TIDMFAR
RNS Number : 6907X
Ferro-Alloy Resources Limited
22 December 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").
22 December 2023
Ferro-Alloy Resources Limited
("Ferro-Alloy" or the "Group" or the "Company")
Trading Update
Ferro-Alloy Resources Limited (LSE:FAR), the vanadium producer
and developer of the large Balasausqandiq vanadium deposit in
Southern Kazakhstan announces a trading update for Q4 2023.
Background
Whilst the main focus of activity for the Company is the
completion of the feasibility study into the Balasausqandiq
vanadium deposit, the existing operation, where the Group processes
purchased concentrates to recover vanadium and other metals
utilising the expanded and upgraded pilot process plant, provides a
regular revenue stream.
The Company's revenue and profitability in the fourth quarter
have been lower than previously expected due to metal prices and
production shortfalls. Further details are set out below.
Metal prices
The existing operation primarily recovers and sells vanadium (as
vanadium pentoxide or ammonium metavanadate), molybdenum (as
ferro-molybdenum) and nickel (as nickel concentrate) from the
treated bought-in concentrates.
Market prices for all of the recovered metals have deteriorated
significantly during the quarter, largely due to decreased demand,
as identified in the table below (pricing from 1 September 2023
shown given that some sales in October 2023 will have been derived
from September 2023 market prices).
Metal Price at 1 September Price at 15 Low for Q4 to
2023 December 2023 date
Vanadium pentoxide
(US$/lb) 8.00 5.50 5.10
--------------------- --------------- --------------
Ferro-molybdenum
(US$/lb) 54.50 42.70 40.00
--------------------- --------------- --------------
Nickel
(US$/kg) 20.45 16.74 15.87
--------------------- --------------- --------------
As a result, the Company has experienced a reduction in expected
revenues during the quarter. Furthermore, concentrates were
procured earlier in the year, on the basis of higher metal values
and, therefore, trading margins have been squeezed
disproportionately.
Concentrate characteristics
Further to the Company's announcement on 10 October 2023 with
respect to incoming concentrate supplies to the existing operation,
the Company has received significant volumes of concentrates for
processing from a variety of suppliers.
These concentrates come from a range of different sources, have
different metal content and require different processing
procedures. The concentrates procured in recent months have proven
to require longer residence times than previous concentrates and
periods of experimentation with new types of concentrates have
resulted in output being reduced.
Outlook
Looking ahead to 2024, the Company will continue to work to
maintain profitability in the current low-price environment by
renegotiating concentrate costs and other contractual terms. The
Company is also experimenting with new types of concentrate which,
whilst producing the same quality of product, could be potentially
more profitable.
As already stated, the main focus of the Company's activities
will continue to be the completion of the feasibility study on the
Balasausqandiq vanadium deposit. The completion of Phase 1 of the
study was expected to be around April 2024, but due to increased
lead times for certain study workstreams, as a result of service
provider capacity constraints within the industry, it is likely to
be delayed. Revised timing will be announced when the Company has
clarification from its service providers.
Nick Bridgen, CEO, commented : "One of the challenges of the
vanadium industry is the extreme volatility of pricing, where the
current low price for vanadium pentoxide of just over US$5/lb is,
unfortunately, beyond our control and is having a negative impact
on all producers. The longer term outlook for vanadium, regarded as
a critical metal by the UK, EU and the US remains highly
encouraging and we continue to make progress towards the completion
of the feasibility study, with results so far supporting the very
strong financial expectations of our previously announced
studies."
ENDS
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/Lucy Bowden
(Joint Corporate Broker) +44 207 408 4090
Liberum Capital Limited Scott Mathieson/Kane
(Joint Corporate Broker) Collings +44 20 3100 2000
------------------------ ---------------------
St Brides Partners
Limited
(Financial PR & IR Catherine Leftley/Ana
Adviser) Ribeiro +44 207 236 1177
------------------------ ---------------------
About Ferro-Alloy Resources Limited:
The Company's operations are all located at the Balasausqandiq
deposit in Kyzylordinskoye 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.
The most recent mineral resource estimate for ore-body one (of
seven) provided an Indicated Mineral Resource of 32.9 million
tonnes at a mean grade of 0.62% V(2) O(5) equating to 203,364
contained tonnes of vanadium pentoxide ("V(2) O(5) "). 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 or the remaining
ore-bodies which remain substantially unexplored.
The Project will be developed in two stages, Stage 1 and Stage
2, treating 1m tonnes per year and an additional 3m tonnes per
year. Production will be some 5,600 tonnes of V(2) O(5) from Stage
1, rising to 22,400 tonnes V(2) O(5) after Stage 2 is
commissioned.
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 expanded and adapted to recover vanadium, molybdenum and
nickel from purchased concentrates.
The existing operation is located on the same site and uses some
of the same infrastructure as the Project, but is a separate
operation which will continue in parallel with the development and
operation of the Project.
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END
TSTUARWROAUUUAA
(END) Dow Jones Newswires
December 22, 2023 02:00 ET (07:00 GMT)
Grafico Azioni Ferro-alloy Resources (LSE:FAR)
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Grafico Azioni Ferro-alloy Resources (LSE:FAR)
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