounted prices.
These conditions are not expected to change in the short term but,
in the longer term, they must do so to prevent large company
closures and reductions in capacity. Significant tonnages are going
to be required for planned large-scale vanadium redox flow
batteries, most notably in China, and recently announced changes to
Chinese re-bar standards will potentially also act to boost demand.
Historically, the vanadium price has been volatile and shortages
rapidly translate into rising prices, sometimes to extremely high
levels.
Meanwhile, the process plant
operations are now running smoothly, and the new equipment,
products and increased pond and drying capacity will put the
Company in a good position to capitalise on rising
prices.
Corporate
During the period, the Company
listed and sold a third tranche of bonds with a nominal value of
US$5m under the terms of the Kazakhstan Bond Programme on the
AIX.
Product prices in the period
Vanadium
Pentoxide
At the start of 2024, the price of
vanadium pentoxide was around US5.75/lb, after which the price
fluctuated within a band of US$5.00/lb to US$6.00/lb for the
entirety of the reporting period under consideration. As at 20
September 2024, the price of vanadium pentoxide was
US$5.00/lb.
Ferro-Molybdenum
At the start of 2024, the price of
ferro-molybdenum was around US$48/kg, after which it remained at a
similar level until the end of April. From May onwards the price
fluctuated within a band of US$51/kg to US$55/kg until the end of
the reporting period. As at 20 September 2024, the price of
ferro-molybdenum was US$50/kg.
Earnings and cash flow
The Group generated total revenues
of US$2.1m for the period compared to US$3.3m for the first six
months of 2023, representing a reduction in overall revenue of
US$1.2m. The reduction in revenue reflects the significant decrease
in the price of vanadium pentoxide between the two reporting
periods (the average price of vanadium pentoxide during the first
six months of 2023 was US$9.06/lb in comparison to US$5.58/lb in
2024). Additionally, the Group has undertaken a number of tolling
contracts during the period instead of processing its own bought-in
concentrates.
The cost of sales for the period
under review was US$3.6m in line, given the volumes and nature of
concentrates processed, with the first six months of 2023 (2023:
US$3.6m).
Administrative expenses for the
period were US$1.8m (2023: US$1.3m) representing an increase of
US$0.5m mainly attributable to broker commission for the issue of
the third tranche of bonds noted above and increased salary
costs.
The Group made a loss before and
after tax of US$3.99m (2023: loss of US$1.53m).
Net cash outflows used in
operating activities were US$2.6m (2023: cash outflow of US$1.0m).
Net cash used in investing activities during the period was US$1.1m
(2023: cash outflow of US$2.3m). Net cash inflow from financing
activities was US$4.5m (2023: cash outflow of US$1.1m) representing
the proceeds received from the sale of the third tranche of
bonds.
Balance sheet review
At the period end, non-current
assets totalled US$14.1m (2023: US$11.9m) reflecting the continued
capitalisation of expenses incurred by the Group on the development
of the Balasausqandiq feasibility study (as an exploration and
evaluation asset).
Current assets, excluding cash
balances, totalled US$5.1m at the period end compared to US$5.0m
for the prior period.
The Group held an aggregate cash
balance of US$2.5m at the period end (2023: US$0.6m) and US$1.1m as
at 20 September 2024. The board of directors is currently
considering the options available to the Group to increase cash
levels to ensure the completion of the feasibility study and the
support of the ongoing processing operations. An option available
to the board would be the issue and sale of a further trance of
bonds under the Kazakhstan Bond Programme.
The Group held non-current
liabilities of US$12.4m at the period end (2023: US$ nil)
representing the value of the Company's bonds sold since the
inception of the Kazakhstan Bond Programme.
Current liabilities at the period
end were US$3.9m (2023: US$3.0m) comprising of trade payables and
accrued bond interest.
Environmental, social and governance
Both the existing operation and
the planned process plant for Balasausqandiq will have a strongly
positive environmental impact. The vanadium from production will
benefit energy storage in both vanadium redox flow batteries, the
front-running technology for fixed ground long-term energy storage,
but also potentially in certain technologies for mobile batteries
used in electric vehicles.
The CO2 emissions
created by our production at Balasausqandiq are expected to be a
fraction of most other producers which generally require
concentration and high-temperature roasting to liberate the
vanadium. The carbon concentrate which we plan to market as a
replacement for carbon black is produced without burning
hydrocarbons, as is the usual production process.
Description of principal risks, uncertainties and how they
are managed
(a) Current processing
operations
Current processing operations make
up a small part of the Company's expected future value but are
intended to provide useful cash flows in the near term and allow
the Group to gain valuable experience of the vanadium industry. The
principal risks of this operation are the prices of its products
(vanadium, molybdenum and nickel), availability of vanadium-bearing
concentrates and the efficiency of recovery of products from those
concentrates.
The Group is constantly reviewing
the market opportunities for supplies of vanadium-bearing
concentrates from reliable suppliers that can deliver concentrates
on a timely basis in order to ensure that the Group does not incur
production shortfalls leading to reduced revenues. The Group aims
to extract all the useful components of the raw materials so that
ultimately no residues remain on site and so that the maximum value
is obtained from each tonne treated. By these means, we aim
to be one of the most efficient and lowest cost secondary vanadium
treatment plants so that our competitive position reduces the
danger of high prices for raw materials making the operation
uneconomic.
(b) Balasausqandiq project
The Balasausqandiq project will be
a much larger contributor to the Company's value than the current
processing operations and is primarily dependent on long-term
vanadium prices.
The project is also dependent on
raising finance to meet projected capital costs (see below) and the
successful construction and commissioning of the project's proposed
mine processing facilities. It is not unusual for new mining
projects to experience unforeseen problems, incur unexpected costs
and be exposed to delays during construction, commissioning, and
initial production, all of which could have a material adverse
effect on the Company's operations and financial position. The
Company has taken steps to mitigate such potential adverse effects
by engaging globally recognised engineers and consultants to assist
with the development and design of the key elements of the project
in addition to the Group's own highly qualified
workforce.
(c) Geopolitical
situation
The ongoing invasion of Ukraine by
Russia is not directly impacting the Group's operations although
current low vanadium pentoxide prices are, in part, likely being
driven by Russian producers selling at significant discounts to
China. The continued main risk of the conflict is to the Group's
import and export transport routes, many of which involve transit
through Russia. Whilst these are currently operating without issue,
sanctions have been made against Russian and Belarusian vehicles
transiting through Europe (but not against vehicles registered in
other jurisdictions in the region such as Kazakhstan). There is a
risk that further sanctions might prevent transit through Russia.
The Company continues to review alternative transit routes for raw
material imports and product exports through the West of
Kazakhstan, either via the Caspian Sea or overland south of the
Caspian Sea. Routes to China are working normally.
With respect to the global
sanctions imposed on certain Russian entities and individuals, the
Group monitors the implications of those sanctions on the Group's
trading activities on an ongoing basis.
(d) Financing risk
The Balasausqandiq project will
require substantial funds to be raised in debt and equity which
will be dependent upon market conditions at the time and the
successful completion of the Phase 1 feasibility study.
In March of 2021 the Company
signed an investment agreement with Vision Blue Resources Limited
("Vision Blue"). Under the terms of this agreement and in addition
to Vision Blue's participation in the 2022 equity fundraise,
investments totalling US$14.3m have already been made and Vision
Blue has the right to subscribe a further US$2.5m at the original
deal price of 9 pence per share at any time up to two months after
the announcement of the Phase 1 feasibility study. Vision Blue also
has further options to subscribe up to US$30m at higher prices to
partially finance the construction of the project.
The favourable financial and other
characteristics of the project determined by studies so far
completed give the Directors confidence that the outcome of the
Phase 1 feasibility study will be successful. Initial discussions
with potential providers of debt finance have been
encouraging.
(e) Climate change risk
The Group has not identified any
particular climate change related scenarios that would likely have
a significant impact on the Balasausqandiq project or the existing
operation. The existing operation already functions in an
environment that is subject to extreme weather conditions and is,
therefore, considered to have a strong resilience to existing and
future climate-related scenarios.
(f) Risks associated with the developing
nature of the Kazakh economy
According to the World Bank,
Kazakhstan has transitioned from lower-middle-income to
upper-middle-income status in less than two decades. Kazakhstan's
regulatory environment has similarly developed and the Company
believes that the period of rapid change and high risk is coming to
an end. Nevertheless, the economic and social regulatory
environment continues to develop and there remain some areas where
regulatory risk is greater than in developed economies.
(g) Commodity price risk:
As already noted above, the
success of the Company is dependent upon the long-term prices of
the products to be produced by the planned mine processing
facilities. As a result of there being no formally established
trading markets for the Company's principal products from the
project, there is a risk that price fluctuations and volatility for
these products may have an adverse impact on the Company's future
financial performance.
Directors' Responsibility Statement
We confirm that to the best of our
knowledge:
a. the condensed
set of unaudited financial statements which have been prepared in
accordance with IAS 34 'Interim Financial Reporting' give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the Company and its undertakings included in the
consolidation as a whole, as required by DTR 4.2.4R;
b. the interim
management report includes a fair review of the information
required by DTR 4.2.7R; and
c. the
interim management report includes a fair review of the information
required by DTR 4.2.8R.
This interim financial report for
the six months ended 30 June 2024 has been approved by the Board
and signed on its behalf by:
William Callewaert
Director
25 September 2024
Ferro-Alloy Resources
Limited
Condensed unaudited Statement of Profit or Loss and Other
Comprehensive Income
for the six months ended 30 June 2024
|
|
Note
|
Unaudited
six-month
period ended
30 June 2024
$000
|
|
Unaudited
six-month period ended 30 June 2023 $000
|
|
Audited year
ended
31 December 2023
$000
|
|
|
Revenue from customers (pricing at
shipment)
|
2
|
2,170
|
|
3,410
|
|
6,164
|
|
|
Other revenue
(adjustments to price after delivery and fair value
changes)
|
2
|
(21)
|
|
(96)
|
|
(448)
|
|
|
Total revenue
|
2
|
2,149
|
|
3,314
|
|
5,716
|
|
|
Cost of sales
|
3
|
(3,622)
|
|
(3,565)
|
|
(6,769)
|
|
|
Gross (loss) / income
|
|
(1,473)
|
|
(251)
|
|
(1,053)
|
|
|
Other income
|
4
|
7
|
|
13
|
|
20
|
|
|
Administrative expenses
|
5
|
(1,850)
|
|
(1,337)
|
|
(3,371)
|
|
|
Distribution expenses
|
|
(58)
|
|
(66)
|
|
(193)
|
|
|
Other expenses
|
6
|
(24)
|
|
(47)
|
|
(471)
|
|
|
Loss from operating activities
|
|
(3,398)
|
|
(1,688)
|
|
(5,068)
|
|
|
Net finance (cost) /
income
|
8
|
(593)
|
|
158
|
|
(183)
|
|
|
Loss before income tax
|
|
(3,991)
|
|
(1,530)
|
|
(5,251)
|
|
|
Income tax
|
|
-
|
|
-
|
|
-
|
|
|
Loss for the period
|
|
(3,991)
|
|
(1,530)
|
|
(5,251)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) / income
Items that may be
reclassified subsequently to profit or loss
|
|
|
|
|
|
|
|
Exchange differences arising on
translation of foreign operations
|
|
(761)
|
|
496
|
|
39
|
|
|
Total comprehensive loss for the period
|
|
(4,752)
|
|
(1,034)
|
|
(5,212)
|
|
|
Loss per
share (basic and diluted)
|
16
|
(0.008)
|
|
(0.003)
|
|
(0.012)
|
|
These condensed unaudited
financial statements were approved by the directors on 25 September
2024 and signed by:
_____________________________
William Callewaert
Director
|
Ferro-Alloy Resources
Limited
Condensed unaudited Statement of Financial Position
for the six months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Unaudited
30 June 2024
$000
|
|
Unaudited
30 June 2023
$000
|
|
|
|
Audited 31 December
2023
$000
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
9
|
|
5,404
|
|
6,072
|
|
|
|
5,951
|
|
Exploration and evaluation
assets
|
10
|
|
7,836
|
|
5,581
|
|
|
|
7,145
|
|
Intangible assets
|
11
|
|
20
|
|
20
|
|
|
|
20
|
|
Prepayments
|
14
|
|
853
|
|
185
|
|
|
|
888
|
|
Total non-current assets
|
|
|
14,113
|
|
11,858
|
|
|
|
14,004
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
12
|
|
1,800
|
|
2,015
|
|
|
|
1,983
|
|
Trade and other
receivables
|
13
|
|
2,152
|
|
1,892
|
|
|
|
1,316
|
|
Prepayments
|
14
|
|
1,166
|
|
1,115
|
|
|
|
762
|
|
Cash and cash
equivalents
|
15
|
|
2,528
|
|
606
|
|
|
|
1,952
|
|
Total current assets
|
|
|
7,646
|
|
5,628
|
|
|
|
6,013
|
|
Total assets
|
|
|
21,759
|
|
17,486
|
|
|
|
20,017
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
55,027
|
|
50,827
|
|
|
|
55,027
|
|
Convertible loan notes
|
16
|
|
-
|
|
4,019
|
|
|
|
-
|
|
Additional paid-in
capital
|
|
|
397
|
|
397
|
|
|
|
397
|
|
Share-based payment
reserve
|
|
|
20
|
|
5
|
|
|
|
20
|
|
Foreign currency translation
reserve
|
|
|
(4,883)
|
|
(3,665)
|
|
|
|
(4,122)
|
|
Accumulated losses
|
|
|
(45,097)
|
|
(37,204)
|
|
|
|
(41,106)
|
|
Total equity
|
|
|
5,464
|
|
14,379
|
|
|
|
10,216
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
17
|
|
12,396
|
|
-
|
|
|
|
7,393
|
|
Provisions
|
|
|
30
|
|
33
|
|
|
|
31
|
|
Total non-current liabilities
|
|
|
12,426
|
|
33
|
|
|
|
7,424
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
18
|
|
3,636
|
|
3,074
|
|
|
|
2,141
|
|
Deferred income
|
19
|
|
-
|
|
-
|
|
|
|
102
|
|
Interest payable
|
17
|
|
233
|
|
-
|
|
|
|
134
|
|
Total current liabilities
|
|
|
3,869
|
|
3,074
|
|
|
|
2,377
|
|
Total liabilities
|
|
|
16,295
|
|
3,107
|
|
|
|
9,801
|
|
Total equity and liabilities
|
|
|
21,759
|
|
17,486
|
|
|
|
20,017
|
10 Exploration and evaluation
assets
The Group's exploration and
evaluation assets relate to the Balasausqandiq deposit. During the
six month period ended 30 June 2024, the Group capitalised the
costs of technical design, sample test-work and project management
costs, all relating to the Company's Stage 1 feasibility study. As
at 30 June 2024, the carrying value of exploration and evaluation
assets was US$7.8m (2023: US$5.6m).
|
|
Unaudited
six-month
period ended
30 June 2024
$000
|
|
Unaudited
six-month
period ended
30 June 2023
$000
|
|
Audited
year ended
31 December 2023
$000
|
|
Balance at 1 January
|
7,145
|
|
4,208
|
|
4,208
|
|
Additions (Stage 1 feasibility
study)
|
1,002
|
|
1,481
|
|
2,931
|
|
Foreign currency translation
difference
|
(311)
|
|
(108)
|
|
6
|
|
Balance at 30 June / 31 December
|
7,836
|
|
5,581
|
|
7,145
|
11 Intangible
assets
|
|
Mineral
rights
$000
|
|
Patents
$000
|
|
Computer
software
$000
|
|
Total
$000
|
|
Cost
|
|
|
|
|
|
|
|
|
Balance at 1 January
2023
|
83
|
|
32
|
|
3
|
|
118
|
|
Additions
|
-
|
|
1
|
|
-
|
|
1
|
|
Foreign currency translation
difference
|
1
|
|
1
|
|
-
|
|
2
|
|
Balance at 30 June 2023
|
84
|
|
34
|
|
3
|
|
121
|
|
Balance at 31 December 2023
|
84
|
|
34
|
|
3
|
|
121
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January
2024
|
84
|
|
34
|
|
3
|
|
121
|
|
Additions
|
-
|
|
1
|
|
-
|
|
1
|
|
Foreign currency translation
difference
|
(3)
|
|
(1)
|
|
-
|
|
(4)
|
|
Balance at 30 June 2024
|
81
|
|
34
|
|
3
|
|
118
|
|
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
|
|
|
Balance at 1 January
2023
|
83
|
|
13
|
|
3
|
|
99
|
|
Amortisation for the
year
|
-
|
|
1
|
|
-
|
|
1
|
|
Foreign currency translation
difference
|
1
|
|
-
|
|
-
|
|
1
|
|
Balance at 30 June 2023
|
84
|
|
14
|
|
3
|
|
101
|
|
Balance at 31 December 2023
|
84
|
|
14
|
|
3
|
|
101
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January
2024
|
84
|
|
14
|
|
3
|
|
101
|
|
Amortisation for the
year
|
-
|
|
1
|
|
-
|
|
1
|
|
Foreign currency translation
difference
|
(3)
|
|
(1)
|
|
-
|
|
(4)
|
|
Balance at 30 June 2024
|
81
|
|
14
|
|
3
|
|
98
|
|
|
|
|
|
|
|
|
|
|
Carrying
amounts
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
-
|
|
19
|
|
-
|
|
19
|
|
At
30 June 2023
|
-
|
|
20
|
|
-
|
|
20
|
|
At
31 December 2023
|
-
|
|
20
|
|
-
|
|
20
|
|
At 30 June 2024
|
-
|
|
20
|
|
-
|
|
20
|
|
|
|
|
|
|
|
|
| |
During the six months ended 30 June 2024 and 2023,
amortisation of intangible assets was charged to administrative
expenses.
12
Inventories
|
|
|
Unaudited
30 June 2024
$000
|
|
Unaudited
30 June 2023 $000
|
|
Audited 31 December 2023
$000
|
|
|
Raw materials and
consumables
|
|
815
|
|
1,422
|
|
1,456
|
|
|
Finished goods
|
|
975
|
|
584
|
|
517
|
|
|
Work in progress
|
|
10
|
|
9
|
|
10
|
|
|
|
|
1,800
|
|
2,015
|
|
1,983
|
|
|
|
|
|
|
|
|
|
|
During the six months ended 30
June 2024,
inventories expensed to profit and loss
amounted to US$2.4m (six months period ended 30
June 2023:US$2.7m).
13 Trade and other
receivables
|
Current
|
Unaudited
30 June
2024
$000
|
|
Unaudited
30 June
2023
|
|
Audited 31 December
2023
|
|
|
|
$000
|
|
$000
|
|
Trade receivables from third
parties
|
1,215
|
|
920
|
|
264
|
|
Due from employees
|
20
|
|
55
|
|
66
|
|
VAT receivable
|
918
|
|
920
|
|
1,049
|
|
Other receivables
|
63
|
|
64
|
|
4
|
|
|
2,216
|
|
1,959
|
|
1,383
|
|
Expected credit loss provision for
receivables
|
(64)
|
|
(67)
|
|
(67)
|
|
|
2,152
|
|
1,892
|
|
1,316
|
The expected credit loss provision
for receivable relates to credit impaired receivables which are in
default and the Group considers the probability of collection to be
remote given the age of the receivable and default
status.
14
Prepayments
|
|
Unaudited
30 June 2024
$000
|
|
Unaudited
30 June 2023
$000
|
|
Audited 31 December 2023
$000
|
|
Non-current
Prepayments
|
853
|
|
185
|
|
888
|
|
|
853
|
|
185
|
|
888
|
|
Current
|
|
|
|
|
|
|
Prepayments for goods and
services
|
1,166
|
|
1,115
|
|
762
|
|
|
1,166
|
|
1,115
|
|
762
|
15 Cash and cash
equivalents
|
|
Unaudited
30 June 2024
$000
|
|
Unaudited
30 June 2023
$000
|
|
Audited 31 December 2023
$000
|
|
Cash at current bank
accounts
|
551
|
|
592
|
|
1,488
|
|
Cash at bank deposits
|
1,976
|
|
13
|
|
417
|
|
Petty cash
|
1
|
|
1
|
|
47
|
|
Cash and cash equivalents
|
2,528
|
|
606
|
|
1,952
|
16
Equity
(a) Share
capital
Number of shares unless otherwise
stated
Ordinary
shares
|
|
Unaudited
30 June
2024
|
|
Unaudited
30 June
2023
|
|
Audited 31 December
2023
|
|
Par value
|
-
|
|
-
|
|
-
|
|
Outstanding at beginning of
year
|
483,222,238
|
|
449,702,150
|
|
449,702,150
|
|
Shares issued
|
-
|
|
-
|
|
33,520,088
|
|
Outstanding at end of period
|
483,222,238
|
|
449,702,150
|
|
483,222,238
|
Ordinary shares
All shares rank equally. The
holders of ordinary shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per share
at meetings of the Company.
The Company did not issue any
ordinary shares during the period. During
2023, the convertible loan notes held by Vision Blue were converted
into equity under the terms of the Convertible Loan Note agreement
in place between the Company and Vision Blue. Further information
can be found in the Company's 2023 Annual Report.
Reserves
Share capital: Value of shares
issued less costs of issuance.
Convertible loan notes: Further
investment rights at issue price.
Additional paid in capital:
Amounts due to shareholders which were waived.
Share-based payment: Share options
issued during the period.
Foreign currency translation
reserve: Foreign currency differences on retranslation of results
from functional to presentational currency and foreign exchange
movements on intercompany balances considered to represent net
investments which are considered as permanent equity.
Accumulated losses: Cumulative net
losses.
(b)
Dividends
No
dividends were declared for the six months ended 30 June 2024
(2023: US$ nil).
(c)
Loss per share
(basic and diluted)
The calculation of basic and
diluted loss per share has been based on the loss attributable to
ordinary shareholders and the weighted-average number of ordinary
shares outstanding. There are no convertible bonds and convertible
preferred stock, so basic and diluted losses are equal.
(i) Loss
attributable to ordinary shareholders (basic and
diluted)
|
|
Unaudited
six-month
period ended
30 June 2024
$000
|
|
Unaudited
six-month
period ended
30 June 2023
$000
|
|
Audited year ended
31 December 2023
$000
|
|
Loss for the period, attributable
to owners of the Company
|
(3,991)
|
|
(1,530)
|
|
(5,251)
|
|
Loss attributable to ordinary shareholders
|
(3,991)
|
|
(1,530)
|
|
(5,251)
|
(ii) Weighted-average
number of ordinary shares (basic and diluted)
|
Shares
|
Unaudited
six-month
period ended
30 June 2024
|
|
Unaudited
six-month
period ended
30 June 2023
|
|
Audited year ended
31 December 2023
|
|
Issued ordinary shares at 1 January
(after subdivision)
|
483,222,238
|
|
449,702,150
|
|
449,702,150
|
|
Effect of shares issued
(weighted)
|
-
|
|
-
|
|
3,857,106
|
|
Weighted-average number of ordinary shares at period / year
end
|
483,222,238
|
|
449,702,150
|
|
453,559,256
|
|
|
|
|
|
|
|
|
Loss per share of common stock
attributable to the Company:
(Basic and diluted /
US$)
|
(0.0083)
|
|
(0.0034)
|
|
(0.012)
|
17 Loans and
borrowings
In 2023 the Company launched a
US$20m bond programme in Kazakhstan ("the Programme") and issued
two tranches of unsecured corporate bonds under the Programme with
effective interest rates of 9.2% and 10.4%, respectively. In 2024,
the Company issued a third tranche of bonds under the Programme
with an effective interest rate of 11.5%.
With respect to the first tranche
of bonds (2023), investors have subscribed for a total of 1,500
bonds with a nominal value of US$2,000 each. These bonds are
unsecured, have a three-year term and bear a coupon rate of 9%,
paid twice-yearly. The bonds have been listed on AIX with ISIN
number KZX000001474.
With respect to the second tranche
of bonds (2023), investors have subscribed for a total of 50,000
bonds with a nominal value of US$100 each. These bonds are
unsecured, have a three-year term and bear a coupon rate of 10%,
paid quarterly. The bonds have been listed on AIX with ISIN number
KZX000001623.
With respect to the third tranche
of bonds (2024), investors have subscribed for a total of 50,000
bonds with a nominal value of US$100 each. These bonds are
unsecured, have a three-year term and bear a coupon rate of 11%,
paid quarterly. The bonds have been listed on AIX with ISIN number
KZX000001946.
|
|
Unaudited
30 June 2024
$000
|
|
Unaudited
30 June 2023
$000
|
|
Audited 31 December 2023
$000
|
|
Non-current
liabilities
Bonds payable
|
12,396
|
|
-
|
|
7,393
|
|
|
12,396
|
|
-
|
|
7,393
|
|
Current
liabilities
|
|
|
|
|
|
|
Interest payable
|
233
|
|
-
|
|
134
|
|
|
233
|
|
-
|
|
134
|
Non-cash transactions from
financing activities are shown in the reconciliation of liabilities
from financing transactions below:
|
|
Unaudited
six-month
period ended
30 June 2024
$000
|
|
Unaudited
six-month
period ended
30 June 2023
$000
|
|
Audited year ended 31
December 2023
$000
|
|
At
1 January
|
7,527
|
|
1,127
|
|
1,127
|
|
Cash flows:
|
|
|
|
|
|
|
-Interest paid
|
(523)
|
|
(32)
|
|
(157)
|
|
-Repayment of loans and
borrowings
|
-
|
|
(1,112)
|
|
(1,112)
|
|
-Proceeds from loans and
borrowings
|
5,003
|
|
-
|
|
7,784
|
|
Total
|
12,007
|
|
(17)
|
|
7,642
|
|
Non-cash flows
|
|
|
|
|
|
|
-
Interest accruing in the period
|
622
|
|
17
|
|
273
|
|
-
Bond discount / premium
|
-
|
|
-
|
|
(388)
|
|
At 30 June / 31 December
|
12,629
|
|
-
|
|
7,527
|
18 Trade and other
payables
|
|
Unaudited
30 June 2024
$000
|
|
Unaudited
30 June 2023
$000
|
|
Audited 31 December 2023
$000
|
|
Trade payables
|
2,565
|
|
2,550
|
|
1,781
|
|
Debt to directors/key management
(Note 22)
|
-
|
|
11
|
|
79
|
|
Debt to employees
|
242
|
|
154
|
|
192
|
|
Other taxes
|
52
|
|
225
|
|
72
|
|
Advances received
|
777
|
|
134
|
|
17
|
|
|
3,636
|
|
3,074
|
|
2,141
|
19 Deferred
income
|
|
Unaudited
30 June 2024
$000
|
|
Unaudited
30 June 2023
$000
|
|
Audited 31 December 2023
$000
|
|
Government grants
|
-
|
|
-
|
|
102
|
|
|
-
|
|
-
|
|
102
|
During 2023, the Group was awarded
grant funding by the Kazakhstan Science Fund for the development of
technology for the production of mixed vanadium oxides for use in
vanadium redox flow
batteries.
20
Contingencies
(a)
Insurance
The insurance industry in
the Kazakhstan is in a
developing state and many forms of insurance protection common in
other parts of the world are not yet generally or economically
available. The Group does not have full coverage for its plant facilities,
business interruption or third party liability in respect of
property or environmental damage arising from accidents on
Group property or
relating to Group operations. There is a risk that the loss or destruction of
certain assets could have a material adverse effect on the
Group's operations and
financial position.
(b) Taxation
contingencies
The taxation system in Kazakhstan
is relatively new and is characterised by frequent changes in
legislation, official pronouncements and court decisions which are often unclear,
contradictory and subject to varying interpretations by different
tax authorities. Taxes are subject to review and investigation by
various levels of authorities which have the authority to impose
severe fines, penalties and interest charges. A tax year generally
remains open for review by the tax authorities for five subsequent
calendar years but under certain circumstances a tax year may
remain open for longer.
These circumstances may create tax
risks in Kazakhstan that are more significant than in other
countries. Management believes that it has provided adequately for
tax liabilities based on its interpretations of applicable tax
legislation, official pronouncements and court decisions. However,
the interpretations of the relevant authorities could differ and
the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant.
There are no tax claims or
disputes at present.
21 Segment
reporting
The Group's operations are split
into three segments based on the nature of operations: processing,
subsoil operations (being operations related to exploration and
mining) and corporate segment for the purposes of IFRS 8
Operating Segments. The
Group's assets are primarily concentrated in the Republic of
Kazakhstan and the Group's revenues are derived from operations in,
and connected with, the Republic of Kazakhstan.
|
Unaudited six-month period ended 30 June
2024
|
|
|
|
|
|
|
|
Processing
$000
|
|
Subsoil
$000
|
|
Corporate
$000
|
|
Total
$000
|
|
Revenue
|
|
2,149
|
|
-
|
|
-
|
|
2,149
|
|
Cost of sales
|
|
(3,622)
|
|
-
|
|
-
|
|
(3,622)
|
|
Other income
|
|
6
|
|
-
|
|
1
|
|
7
|
|
Administrative expenses
|
|
(475)
|
|
(42)
|
|
(1,333)
|
|
(1,850)
|
|
Distribution & other
expenses
|
|
(82)
|
|
-
|
|
-
|
|
(82)
|
|
Finance costs
|
|
217
|
|
-
|
|
(810)
|
|
(593)
|
|
Loss before tax
|
|
(1,807)
|
|
(42)
|
|
(2,142)
|
|
(3,991)
|
|
Unaudited six-month period ended 30 June
2023
|
|
|
|
|
|
Processing
$000
|
|
Subsoil
$000
|
|
Corporate
$000
|
|
Total
$000
|
|
Revenue
|
|
3,314
|
|
-
|
|
-
|
|
3,314
|
|
Cost of sales
|
|
(3,565)
|
|
-
|
|
-
|
|
(3,565)
|
|
Other income
|
|
8
|
|
-
|
|
5
|
|
13
|
|
Administrative expenses
|
|
(402)
|
|
(24)
|
|
(911)
|
|
(1,337)
|
|
Distribution & other
expenses
|
|
(113)
|
|
-
|
|
-
|
|
(113)
|
|
Finance costs
|
|
(40)
|
|
-
|
|
198
|
|
158
|
|
Loss before tax
|
|
(798)
|
|
(24)
|
|
(708)
|
|
(1,530)
|
|
Audited year ended 31 December 2023
|
|
|
|
|
|
|
|
|
|
Processing
$000
|
|
Subsoil
$000
|
|
Corporate
$000
|
|
Total
$000
|
|
Revenue
|
|
5,716
|
|
-
|
|
-
|
|
5,716
|
|
Cost of sales
|
|
(6,769)
|
|
-
|
|
-
|
|
(6,769)
|
|
Other income
|
|
15
|
|
-
|
|
5
|
|
20
|
|
Administrative expenses
|
|
(1,130)
|
|
(41)
|
|
(2,200)
|
|
(3,371)
|
|
Distribution & other
expenses
|
|
(649)
|
|
-
|
|
(15)
|
|
(664)
|
|
Finance costs
|
|
(139)
|
|
-
|
|
(44)
|
|
(183)
|
|
Loss before tax
|
|
(2,956)
|
|
(41)
|
|
(2,254)
|
|
(5,251)
|
Included in revenue arising from
processing are revenues of US$2.2m (2023: US$3.1m) which
arose from sales to four of the Group' largest customers. No other
single customer contributes 10 per cent or more to the Group's
revenue.
All of the Group's assets are
attributable to the Group's processing operations.
Sales to the Group's largest
customers during the six months ended 30 June 2024 were as
follows:
Customer
A
US$ 1.0m (45%) (2023:US$ 1.5m)
Customer
B
US$ 0.4m (17%) (2023: US$1.5m)
Customer
C
US$ 0.4m (20%) (2023: US$ 0.1m)
Customer
D
US$ 0.4m (18%) (2023: nil)
22 Related party
transactions
Transactions with management and close family
members
Management
remuneration
Key management personnel received
the following remuneration during the year, which is included in
personnel costs (see Note 5):
|
|
|
Unaudited
six-month
period ended
30 June 2024
$000
|
|
Unaudited
six-month
period ended
30 June 2023
$000
|
|
Audited year ended 31
December 2023 $000
|
|
Wages, salaries and related
taxes
|
|
538
|
|
474
|
|
1,114
|
The amount of wages and salaries
outstanding at 30 June 2024 is equal to US$ nil (2023:
US$11,000).
Other
The Company is party to a sub-let
agreement between Turian Sports Horses Limited as head lessee and
NH Limited as landlord for the rental of office space in Guernsey.
Turian Sports Horses Limited is wholly owned by James Turian, one
of the Company's directors and NH Limited is owned by James Turian
and Sharon Turian, equally. Sums paid to NH Limited during the six
months ended 30 June 2024 were US$7,214 (2023:
US$10,667).