TIDMFAR
RNS Number : 1735O
Ferro-Alloy Resources Limited
30 January 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 (INCLUDING AS IT
FORMS PART OF THE LAWS OF ENGLAND AND WALES BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").
30 January 2023
Ferro-Alloy Resources Limited
("Ferro-Alloy" or the "Company")
Trading update, operational update and receipt of grant funding
for electrolyte
Ferro-Alloy Resources Limited (LSE:FAR), the vanadium producer
and developer of the large Balasausqandiq vanadium deposit in
Southern Kazakhstan , announces a general trading update, an update
on the planned expansion of the existing processing plant treating
purchased concentrates and the receipt of Kazakhstan grant funding
for a vanadium electrolyte project
Trading Update
During Q4 2022 and primarily in December, the Company
experienced delays in the delivery of concentrates to the
processing plant which resulted in reduced output. The Company
therefore focused on the initiation of nickel concentrate
production which partially mitigated the impact but did not fully
make up the shortfall. Consequently, the trading results for the
final quarter of 2022 and the first half of January 2023 have been
lower than anticipated.
Concentrate deliveries have now started to arrive at the plant
site in significant quantities and, to help avoid repetition of the
shortfall, the Company has signed a new regular concentrate
delivery contract with an additional supplier, the first
consignment of which is scheduled for delivery at the plant site in
March 2023.
Nevertheless, the shortfall of production experienced during the
final quarter of 2022, and in particular December, will negatively
impact the Company's 2022 financial results. Gross revenue for the
year ended 31 December 2022 is expected to be in the region of
US$6.8m with a net loss expected to be in the region of US$3.3m,
lower than current market expectations, subject to the finalisation
of the year end accounts. The Company's cash position at 31
December 2022 was US$4.2m (2021: US$2.8m).
Existing Processing Plant Update
Vanadium pentoxide circuit
The design of the Company's new dissociation oven to convert AMV
to vanadium pentoxide, for which a higher price is obtained, has
been modified to allow for the future production of various oxides
of vanadium as part of the electrolyte project noted above. The
oven is in transit to the plant and will be commissioned
immediately upon receipt. A previous dissociation oven, procured
for this purpose in 2021, was diverted to the more profitable use
of drying calcium molybdate prior to smelting to produce
ferro-molybdenum.
The Company has also installed a further press-filter which is
used in a subsequent process to re-pulpate the solid residues and
achieve an additional recovery of vanadium, increasing the overall
recovery of vanadium from the concentrates.
Ferro-molybdenum circuit
The augmentation of the molybdenum recovery circuit has been
completed and is operating well. The capacity of the molybdenum
extraction process has almost doubled, although the actual amount
produced will depend on the molybdenum content of the purchased
concentrates.
Nickel circuit
After extraction of vanadium and molybdenum from the purchased
concentrates, the solid residues contain low grades of nickel
which, until the end of 2021, were sold at relatively low prices.
Since the beginning of 2022, the nickel-rich residues have been
stockpiled and the Company has installed a new roasting oven and
associated equipment to upgrade the nickel content to a level which
can be sold at commercial nickel concentrate prices or further
treated to produce ferro-nickel.
The circuit operates by way of a roasting and leaching process
to upgrade the concentrate to a grade which can be sold for around
half of the prevailing international nickel metal price. During
December 2022, the Company tested the process and developed the
appropriate operating regimes, producing 6.8 tonnes of contained
nickel in concentrate.
The process produces an additional by-product comprising sodium
hydroaluminate which can also be potentially sold, providing a
possible third revenue stream.
The flexibility to use the new equipment for nickel
concentration or further vanadium production, and the option to
further treat the nickel concentrate to make ferro-nickel, will
allow the Company to optimise the configuration to suit the
availability of concentrates, local product and reagent prices and
thereby maximise profitability.
Vanadium Electrolyte Grant Funding
The Company's wholly owned Kazakhstan subsidiary, TOO Firma
Balausa ("Balausa"), is to receive grant funding of KZT300 million
(approximately US$638,000) (the "Grant") for the development of
technology for the production of mixed vanadium oxides for use in
vanadium redox flow batteries ("VRFBs"). The Grant funding will be
received by Balausa during the course of 2023 and 2024.
The decision to award the Grant was made by Kazakhstan's
National Scientific Council which awarded the Grant for the most
promising commercialisation of the results of scientific and
scientific-technical activities.
Balausa will provide contributing funding of KZT60 million
(approximately US$128,000). The total funding will be used to
install the equipment needed at the existing plant to manufacture
the mixed vanadium oxides required to produce vanadium electrolyte
and to procure and install test-equipment and a VRFB at the
premises of the Physical-Technical Institute in Almaty, a part of
the Satbayev University.
After further development and testing of the technology and the
evaluation of the performance of the VRFB, the project involves the
production and sale by Balausa, on a commercial basis, of three
tonnes of mixed vanadium oxides. Balausa will have ownership of all
project assets and will receive all revenues, continuing after the
project period.
The project is scheduled to last for 26 months, after which the
Company plans to continue the production of vanadium oxides to
satisfy any regional demand for electrolyte or for other
purposes.
The Company announced on 2 September 2020 that it had developed
and patented the technology to produce vanadium electrolyte
directly from ammonium metavanadate ("AMV"). The ability to make
vanadium electrolyte directly from AMV provides not only the
required know-how to enter this market, but also a cost advantage
over traditional processes. The Grant will enable the next steps to
be taken to progress the commercialisation of vanadium
electrolyte.
Outlook for 2023
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 being operationally profitable 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; and
-- 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.
The main activity in 2023 will continue to be the completion of
the feasibility study into the giant Balasausqandiq vanadium
project, expected in Q4 2023.
Nick Bridgen, CEO, commented : "The completion of these plans
means that we are now recovering far more value from each tonne of
concentrate treated, greatly increasing operating margins. Together
with the new procurement contract, which should greatly increase
the tonnes throughput, the impact on 2023 should be
substantial."
S
For further information, visit www.ferro-alloy.com or contact:
Ferro-Alloy Resources Nick Bridgen (CEO) info@ferro-alloy.com
Limited / William Callewaert
(CFO)
Shore Capital Toby Gibbs/John More
(Joint Corporate Broker) +44 207 408 4090
Liberum Capital Limited Scott Mathieson/William
(Joint Corporate Broker) King +44 20 3100 2000
St Brides Partners
Limited
(Financial PR & IR Catherine Leftley/Ana
Adviser) Ribeiro +44 207 236 1177
Notes to Editors
About Ferro-Alloy Resources Limited:
The Company's operations are all located at the Balasausqandiq
deposit in the Kyzylordinskaya Oblast in the South of Kazakhstan.
Currently the Company has two main business activities:
a) the high grade Balasausqandiq vanadium project (the
"Project"); and
b) an existing vanadium concentrate processing operation (the
"Existing Operation").
Balasausqandiq is a very large deposit, with vanadium as the
principal product together with several by-products. Owing to the
nature of the ore, the capital and operating costs of development
are very much lower than for other vanadium projects.
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.
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END
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