TIDMFAR
RNS Number : 2917B
Ferro-Alloy Resources Limited
07 October 2020
Ferro-Alloy Resources Limited / EPIC: FAR.L/ Market: LSE/
Sector: Mining
7 October 2020
Ferro-Alloy Resources Limited ('the 'Company')
Production & Progress Update
Ferro-Alloy Resources Limited (LSE: FAR) is pleased to announce
a production and progress update for the nine months ended 30
September 2020.
Highlights
-- 188 tonnes vanadium pentoxide produced in nine months to 30
September 2020, an increase of 72% on the same period in 2019
-- Record 90 tonnes of vanadium pentoxide produced in Q3 2020, an increase of 135% over Q3 2019
-- Progress made on commissioning equipment to extract
molybdenum in the form of calcium molybdate or ammonium
paramolybdate generating additional income
-- Signed an agreement with the Institute of Metallurgy and
Enrichment in Almaty, Kazakhstan, to start the production of
commercial samples of vanadium electrolyte
Nick Bridgen, CEO, said : "The good work achieved so far at the
existing operation is paying off and this can be seen by the record
levels of production seen in recent months, in particular during
August, and that is notwithstanding the unreliable power supply and
COVID-19 sometimes holding us back. With the recent funding
secured, we will be further building the connection to the adjacent
high voltage power line, as well as continuing to make enhancements
to the process plant, and I am therefore confident that we should
continue to see further increases in production in the near
term.
"The technology we recently developed for the production of
electrolyte for vanadium flow batteries directly from ammonium
metavanadate will allow us to t ake part in the growing clean
energy revolution, and the agreement with the Institute of
Metallurgy and Enrichment in Almaty to start the production of
commercial samples will assist in our discussions with potential
off-takers. We are already perhaps the only significant new
producer that can provide the huge quantities of vanadium that will
be needed without driving the price up to levels which are
uneconomic for the vanadium flow battery industry.
"The commissioning of equipment to extract molybdenum from the
high-grade raw materials treated in the pyrometallurgical line will
provide a useful additional income without further raw-material
costs.
"I look forward to providing further production and operational
updates in due course."
Vanadium pentoxide production
During the first nine months of 2020, 188 tonnes of vanadium
pentoxide were produced, an increase of 72% over the same period
last year. Despite continuing COVID-19 restrictions, the Company
achieved record production in the third quarter of almost 90
tonnes, including nearly 40 tonnes in August, an increase of 135%
over the third quarter of 2019.
Period Production Growth Shipments Growth
(tonnes of vanadium vs (tonnes of vanadium vs
pentoxide contained last pentoxide contained last
in AMV * ) year in AMV * ) year
Q1 2020 4 9.1 +53% 61.0 +56%
--------------------- ------- --------------------- -------
Q2 2020 48.9 +25% 48.2 +19%
--------------------- ------- --------------------- -------
Q3 2020 89.8 +135% 79.7 +100%
--------------------- ------- --------------------- -------
Nine months to
30 September
2020 187.8 +72% 189.0 +75%
--------------------- ------- --------------------- -------
* AMV: ammonium metavanadate
Production outlook
Whilst record production has already been achieved as a result
of recent improvement work, further increases are expected to come
in the remainder of the financial year and beyond. The converter
oven to produce vanadium pentoxide from AMV, as well as
improvements to washing and filtration, will be commissioned over
the rest of this year, and completion early next year of the
connection to the adjacent high-voltage power-line is expected to
reduce plant disruption and down-time. The new power connection
will also enable the Company to install the electric arc furnace
which will complete the Company's plan to take production from the
existing plant to 125 tonnes per month. The furnace, which has
already been designed and contractors agreed, will enable the
direct production of ferro-vanadium from high-grade concentrates,
as well as ferro-molybdenum and ferro-nickel, and thus will capture
more of the components of the raw-materials that we treat and our
products will be higher along the value chain.
Molybdenum
The Company is in the process of commissioning equipment to
extract molybdenum in the form of calcium molybdate or ammonium
paramolybdate from the high-grade raw materials treated in the
pyrometallurgical line. These materials contain significant
by-product grades of molybdenum which are already taken into
solution during the recovery of vanadium, and their recovery will
provide additional income without further raw-material costs.
The Company has so far established the processes for the
sorption, desorption and the removal of impurities and is now
awaiting the arrival of additional filtration media for
optimisation of final product preparation.
The Company is in discussion with potential customers with a
view to starting shipments in the near future.
Vanadium electrolyte
The Company has recently signed an agreement with the Institute
of Metallurgy and Enrichment in Almaty to start the production of
samples of vanadium trioxide and tetroxide using the Company's
newly developed technology. This work is intended to further test
the technology and provide samples for analysis. Early-stage
discussions concerning offtake and finance for the production
facilities are ongoing.
Vanadium prices and Outlook
The price of vanadium pentoxide in Europe has remained in the
range of US$5 - 6/lb over the last 14 weeks. This price is lower
than historic averages, affected by the impact of the COVID-19
pandemic and summer holiday season. The Company is expecting prices
to move upwards driven by increasing demand for construction steel
as infrastructure projects are initiated to counter COVID-19
recessionary pressures and through growth from vanadium flow
battery producers.
The Company continues to use a long-term forecast price of
around US$7.50/lb, a little above today's level but lower than
external forecasters and other vanadium project companies were
using before the impact of COVID-19. Both the current market price
and our long-term estimate would provide an exceptionally high
margin to the company's forecast cash cost of production of US$1.54
from the development of the group's Balasausqandiq deposit.
For further information, visit www.ferro-alloy.com or
contact:
*S*
Ferro-Alloy Resources Limited
Nick Bridgen, Chief Executive Officer info@ferro-alloy.com
Shore Capital (Broker)
Corporate Advisory: Toby Gibbs / Mark Percy / John More Tel: +44 (0)207 408 4090
Corporate Broking: Jerry Keen
VSA Capital (Financial Adviser) Tel: +44 (0)203 005 5000
Andrew Monk / Simon Barton
St Brides Partners Limited (Financial PR & IR Adviser)
Catherine Leftley / Megan Dennison Tel: +44 (0)207 236 1177
Further information about Ferro-Alloy Resources Limited
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 "Project"); and
b) an existing profitable vanadium concentrate processing operation (the "Existing Operation")
Balasausqandiq is a very large deposit, with vanadium as the
principal product, together with by-products of carbon, molybdenum,
uranium, rare earth metals, potassium, and aluminium. Owing the
nature of the ore, the capital and operating costs of development
are very much lower than for other 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 2-5.
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 low-grade concentrates and is now in the
process of being expanded and further adapted to treat a wider
variety of raw materials.
The Company has already completed the first steps of a
development plan for the existing operation which is expected to
result in annualised production capacity increasing gradually to
around 1,500 tonnes of contained vanadium pentoxide. The
development plan includes upgrades to infrastructure, an extension
to the existing factory and the installation of equipment to
increase the throughput and to add the facilities to convert AMV
into vanadium pentoxide.
The strategy of the Company is to develop both the Existing
Operation and the Project 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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