Ferro-Alloy Resources profitability boosted by by-product credits, says Liberum

Ferro-Alloy Resources

Ferro-Alloy Resources (LON:FAR) is the topic of conversation when DirectorsTalk MD, Darren Turgel, caught up with Yuen Low, Equity Research Analyst, at Liberum.

Q1. What are the key highlights from the latest results?

A1. The key takeaways for me are: firstly, that FAR’s secondary vanadium operation is now going well and profitable; second, that revenues should improve still further (with no additional raw material costs) when ferro-nickel production commences later this year; thirdly, that as a result of the aforementioned, the secondary operation should be able to finance the remainder of the BFS on the flagship Balausa project and potentially even contribute to construction capital; fourthly, that the Bankable Feasibility Study (BFS) on the flagship Balausa project is being extended further.

Q2. Why is the Bankable Feasibility Study (BFS) on the flagship Balausa project being further extended?

A2. The extension of the BFS is to investigate the potential for increased by-product credits, including from rare earths. By-product credits effectively reduce the cost of vanadium production (indeed, FAR expects Balausa’s opex to be net-negative after credits), thereby boosting competitiveness and financial robustness. Maximisation of by-products also minimises tailings generation (and associated opex and capex) and, hence, environmental impact. Furthermore, most of the various potential by-products have important roles in ‘green-ing’ the world. FAR has previously disclosed that it is assessing the potential to produce ferro-silicon and carbon black. 

Q3. Why is Sir Mick Davis’s Vision Blue Resources involvement important?

A3. The strategic investment by Vision Blue (and its co-investors) represents independent validation of Balausa’s potential by respected industry figures. When Sir Mick was at Xstrata, Peet was CEO of Xstrata alloys, a leading producer of vanadium. Meanwhile, co-investor (and ex-Anglo CEO) Tony Trahar was a former director of Highveld Steel & Vanadium, another major vanadium producer.

Q4. How do you see the outlook for the company?

A4. Unlike many developer peers (whether in the vanadium space or the broader mining sector), FAR is already profitable and could potentially finance the remainder of the Balausa BFS from internal cashflow generation. 


Ferro-Alloy Resources Ltd (LON: FAR) is developing the potentially very large Balasausqandiq vanadium deposit in Kyzylordinskaya oblast of southern Kazakhstan. The ore at this deposit is unlike that of many other primary vanadium deposits, appearing to be amenable to treatment by a much lower cost process. It is currently planned that output will be increased in two stages to reach 22,400 tonnes of vanadium pentoxide per year.

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