Ferro-Alloy Resources Limited (LON:FAR), the vanadium mining and processing company with operations based in Southern Kazakhstan, has announced its final results for the year ended 31 December 2021.
Overview
· Strategic long-term investment by Vision Blue Resources and co-investors of US$ 10.1m to date to fund completion of Balasausqandiq feasibility study and expansion of existing operations
· Balasausqandiq feasibility study further extended to assess potential for increased by-product credits, including from rare earths, that could account for more than one third of revenues. Study now expected to complete at the end of the first half of 2023
o Potential recovery of uranium, molybdenum, aluminium, potassium, and rare-earth by-products is being studied within metallurgical test-programme
o Studies already underway to assess the potential to produce ferro-silicon and high value carbon that could be used as carbon black to manufacture rubber for tyres
o Drilling of ore-body 1 completed and expanded drilling programme for remaining ore-bodies commenced. Based on the results of infill drilling of ore-body 1, drilling programme increased from 6,000 metres of core-drilling to 10,000 metres and impacted by slower than planned drilling by subcontractors
· Expansion of existing operations progressing
o Second roasting oven commissioned in 2021 with third roasting oven commissioned in March 2022
o Nickel tailings now being stockpiled in readiness for production from new nickel recovery process later in 2022
o Construction of new laboratory, warehouses and connection to adjacent reliable high voltage power line completed
· Solid production performance achieved
o 9.4% increase in vanadium pentoxide production to 260 tonnes with production rates in the second half 70% ahead of the 2020 average
o First sales of ferro-molybdenum achieved, with production of 6 tonnes of contained molybdenum in the fourth quarter
· Strengthened board and management team
o Appointment of Sir Mick Davis as non-executive chairman and Peet Nienaber as non-executive director
o Appointment of William Callewaert to the board as Chief Financial Officer in April 2022
o Process initiated to recruit an experienced project director to bring the project to production
· Improved financial results
o Revenue increased 96% to US$ 4.7m (2020:US$ 2.3m)
o Loss before tax of US$ 2.83m (2020: loss before tax of US$ 3.94m)
o The Group held cash of US$ 2.81m at 31 December 2021 (2020: US$ 0.707m)
· Improved outlook for 2022
o Third roasting oven increased capacity by 50%
o Group already operating profitably
o Nickel recovery project will increase revenues from each tonne treated with no additional raw material costs
· Price of vanadium pentoxide currently $12/lb, up from $5.4/lb at the beginning of 2021. Ferro-molybdenum and nickel prices up by 100% and 92% respectively from 1 January 2021 to date
Sir Mick Davis, Non-executive Chairman, commented:
“Ferro-Alloy has made good progress on a number of fronts following Vision Blue’s investment in early 2021 demonstrating the value we see in the Company’s assets. The expanded feasibility study is already showing the potential for Balasausqandiq to become a globally significant vanadium operation with a highly attractive suite of by-products that could eventually contribute over one third of revenues. The combination of a very large deposit, access to excellent existing power and logistics infrastructure and the potential to achieve net-negative cash vanadium production costs are highly compelling. Furthermore, increasing intensity of vanadium use in the steel sector and growing applications in energy storage gives us confidence in the future demand for the Company’s product.”
Nick Bridgen, Ferro-Alloy Resources CEO, commented:
“The Company is in an exciting phase of development as we invest in our existing operations to maximise profitability from each tonne of material treated and undertake our expanded feasibility study. Following the completion of a number of operational initiatives, including the commissioning of the third roaster in April 2022 which has materially increased our production capacity, the existing plant is performing well and is positioned to finance the remainder of the feasibility study and thereafter contribute to the development of Phase 1 of the Balasausqandiq project. We have several further operational initiatives planned in the coming months all of which are focussed on maximising profitability and cashflows from our existing operations as we continue to focus on delivering the larger growth projects ahead of us.
“In June 2021 we welcomed Sir Mick Davis to our board as non-executive chairman and Peet Nienaber and as a non-executive director, and in April 2022 we welcomed William Callewaert as Chief Financial Officer. All three of these additions greatly strengthen the experience of the board and I look forward to the next chapter with confidence.”
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, targeting annual operating cash generation of $10m.
The Existing Operation will provide not only useful cash flows but also an experienced management and infrastructure that will greatly assist and de-risk the main prize – the development of Balasausqandiq.
