Ferro-Alloy Resources Limited (LON:FAR), the vanadium producer and developer of the large Balasausqandiq vanadium deposit in Southern Kazakhstan, has announced its final results for the year ended 31 December 2022.
In addition, the Company announces that on the 27 April 2023 it received the results of the revised mineral resource estimate (“MRE”) from SRK Consulting Ltd (“SRK”) for Ore-Body 1 (“OB1”) at the Balasausqandiq deposit. Selected highlights from the report are summarised below with a full announcement expected to be released on 2 May 2023, once management has reviewed the full report.
MRE selected highlights (post period)
· An Indicated Mineral Resource of 32.9 million tonnes for OB1 at a mean grade of 0.62% V2O5 reported at a marginal cut-off grade of 0.4% V2O5 – equating to 203,364 contained tonnes of V2O5
· An increase of 8.6 million tonnes (35.4%) of mineral resource and an increase of 38,058 tonnes (23%) of contained V2O5 by comparison to the Company’s 2018 Competent Persons Report
· The results of the previously reported infill drilling and trenching programs completed during 2021/22 have been successful in converting 100% of the Resources to Indicated for the OB1 deposit. No Measured or Inferred Resource are stated
Financial and corporate highlights
· Group revenues of US$6.27m (2021: US$4.73m), a 28% increase over the period, but slightly below market expectations
· The Group made an overall loss for the year of US$4.29m (2021: loss of US$2.83m), a greater loss than market expectations, mainly attributable to the difficulties importing raw materials during the period, increased costs of associated reagents and fuel
· Cash in the bank of US$4.33m as at 31 December 2022 (2021:US$2.81m)
· Successful equity fundraising of US$10.0m (approximately £8.6m) in September 2022 to advance the feasibility study on the Balasausqandiq deposit
· Continue to develop the Group’s senior management in readiness for the main project inception with the appointment of William Callewaert as Chief Financial Officer, Baurzhan Tleulinov as Mine Project Director and Anvar Moldakhanov as Kazakhstan Finance Director
Feasibility study
The feasibility study for Stage 1 of the Balasausqandiq project is expected to be completed in the final quarter of 2023 with Stage 2 to follow in 2024.
Work is progressing well and continues to support or exceed the results of previous company test work that was disclosed in the 2018 Competent Persons Report, which indicated a transformative vanadium project producing some 22,400 tonnes of vanadium pentoxide per annum (over 10% of current world supply), with an operating margin of almost 80% and a project Net Present Value of c.US$2 billion with relatively modest capital expenditure.
Progress during the period includes:
· Completion of the drilling programme for Ore-Bodies 1,2,3 and 4
· Open pit geotechnical drilling for Ore-Body 1 has been completed with mechanical testing pending
· Open pit hydrogeological drilling completed
· Full site topographical survey completed
· Metallurgical testing nearing completion indicates high metallurgical recovery in line with previous Company test work
· Carbon flotation tests show that a >40% carbon concentrate can be made with good overall carbon recovery. Test work on the resulting rubber performance shows that partial substitution of this concentrate for carbon black in the production of rubber for tyres can be made without loss of performance
Existing operation
Although operations during the year were severely impacted by difficulties importing raw materials, the Group has made significant progress with the development of the existing operation.
· The planned expansion of the plant to increase production and to recover more value from each tonne treated was completed, including:
– Approximately doubling the potential maximum recovery of molybdenum from additional ion-exchange resin
– Adding a third roaster to the vanadium pentoxide line to increase maximum throughput of treatable concentrates and a fourth roaster for the nickel process
– Installation of three new press filters
– Commissioning of a new equipment to convert ammonium metavanadate to vanadium pentoxide that commands better product pricing in the market
– Implementing a plan to convert the fuel of the roasting ovens used by the plant from diesel to gas
· Increased the number of vanadium concentrate supply contracts and diversified source location in order to minimise the risk of failure of delivery of concentrates by any one supplier
· Funding from a Kazakhstan government agency was received to undertake a project leading to the production of vanadium oxides for making electrolyte for vanadium redox flow batteries
Reconciliation of year end losses
· The Company announced a preliminary unaudited loss for the year in January in the region of US$3.3m. The further losses being reported of c. US$1m incurred following the finalisation of the year end accounts and are a result of:
– c. US$210,000 of negative pricing adjustments incurred on long duration delivery sales contracts due to the falling price of vanadium between June and November
– c. US$160,000 of post year end stock provisions made against slow moving and obsolete stock lines held by the Group at the year end
– c. US$55,000 of obsolete asset write offs for Group equipment that can no longer be repaired or do not have a future useful life
– c. US$205,000 of administrative expenses incurred by the Group after the year relating to 2022 trading activity
– c. US$370,000 of foreign exchange losses incurred on finalised year end balances and transactions completed during the year
Outlook
· Positive updated MRE report on the OB1 deposit shows an increase in contained metal and the successful conversion of 100% of the Resources to Indicated – post period
· In Q1 2023 a contract was signed with a significant new ongoing supplier of raw materials to compensate for the shortfalls being experienced from existing suppliers
· The Group’s assumption is for metal prices to remain at current levels of around US$9.50/lb of vanadium pentoxide and US$24.3/kg of nickel for the remainder of 2023. Molybdenum prices have come down from the exceptionally high levels of early 2023 but are expected to remain at current levels of around US$53/kg.
· With the plant now fully developed and with concentrates expected to be in good supply, the Company believes that both the production and financial results for 2023 are likely to be significantly better than 2022 and result in the Company operating profitably because of:
– increased quantity of concentrates to be treated
– increased recoveries of vanadium, molybdenum and nickel from each tonne treated
– higher prices expected for vanadium as a result of the conversion of AMV to vanadium pentoxide or other oxides
– return to more normal levels of transport, fuel and reagent costs which in 2022 were impacted by the ending of the pandemic and the commencement of the Ukrainian invasion.
Sir Mick Davis, Non-executive Chairman, commented:
“The management team has acted to address external pressures related to the constrained raw material supply which impacted financial results during the year.
Another successful capital raise in September, followed by the endorsement of the recent mineral resource estimate, enables the Company to continue its journey towards becoming an important global vanadium producer. At the same time, it is encouraging to see continuing growth in demand for vanadium serving both the growing stainless steel and battery market segments.”
Commenting on the results, Nick Bridgen, CEO of Ferro-Alloy Resources said:
“It is extremely encouraging that the feasibility study results so far have met or exceeded the Company’s previous work which shows how transformative the Balasausqandiq project will be for the world’s vanadium industry.
“The existing operation has been impacted by supply difficulties during 2022 but the plant is now fully developed and, with concentrates in good supply, we expect the existing plant to operate profitably from now on, producing a meaningful contribution to the development of the Balasausqandiq project.
“I am also delighted to have received the updated MRE report from SRK which has shown some encouraging results at our OB1 deposit. We are reviewing the report and will provide shareholders with an update on 2 May 2023.”
Report on Operations
Strategy
Operational Review
During 2022 and the first quarter of 2023, the Group made significant progress with the ongoing feasibility study into the development of the transformative Balasausqandiq vanadium deposit as well as the expansion of the existing operations treating bought-in vanadium concentrates.
Feasibility study
The progress made by the Group on the Stage 1 feasibility study is covered more fully by the feasibility study review.
The highlights of that review are:
– Completion of the drilling programme for Ore-Bodies 1,2,3 and 4;
– Imminent publication of the revised mineral resource estimate for Ore-Body 1 (“OB1”);
– Mine planning for Stage 1 of the feasibility study to commence post publication of the OB1 mineral resource estimate;
– Open pit geotechnical drilling for OB1 has been completed with mechanical testing pending;
– A full site topography survey has been taken;
– Extraction of vanadium during acid leaching shows 94-97% vanadium extraction into solution and 95% adsorbed in ion-exchange in line with previous Group test work; and
– Flotation tests show that a >40% carbon concentrate can be made with good overall carbon recovery. Test work on the resulting rubber performance shows that partial substitution of this concentrate for carbon black in the production of rubber for tyres can be made without loss of performance.
Existing operation
The existing operation is the result of the conversion and expansion of the large scale test-plant that was constructed to pilot and test the metallurgical processes to be used in the main Balasausqandiq project.
This operation will provide a cash flow to assist with the substantial ongoing costs of the preparation of the feasibility study and to contribute to the construction costs of the Balasausqandiq project mining operations.
A second objective is to retain the high-quality technical and operating team that developed the metallurgical processes to be used in the main Balasausqandiq project so that they are available to assist with the feasibility study, design and future construction and operation of Stage 1 and Stage 2 of the Balasausqandiq project. As a result, the Group’s work-force is experienced and will have a high level of technical and operational expertise prior to commissioning of the mine. This significantly de-risks the project.
Plant developments
The original test-plant has been adapted to treat bought-in vanadium concentrates. During 2022 and the start of 2023, the plant has been significantly expanded and equipment added to enable the full recovery of all of the components of the purchased concentrates so that a great deal more value is extracted from each tonne treated and, more importantly, no tailings or other residues are left on-site.
Although the plant is designed to be flexible and able to treat a variety of raw materials, the most common raw materials are the spent (charged) catalysts used to remove impurities from crude oil in refineries. These typically contain vanadium, molybdenum and nickel, all of which can now be recovered.
Specifically, the Group has completed the following installations at the plant during the year:
· Added a third roaster to the vanadium pentoxide line to increase maximum throughput of treatable concentrates;
· Added a fourth roaster to either upgrade the low-grade nickel residues to high-grade nickel concentrates, or to provide additional vanadium pentoxide throughput capacity, depending on market prices and demand;
· Procured the equipment to convert the roasting fuel used by the plant from diesel to natural gas (to be commissioned in May 2023);
· Approximately doubled the maximum recovery of molybdenum by the addition of additional ion-exchange resin tanks;
· Installed three new press filters;
· Commissioned a new dissociation oven to convert ammonium metavanadate (“AMV”) to vanadium pentoxide;
· Purchased a new product drying oven; and
· Equipped a new ferro-molybdenum department to provide greater smelting capacity and better environmental control.
Together, these additions have transformed the operating capability of the Group by not only increasing throughput capacity but also maximising the value recovered from each tonne treated.
Production
During the year, production of vanadium pentoxide and molybdenum (in ferro-molybdenum) amounted to 305.5 tonnes (2021: 259.6 tonnes) and 36.0 tonnes (2021: 38.7 tonnes), respectively.
| Quarter | Production of Vanadium pentoxide(tonnes of vanadium pentoxide contained in AMV) | Growth vs last year | Production of Molybdenum(tonnes of molybdenum contained in ferro-molybdenum and in calcium molybdate) | Growth vs last year |
| Q1 | 81.1 | +41% | 11.3 | -18% |
| Q2 | 91.7 | +197% | 10.4 | +395% |
| Q3 | 69.9 | – | 11.0 | -19% |
| Q4 | 62.8 | -38% | 3.3 | -65% |
| 2022 total | 305.5 | +17.7% | 36.0 | -7% |
The plant also produced a nickel concentrate for sale to customers during the year.
Production during 2022 was severely disrupted by a combination of factors that affected deliveries of concentrates available for processing at the plant.
At the beginning of 2022 both concentrate supplies and transport routes continued to be adversely affected by residual Covid-19 issues as well as the piecemeal re-opening of the global economy following lockdown. Domestic riots in Kazakhstan during January caused further, albeit short-term, disruption, and then in February, the Russian invasion of Ukraine resulted in increased disruption across the Group’s supply and transport networks.
As a result, transportation prices increased dramatically and some of the usual freight routes into Kazakhstan were blocked, requiring longer and more expensive routing. Similarly, the cost and availability of reagents and, particularly, diesel, were also impacted by the geo-political disruption. Diesel prices rose significantly over the year and, at times, became unavailable.
In order to mitigate future concentrate supply issues in light of the ongoing regional geo-political disturbance and other factors, the Group has:
i. increased the number of vanadium concentrate supply contracts and diversified source location in order to minimise the risk of failure of delivery of concentrates by any one supplier; and
ii. implemented a plan to convert the fuel intake of the roasting ovens used by the plant from diesel to natural gas which will not only be cheaper, but also be more reliable and will make use of more widely available gas supplies in the region.
Product prices remained broadly stable during the year:
| Start of 2022 | Average for the year | Current (21 April 2023) | |
| Vanadium pentoxide (US$/lb) | 8.50 | 9.19 | 9.50 |
| Ferro-molybdenum (US$/kg of Mo) | 44.00 | 43.95 | 53.00 |
| Nickel (US$/kg) | 20.72 | 25.60 | 24.33 |
Development of VRFBs
Vanadium VRFBs (vanadium redox flow batteries) are a means of energy storage particularly suitable for the longer-duration storage of energy from intermittent renewable sources in order to make energy available at night and when there is no wind. VRFBs have certain advantages over lithium-ion technology, including being scalable, not degrading over time and not catching fire, which make them more suitable for bulk energy storage.
The world-wide roll-out of VRFBs appears to have started and although forecasts vary, the general expectation is for the demand for vanadium for electrolyte purposes to expand to become a significant part of overall vanadium demand.
The Group has been awarded a grant from the Kazakhstan Science Fund to produce vanadium oxides for the production of vanadium electrolyte for use in VRFBs. The grant will be used to buy additional production equipment and to modify existing equipment to produce vanadium tri-oxide, a test VRFB and some related equipment for laboratory use. After a period of testing and development, the plan is to continue to produce and market vanadium tri-oxide and, if there is demand in the local region, to supply electrolyte. The aim is to position the Group to be able to supply at a large scale into this potentially very large market when the main Balasausqandiq project is commissioned.
Production outlook
The planned expansion of the existing operation is now complete. The plant is, therefore, capable of making significant cash flows to fund the ongoing costs of completing the Stage 1 feasibility study and contribute to the funding of the future construction of the Balasausqandiq facilities.
In order to prevent the recurrence of the concentrate supply problems of 2022 and early 2023, the Group has signed additional concentrate supply contracts. Supplies under previous contracts have resumed and are expected to continue, so the board of directors (“the Directors” or “the Board”) are optimistic that the historic supply problems have now been resolved.
Vanadium prices are strong, and although difficult to forecast, the Group’s assumption is for them to remain at current levels of around US$9.50/lb of vanadium pentoxide and US$24.3/kg of nickel. For the remainder of 2023. Molybdenum prices have come down from the exceptionally high levels of early 2023 but are expected to remain at current levels of around US$53/kg.
With the plant now fully developed and with concentrates expected to be in good supply, the Group expects the existing plant to operate profitably, producing a meaningful positive cash flow, for the remainder of 2023 and beyond.
Financial Review
Earnings
The Group reported increased revenues of US$6.27m for the year compared to US$4.73m in 2021, reflecting a 33% increase in sales over the period.
| US$’000 | 2022 | 2021 |
| Revenue from shipments recorded at the price at time of dispatch | 6,773 | 4,709 |
| Adjustments to revenue after final price determination and fair value changes | (502) | 22 |
| Total Revenue | 6,271 | 4,731 |
Revenue is recognised at the time of transfer of control of the Group’s products to the customer but, as is common in the industry, the final pricing determination is often based on assay and prices after arrival of the goods at the final port of destination. The adjustments to revenue reflect these final pricing determinations which occur after the relevant revenue is initially recognised.
Between mid-June and the end of November the market price of vanadium pentoxide fell from around US$10.50/lb to c. US$7.50/lb and, therefore, a number of the Group’s sales contracts entered into before June were subject to a negative final pricing determination upon arrival at the final port of destination leading to an overall negative revenue adjustment of c. US$0.5m for the year. The price of vanadium pentoxide has subsequently risen to c. US$10/lb after the year end.
Cost of sales increased to US$7.5m from US$4.9m in 2021 primarily reflecting increases in the prices of the raw materials used in the production process of AMV and other products. In particular, as a result of the Russian invasion of Ukraine, a number of the reagents used by the plant and sourced from the CIS significantly increased in price during the year, as did the cost of diesel. The prices of reagents and diesel have both stabilised after the year end, and as noted in the Operational Review, the Group is taking steps to convert the fuel supply for the roasting ovens from diesel to natural gas which is a significantly cheaper form of fuel and more widely available in country. The largest part of the 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 the prices prevailing at the time of purchase.
Administrative expenses of US$2.5m (2021: US$2.5m) were broadly in line with the prior year other than wages and salary costs which have increased by approximately US$0.58m as a result of the recruitment of a number of senior management employees during the year including a group finance director, mine project director and Kazakhstan finance director. The Group has not suffered any non-refundable VAT write-downs during the year as was the case in 2021 (US$0.5m).
The Group incurred other expenses during the year of US$0.43m (2021: US$0.011m) comprising currency conversion losses (representing transactional foreign exchange differences), an agreed write down of slow moving / obsolete stocks held at the existing plant and the write-off of unrepairable factory equipment.
The Group made an overall loss for the year of US$4.29m (2021: loss of US$2.83m).
Cashflow
Net cash outflows from operating activities, before changes in working capital, for the year totalled US$3.46m (2021: US$4.98m) following adjustments for depreciation, amortisation, inventory write-downs and net finance gains. Changes in trade and other receivables increased to US$1m (2021: US$0.4m) as a result of the recognition of a significant VAT refund due from the Kazakh tax authorities at the year end (received after the year end). Changes in trade payables increased to US$1.56m (2021: decrease US$ 0.85m) in light of substantial orders of concentrates for processing at the existing plant, yet to be paid for by the Group.
Net cash outflows from investing activities totalled US$4.3m (2021: US$2.5m) and included US$1.47m (2021: US$2.2m) of capital expenditure associated with the planned expansion of the processing operation’s production facilities (see Operational Review) and US$2.87m (2021: US$0.33m) of expenditure on the Stage 1 feasibility study capitalised as an exploration and evaluation asset (see Note 13).
Net cash inflows from financing activities for the year were US$9.19m (2021: US$10.06m), representing the proceeds of the US$10m cash equity fundraise conducted during the year (2021: US$5.9m) less the costs of the fundraise of US$0.43m (2021: US$0.24m), repayment of a bondholder entitled to an early redemption of US$0.3m (2021: proceeds received of US$0.48m) and interest payable to the Company’s residual bondholders of US$0.08m (2021: US$0.08m).
The Group held cash of US$4.33m at 31 December 2022 (2021: US$2.81m).
Balance sheet review
Total non-current assets increased to US$10.93m from US$7.25m principally due to the continued capitalisation of the feasibility study as an exploration and evaluation asset and the addition of new equipment at the production plant.
Current assets increased from US$5.7m to US$8m, reflecting a significant VAT refund due from the Kazakh tax authorities at the year end and an increase in cash from the finance raising activities completed during the year, as noted below.
Total non-current liabilities decreased by approximately US$0.9m during the year from US$0.94m to US$0.03m as a result of the Company’s outstanding bond liabilities being reclassified to current liabilities to reflect their maturity in March 2023.
Current liabilities increased from US$1.34m to US$3.5m as a result of the outstanding bond reclassification noted above and the purchase of significant quantities of concentrate for the existing operation prior to the year end.
Corporate
During September 2022, the Company completed an equity fundraise by way of a placing, in addition to direct subscriptions, of ordinary shares of the Company. As a result, the Company issued 72,025,351 new ordinary shares for cash at a price of 12 pence per share raising a total of £8.64m (US$10.0m).
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 deposit 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 Group 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 (refer to the Operational Review for further information).
Feasibility Study Review
The main objective of the Group is to bring into production the Balasausqandiq deposit and to build a processing plant to treat one million tonnes of ore per year (Stage 1) mined from OB1 and later increase to a total of four million tonnes per year (Stage 2) through the additional mining of Ore Bodies 2, 3 and 4 (“OB2, 3 and 4”).
An initial feasibility study has been completed under Kazakhstan standards and is in the process of being upgraded and expanded to western bankable standards by the Group’s appointed feasibility study consultants, SRK Consulting (Kazakhstan) Limited.
Balasausqandiq deposit
The Balasausqandiq deposit is exceptional in a number of ways. Primarily, it is not a typical vanadiferous magnetite deposit but a sedimentary deposit and is expected to have far lower capital and operating costs.
Furthermore:
· The ore is amenable to a whole-ore pressure acid leach process which gives a far higher metallurgical recovery than conventional magnetite extraction;
· Pre-concentration of the ore and high temperature roasting are not required;
· There are potentially valuable by- or co- products within the ore, principally carbon, which can be easily recovered without significant additional processing;
· Major infrastructure items of power and road and rail connections already exist on site or nearby;
· The Balasausqandiq deposit is a very large deposit and is easily mined from an open pit. Stages 1 and 2 combined envisage production of 24,000 tonnes per year of vanadium pentoxide, over 10% of known current world supply; and
· The Competent Person’s Report of 2018 indicated exceptional financial characteristics, with an overall net present value (“NPV”) of US$2 billion, an operating margin of nearly 80%, and low capital costs.
The development of the deposit is planned to be in two stages, Stage 1 and Stage 2. Stage 1 will involve the construction and operation of an initial process plant treating one million tonnes per year of ore, followed, as soon as commissioning has been successfully concluded, by a Stage 2 operation for a further three million tonnes per year. The staging is to allow for the reduction of engineering scale-up risk and to also allow time for the development of markets as production increases. The staged development also reduces the amount of capital that has to be raised for the initial development, with the second stage to be largely financed by the earnings of the first.
The feasibility study is also being carried out in two stages, with the results of the first stage scheduled to be announced in the fourth quarter of 2023 and those for the second stage in 2024.
Exploration
There are six known ore-bodies in the deposit which have been named OB1 – 6, and there is some evidence of a seventh. Of these, only OB1 had previously been explored sufficiently to declare a resource under the CRIRSCO approved standards.
The Group’s recent drilling campaign, now completed, has included 19,720 meters of drilling on OB1, 2, 3, and 4 with a view to being able to identify CRIRSCO compliant resources and, eventually, reserves, sufficient to provide feed for two stages of development, the first involving the processing of one million tonnes per year of ore, and the second an additional three million tonnes per year.
OB1
The exploration of OB1 during the year involved infill drilling and trenching to reduce the section spacing from around 500m to 250m, so as to be able to further define and upgrade the resource.
Following receipt and analysis of the assaying from the updated drilling programme, a revised resource estimate for OB1 is expected by the Company imminently.
OB2, 3 and 4
The drilling of OB2, 3 and 4 has been completed and receipt of the final assay results and corresponding mineral resource estimate is expected later in the year. Some 25% of the planned exploration area has proved to be difficult and expensive to access and as a result has not been drilled (albeit the Company does not expect the area of difficult topography to create difficulties for actual mining).
The new mineral resource estimate for these ore-bodies will exclude the area of difficult topography in the expectation that the remaining area will provide sufficient ore to feed the Stage 2 development.
Open pit geotechnical drilling
Open pit geotechnical drilling for OB1 has been completed and geotechnical sample collection and mechanical testing is currently in progress. The results of the drilling and subsequent mechanical testing programme will be used to confirm the open pit slope design.
Open pit hydrogeological drilling
Open pit hydrogeological drilling for OB1 has commenced and is expected to finish on schedule during July 2023. The results of the drilling will determine potential water inflows and pore pressures in the pit walls, providing inputs to the geotechnical and mine planning studies.
Water supply hydrogeological drilling
A geophysical survey of the water supply bore field area has been completed. The results of the survey will be used to define the fieldwork and drilling programme required to define the water extraction bore field required to support the project’s water needs.
Site topography survey
A full topography survey of the deposit utilising both aerial drone footage and satellite imagery has been completed to identify the sites most suitable for the location of the process plant and planned tailing storage facility.
Processing
Metallurgy
Extraction of vanadium during acid leaching, following initial pilot and subsequent testing, continues to be above Group expectations with 94-97% vanadium extraction into solution.
Metallurgical testing including ore body variability tests, solid liquid separation tests and ion exchange testing continues at SGS Canada Inc (“SGS”) supervised and managed by Tetra Tech Limited (“Tetra Tech”).
Testing of the carbon element of the ore has been added to the scope of work at SGS targeting a
minimum 40% carbon grade product with carbon flotation optimisation work continuing contemporaneously. Testing of the product for use in making rubber by substitution for carbon black has been successfully completed and a further test programme to produce tyre industry normative data has been commissioned.
Process design
The process plant design by Tetra Tech is focussed on employing the results of the SGS laboratory
test work to initially design the comminution, leaching circuit and full process design criteria for the Stage 1 plant.
Carbon
Test work on the extraction of a carbon concentrate and on its use as a substitute for carbon black has been included within the scope of the Stage 1 feasibility study. Flotation tests show that the necessary >40% concentrate can be made with good overall carbon recovery. Test work on the resulting rubber performance shows that partial substitution of this concentrate for carbon black in the production of rubber for tyres can be made without loss of performance. A further programme aimed at facilitating marketing is planned. Test work on an alternative use for the carbon-rich tailings for use in the smelting of ferro-silicon is ongoing.
Conclusion
The results of the feasibility study for Stage 1 so far support or exceed the results indicated in the Company’s 2018 Competent Person’s Report which indicated a project (combined Stage 1 and Stage 2) NPV of some US$2 billion.
The Company expects the publication of the Stage 1 feasibility study in the fourth quarter this year to significantly raise awareness of the emergence of this transformational addition to the global vanadium market.
Discussions with various potential investors and debt funders have already been initiated but the publication of the study will be the trigger for the finalisation of these plans.
