Ferro-Alloy Resources Limited (LSE:FAR), the vanadium producer and developer of the large Balasausqandiq vanadium deposit in Southern Kazakhstan, has announced a strategic update following the successful carbon black substitute (“CBS”) product marketing study and the sale of a fourth tranche of the Company’s Kazakhstan Exempt Offer Bond Programme with a nominal value of US$5 million.
Summary
· In order to pursue the commercial opportunities in CBS revealed by the Smithers Study, the focus of the Company’s operating plant will be switched to research and development (“R&D”) to complete and optimise the ongoing feasibility study, including the development of markets for the Company’s CBS product.
· The Smithers Study (see announcement dated 21 November 2024) estimated the price of the Company’s CBS product at US$500 per tonne in the tyre market and between US$550 – US$600 per tonne in the non-tyre market (excluding any value attributable to the product’s strong sustainability credentials).
· As previously announced on 27 July 2023, the Company launched a new Exempt Offer Bond Programme where all bonds issued under the Programme will be listed on the Astana International Exchange (“AIX”) in Kazakhstan.
· The first three tranches of bonds have already been sold for US$13 million and the Company has now sold a fourth tranche of bonds (the “Fourth Tranche”) with a nominal value of US$5 million, issued at par.
· Under the terms of the Programme, US$2 million of headroom remains for the issue of future tranches by the Company.
Research and Development
The focus of the current production facilities will be moved to R&D that will expedite and optimise the feasibility study and increase marketing opportunities. The main R&D projects will be:
· Completion and commissioning of the carbon concentrator, directly treating ore from the Balasausqandiq deposit, aimed at finalising the technology and providing materials for the development of markets for the Company’s CBS product
· Development of processes to achieve high-purity vanadium oxides which will open marketing opportunities to access higher market prices for future vanadium production
· Completion of the process changes and commissioning of the production of special vanadium oxides needed for the production of battery electrolyte
· Optimisation of leaching technology, including the patented process for the sorption and desorption of low-grade vanadium solutions and enhanced leaching of Balasausqandiq ore to further improve the existing processes already successfully tested in the current feasibility study work
Plant Operations
With the focus now on completion and optimisation of the feasibility study, the process plant operations will be conducted only when suitably profitable raw materials are available. Ongoing operating costs are being reduced to enable the facilities to be operated principally as an expanded R&D centre. Consequently, quarterly production figures will not be published going forwards.
Commenting on the new strategy and the bond sale, Nick Bridgen, CEO of Ferro-Alloy Resources said:
“The successful raising of US$5m by the issue of bonds enables us to refocus all our efforts on expediting and optimising the feasibility study, including the piloting of the carbon black substitute we announced on 21 November. The bulk of the feasibility study is now complete and we expect to be able to announce several updates over the next few months before completion during the second quarter of 2025.”
Fourth Bond Tranche
· On 29 November 2024, the Company listed and sold the Fourth Tranche issued under the Programme on the AIX.
· The net proceeds of $4.7 million from the sale of the Fourth Tranche will be used to complete the ongoing feasibility study for the Balasausqandiq project.
· A summary of the salient terms and conditions of the Fourth Tranche is as follows:
– ISIN: KZ000003348
– Specified currency: US Dollars
– Face value: US$100 (one hundred US dollars)
– Number of bonds: 50,000 (fifty thousand) units
– Aggregate principal amount: US$5,000,000 (five million US dollars)
– Issue date: 29 November 2024
– Maturity date: 29 November 2027
– Coupon rate: 13.5% fixed of the nominal value of the bonds issued
– Frequency of interest payments: quarterly, 28 February, 29 May, 29 August and 29 November of each year during the circulation period, commencing on 28 February 2025
– Coupon basis: 30/360
– Issue price: 100%
– Put option: within seven calendar days starting from 29 November 2026 the Company shall, at the option of a bondholder, upon the bondholder giving relevant notice to the Company within 30 calendar days starting from 29 September 2026, repurchase such bonds at 100% of their nominal value together with the interest accrued on the date of actual repurchase.
· Trading of the Fourth Tranche will commence on 2 December 2024.
