# Ferro-Alloy Resources advances with carbon black breakthrough

- Link: https://www.directorstalkinterviews.com/ferro-alloy-resources-advances-with-carbon-black-breakthrough/4121194508
- Published: 2025-04-30T07:07:56+01:00
- Author: Amilia Stone

**[Ferro-Alloy Resources Limited](https://www.directorstalkinterviews.com/company/ferro-alloy-resources/far.l)**(
[LON:FAR](https://www.directorstalkinterviews.com/company/ferro-alloy-resources/far.l)),
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
2024.

**Operational Highlights**

**Feasibility study**

·    The completion of the Phase 1 feasibility study continued to be the main focus
of the Company during the financial year and the Company expects the publication
of the study during Q2 2025

·    Several key areas of the study have been completed during the year, including
open pit geotechnical and hydrogeological drilling and water supply hydrogeological
drilling

·    Tailings management design, a significant part of the study, is expected to
conclude imminently

·    As announced on 17 December 2024, the Company has entered into a non-binding
offtake term sheet with LL-Resources GmbH for sale of the entire production of standard
vanadium pentoxide from Phase 1 of the Balasausqandiq Project

**Carbon black substitute**

·    Testing of the carbon black substitute (“CBS”) product has been successfully
completed, indicating that rubber made from 90% carbon black plus 10% CBS can perform,
for passenger vehicle tyre purposes, as well as rubber with 100% carbon black. Tests
by potential customers, using higher levels of substitution, have also been successfully
concluded

·    Market consultants have advised that a market price of between US$500 and US
$600 per tonne of CBS is appropriate, bearing in mind the technical performance 
of the material compared with currently available substitutes

·    Production of CBS from Phase 1 is expected to be over 220,000 tonnes per year,
implying revenue potential of over US$110 million per annum

**Research and development**

The Group has several ongoing research and development initiatives, summarised as:

·    _Electrolyte for vanadium redox flow batteries_: the existing process plant
is already capable of producing high purity vanadium pentoxide. The next step is
to commission the new equipment at site to produce the mixed oxides required for
electrolyte

·    _Carbon concentrate production for substitution of carbon black in rubber:_
working with the National Engineering Academy of the Republic of Kazakhstan on the
industrial production and usage of carbon-silica fillers in the making of rubber.
A pilot plant, substantially funded by government grants, is to be commissioned 
shortly and will enable greater quantities of samples to be produced for marketing
purposes

·    _Enhanced leaching:_ awarded grant funding as a private partner to a Satbayev
University programme for the development of new metallurgical technologies, particularly
focused on enhanced leaching techniques which may be applicable to vanadium-bearing
ores

·    _Ferro-nickel production:_ applied for funding to research production of ferro-
nickel from the nickel-rich residues currently produced from the existing operation

**Financial and corporate summary**

·    Group revenues of US$4.72 million (2023: US$6.16 million), a 23.3% fall on 
the previous year mainly due to the continued falling market price for vanadium 
pentoxide, as flagged at the timing of the Group’s 2024 interim results

·    Cost of sales increased to US$7.6 million (2023: US$6.8 million) largely driven
by an increase in depreciation charges which rose following the installation of 
a significant item of power transmission equipment which will be used for the main
project, as well as increased wages and salaries, leading to a gross loss of US$
2.8 million (2023: US$1.1 million)

·    As announced on 2 December 2024, save where profitable concentrates can be 
sourced and treated, the Group’s existing plant has been switched to research and
development  activities to complete and optimise the ongoing feasibility study. 
As a result, the Company has recognised a one-off impairment charge at the year-
end against plant and equipment of US$0.95 million (2023: nil) which has no cash
impact on the business

·    Following the success of the Kazakh bond programme launched in 2023, the Company
has sold US$18 million of bonds to date leading to an interest charge for the year
of US$1.3 million (2023: US$0.27 million)

·    The Group made an overall net loss for FY24 of US$9.43 million (2023: loss 
of US$5.25 million)

·    Cash at bank at 31 December 2024 was US$3.78 million (2023:US$1.95 million).
Cash at bank at 31 March 2025 was US$1.8 million

**Production**

Despite the change in focus to research and development, the existing plant itself
has operated as expected during FY24 and produced:

·    300.9 tonnes (2023: 310.5 tonnes) of vanadium pentoxide (mainly as ammonium
metavanadate)

·    34.9 tonnes (2023: 34.3 tonnes) of molybdenum (in ferro-molybdenum)

On a forward looking basis, process plant operations will be conducted only when
suitably profitable raw materials are available.

> **Commenting on the results, Nick Bridgen, CEO of Ferro-Alloy Resources said:**
> _“Current market conditions for all vanadium producers have been difficult, but
> the main activity, the feasibility study, has continued as planned and is now 
> nearing completion. The results gathered to date for the study have amply confirmed
> the outstanding expectations we published in our earlier competent persons report._
> _Furthermore, the commercial opportunity presented by our CBS product, which was
> affirmed towards the end of 2024, adds to the anticipated project NPV and gross
> revenue generation, and will help to enhance our competitive position._
> _I look forward to advancing these two key revenue streams over the coming year.”_

**Publication of Annual Report**

The Company’s Annual Report will be available shortly on the Company’s website at
www.ferro-alloy.com

**REVIEW OF THE YEAR**

**Operational Review**

The focus of the Company and its wholly owned group of subsidiary undertakings (“
the Group”) has been on the completion of the feasibility study on the Balasausqandiq
vanadium deposit, expected before the end of the first half of 2025. The Group is
also engaged in the business of extracting vanadium, molybdenum and nickel from 
purchased concentrates using the pilot-plant that was constructed to test the metallurgical
processes to be used in the main Balasausqandiq project.

This operation was intended to 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.  However, the
scale of the operation, combined with current low metal prices, means that the expected
contribution is small and the decision was announced on 2 December 2024 to focus
current operations on some important research and development (“R&D”) that will 
greatly assist future operations and marketing. Notwithstanding the change of priorities,
production is continuing and will do so whenever there are high-grade, profitable,
concentrates available.

Maintaining the small operation has enabled us 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. 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, significantly de-risking the project.

**_Production_**

As noted, during December 2024, we announced that the strategic focus of the Company
would be on development of the carbon black substitute product and other R&D efforts
aimed at improving operations or marketing of the main Balasausqandiq project. Accordingly,
we decided that production was no longer a priority and would only continue when
other commitments allowed, and when profitable concentrates were available. Nevertheless,
during 2024, the plant operated as planned.

During the year, production of vanadium pentoxide (“V_(2)O_(5)“) (mainly as ammonium
metavanadate) and molybdenum (in ferro-molybdenum) amounted to 300.9 tonnes (2023:
310.5 tonnes) and 34.9 tonnes (2023: 34.4 tonnes), respectively.

|  Quarter | Production of Vanadium pentoxide(tonnes) | Growth vs last year | Production of Molybdenum(tonnes) |   Growth vs last year | 
| Q1 | 81.6 | +161% | 7.1 | +9% | 
| Q2 | 87.6 | -38% | 6.9 | -51% | 
| Q3 | 52.3 | +12% | 7.1 | +11% | 
| Q4 | 79.4 | -12% | 13.8 | +86% | 
| **2024 total** | **300.9** | **-3%** | **34.9** | **2%** |

The plant also produced a low-grade nickel concentrate for sale to customers during
the year.

Product prices (mid-market, as published) for ferro-molybdenum have broadly remained
stable during the year while the price of vanadium pentoxide has reduced by approximately
18%, as shown in the table below: 

|  | Start of 2024 | Average for the year | End of 2024 | Current (25 April 2025) | 
| Vanadium pentoxide (US$/lb) | 6.53 | 5.86 | 5.37 | 5.29 | 
| Ferro-molybdenum (US$/kg of Mo) | 48.7 | 50.7 | 49.8 | 48.0 |

**_Research and Development_**

_Electrolyte for vanadium redox flow batteries_

Vanadium Redox Flow Batteries (“VRFBs”) are a means of energy storage particularly
suitable for the long-duration storage of energy from intermittent renewable sources.
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, longer duration, energy storage.

The roll-out of VRFBs is well underway in China and is beginning in the rest of 
the world.  In 2024 some 10% of world vanadium production was used for vanadium 
battery electrolyte, up from around 2% in 2020. China has announced the commencement
of construction of new VRFB projects totalling more than 11 GWh of storage, implying
further consumption of around 50,000 tonnes of vanadium, around 38% of 2024 global
production.

The Group, therefore, intends to position itself to supply into this growing market
by developing the capability to produce the high purity product required, in the
form of the specific vanadium oxides that are, ideally, used to make electrolyte.

Using grant funding from Kazakhstan’s National Scientific Council, the Group has
already adapted the existing process plant to be capable of producing high purity
vanadium pentoxide. The next step is to commission the equipment needed to produce
the mixed oxides (V_(2)O_(4) and V_(2)O_(3)) required for electrolyte. Concurrently,
we have installed equipment, including a test VRFB, at the laboratory of our research
partner, the Physical Technical Institute in Almaty, to test our materials, electrolyte
and performance within an operating VRFB.

After a period of testing and development, the plan is to continue to move most 
of our current production to these higher value products. Offtake discussions for
mixed oxides have already been held with three major VRFB manufacturing companies.
By developing the expertise and the market, the aim is to position the Group to 
be able to supply mixed oxides at scale into this potentially very large market 
when the main Balasausqandiq project is commissioned.

_Production of carbon concentrate for the substitution of carbon black in the making
of rubber_

The Group has previously announced the successful technical and marketing studies,
using specialist consultants, for the production of a concentrate from the carbon
in the tailings at the planned major processing plant at Balasausqandiq. The ongoing
R&D work is designed to further enhance our knowledge of the production process 
and to develop markets.

The Group is working with the National Engineering Academy of the Republic of Kazakhstan
on a technological project covering the industrial production and usage of carbon-
silica fillers in the making of rubber. The aim of the project is to construct a
pilot plant, substantially funded by government grants, on the Group’s existing 
processing site to concentrate the Group’s carbon tailings to provide over ten tonnes
of fine-ground carbon-silica concentrate per month for testing and marketing. All
equipment is now in place, requiring only cabling before commissioning can start.
The Group is well advanced in understanding the requirements of this market and,
using consultants, has already tested the production and performance of the carbon
black substitute material in the manufacture of rubber.

_Enhanced leaching research_

The Group has been awarded grant funding as a private partner to a Satbayev University
programme for the development of new metallurgical technologies, particularly focused
on enhanced leaching techniques which may be applicable to vanadium-bearing ores.
From these funds, the Group has set up a full lab-scale comminution circuit at the
Satbayev University site in Almaty.

_Production of ferro-nickel from low grade nickel concentrates_

The Company has applied for funding to research production of ferro-nickel from 
the low grade nickel residues currently produced from the existing operation.

**Feasibility Study Review**

The Company has been carrying out a feasibility study into the first phase (“Phase
1”) of the Balasausqandiq project, due to be completed towards the end of the first
half of this year.

In September 2024 we announced the increase in the proposed Phase 1 annual throughput
of ore at the Balasausqandiq deposit from 1.1m tonnes to 1.65m tonnes, reflecting
the substantial increase in the estimated resource at Ore-Body 1 (“OB1”), as well
as increasing forecasts of world vanadium demand. Phase 1 production is now expected
to be some 8,000 tonnes per year of vanadium pentoxide.

**Balasausqandiq deposit**

The Balasausqandiq deposit is exceptional in a number of ways. Primarily, it is 
not comprised of titano-vanadiferous magnetite, as most of the world’s vanadium 
deposits are. It is a sedimentary deposit which, for the following reasons, is expected
to have significantly lower capital and operating costs in comparison with other
vanadium producers, placing the Group at the very bottom of the curve of cash costs
of production:

·    The ore is amenable to a whole-ore pressure acid leach process which gives 
a higher metallurgical recovery than conventional extraction from magnetite;

·    Pre-concentration of the ore and high temperature roasting are not required;

·    There are valuable co- and by- products within the ore, principally carbon,
which can be easily recovered without significant additional processing;

·    Major infrastructure items of power, road and rail connections already exist
on site or nearby; and

·    The Balasausqandiq deposit is a very large deposit and is easily mined from
an open pit. Phases 1 and 2 combined envisage production of over 10% of 2024 world
supply.

**Exploration**

**_OB1_**

There are six known ore-bodies in the deposit and there is some evidence of a seventh.
Of these, only OB1 has now been explored sufficiently to declare a resource under
the Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves published by the Joint Ore Reserves Committee (“JORC”).

A revised mineral resource estimate was issued by the Company’s consultants SRK 
Consulting (Kazakhstan) Limited (“SRK”) in April 2023 and included the following
highlights:

·   An Indicated Mineral Resource of 32.9 million tonnes for OB1, at a mean grade
of 0.62% V_(2)O_(5), reported at a marginal cut-off grade of 0.4% V_(2)O_(5) – equating
to 203,364 contained tonnes of V_(2)O_(5)

·   An increase of 8.6 million tonnes (35.4%) of mineral resource and an increase
of 38,058 tonnes (23%) of contained V_(2)O_(5) by comparison with the estimate contained
in the Company’s 2018 Competent Persons Report 

·  The results of the previously reported infill drilling and trenching programmes
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

·   A total of 75 diamond core holes and 88 trenches were used to define the Resource(
a reduction of drill section spacing to 250 metres from the original 500 metres 
increased confidence)

·   Confirmation that there are reasonable prospects for eventual economic extraction
by constraining the Mineral Resources to an optimised open pit shell (50 degree 
slopes and a revenue factor of 1) using a selling price for 98% V_(2)O_(5) flake
of US$9.82 /lb

**Summary Report for April 2023 MRE OB 1 Resource**

| **Classification** | **Zone** | **Tonnage (Mt)** | **% V_(2)O_(5)** | **% Mo ** | **% U ** | **% C** | 
| Indicated   | OxideTransitionalFresh (Sulphide) | 1.57 | 0.67 | 0.014 | 0.0047 | 7.16 | 
| 1.25 | 0.66 | 0.014 | 0.0045 | 7.17 | 
| 30.08 | 0.61 | 0.015 | 0.0052 | 8.83 | 
| **Total** |  | **32.90** | **0.62** | **0.015** | **0.0051** | **8.69** |

**_OB2, 3 and 4_**

The drilling of OB2, 3 and 4 was completed during 2022/23. X-ray fluorescence (“
XRF”) grade measurements, together with full assays for some 5% of the samples as
checks, is expected to enable an inferred resource estimate to be prepared to JORC
standards. Due to unfavourable topography, some 25% of the planned exploration area
proved difficult and expensive to access and as a result was not drilled (albeit
the Company does not expect the area to create difficulties for actual mining).

The mineral resource estimate for OB2,3 and 4 will exclude the area of difficult
topography, but, based on the XRF analysis carried out on cores by the Company (
and not yet verified by the 5% full assay checks), the amount drilled is expected
to provide ample ore to provide a relatively long life for the Phase 2 development.

**_Open pit geotechnical drilling_**

The open pit geotechnical study has been completed and the results will be used 
to confirm the open pit slope design for the mine planning study.

**_Open pit hydrogeological drilling_**

Open pit hydrogeological drilling has been completed and the hydrogeological study
will be concluded as a part of the mine planning study.

**_Water supply hydrogeological drilling_**

A water bore drilling investigation for the project water supply has been completed
and the results have been used to design the borefield and water pipeline required
to pump the water to the proposed process plant.

**_Tailings management_**

The tailings management design is in progress and is expected to conclude during
April 2025, managed by SRK.

**Processing**

**_Metallurgy_**

Extraction of vanadium during acid leaching, following initial pilot and subsequent
feasibility study testing has concluded achieving between 94-97% vanadium extraction
into solution.

Metallurgical testing including ore characterisation, grinding, engineering tests,
solid liquid separation tests, impurity removal, tailings product assessment and
vanadium recovery to a saleable product has concluded  at SGS Canada Inc (“SGS”)
managed by Tetra Tech Limited (“Tetra Tech”). The results of this testing program
are being used by Tetra Tech to design the processing plant and supporting services
as part of the feasibility study.

**_Carbon black substitute (“CBS”)_**

Test work on the extraction of a carbon concentrate from the vanadium bearing ore
and on its subsequent use as a substitute for carbon black has been completed.

Flotation tests show that the necessary >40% concentrate can be made with good overall
carbon recovery. Testing of the product for use in making rubber by substitution
for carbon black has been successfully completed and rubber made from 90% carbon
black plus 10% CBS has been shown to perform, for passenger vehicle tyre purposes,
as well as with 100% carbon black.  Higher substitution levels are expected to yield
satisfactory performance in other rubber products.

By comparing the performance of CBS with other available reinforcing fillers, including
carbon black, market consultants have advised that a market price of between US$
500 and US$600 per tonne is appropriate for CBS.

Production of CBS from Phase 1 is expected to be over 220,000 tonnes per year, implying
anticipated revenues of over US$110 million per annum.

**Conclusion**

Ferro-Alloy Resources expects the publication of the Phase 1 feasibility study in
H1 2025 to significantly raise awareness of the emergence of this new addition to
the global vanadium market at the time of growing investor appreciation for rising
vanadium use in both the construction and green energy sectors. The work on CBS 
has proven that this product can be produced and sold at prices that make it a genuine
co-product, bringing down the already low cash costs attributable to the vanadium
product to unprecedentedly low levels.

Discussions with various potential investors and debt funders have already been 
initiated but the publication of the feasibility study is expected to trigger the
advancement of these discussions.

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