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Ferro Alloy Resources

Low-cost vanadium producer developing the giant Balasausqandiq vanadium deposit in southern Kazakhstan

(LON:FAR)

Overview

  • Principal asset is subsoil-use contract for the Balasausqandiq deposit located in the Shieliiskiy Region of Kyzlorda Oblast in southern Kazakhstan; an advanced black shale vanadium development project.

  • PFS shows post-tax NPV10 of US$2bn using a flat US$7.50/Ib V2O5 price with upfront stage 1 capex of US$100m and stage 2 capex of US$225m internally funded, for respective production of 5.6ktpa and 22.4ktpa V2O5.

  • Unit costs before by-products of US$2.26/lb, US$1.54/lb on a co-product basis and negative US$-1.20/lb on a by-product basis gives the project an industry leading cost base; around 56% lower than current low cost peers.

  • Ore body is not titano-vanidiferous-magnetite (TVM) in nature which enables a simpler metallurgical process which does not include high temperature roasting or pre-concentration. This reduces capex and opex by around 60% against TVM peers which account for 80% of current supply. Overall recoveries over 90% versus around 75% for TVM.​

  • Surface outcropping and large shallow orebody allow low cost mining with a low strip ratio. ​

  • Annual revenue of US$135mpa combined with strong margins result in free cash flow generation of US$103mpa during phase 1; this rises to US$541mpa and US$430mpa in phase 2. 2.2 years of phase 1 cashflow is sufficient to fund phase 2 internally. ​

Share Price

Existing Production

  • The company currently operates a processing plant which treats brought-in concentrates.

  • Near-term expansion of the existing operation, which produced c150t V2O5 in 2019, up to 1.5ktpa.

  • Aiming to provide cashflow during construction phase.

Pro-Mining Jurisdiction

  • Kazakhstan is located on the Silk Road Economic Belt with corridor of roads, rail, energy, telecoms and infrastructure linking China to Europe.

  • Significant site infrastructure already in place with easy access to roads, rail, power and water.

  • Stable jurisdiction with a mining-friendly government.

  • FAR has signed an Investment Incentive Agreement with Kazakh Government stipulating 0% tax until 2026 and full property tax exemption until 2024.

Reserves & Resources

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