Ferro-Alloy Resources pushing ahead with Balasausqandiq development plans

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What it does

Ferro-Alloy Resources Limited (LON:FAR) is a Kazakhstan-focused company working on the development of the Balasausqandiq vanadium deposit in the south of the country.

The company also has small scale production from a pilot plant there.

Vanadium is an element that has a wide range of application in the manufacture of metal alloys and is often used to increase the strength of steel for use in surgical tools, jet engines and dental implants.

What it owns

Balasausqandiq

Ferro-Alloy is the 100% owner of the Balasausqandiq vanadium deposit that also contains by-products such as uranium, molybdenum, aluminium, rare earth metals and carbon.

A reserve summary carried out in 2014 by the Kazakh State Reserves Committee confirmed a reserve at the site of more than 70mln tonnes, although Ferro said this assessment is only based on partial drilling and does not reflect the extent of the deposit.

The company says that the deposit is unlike the vast majority of vanadium deposits elsewhere in the world as it is not comprised of the mineral vanadiferous titano-magnetite, meaning material from the site can be processed with much lower capital and operating costs.

Ferro estimates that Balasausqandiq is large enough to produce around 10mln tonnes of ore per year, generating around 55,000 tonnes of vanadium pentoxide.

Processing plant

Aside from its developments at Balasausqandiq, the company also operates a processing plant treating low-grade bought-in concentrates with a production capability of around 150 tonnes per year of vanadium pentoxide.

The company is planning to increase output at the plant to around 1,500 tonnes per year by “by further debottlenecking the plant and installing additional equipment”, the cash from which it intends to use to fund the development of the Balasausqandiq deposit.

First commercial production and sale of calcium molybdate from the small-scale plant was achieved in October, with the company saying it is in discussions with potential off-takers

What’s the latest?

Ferro-Alloy reported a 72% rise in vanadium output to 188 tonnes for the nine months ended September 2020, bolstered by a company-record 90 tonnes in the third quarter.

The group has topped up its finances with £1.2mln of bonds and new equity so far in the year.

This has helped fund the significant progress on a major expansion of the existing processing operation, with the new equipment installed increasing capacity to 60 tonnes of vanadium pentoxide per month.

A second major phase of expansion aims to take capacity up to some 1,500 tonnes per year.

Separately, Ferro Alloy is also upgrading the feasibility study on the Balasausqandiq vanadium project, which has an NPV of US$2bn at a long-term forecast vanadium pentoxide price of US$7.50 per pound.

In September the company said it has developed technology for the production of electrolyte for vanadium flow batteries (VFBs).

From the chief executive

Nick Bridgen, CEO, commented in October: “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.”

Video interview

Inflexion points

  • Expanding vanadium production
  • Improving power connection
  • In talks about offtake for calcium molybdate
  • Entering the vanadium-flow battery market

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