# Ferro-Alloy Resources Feasibility Study Update

- Link: https://www.directorstalkinterviews.com/ferro-alloy-resources-feasibility-study-update/4121140617
- Published: 2024-02-01T07:37:33+00:00
- Author: Ethan Davis

**[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 high grade Balasausqandiq vanadium
project in Southern Kazakhstan, has announced a comprehensive update on the Project’s
current Feasibility Study. The Company has also launched a third tranche of bonds
with a nominal value of US$5 million under its existing exempt US$20 million exempt
offer bond programme (RNS 27 July 2023).

**Project Feasibility Study Update**

**Summary**

The following update summarises the work completed to date, outlines the ongoing
work to be completed and sets out the associated timing for completion.

The main fieldwork for the study is now complete and the publication of the study
is expected in early Q4 2024. The delay to the completion of the study is due to
unforeseen increased time scheduling imposed by a lead technical consultant to the
study with respect to the tailings facility design, as well as capacity constraints
at sample testing laboratories, in particular those laboratories processing the 
samples taken for the geotechnical elements of the tailings facility and plant site
investigation programme.

As previously announced, all drilling for the study has been completed, and the 
new mineral resource estimate for Ore-Body 1 (“OB1”) showed a large increase in 
Indicated Mineral Resource to 32.9 million tonnes.

Similarly, all metallurgical test work has been completed with a metallurgical recovery
of 87.3% with the potential to increase recovery to above 90% following optimisation
post commissioning of Phase 1.

**Mineral Resource Estimates**

**_Ore-Body 1_** _**(Phase 1)**_

Based on an additional 4,308 metres of diamond drilling, the new mineral resource
estimate (“MRE”) completed by SRK Consulting (Kazakhstan) Limited (“SRK”) on OB1
represented a significant increase on the previous estimate contained in the Company’s
2018 Competent Person’s Report.

The new MRE, announced on 2 May 2023, was as follows:

| **Summary MRE Report for OB1 Resource. 30 April 2023. Cut off grade applied = 0.4% V_(2)O_(5)** | 
| ** ** | ** ** | ** ** | **Average Value** | **Material Content** | 
| **CLASSIFICATION** | **WEATHERING** | **Mass****Million****tonnes** | **V_(2)O_(5)****%** | **Mo****%** | **U****%** | **C****%** | **V_(2)O_(5)****tonnes** | **Mo****tonnes** | **U****tonnes** | **C****tonnes** | 
| INDICATEDRESOURCE | Oxide | 1.56 | 0.67 | 0.0139 | 0.0047 | 7.16 | 10,560 | 216 | 73 | 112,151 | 
| Transitional | 1.25 | 0.66 | 0.0138 | 0.0045 | 7.17 | 8,260 | 172 | 56 | 89,869 | 
| Fresh sulphide | 30.08 | 0.61 | 0.0150 | 0.0052 | 8.82 | 184,814 | 4,523 | 1,554 | 2,655,454 | 
| Total | **32.89** | **0.62** | **0.0149** | **0.0051** | **8.68** | **203,634** | **4,911** | **1,683** | **2,857,473** |

Differences may occur in tables due to rounding.

Resource optimisation indicates that the whole of this ore-body has the potential
to be economically exploited.

At the proposed Phase 1 mining rate of just over 1 million tonnes per year, this
is expected (subject to finalisation of detailed mine planning) to be sufficient
for over 30 years of processing operations. It may, therefore, prove to be sufficient
a resource to justify the construction of an additional processing module as part
of Phase 1 of the Project once the first module has been successfully commissioned
and in advance of the construction of Phase 2 of the Project.

**_Ore-Bodies 2, 3 and 4 (Phase 2)_**

Although not needed for the feasibility study into Phase 1 of the Project, the Company
has already completed an additional drilling programme to determine a resource estimate
for Ore-Bodies 2, 3 and 4 (“OB2, 3 and 4”). The purpose of this additional resource
drilling was to enable preliminary planning for Phase 2 of the Project. Phase 2 
is expected to lead to an additional three million tonnes of ore being mined and
treated per year with the aim of expanding total production to more than 22,400 
tonnes per annum of vanadium pentoxide. As a result, an additional 60 million tonnes
of ore are targeted for definition, supporting a Phase 2 life of mine of 20 years.
There remain a further three ore-bodies for future exploration.

In total, 15,614 metres of drilling has been completed, covering around 70% – 75%
of the planned total area for OB2, 3 and 4. This area is expected to yield sufficient
ore to support the targeted life of mine for Phase 2.

The samples from this expanded drilling programme are scheduled for preparation 
by SGS Kazakhstan in March 2024 for assay and will then be sent to Intertek Genalysis
in Australia for assaying. Semi-quantitative grade estimation carried out by Company
geologists using X-ray fluorescence has indicated that (subject to confirmation 
by more accurate assaying and resource estimation / mine planning) the drilling 
already carried out could yield more than the required tonnage for the planned Phase
2 of the Project. We plan to announce the results of this resource definition work
in conjunction with the Phase 1 feasibility study results.

**_Phase 1 Second module_**

The mineral resource estimate for OB1 of over 30 million tonnes together with the
further tonnages expected to be estimated in OB2, 3 and 4, allow for the early consideration
of an additional module identical to the currently planned module for Phase 1, treating
an additional 1.1 million tonnes per year of ore, and the already envisaged Phase
2, treating an additional three million tonnes per year.

Whilst there are certain aspects of these downstream projects that cannot be studied
to feasibility study level in advance, the Company plans to incorporate these projects
into the Phase 1 study but at a lower level of confidence than full feasibility 
study standard.

OB2, 3 and 4 represent a continuation of the same mineralisation as OB1 so the metallurgical
treatment process is likely to be the same, subject to any natural variations in
the ore. The proximity of OB2 ,3 and 4 to OB1 makes it likely that there will be
some shared infrastructure. A great deal of information will, therefore, be known
about these projects, sufficient to allow an estimation of their likely economic
costs and value.

**Metallurgy**

**_Vanadium_**

The Company successfully tested the vanadium extraction potential and operating 
methods to separate a saleable vanadium product from the deposit’s black shale mineralisation
at the site pilot test plant in 2015. These processes do not require the concentration
and high-temperature roasting commonly used in other vanadium deposits. Tetra Tech
Limited (“Tetra Tech”) were subsequently appointed as consultants to design a programme
to independently validate this process while SGS Canada Inc (“SGS”) were contracted
concurrently to complete the required laboratory testing.

A bulk sample of black shale mineralisation from OB1 was tested at SGS during 2022/
23 as well as additional samples from different sections of OB1 to understand the
variability across the ore-body.

The stages tested included crushing, grinding, leaching, filtration, precipitation,
ion exchange and vanadium product recovery.

The SGS test work is now complete, and the results were in line with expectations.
Following engineering estimates and scale up considerations by Tetra Tech based 
on the SGS test work results, an overall metallurgical recovery of 87.3% is expected
from the ore with a good vanadium pentoxide product quality. This recovery is significantly
higher than the 75% – 80% normally recovered from the more commonly occurring vanadium-
containing titaniferous magnetite ores. The Company believes that, on commissioning,
and with further operational optimisation there is the potential to increase the
percentage of vanadium recovered to above 90%. Some additional test work may also
be commissioned to investigate the production of higher quality niche vanadium products
but these are not required for completion of the feasibility study.

At the planned treatment rate of 1.1 million tonnes of ore, including dilution, 
per year, this is likely to yield annual production of circa 5,600 tonnes of vanadium
pentoxide flake. This production volume is subject to detailed calculation of mining
dilution and scheduling as part of the mine planning process. Additional mine modelling
will be undertaken which may lead to higher vanadium grades in the early years of
mining.

In addition to vanadium pentoxide, saleable quantities of molybdenum and uranium
will be recovered for sale, and further treatment of the vanadium leach residue 
will recover the carbon by-product as described below.

Equipment specification, costings and plant layout optimisation are ongoing, with
Tetra Tech expecting to complete this work during Q2 2024.

**_Molybdenum and uranium_**

The Company expects to sell uranium and molybdenum recovered from its metallurgical
process to the Kazakhstan state monopoly uranium producer (KazAtomProm) but is permitted
to sell to other customers if more attractive commercial terms can be obtained. 
Production volumes of molybdenum and uranium are subject to final mine planning.

**Carbon**

The ore contains nearly 9% carbon, with grades correlating quite strongly with the
vanadium grade. This carbon material passes through the leaching circuit, together
with a high silica content, to final tailings.

The Company has been testing two main uses for this potentially valuable material:
as the raw material to be sold to smelters for the production of ferrosilicon, or
as an additive used in place of carbon black in the making of rubber.

**_Ferrosilicon briquettes_**

The Company has tested the creation of briquettes from the whole tailings product(
without concentration), and the use of those briquettes in smelting to make ferrosilicon.
Ferrosilicon is usually made by smelting a mix of silica, obtained from mining, 
and carbon in various forms. The briquettes will substitute for the whole of the
silica required, and part of the carbon. Test work showed that good quality ferrosilicon
can be made from this material and study work is now in process to determine the
likely size of the market, logistics requirements, product pricing and end use customers.

**_Carbon black_**

Carbon black is a high-value form of carbon, used in the making of rubber, particularly
tyres. It is usually made by burning hydrocarbons in a depleted oxygen atmosphere.
Early work determined that the tailings from the Company’s production of vanadium,
after concentration to around 40% carbon, has the potential to be used in partial
substitution for carbon black in the making of rubber generally, but particularly
in the making of tyre side walls, with the Company’s product substituting for a 
part of the commercial grade of carbon black N660. 

A test programme has demonstrated that a simple flotation method can be used to 
concentrate the carbon grade to the required 40%. Early test work on the use of 
the concentrate in making rubber has been encouraging, and a further comprehensive
programme is being undertaken to determine the characteristics and performance of
the resulting rubber in various formulations and at various rates of substitution,
aiming to provide sufficient information to allow marketing of the product to begin.

The Company 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 Company’s existing
processing site to concentrate the Company’s carbon tailings to provide over 10 
tonnes of carbon-silica concentrate per month for testing and marketing.  Although
the exact timing is not currently known, the expectation is that construction of
the new pilot plant will be completed around the end of 2024 or early 2025, allowing
test marketing and offtake negotiations for the product well in advance of the commissioning
of the first Phase 1 module.

**Hydrogeological study**

A hydrogeological study to assess water flows and water pressures inside the pit
walls is well underway and will be concluded in conjunction with the upcoming SRK
mine planning study.

**Mine planning**

Resource level optimisation has so far indicated that the whole of OB1 can be economically
mined and the next stage is detailed mine planning and scheduling.

**Process water**

A site for the extraction of water from underground has been located and extraction
rights have been secured. Although historic records show adequate supplies, a test
programme has been started to ensure that no changes of the aquifer characteristics
have occurred over time. The drilling of a test-borehole has been completed and 
pump testing has commenced.

**Power**

In 2021, Ferro-Alloy Resources connected to a nearby 110kV powerline and is currently
able to take up to three MW. Although subject to more exact estimation as the design
work progresses, the current expectation is for a requirement of up to 15 MW of 
electrical power for the mine plant. The current line and connection can, with little
modification, supply up to this level and negotiations are ongoing with the line’s
owners to confirm this availability.

The Company plans to install a sulphuric acid plant at the mine site to guarantee
supply of this reagent to the plant. As a by-product of this operation, the process
will emit around 6 MW of power in the form of heat which will be used in the metallurgical
process. This power is produced without significant CO_(2) emissions.

**Tailings facility**

To the extent that the tailings may be made into briquettes and sold for smelting
to make ferrosilicon, tailings storage may not be required. If the carbon-rich tailings
are concentrated, the carbon-depleted remainder will be stored in a tailings storage
facility.

Geotechnical drilling of 1,254 metres at the proposed site have been completed. 
The schedule for completion of the design of the tailings storage facility has been
delayed by a lead technical consultant to the study, partly due to their own scheduling
requirements and partly due to capacity constraints at the sample testing laboratories
processing the samples taken from the geotechnical drilling.

**Feasibility Study completion**

The feasibility study is progressing to plan from an engineering perspective, although
there have been significant impacts to the schedule. The study is expected to be
published in early Q4 2024 as a result of the delays noted above.  

**Exempt Offer bond programme**

On 30 January 2024, Ferro-Alloy Resources listed a third tranche of bonds, with 
a nominal value of US$5 million under the Company’s existing exempt offer bond programme
in Kazakhstan.

The proceeds from the sale of the Third Tranche will be used to continue the development
of the Balasausqandiq project, including front-end engineering.

A summary of the terms and conditions of the Third Tranche is as follows:

–      ISIN: KZX000001946

–      Specified currency: US Dollars

–      Face value: US$100 (one hundred US dollars)

–      Number of bonds: 50,000 (fifty thousand) units

–      Total nominal amount of the bonds: US$5,000,000 (five million US dollars)

–      Issue date: 30 January 2024

–      Last date of the circulation period: 30 July 2026

–      Maturity date: 30 July 2026

–      Coupon rate: 11.0% fixed of the nominal value of the bonds issued

–      Frequency of interest payments:  quarterly, 30 April, 30 July, 30 October
and 30 January of each year during the circulation period, commencing on 30 April
2024

–      Coupon basis: 30/360

Trading of the Third Tranche commenced on 31 January 2024.

**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; 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. 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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