# Ferro-Alloy Resources in an exciting phase of development

- Link: https://www.directorstalkinterviews.com/ferro-alloy-resources-in-an-exciting-phase-of-development/4121062613
- Published: 2022-04-29T07:12:58+01:00
- Author: Giles

**[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 mining and processing company with operations based in Southern Kazakhstan,
has announced its final results for the year ended 31 December 2021.

**Overview**

·    Strategic long-term investment by Vision Blue Resources and co-investors of
US$ 10.1m to date to fund completion of Balasausqandiq feasibility study and expansion
of existing operations

·    Balasausqandiq feasibility study further extended to assess potential for increased
by-product credits, including from rare earths, that could account for more than
one third of revenues. Study now expected to complete at the end of the first half
of 2023 

o  Potential recovery of uranium, molybdenum, aluminium, potassium, and rare-earth
by-products is being studied within metallurgical test-programme

o  Studies already underway to assess the potential to produce ferro-silicon and
high value carbon that could be used as carbon black to manufacture rubber for tyres

o  Drilling of ore-body 1 completed and expanded drilling programme for remaining
ore-bodies commenced. Based on the results of infill drilling of ore-body 1, drilling
programme increased from 6,000 metres of core-drilling to 10,000 metres and impacted
by slower than planned drilling by subcontractors

·    Expansion of existing operations progressing

o  Second roasting oven commissioned in 2021 with third roasting oven commissioned
in March 2022

o  Nickel tailings now being stockpiled in readiness for production from new nickel
recovery process later in 2022

o  Construction of new laboratory, warehouses and connection to adjacent reliable
high voltage power line completed

·    Solid production performance achieved

o  9.4% increase in vanadium pentoxide production to 260 tonnes with production 
rates in the second half 70% ahead of the 2020 average

o  First sales of ferro-molybdenum achieved, with production of 6 tonnes of contained
molybdenum in the fourth quarter

·    Strengthened board and management team

o  Appointment of Sir Mick Davis as non-executive chairman and Peet Nienaber as 
non-executive director

o  Appointment of William Callewaert to the board as Chief Financial Officer in 
April 2022

o  Process initiated to recruit an experienced project director to bring the project
to production

·    Improved financial results

o  Revenue increased 96% to US$ 4.7m (2020:US$ 2.3m)

o  Loss before tax of US$ 2.83m (2020: loss before tax of US$ 3.94m)

o  The Group held cash of US$ 2.81m at 31 December 2021 (2020: US$ 0.707m)

·    Improved outlook for 2022

o  Third roasting oven increased capacity by 50%

o  Group already operating profitably

o  Nickel recovery project will increase revenues from each tonne treated with no
additional raw material costs

·    Price of vanadium pentoxide currently $12/lb, up from $5.4/lb at the beginning
of 2021. Ferro-molybdenum and nickel prices up by 100% and 92% respectively from
1 January 2021 to date

> **Sir Mick Davis, Non-executive Chairman, commented:** 
> _“Ferro-Alloy has made good progress on a number of fronts following Vision Blue’s
> investment in early 2021 demonstrating the value we see in the Company’s assets.
> The expanded feasibility study is already showing the potential for Balasausqandiq
> to become a globally significant vanadium operation with a highly attractive suite
> of by-products that could eventually contribute over one third of revenues. The
> combination of a very large deposit, access to excellent existing power and logistics
> infrastructure and the potential to achieve net-negative cash vanadium production
> costs are highly compelling.  Furthermore, increasing intensity of vanadium use
> in the steel sector and growing applications in energy storage gives us confidence
> in the future demand for the Company’s product.”_

> ** Nick Bridgen, Ferro-Alloy Resources CEO, commented:**
> _“The Company is in an exciting phase of development as we invest in our existing
> operations to maximise profitability from each tonne of material treated and undertake
> our expanded feasibility study. Following the completion of a number of operational
> initiatives, including the commissioning of the third roaster in April 2022 which
> has materially increased our production capacity, the existing plant is performing
> well and is positioned to finance the remainder of the feasibility study and thereafter
> contribute to the development of Phase 1 of the Balasausqandiq project. We have
> several further operational initiatives planned in the coming months all of which
> are focussed on maximising profitability and cashflows from our existing operations
> as we continue to focus on delivering the larger growth projects ahead of us. _
> _“In June 2021 we welcomed Sir Mick Davis to our board as non-executive chairman
> and Peet Nienaber and as a non-executive director, and in April 2022 we welcomed
> William Callewaert as Chief Financial Officer. All three of these additions greatly
> strengthen the experience of the board and I look forward to the next chapter 
> with confidence.” _

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 “Balausa 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 numerous 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, targeting annual operating cash generation
of $10m.

The Existing Operation will provide not only useful cash flows but also an experienced
management and infrastructure that will greatly assist and de-risk the main prize–
the development of Balasausqandiq.

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