TIDMFAR
RNS Number : 2350D
Ferro-Alloy Resources Limited
28 June 2021
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.
28 June 2021
Ferro-Alloy Resources Limited
("Ferro-Alloy" or the "Company" or the "Group")
Final Results for the year ended 31 December 2020
Ferro-Alloy Resources Limited (LSE:FAR), the vanadium mining and
processing company with operations based in
Southern Kazakhstan is pleased to announce its final results for the year ended 31 December 2020.
Overview
-- Increased production of vanadium pentoxide by 56% to 237 tonnes
-- Revenue increased to US$2.4m (2019:US$1.8m)
-- Commissioning and expansion of pyrometallurgical process line
which is designed to treat a different type of concentrate from
that which was previously treated creating new revenue stream
o total capacity of the combined plant now up to 80 tonnes per
month depending on the grades of concentrates treated, six times
more than 2019 production
-- Connection to adjacent high voltage power line complete with
first power expected late July 2021
-- Technological developments:
o Conversion of ammonium metavanadate to vanadium pentoxide and
trial production of vanadium pentoxide powder commenced; product is
suitable for chemical uses and often attracts higher prices than
standard vanadium pentoxide depending on the purity
o Commercial production of calcium molybdate started in October
2020 with 20 tonnes of calcium molybdate (CaMoO4), containing 12
tonnes of molybdic oxide (MoO3) produced by the end of the year; a
highly profitable process as provides additional recovery as a
by-product from the same raw-materials
o Developed technology to produce electolyte for vanadium flow
batteries directly from ammonium metavanadate
-- Scope of Feasibility Study upgrade on the Balasausqandiq
vanadium project now expanded to include Phase 1 and Phase 2 which
will facilitate a focussed development of the resource and more
properly reflect the Company's value and potential. Publication of
the expanded Feasibility Study expected mid-2022
-- Covid-19 restrictions particularly affected raw-material
supplies, restricted production and prevented full use of the
increased capacity
-- Prices of vanadium pentoxide currently c.US$8/lb
Post-Period
-- Strategic long term investment by Vision Blue Resources in
March 2021 with investment to date totalling $3.1m
-- Further options available to Vision Blue to invest an
additional $9.5 million at an agreed price of GBP0.09 per share,
plus a further $30 million at higher prices to finance construction
of Phase 1 of the Balasausqandiq vanadium project
-- Strengthening of board with the appointment of Sir Mick Davis
as non-executive chairman and Peet Nienaber as non-executive
director
-- Further US$476,000 raised in 2021 to date by the issue of bonds on AIX
Nick Bridgen, CEO, commented:
"2020 saw Ferro-Alloy continuing to make strong progress towards
our main goal of developing the world-leading Balasausqandiq
project. Progress has been made with the feasibility study and
infrastructure improvements despite the ongoing Covid-19 pandemic
which restricted deliveries of raw materials and prevented us from
utilising fully the new capacity that we've added. Nevertheless, we
saw a significant increase in production of vanadium pentoxide in
the year and I anticipate future production to improve strongly now
that raw materials have started to be delivered reliably and
accumulate on site.
"In March 2021, we welcomed Vision Blue Resources as a strategic
investor in the Company. Vision Blue share our view that
Balasausqandiq is a truly extraordinary project with the potential
to become the leading vanadium asset in the world. The strategic
relationship established is significant with investment of $12.6m
envisaged plus options to invest a further $30m at higher prices.
We have received the Initial Investment of $3.1m and we expect
Vision Blue to exercise their option to invest the next $7m
imminently.
"We welcomed Sir Mick Davis to our board as non-executive
chairman and Peet Nienaber and as non-executive director. Their
collective experience, knowledge and relationships in the mining
industry will be hugely beneficial to us.
Annual Report
The Annual Report for the year ended 31 December 2020 will be
available on the Company's website shortly at
www.ferro-alloy.com
For further information, visit www.ferro-alloy.com or
contact:
Ferro-Alloy Resources Limited
Nick Bridgen, Chief Executive Officer info@ferro-alloy.com
Shore Capital (Broker)
Corporate Advisory: Toby Gibbs / Mark Percy / John More Tel: +44 (0)207 408 4090
Corporate Broking: Jerry Keen
VSA Capital Tel: +44 (0)203 005 5000
Andrew Monk / Simon Barton
St Brides Partners Limited (Financial PR & IR Adviser)
Catherine Leftley/Charlotte Hollinshead Tel: +44 (0)207 236
1177
Further information about Ferro-Alloy Resources Limited
The Company's operations are all located at the Balasausqandiq
Deposit in Kyzylordinskaya Oblast in the South of Kazakhstan.
Currently the Company has two main business activities:
a) the high grade Balasausqandiq Vanadium Project (the "Balausa
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 numerous 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.
CEO's report on operations for the year to 31 December 2020 and
2021 to date
Introduction
Despite the challenges resulting from the Covid-19 pandemic and
consequent economic turmoil, the Company has made significant
progress towards the expansion of the existing operation and, most
importantly, continued the work to put Balasausqandiq into
production including the feasibility study and infrastructure
development.
In March 2021 the Company entered into an Investment Agreement
with Vision Blue Resources under which Vision Blue has invested
$3.1m in equity and has an option to invest a further $9.5m at the
agreement price of GBP0.09 per share plus up to a further $30m at
higher prices to finance construction of Phase 1 of the
Balasausqandiq vanadium project.
Production
During the year ended 31 December 2020, production of vanadium
pentoxide (V2O5) amounted to 237 tonnes, some 56% above 2019.
Whilst this is a very solid increase, without the disruptions
experienced due to the Covid-19 pandemic and previously reported
interruptions to power supply, production would have been
significantly higher.
Production of Vanadium Growth vs last Production of
Quarter (2020) Pentoxide year Molybdic Oxide
(tonnes of vanadium (tonnes of molybdic
pentoxide contained oxide contained
in AMV*) in calcium molybdate)
Q1 49.1 +53% -
----------------------- --------------- -----------------------
Q2 48.9 +25% -
----------------------- --------------- -----------------------
Q3 89.8 +135% -
----------------------- --------------- -----------------------
Q4 49.5 +15% 12.0
----------------------- --------------- -----------------------
2020 total 237.3 56% 12.0
----------------------- --------------- -----------------------
* AMV: ammonium metavanadate
The focus of the Existing Operation during 2020 was the
commissioning and expansion of the new pyrometallurgical process
line which is designed to treat a different type of concentrate
from that which was previously treated.
In February, the second roasting oven was installed and the
pyrometallurgical line completed. Over the course of the first half
of the year this new process became the most important contributor
to the production, bringing the total capacity of the combined
plant to some 80 tonnes per month depending on the grades of
concentrates treated, six times more than 2019 production. Actual
production has lagged significantly behind this level as a result
of both Covid-19 restrictions, which have affected both the Company
and its suppliers, power supply issues which are being resolved by
the commissioning of the new power line, and a mix of raw-materials
including some lower grades.
It is expected that the connection to the adjacent high-voltage
power-line will take place during July 2021, further details of
which are set out below.
The impact of Covid-19 has been seen particularly in the more
technically difficult hydrometallurgical production process which
has been temporarily halted several times, primarily as a result of
the inability to bring specialist staff to site. This has resulted
in some five months of lost production from this part of the
operation. The Company has prioritised the pyrometallurgical
operations, not only because it is technically simpler, but also
because the prices paid for the raw materials flex with the
vanadium price so margins are less affected by low prices than for
the hydrometallurgical line where the price is fixed.
The Covid-19 travel bans also made installation, commissioning
and fault rectification much more difficult. The Company has, using
substantially its own workforce, completed commissioning work on
two of the three new press filters which would normally have
required site visits from the suppliers, and completed the
installation of the oven to convert ammonium metavanadate to
vanadium pentoxide.
Production in the fourth quarter was disappointing, with little
contribution from the hydrometallurgical line and restricted
deliveries from the Company's main high-grade concentrate supplier,
attributed to the effects of the Covid-19 restrictions on their
operation.
Production outlook
Although the progression to higher production slowed towards the
end of 2020, the equipment is now in place to achieve significantly
higher production, assisted by the near-term connection to the
high-voltage power-line and as the global vaccination programme
starts to lessen the restrictions caused by the Covid-19
pandemic.
Supplies of raw materials continued to be restricted below
contracted levels throughout the first half of 2021, attributed by
suppliers to Covid-19 related restrictions and container shortages.
The delayed supplies have now started to arrive and enough material
is on site and in transit for over four months of production at the
planned level. Contracts are in place for regular monthly
deliveries which should enable the Company to maintain sufficient
stocks of raw materials to avoid shortages in future.
Looking further ahead, the Company is planning to procure an
electric arc furnace which can double production capacity again.
This furnace has been designed, contracts agreed and will take some
six months to build. The furnace will be used to produce
ferro-vanadium directly from raw-material concentrates without
first producing vanadium pentoxide, and it will also be used for
the production of by-product ferro-nickel, utilising the nickel
content of our raw-materials which is currently sold at very low
prices as a low-grade concentrate.
Other developments
Conversion of AMV to vanadium pentoxide
The equipment to convert AMV to vanadium pentoxide has been
commissioned and trial production of vanadium pentoxide powder has
commenced. This product is suitable for chemical uses and often
attracts higher prices than standard vanadium pentoxide depending
on the purity.
Calcium molybdate production
Commercial production of calcium molybdate started in October
2020, with 20 tonnes of calcium molybdate (CaMoO4), containing 12
tonnes of molybdic oxide (MoO3) produced by the end of the year.
Calcium molybdate production, although small scale, is highly
profitable because it provides additional recovery as a by-product
from the same raw-materials and with relatively low processing
costs. The Company now has the option to source molybdenum-bearing
raw-materials with molybdenum as the primary content where it is
more profitable to do so.
Electrolyte for batteries
In September we reported that the Company's specialists had
developed a new process for the production of electrolyte for
vanadium flow batteries directly from ammonium metavanadate, a more
economical process. .
Connection to high-voltage powerline
As previously reported, the Company's operations have up to now
been severely impacted by the unreliability of the existing power
supply with power delivered over a long distance on a low voltage
line with wooden poles. It is subject to frequent unplanned
outages, voltage and phase instability, and is expensive. The
instability damages our equipment and causes long interruptions as
restart procedures can take far longer than the power
interruption.
The Company has been constructing a link to draw power from an
adjacent high voltage (110kV) line, including the connection,
transformers, some three km of line and necessary communications
and switching. This US$2.5m project has now been completed on
budget and substantially on time, but delays by the supplier of
power-measurement equipment required by the owners of the line mean
that first power is expected to be drawn only in late July
2021.
The new power supply will also be used for Phase 1 of the large
Balasausqandiq vanadium project, although some augmentation of
transformer capacity will be required.
Balasausqandiq project - feasibility study
Development of the large Balasausqandiq vanadium deposit is
on-going in parallel with the Company's Existing Operations.
The main components of the feasibility study into Phase 1 of the
project had already been completed as part of the locally required
Kazakhstan study but parts require upgrade or further review to
meet the requirements of a western bankable feasibility study. The
remaining parts of the study have been significantly delayed by
Covid-19 restrictions, including a prohibition on overseas
specialists visiting site and an inability to export samples but
the process plant design work has continued remotely by Coffey
International, a Tetra Tech group company, whose work was
initiated, including a site visit, before the lock-downs.
The innovative process developed and refined in our commercial
demonstration plant in Kazakhstan has been adapted to produce a
high purity V2O5 product from the black shale mined at
Balasausqandiq. Flow sheet development, the associated mass and
energy balance, and the process design criteria, are complete. In
parallel Coffey International have specified confirmatory
metallurgical test work that will be completed at an accredited
international laboratory. The sample material has been collected
and is ready to ship.
Coffey International's engineering team has specified the major
mechanical equipment, designed the process areas and completed a 3D
CAD model of the general arrangement of the plant. The model
includes the buildings that will house the process equipment.
Budget price enquiry, in support of the capital cost estimate, is
underway and is approximately 50% complete.
Following the investment by Vision Blue, and consequently the
greater funds expected to be available to the Company in due
course, it has been decided to expand the scope of the study to
include not just Phase 1 of the Group's development plans (1
million tonnes of ore treated per year) but also, so far as
appropriate, Phase 2 (increase to 4 million tonnes of ore per year)
and the by-product revenues. This will involve some additional
drilling to upgrade ore-bodies 2, 3 and 4 to the Indicated level
(under JORC 2012) and, with the addition of mine planning, to the
probable reserve standard. The Directors believe that although this
will delay the publication of the feasibility study until mid-2022,
it will facilitate a focussed development of the resource, more
properly reflect the Company's value and potential which will
result in the most optimal financing arrangements for the
project.
Covid-19
The Covid-19 pandemic had a negative impact on the Company's
operations in 2020. While cases started to decline towards the end
of Q3 2020, Kazakhstan experienced a second wave during Q4 2020,
albeit at lower levels than in Europe. Kazakhstan has maintained
restrictions on visitors from overseas and implemented lock-downs
on a selective basis. A third wave started in March 2021 but
actions taken by the Government have prevented a major outbreak and
currently, there are around one thousand cases per day.
Kazakhstan started vaccinations on 1 February 2021 using the
Russian Sputnik-V vaccine and Kazakhstan QazVac vaccine. During
2021 the plan is to vaccinate some 6 million people in Kazakhstan
starting with front line medical professionals followed by
education providers and then higher risk individuals. The current
level of vaccination is now approaching 10% of the population.
Environment & changing climate
On the 2-13 December 2019 the UN Climate Change Conference was
held in Madrid. During the annual conference, countries' approaches
to the implementation of actions in the field of climate change,
based on the provisions of the United Nations Framework Convention
on Climate Change, the Kyoto Protocol and the Paris Agreement, were
agreed. Kazakhstan participated in the conference and reconfirmed
that its is commitment to reduce greenhouse gas emissions by 15% by
2030 (compared with the levels of 1990). In addition, Kazakhstan is
planning to develop a concept of low carbon development by 2050
which is expected to be finalised and published in June 2021.
During 2020, the Company's operations emitted 24.21 tonnes of
carbon oxides, compared with the permitted level of 50.33 tonnes
during the year. The Company will be reviewing the Government
report on low carbon development after its publication and will
develop its strategy related to Climate Change accordingly while
ensuring that it is in line with leading international
practice.
Product prices
At the start of 2020 the price of vanadium pentoxide in Europe
was a little over US$5/lb, having fallen from around US$16/lb at
the start of 2019 and a high of US$29/lb in late 2018. The fall
from the exceptionally high levels of 2018 had been expected but
overshot and remained below historic average prices throughout
2020, most likely as a result of reduced world-wide construction
during the Covid-19 pandemic. The price has been rising since the
start of 2021 and is now at over US$8.00 per lb.
The Directors expect demand in the longer-term to be strong for
a number of reasons:
-- Post Covid-19 stimulus infrastructure development expected
around the world, especially with the stimulus programme in the
USA, causing a significant rise in consumption of
vanadium-containing structural steel;
-- Increasing use of vanadium for micro-alloying of steel,
enabling smaller sections to be used to obtain the same strength
and thereby reducing the CO2 emissions caused by construction;
-- Growing penetration of vanadium redox flow batteries for long-term grid energy storage; and
Whilst this demand can be met from vanadium projects currently
under evaluation, the cash cost of production of this new capacity
and the associated capital costs implies the need for a
significantly higher vanadium price than today's, giving an
expectation that the price will need to rise before such projects
become financeable. By contrast, the Company's Balasausqandiq
deposit is expected to be able to produce vanadium pentoxide at a
cost of less than half that of other primary producers.
The Group reported revenues of US$2.4m for the period compared
to US$1.8m in 2019, reflecting the considerable increase in
production and shipping.
Revenue, and the corresponding trade receivable, are recognised
at the time of transfer of control to the customer but, as is
common in the industry, the final price determination is often
based on assay and prices after arrival of the goods at the port of
destination. Therefore, revenues recognised at the time of shipment
are subject to adjustment to prices prevailing up to four months
later. Typically, the customer makes a provisional payment based on
volumes, quantities and spot prices at the date of shipment and
makes a final payment once the product has reached its final
destination. As a result, when prices are rising, the final receipt
can exceed the initial revenue recorded and vice versa. Where
prices decrease significantly, this can result in the Company being
in a net payable position if a downward adjustment to the
consideration exceeds the provisional payment received.
Amounts receivable from or payable to customers for sales which
are still subject to final price determination are initially
recorded at the estimated fair value at the time of shipment, with
changes in fair value recorded as other revenue. Changes in this
fair value during the year and, for those sales where the final
determination has not been made, fair values assessed on the basis
of prices prevailing at the year end, increased revenue by US$0.07m
to US$2.37m (2019: decrease by US$0.55 to US$1.84m). In periods of
rising prices this adjustment would be expected to be positive and
in the long run such pluses and minuses can be expected to even
out. The final price determinations made after the end of 2020 in
respect of sales made before the end of the year were not
significantly different from the fair value assessed at the end of
the year.
US$000 2020 2019
Revenue from shipments recorded
at the price at time of dispatch 2,300 2,391
------ ------
Adjustments to revenue after
final price determination
and fair value changes 73 (550)
------ ------
Revenue 2,373 1,841
------ ------
Cost of sales increased to US$3.8m from US$3.2m in 2020
primarily reflecting the increased volumes and increases in the
price of the vanadium concentrate purchased at the high prices
prevailing in 2019 and utilised in 2020. The largest part of cost
of sales is the purchase of raw materials, the price for which is
determined as a percentage of the value of the content of vanadium
at prices prevailing at the time of purchase. Since such materials
are purchased up to several months before processing, and sales
price determination is made several months after shipment, the
prices used as a basis for the calculation of raw material prices
were significantly higher than the price used as a basis for
product sales. This means that the operating margin was squeezed as
prices were kept low in 2020. Again, during times of rising prices
this effect would be reversed and is likely to even out in the long
term as prices move up and down.
Administrative expenses of US$2.2m (2019: US$1.8m) principally
comprised employee costs, listing costs, audit and professional
services. The costs directly relating to the listing on the London
Stock Exchange amounted to US$0.103m (2019: US$0.304m).
Net finance costs were US$0. 133 m (2019: net finance costs
US$0.183m) as a result of the tenge devaluation and sales in USD
and RUR. US$0. 03 m costs are related to bonds' coupons.
The Group made a loss before tax of US$ 3 .94m (2019: loss
before tax of US$3.34m).
Net cash outflows from operating activities totalled US$1.3m
(2019: US$4.5m) with the reduction principally reflecting tight
management of working capital. Changes in trade receivables
increased to US$ 0 .1m (2019: minus US$ 0 . 4 m). Changes in trade
payables increased to US$0. 5 m (2019: minus US$ 0 . 4 m) by making
payment terms with suppliers of raw materials more favourable for
the Company and change in inventory which generated a cash inflow
of $1.0m (2019: $1.0m outflow).
Net cash outflows from investing activities totalled US$1.1m
(2019:US$2.3m) and included US$0.73m (2019:US$2.3m) of capital
expenditure associated with expanding the processing operation and
US$0.33 (2019: nil) of expenditure on the feasibility study for the
exploration and evaluation asset.
Net cash inflows from financing activities included
subscriptions for shares amounting to US$1.6m and bonds amounting
to US$0.9m.
The Group had cash of US$0.707m at 31 December 2020 (2019:
US$0.648m).
Key performance indicators
The Group is in a period of development and its current
operations, the processing of bought-in secondary
vanadium-containing materials for extraction of vanadium, are
relatively small in comparison with the main objective of the Group
to develop the Balasausqandiq mine and processing facility.
Moreover, the current operations are themselves undergoing a
significant expansion which means that operations are not in a
steady state capable of meaningful inter-period comparisons. The
directors are therefore of the opinion that Key Performance
Indicators may be misleading if not considered in the context of
the development of the operation as a whole for which the
information for shareholders is better given in a descriptive
manner than in tabular form.
Furthermore, the existing processing business of the company is
complex and the business model has been developed to allow maximum
flexibility in the type of raw-materials treated so that market
variations in raw material prices can be moderated by the ability
to select raw materials which may be more profitable to treat
notwithstanding they be of lower grade and result in a lower level
of production. Nevertheless, the directors consider that the main
indicator of performance, although subject to interpretation as
described above, is the level of production. This has been dealt
with in the section "Production" above.
Environmental matters are of paramount importance to the Group.
Up to this date most of the residues from the main raw materials
treated have been used for the construction of evaporation ponds
and the Company has started to produce low grade nickel concentrate
as by-product from the residues of high grade vanadium concentrate
and signed long term contract for selling it. As a result no
residues from the production of ammonium metavanadate, calcium
molybdate and low grade nickel concentrate are left. No significant
mining operations have yet been carried out but plans are being
developed at an early stage to ensure the highest standards for
site rehabilitation at the sites of future mining.
Balance sheet review
Total non-current assets increased to US$5.101m from US$5.089m
principally due to the capitalisation of the feasibility study as
exploration and evaluation assets. The increase in prepayments for
equipment is largely related to prepayments made for construction
of the new Power Line (US$1m).
Current assets decreased from US$ 2 . 47 m to US$1.66m,
principally reflecting decrease in inventory.
Corporate
On 28 March 2019 the Company was admitted to listing on the
London Stock Exchange, raising GBP5.2m gross, equivalent to
US$6.9m, or US$6.6m net of issue costs. The Company listed on the
new Astana International Stock Exchange (AIX) on 6 January 2020 and
consequently delisted from the Kazakhstan stock exchange (KASE) on
21 February 2020.
During 2020 the Company raised equity finance of US$1.7m
(US$1.6m after expenses) and issued bonds to the value of US$0.9m.
Since the start of 2021 the Company has raised US$475,829 from
further issues of 242 bonds, with 58 issued in February and a
further 184 issued on 12 March 2021. All the bonds have been issued
on the Astana Stock Exchange ("AIX") with a nominal value of
US$2,000 each, have a coupon of 5.8% payable twice-yearly, are
unsecured and are repayable on 17 March 2023. Some of the bonds
issued in 2020 (256) had an early redemption right for the holders.
Each issue is made at a premium or discount as negotiated at the
time of issue.
On the 7 June 2021, pursuant to the Investment Agreement signed
in March 2021, Vision Blue Resources invested a further US$1.6m in
equity in addition to the investment of US$1.5m already made.
During 2020 the Group's main operating company in Kazakhstan was
audited by the tax authorities for the purpose of receiving a
reimbursement of excess VAT for the period from 2015 to 31 March
2020. Following the completion of the audit, a repayment of
116,000,000 KZT (approximately US$276,000) was received. VAT of
$301,000 was written off as non-refundable. During 2020 VAT
receivables increased by $230,000, mainly due to VAT on imports and
a reduction of $101,000 in the VAT receivable was made to reflect a
decision by the tax authorities, resulting to the ending balance of
$205,000. In 2021 the Company applied for a refund of this amount.
It is expected that VAT receivable will be reimbursed on a
quarterly basis.
Description of principal risks, uncertainties and how they are
managed
(a) Current processing operations:
Current processing operations make up a small part of the
Group's expected future value but provide useful cash flows in the
near term and allow the group to gain valuable experience of the
vanadium industry. The principal risk of this operation is the
price of its product, vanadium. The price of vanadium pentoxide is
volatile and rose from historic lows at the beginning of 2016 to a
near-record high of nearly US$30/lb near the end of 2018.
Currently, the price of vanadium pentoxide is at around US$8.00/lb
which is close to the ten-year average to date. Most forecasters
anticipate that vanadium will be in deficit in the short to medium
term, resulting in some increase in current prices, and will return
to the long-run marginal cost of production in the longer term
which may be substantially higher. The Company acquires
raw-materials at a cost that is related to the price of vanadium so
there is a natural hedge but there is a risk of changes in vanadium
prices between the time of acquisition of the raw materials and
sale of the product which cannot be entirely avoided.
The processing operation is also dependent on the continuing
availability of raw materials which are subject to competition from
other processors. The Company is mitigating this risk by
positioning itself to treat a wide variety of potential
raw-materials and maintaining low treatment costs.
The level of profitability of the current processing operation
is also dependent on production levels sufficient to generate
profits to cover fixed overheads. The level of production could be
impacted by unanticipated production difficulties, power outages
and raw-material delivery limitations. The Company aims to keep a
stockpile of raw-materials and has installed a larger capacity
generator to maintain production during outages.
The Company is currently carrying out an expansion project which
will lower the average cost of production and as part of this
project, will be connecting to a larger capacity and more reliable
power supply as described above. Although a substantial part of
this expansion has already been completed, the plans include
completion of the link to the adjacent high voltage powerline and
the installation of an electric arc furnace. The full benefits of
the expansion depend upon the raising of sufficient finance and the
successful completion of these projects.
(b) Covid-19:
There remains a risk that the Covid-19 crisis worsens in
Kazakhstan. This could cause further disruption to supply-lines,
staffing and subcontractors as has already occurred, but it is also
possible that a case might arise on site requiring a temporary
shutdown of operations and create further pricing volatility. In
addition, Covid-19 may impact the availability of finance or the
terms which are available. Whilst it is not possible to guard
against this, the Company continues to take all recommended
precautions and will aim to maintain higher than normal stores of
essential supplies on site. In terms of funding, cash flows are
monitored on a continuous basis to enable the Company to take
proactive measures to safeguard liquidity.
(c) Financing risk:
The Company is in stronger financing position relative to the
prior year. In March of 2021 the Company signed an investment
agreement with Vision Blue Resources. Under the terms of this
agreement, an initial investment of $3.1m has been made which will
fund capital projects and Vision Blue has the right to subscribe
further amounts which, if exercised, will bring the total up to
$12.6m. Since the current share price is greatly in excess of the
option price, the directors expect this investment to be made.
However, as detailed in note 1, a material uncertainty in respect
of going concern is considered to exist as a result of the risks
and uncertainties associated with Covid-19.
(d) Climate change risk:
On the 2-13 December 2019 the UN Climate Change Conference was
held in Madrid. During the annual conference, countries' approaches
to the implementation of actions in the field of climate change,
based on the provisions of the United Nations Framework Convention
on Climate Change, the Kyoto Protocol and the Paris Agreement, were
agreed. Kazakhstan participated in the conference and reconfirmed
that as a part of the international community focusing on reducing
risk of climate change it is committed to reduce greenhouse gas
emissions by 15% by 2030 (from the levels of 1990). Additionally,
Kazakhstan is planning to develop a concept of low carbon
development by 2050 which is expected to be finalised and published
during June 2021.
The Company is following the development of Government strategy
in relation to the Global Climate Change. During 2020 the Company
emitted 24.21 tonnes of carbon oxides compared with the permitted
level of 50.33 tonnes. The Company will be reviewing the Government
concept of low carbon development after its publication and will
develop its strategy related to Climate Change accordingly.
(e) Risks associated with the developing nature of the
Kazakhstan 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.
(f) Balasausqandiq project:
The Balasausqandiq project is a much larger contributor to the
Group's value than current operations and is primarily dependent on
long term vanadium prices. The Company's long-term assumption is
US$7.50/lb of vanadium pentoxide, but the forecast low cost of
production means that the project would remain profitable at lower
price levels.
The project is also dependent on raising finance to meet capital
costs anticipated to amount to in excess of US$100m for the first
phase. Raising this money will be dependent on the successful
outcome of the western bankable feasibility study which is ongoing.
The favourable financial and other characteristics of the project
determined by studies so far completed give the directors
confidence that the outcome of the study will be successful.
Initial discussions with the providers of finance, including with
the Development Bank of Kazakhstan for which our project has passed
through initial screening, have been encouraging.
Signed on behalf of the Board of Directors
on 25 June 2021
Consolidated Statement of Profit or Loss and Other Comprehensive
Income for the year ended 31 December 2020
2020 2019
$000 $000
--------------- ------------------------------
Revenue from customers (pricing
at shipment) 2,300 2,391
Other revenue ( adjustments
to price after delivery and
fair value changes) 73 (550)
Total revenue 2,373 1, 841
Cost of sales ( 3 ,7 79 ) ( 3 , 178 )
--------------- ------------------------------
( 1 , 406
Gross loss ) ( 1 , 337 )
Other income 8 70
Administrative expenses ( 2 , 233 ) (1,8 41 )
Distribution expenses ( 178 ) ( 42 )
Other expenses - (9)
--------------- ------------------------------
Loss from operating activities (3,809) (3,1 5 9 )
--------------- ------------------------------
Net finance costs (133) (18 3 )
--------------- ------------------------------
Loss before income tax ( 3 ,942) ( 3 , 342 )
=============== ==============================
Income tax (2) -
Loss for the period ( 3 ,944) ( 3 , 342 )
Other comprehensive income
(loss)
Items that may be reclassified
subsequently to profit or loss
Exchange differences arising
on translation of foreign operations (528) 31
--------------- ------------------------------
Total comprehensive (loss)
income for the period (4,472) (3,311)
=============== ==============================
Loss per share (basic and diluted),
US$ (0.012) (0.01 1 )
--------------- ------------------------------
31 December 31 December
2020 2019
Consolidated Statement of
Financial Position as at
31 December 2020 $000 $000
------------- ------------
ASSETS
Non-current assets
Property, plant and equipment 2,800 3,2 06
Exploration and evaluation
assets 813 59
Intangible assets 21 24
Long-term VAT receivable - 652
Prepayments 1,467 1,148
Total non-current assets 5, 101 5,089
------------- ------------
Current assets
Inventories 694 1,750
Trade and other receivables 205 35
Prepayments 52 38
Cash and cash equivalents 707 648
Total current assets 1,658 2,47 1
------------- ------------
Total assets 6,759 7,560
============= ============
EQUITY AND LIABILITIES
Equity
Share capital 35,606 33,965
Additional paid-in capital 397 397
Foreign currency translation
reserve (3,462) ( 2 ,934)
Accumulated losses (28,561) (24,6 17 )
------------- ------------
Total equity 3,980 6,811
------------- ------------
Non-current liabilities
Loans and borrowings 412 -
Provisions 47 64
Total non-current liabilities 459 64
------------- ------------
Current liabilities
Loans and borrowings 524 -
Trade and other payables 1,736 6 26
Payables at FVTPL 60 59
------------- ------------
Total current liabilities 2,320 685
------------- ------------
Total liabilities 2,779 7 49
------------- ------------
Total equity and liabilities 6,759 7,560
============= ============
Consolidated
Statement of Changes
in Equity for the
year ended 31
December
2020
Additional Foreign currency
Share Share paid in capital translation Accumulated
capital premium $000 reserve losses Total
$000 $000 $000 $000 $000
-------- -------- ---------------- ---------------- ------------------- ---------
Balance at 1 January
2019 27,330 - 380 (2,965) (21,275) 3,470
( 3 , 342 ( 3 , 342
Loss for the year - - - - ) )
Other comprehensive
expense
Exchange differences
arising on
translation
of foreign
operations - - - 31 - 31
-------- -------- ---------------- ---------------- ------------------- ---------
Total comprehensive
income (loss) ( 3 , 342
for the year - - - 31 ) (3,311)
-------- -------- ---------------- ---------------- ------------------- ---------
Transactions with
owners, recorded
directly in equity
Shares issued, net
of issue costs 6,635 - - - - 6,635
Warrants issued - - 17 - - 17
-------- -------- ---------------- ---------------- ------------------- ---------
Balance at 31 (24,6 17
December 2019 33,965 - 397 ( 2 ,934) ) 6,811
======== ======== ================ ================ =================== =========
Balance at 1 January
2020 33,965 - 397 (2,934) (24,617) 6,811
( 3 ,944
Loss for the year - - - - ( 3 ,944) )
Other comprehensive
income
Exchange differences
arising on
translation
of foreign
operations - - - (528) - (528)
-------- -------- ---------------- ---------------- ------------------- ---------
Total comprehensive
income (loss)
for the year - - - (528) ( 3 ,944) (4,472)
-------- -------- ---------------- ---------------- ------------------- ---------
Transactions with
owners, recorded
directly in equity
Shares issued, net
of issue costs
(note 20) 1,641 - - - - 1,641
Balance at 31
December 2020 35,606 - 397 (3,462) (28,561) 3,980
======== ======== ================ ================ =================== =========
Consolidated Statement of Cash Flows for the year ended 31
December 2020
2020 2019
$000 $000
--------- ------------
Cash flows from operating activities
Loss for the year ( 3 ,944) ( 3 , 342 )
Adjustments for:
Depreciation and amortisation 431 4 28
Loss on write-off of property, plant
and equipment plant, property and
equipment - (18)
Loss on write-off of VAT non-refundable 301 -
Loss on write-off of prepayments 7 -
Loss on write-off of receivables 15
Write - down of inventories to net
realisable value and obsolescence
provision - 208
Expenses on credit loss provision 15 -
Share payments and issuance of call
option 75 17
Income tax 2 -
Net finance costs 133 18 3
Cash from operating activities before
changes in working capital (2,965) (2,524)
Change in inventories 1,044 (989 )
Change in trade and other receivables 90 ( 4 4 2 )
Change in prepayments (25) 5 3
Change in trade and other payables 517 ( 3 69)
Change in payables at FVTPL 7 ( 2 0 5 )
--------- ------------
Net cash from operating activities (1,332) (4, 4 7 6 )
--------- ------------
Cash flows from investing activities
Acquisition of property, plant and
equipment (733) (2, 337 )
Acquisition of exploration and evaluation
assets (326)
Acquisition of intangible assets (1) (1)
Proceeds from disposal of property,
plant and equipment - 18
Net cash used in investing activities (1,060) (2,320)
--------- ------------
Cash flows from financing activities
Proceeds from issue of share capital 1,649 6,9 39
Transaction costs on shares subscription (82) ( 304 )
Proceeds from borrowings 924 -
Interests paid (19) -
Net cash from financing activities 2,472 6,635
--------- ------------
Net increase in cash and cash equivalents 80 ( 161 )
Cash and cash equivalents at the beginning
of year 648 892
--------- ------------
Effect of movements in exchange rates
on cash and cash equivalents (21) ( 83 )
--------- ------------
Cash and cash equivalents at the end
of year 707 648
========= ============
Notes to the consolidated financial statements for the year
ended 31 December 2020
The financial information for the year ended 31 December 2020
and 31 December 2019 set out in this announcement does not
constitute the Company's statutory financial statements for the
year ended 31 December 2020 but is extracted from the audited
financial statements for those years. The 31 December 2019 accounts
have been delivered to the Registrar of Companies. The statutory
financial statements for 2020 will be delivered to the Registrar of
Companies in due course. The auditors have reported on the
financial statements for the year ended 31 December 2020 and their
report was unqualified but did contain a material uncertainty in
relation to going concern.
1 Basis of preparation
Ferro-Alloy Resources Limited (the "Company") is incorporated in
Guernsey and has its registered address at Noble House, Les
Baissieres, St. Peter Port, Guernsey, GY1 2UE. The consolidated
financial statements for the year ended 31 December 2020 comprise
the Company and the following subsidiaries (together referred to as
the "Group"):
Company's
share in charter
Company Location capital Primary activities
------------------- ---------------- ------------------ ----------------------------
Ferro-Alloy British Dormant since 4
Products Limited Virgin Islands 100% January 2021
Manages processing
Energy Metals activity and performs
Limited UK 100% management service
Vanadium Products Performs services
LLC Kazakhstan 100% for the Group
Production and sale
Firma Balausa of vanadium and associated
LLC Kazakhstan 100% by-products
Balausa Processing Development of processing
Company LLC Kazakhstan 100% facilities
(a) Statement of compliance
These financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by EU
("IFRSs").
(b) Basis of measurement
The consolidated financial statements are prepared on the
historical cost basis except as otherwise noted below.
(c) Functional and presentation currency
The national currency of Kazakhstan is the Kazakhstan tenge
("KZT) which is also the functional currency of the Group's
operating subsidiaries. The functional currency of the Company is
US$.
The presentation currency of the consolidated financial
statements is US$.
(d) Going concern
The consolidated financial statements are prepared in accordance
with IFRS on a going concern basis.
The Directors have reviewed the Group's cash flow forecasts for
a period of at least 12 months from the date of approval of the
financial statements, together with sensitivities and mitigating
actions. In addition, the Directors have given specific
consideration to the continued risks and uncertainties associated
with the COVID-19 pandemic and considered reverse stress test
scenarios to assess the potential impact on liquidity in line with
recent guidance.
On 8 February and 12 March 2021 the Company issued bonds for
consideration totalling $476,000 with a three-year maturity term,
bearing interest of 7.0%, payable twice-yearly.
The Company signed an investment agreement with Vision Blue
Resources and their co-investors on 15 March 2021. In pursuit of
this agreement, on 19 March 2021, the Company issued 24,741,021
ordinary shares for cash at a price of 9 pence per share to raise
$3.1m to finance the further expansion of the existing process
plant and completion of the bankable feasibility study. The Initial
Investment by Vision Blue has been completed by June 2021. A
further investment of $7m is anticipated to be received imminently
with discussions at an advanced stage with Vision Blue for $4.2m to
be received as a nil coupon convertible loan note and $2.8m to be
received through an equity subscription. Additionally, a further
$2.5m will be invested at Vision Blue's option two months after the
feasibility study for the development of Phase 1 of the
Balasausqandiq project is released - expected around the end of
this year. These funds will be sufficient to bring the existing
processing factory to the level of 1500 tonnes of V2O5 production
per year, generating forecast cash flow of up to $10m per year. In
addition, the investments will be used for finalising the Western
Bankable Feasibility Study.
Although the remaining funds to be invested remains at the
option of Vision Blue Resources and therefore cannot be guaranteed,
in view of the current share price which is substantially in excess
of the agreed exercise price and advanced discussions with Vision
Blue, the Directors are confident that the $7m funding will be
received imminently and the further $2.5m investment will be
made.
The agreement also provides for further investments at higher
share prices to be made at the option of Vision Blue Resources to
finance the construction of the Phase 1 project, but these further
options are likely to come beyond the time under consideration for
current Going Concern purposes.
For the purpose of making an assessment of going concern, the
cash flow forecasts reviewed by the Board exclude funding which is
not contractually committed and also exclude discretionary
expenditure in relation to the capital developments and associated
production enhancements. The Group's forecasts indicate that at
current vanadium pentoxide and molybdic oxide prices and the
planned production levels that the Group will generate sufficient
cash flows to meet operational costs and maintain liquidity. Whilst
the Group plans to continue its expansion of the existing
processing facilities the required capital expenditure, which is
discretionary or can be deferred without significant penalty, will
require the additional funding above.
Notwithstanding that the current cash position and forecast
operational cash flow in the base case and the relatively low
number of COVID-19 cases and fatalities to date in Kazakhstan
compared to other countries, the further potential impact on the
Group of the pandemic remains inherently uncertain. There is
further potential for volatility in commodity prices, supply chain
disruption, mine site workforce rotations and travel to the mine
site if the pandemic escalates. Stress test scenarios indicate that
in the event of a sustained further period of restrictions
impacting production levels or a significant reduction in vanadium
pentoxide price additional funding would be required. In case of a
reduction in vanadium pentoxide prices from $7.5/lb to 5.55/lb and
molybdic oxide prices from $11.97/lb to $8.86/lb additional funding
would be required in December 2021.
After review of these forecasts and scenarios the Directors have
a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future based
on the recent funds raised and operational cash flow generation of
the processing operations at forecast prices. The Directors
anticipate completion of the anticipated $7m funding from Vision
Blue shortly which would, having considered the forecasts and
COVID-19 stress case scenarios above, provide adequate headroom.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the consolidated financial statements.
However, at the date of approval of these financial statements,
until such time as the anticipated $7m funding is received, the
potential future impact of COVID-19 and the resulting requirement
for funding should such possible adverse scenarios materialise
indicate the existence of a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going
concern and therefore it may be unable to realise its assets and
discharge its liabilities in the normal course of business. The
financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
2 Use of estimates and judgements
Preparing the financial statements requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Carrying value of processing operations
Given the remaining low in vanadium pentoxide prices in the
period, the Directors have tested the processing operations
PP&E for impairment (note 12) at 31 December 2020. In doing so,
net present value cash flow forecasts were prepared using the fair
value less cost to develop method which required key estimates
including vanadium pentoxide and molybdic oxide prices, production
including the impact of ongoing and planned expansion together with
costs and discount rate. Key estimates included:
-- Production volumes of 48 tonnes per month of vanadium
pentoxide from pyrometallurgical line and 86 tonnes per month of
vanadium pentoxide from electrometallurgical line from 2022 with
flat production thereafter.
-- Average prices of vanadium pentoxide of US$7.5/lb and
molybdic oxide of US$11.97/lb in 2021 and thereafter, reflecting
management estimates having consideration of market commentary less
a discount, and used by the Company as a long-term assumption for
other planning purposes.
-- Further capital development costs of US$7.6m.
-- Discount rate of 10% post tax in real terms.
Based on the key assumptions set out above, the recoverable
amount of PP&E ($48m) exceeds its carrying amount ($2.8m) by
$45m and therefore PP&E were not impaired.
Sensitivity analysis
Any impairment is dependent on judgement used in determining the
most appropriate basis for the assumptions and estimates made by
management, particularly in relation to the key assumptions
described above. Sensitivity analysis to potential changes in key
assumptions has therefore been provided below.
The impact on the impairment calculation of applying different
assumptions to vanadium pentoxide prices, production volumes,
future capital expenditure and post-tax discount rates, all other
inputs remaining equal, would be as follows:
Increase/(decrease)
in headroom
$'000
------------------------------- --------------------------- --------------------
Impact if vanadium pentoxide
prices: increased by 30% 30,143
-------------------------------
reduced by 30% (30,143)
---------------------------- ------------------------------ --------------------
Impact if production volumes: increased by 10% 10,006
-------------------------------
decreased by 10% (10,006)
---------------------------- ------------------------------ --------------------
Impact if future capital
expenditure: increased by 20% (4,661)
-------------------------------
reduced by 20% 4,661
---------------------------- ------------------------------ --------------------
Impact if post-tax discount increased by 2 percentage
rate: points (7,371)
-------------------------------
decreased by 2 percentage
points 9,264
---------------------------- ------------------------------ --------------------
Fair value of trade receivables and payables classified at fair
value through profit and loss (note 24)
The consideration receivable in respect of certain sales for
which performance obligations have been satisfied at year end and
for which the Group has received prepayment under the terms of the
sale agreements, remain subject to pricing adjustments with
reference to market prices in the month of arrival at the port of
final destination for AMV and month of shipment from the port for
calcium molybdate . Under the Group's accounting policies, the fair
value of the consideration is determined and the remaining
receivable is adjusted to reflect fair value, or, if the final
estimated consideration is lower than the amounts received prior to
the year end, a payable at FVTPL is recorded. In the absence of
forward market prices for the commodity, management estimated the
forward price based on: a) spot market prices for vanadium
pentoxide and molybdic oxide at 31 December 20 20 less applicable
deductions for AMV or calcium molybdate; b) foreign exchange rates;
c) risk free rates and d) carry costs when material.
As at 31 December 2020 the Group recognised a payable at FVTPL
of US$0.06m (201 9 : payable at FVTPL US$0. 059 m).
Inventories (note 16)
The Group holds material inventories which are assessed for
impairment at each reporting date. The assessment of net realisable
value requires consideration of future cost to process and sell and
spot market prices at year end less applicable discounts. The
estimates are based on market data and historical trends.
Exploration and evaluation assets (note 13)
The Group holds material exploration and evaluation assets and
judgment is applied in determining whether impairment indicators
exist under the Group's accounting policy. In determining that no
impairment indicator exists management have considered the
Competent Person's Report on the asset, the strategic plans for
exploration and future development and the status of the licence.
Judgment was required in determining that the application for
deferral of obligations under the licence (note 26) will be granted
and management anticipate such approvals being provided given the
impact of Covid-19, their understanding of the Kazakh market and
plans for the asset.
3 Revenue
2020 2019
$000 $000
------ ------
Revenue from sales of vanadium
products 2,197 2,376
Revenue from sales of molybdate
calcium 68 -
Sales of gravel and waste rock 8 15
Service revenue 27 -
Total revenue from customers under
IFRS 15 2,300 2,391
------ ------
Other revenue - change in fair
value of customer contract 73 (550)
====== ======
Total revenue 2,373 1,841
====== ======
Vanadium and molybdenum products
Under certain sales contracts the single performance obligation
is the delivery of AMV or calcium molybdate to the designated
delivery point at which point possession, title and risk on the
product transfers to the buyer. The buyer makes an initial
provisional payment based on volumes and quantities assessed by the
Company and market spot prices of vanadium pentoxide for AMV and
molybdic oxide for calcium molybdate at the date of shipment. The
final payment is received once the product has reached its final
destination with adjustments for quality / quantity and pricing.
The final pricing is based on the historical average market prices
during a quotation period based on the date the product reaches the
port of destination for AMV and the month of shipment from the port
for calcium molybdate and an adjusting payment or receipt will be
made to the initially received revenue. Where the final payment for
a shipment made prior to the end of an accounting period has not
been determined before the end of that period, the revenue is
recognised based on the spot price that prevails at the end of the
accounting period.
Other revenue related to the change in the fair value of amounts
receivable and payable under the sales contracts between the date
of initial recognition and the period end resulting from market
prices are recorded as other revenue. Refer to note 17 and 24 for
details of trade receivables and payables at FVTPL recorded in 2020
and 2019.
The Company has started production and sales of calcium
molybdate in the end of 2020. The amount is not yet significant but
the product is demanded by the market.
4 Loans and borrowings
In 2020 the Company issued unsecured corporate bonds with
effective interest rates of 7.5%, 7.0% and 5.8%. Investors have
subscribed for a total of 464 of the Company's bonds with a nominal
value of US$2,000 each but are issued at a premium or discount to
achieve the effective interest rates agreed. The bonds are
unsecured, have a three-year term, and bear the coupon rate of
5.8%, paid twice-yearly. The bonds have been listed on AIX with
identifier FAR.0323 and ISIN number KZX000000336. The investors in
certain bonds have the right to receive early repayment after a
minimum period of 12 months.
31 December 31 December
2020 2019
$000 $000
----------- -----------
Non-current liabilities
Bonds payable 412 -
----------- -----------
412 -
=========== ===========
Current liabilities
Bonds payable (early repayment
rights) 512 -
Interest payable 12 -
---
524 -
===
Terms and conditions of outstanding bonds in 2020 were as
follows:
Effective
interest Nominal Actual Coupon Coupon
USD Currency rate amount amount rate paid Interest
--------- --------- ------- ------- ------ ------ --------
Bonds payable USD 7.5% 506 504 5.8% 10 16
Bonds payable USD 7.0% 402 400 5.8% 9 14
Bonds payable USD 5.8% 20 20 5.8% - 1
------- ------
928 924 19 31
======= ======= ====== ========
During 2020 the Group sold bonds to subscribers and received
cash from subscribers in the total amount of USD 924,000 (2019:
$nil).
Details of tranches of the bonds
Actual Earliest
Bond price Number Nominal Actual repayment Maturity
Tranche date denomination per bond of bonds amount amount date date
------------- -------------- ---------- --------- ------- ------- ---------- ----------
05.06.2020 2000 2000 50 100,000 100,000 05.07.2021 17.03.2023
11.06.2020 2000 2000 100 200,000 200,000 17.03.2023 17.03.2023
01.09.2020 2000 2053 5 10,000 10,264 01.10.2021 17.03.2023
09.09.2020 2000 2001 150 300,000 300,114 09.10.2021 17.03.2023
30.09.2020 2000 1951 26 52,000 50,717 17.03.2023 17.03.2023
10.11.2020 2000 1985 51 102,000 101,229 10.12.2021 17.03.2023
23.11.2020 2000 2021 5 10,000 10,105 17.03.2023 17.03.2023
14.12.2020 2000 1958 52 104,000 101,833 17.03.2023 17.03.2023
22.12.2020 2000 1981 25 50,000 49,537 17.03.2023 17.03.2023
-------
Total 928,000 923,799
======= =======
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions
below.
Loans and borrowings 2020 2019
$000 $000
------ ------
At 1 January - -
Cash flows:
-Interest paid (19) -
-Proceeds from loans and borrowings 924 -
------ ------
Total 905 -
Non-cash flows
33 -
* Interest accruing in period
* Bond discount/premium (2)
At 31 December 936 -
====== ======
5 Property, plant and equipment
Plant and Construction
Land and buildings equipment Vehicles Computers Other in progress Total
$000 $000 $000 $000 $000 $000 $000
------------------ ---------- -------- --------- ----- ------------ --------
Cost
Balance at 1 January
2019 1,611 1,836 426 23 75 474 4,445
Additions 2 183 157 1 5 28 1,053 1,438
Transfers 62 28 - - - (90) -
Disposals - ( 48 ) - - - - (48)
Foreign currency
translation
difference 12 1 5 4 1 1 8 41
------------------ ---------- -------- --------- ----- ------------ --------
Balance at 31 December
2019 1, 6 87 2,01 4 587 3 9 104 1,4 4 5 5,87 6
================== ========== ======== ========= ===== ============ ========
Balance at 1 January
2020 1,687 2,014 587 39 104 1,445 5,876
Additions - 28 10 1 5 255 299
Foreign currency
translation
difference (158) (189) (56) (4) (10) (140) (557)
------------------ ---------- -------- --------- ----- ------------ --------
Balance at 31 December
2020 1,529 1,853 541 3 6 99 1,560 5,618
================== ========== ======== ========= ===== ============ ========
Depreciation
Balance at 1 January
2019 581 1 , 335 282 12 32 - 2 , 242
Depreciation for the
period 53 312 4 6 6 9 - 426
Disposals - (14) - (1) (2) - (17)
Foreign currency
translation
difference 5 1 2 2 - - - 19
------------------ ---------- -------- --------- ----- ------------ --------
Balance at 31 December
2019 639 1 , 645 3 30 17 39 - 2 , 6 70
================== ========== ======== ========= ===== ============ ========
Balance at 1 January
2020 639 1 , 645 330 17 39 - 2 , 670
Depreciation for the
period 51 294 42 7 12 - 4 0 6
Foreign currency
translation
difference (61) (160) (3 2 ) (2) (3) - (258)
------------------ ---------- -------- --------- ----- ------------ --------
Balance at 31 December
2020 629 1 , 779 34 0 22 48 - 2 , 818
================== ========== ======== ========= ===== ============ ========
Carrying amounts
At 1 January 2019 1,030 501 144 11 43 474 2,203
================== ========== ======== ========= ===== ============ ========
At 31 December 2019 1,048 369 2 57 22 65 1,445 3,2 06
================== ========== ======== ========= ===== ============ ========
At 31 December 2020 900 74 201 14 51 1,560 2,800
================== ========== ======== ========= ===== ============ ========
During 2020 depreciation expense of US$380 thousand (2019:
US$394 thousand) has been charged to cost of sales, excluding cost
of finished goods that were not sold at year-end, US$25 thousand
(2019: US$ 26 thousand) - to administrative expenses, and US$1
thousand has been charged to cost of finished goods that were not
sold at the year-end (2019: US$25 thousand). Construction in
progress relates to upgrades to the processing plant associated
with the expansion of the facility.
The Company is planning to procure an electric arc furnace which
will be used in production of ferro-vanadium and ferro-nickel. This
furnace has been designed, contracts agreed and will take some six
months to build once the order is placed.
6 Exploration and evaluation assets
The Group's exploration and evaluation assets relate to
Balasausqandiq deposit. During the year ended 31 December 2020 the
Group capitalised the expenses on services of Coffey Geotechnics
Ltd regarding development of a feasibility study as exploration and
evaluation assets (in 2019: US$Nil). As at 31 December 2020 the
carrying value of exploration and evaluation assets was US$0.8m
(2019: US$0.059m).
2020 2019
$000 $000
------ ------
Balance at 1 January 59 59
Additions (feasibility study) 770 -
Change in estimate (asset restoration
obligation) (14) -
Foreign currency translation difference (2) -
Balance at 31 December 813 59
------ ------
7 Inventories
31 December
31 December 2020 2019
$000 $000
---------------- -----------
Raw materials and consumables 434 1,575
Finished goods 75 172
Work in progress 185 -
Goods in transit - 3
694 1,750
---------------- -----------
During 2020 inventories expensed to profit and loss amounted to
$2,580 thousand (2019: $1,756 thousand)
8 Prepayments
31 December
2020 31 December 2019
$000 $000
----------- ----------------
Non-current
Prepayments for equipment 1,467 1,148
1,467 1,148
----------- ----------------
Current
Prepayments for goods and services 52 38
----------- ----------------
52 38
----------- ----------------
The prepayments for equipment is related mainly to high-voltage
powerline connection. For more details see Report on
production.
9 Equity
(a) Share capital
Number of shares unless otherwise stated Ordinary shares
31 December 2020 31 December 2019
---------------- -------------------------
Par value - -
Outstanding at beginning of year 312,978,848 305,471,087
Shares issued 17,610,204 7,507,761
----------------
Outstanding at end of year 330,589,052 312,978,848
---------------- -------------------------
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.
On 6 January 2020 the Company's shares were admitted to listing
on the Astana International Stock Exchange (AIX).
From 23 January 2020 the Company's shares were delisted from the
Kazakh Stock Exchange (KASE).
During 2020 the Company issued 16,846,154 ordinary shares of no
par value by way of a direct subscription into the Company for cash
at prices from 6.5 to10 pence per share, raising a total of
GBP1,300,000.
In June 2020 the Company issued 764,050 ordinary shares of no
par value at 8 pence per share in lieu of fees in the amount of
$75,000 to pay salary to non-executive directors.
Reserves
Share capital: Value of shares issued less costs of
issuance.
Additional paid in capital: Amounts due to shareholders which
were waived.
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 permanent as equity.
Accumulated losses: Cumulative net losses.
(b) Dividends
No dividends were declared for the year ended 31 December
2020.
(c) (Loss) earnings per share (basic and diluted)
The calculation of basic and diluted (loss) / earnings per share
has been based on the following loss attributable to ordinary
shareholders and weighted-average number of ordinary shares
outstanding. There are no convertible bonds and convertible
preferred stock, so basic and diluted losses re equal.
(i) Loss attributable to ordinary shareholders (basic and diluted)
2020 2019
$000 $000
------- -------
Loss for the year, attributable to
owners of the Company (3,944) (3,342)
------- -------
Loss attributable to ordinary shareholders (3,944) (3,342)
------- -------
(ii) Weighted-average number of ordinary shares (basic and diluted)
Shares 2020 2019
----------- -----------
Issued ordinary shares at 1 January
(after subdivision) 312,978,848 305,471,087
Effect of shares issued (weighted) 6,812,878 5,718,240
Weighted-average number of ordinary
shares at
31 December 319,791,726 311,189,327
----------- -----------
Earnings (loss) per share of common
stock attributable to the Company
(basic and diluted) (0.012) (0.011)
----------- -----------
10 Subsequent events
Investment agreement
On 15 March 2021 the Company signed an Investment Agreement with
Vision Blue Resources Limited under the terms of which Vision Blue
Resources has agreed to make investments of $10.1m subject to
certain conditions, and has options to invest a further $32.5m at
varying prices per share. In pursuit of this agreement, the Company
issued 24,741,021 ordinary shares for cash at a price of 9 pence
per share to raise $3.1m to finance the further expansion of the
existing process plant and completion of the bankable feasibility
study.
Subscription for bonds
On 8 February 2021 investors subscribed for 58 of the Company's
bonds with a nominal value of US$2,000 each. The bonds are
unsecured, have a three-year term, and bear interest of 7.0%, paid
twice-yearly.
On 12 March 2021 investors subscribed for 184 of the Company's
bonds with a nominal value of US$2,000 each. The bonds are
unsecured, have a three-year term, and bear interest of 7.0%, paid
twice-yearly.
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END
FR FRMATMTTTBTB
(END) Dow Jones Newswires
June 28, 2021 02:00 ET (06:00 GMT)
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