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MINING | Ferro-Alloy Resources Group
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FERRO-ALLOY RESOURCES GROUP Developing the world’s lowest cost vanadium deposit in Kazakhstan
MINING | Ferro-Alloy Resources Group
Ferro-Alloy Resources Group (FAR) is developing the giant Balasausqandiq vanadium deposit in Southern Kazakhstan and listed on the London Stock Exchange (LSE) in March 2019. The company had previously listed on the Kazakhstan Stock Exchange in 2017 as a precursor to floating on a major international bourse, due to a legal requirement which stipulates that companies with a majority of their assets in Kazakhstan must, when placing shares abroad, place at least 20% of the shares on the domestic market. Why did FAR choose the London market? CEO Nicholas Bridgen views London as a strong exchange with good liquidity and a convenient choice. “We are registered in Guernsey and have many British shareholders so there are obvious advantages to being listed in London. The LSE uses the CREST settlement system and London has a daytime overlap with Kazakhstan so communications are easier,” he says. The London IPO raised £5.2 million which will be used to further develop and expand production at Balasausqandiq, with FAR already in production at the site through a small-scale treatment plant which processes secondary vanadium materials.
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MINING | Ferro-Alloy Resources Group
However, the major focus going forward
The US$10 million expansion project is
will be the development of the large-scale
already underway and it provides a quick
Balasausqandiq vanadium deposit, along
and easy way to generate cash flow ahead
with the construction of a new standalone
of the big project, according to Bridgen. The
processing plant.
expansion will allow the plant to treat a wider range of vanadium-containing feedstocks and
“The bulk of the London capital raise will go towards the expansion of the existing
to produce higher-value products.
operation. To some extent you may think that
Eyes on the prize
is counter-intuitive as 95% of our value is in
Nonetheless, the real prize for FAR centres
the main project,” Bridgen suggests.
on the successful development of the Balasausqandiq deposit, which has the
“But, although most of the money from the
potential to be one of the world’s largest and
float is for the small project, about half of it is
lowest cost sources of vanadium.
on things which will be necessary for the big project as well, so in a sense we are starting
The scale of the deposit has previously been
the big project now.”
assessed using the local GKZ system, which estimated a reserve of around 70 million
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“The scale of the deposit is huge. All of our orebodies outcrop to surface so if we start further exploration and drilling there may be an awful lot more” Nicholas Bridgen, CEO Ferro-Alloy Resources Group
tonnes (Mt) of ore without going to full depth
However, the deposit is world class not
on most of the orebodies.
because of its size, but mainly due to the unique nature of its mineralisation compared
However, under the more commonly used
with most other vanadium deposits. The
JORC basis the resource for one orebody
majority of the world’s vanadium is found in
(OB1) was estimated at 24.3 Mt. The
vanadiferous titanomagnetite (VTM) deposits.
remaining four orebodies are classified under JORC as exploration targets which, taking the
Containing high levels of iron oxide, ore
centre of the estimated range, would give a
from VTM deposits must be subjected to
total resource of around 126 Mt.
a complex treatment route to produce the vanadium product. The usual process
“The scale is huge. We’ve only really scratched
involves making a magnetite concentrate
the surface of it with drilling and exploration
before roasting the material at a temperature
so far. All of our orebodies outcrop to surface
of around 1,100 °C.
so if we start further exploration and drilling there may be an awful lot more,” Bridgen
“That is an expensive process in terms of
exclaims.
both capital and operating costs. For capital
MINING | Ferro-Alloy Resources Group
Ferro-Alloy Resources Group listing ceremony at the London Stock Exchange, March 2019 costs you need a concentrator plant and then
capital and operating costs by around 60%,
a roasting plant, which involves bringing in a
which should make FAR the lowest cost
huge amount of power further contributing
vanadium producer in the world.
to operating costs. After all those steps, the metallurgical recovery is typically only around
“We have an orebody that is amenable to a
75%.”
treatment process which is in a different class from all other vanadium deposits. That is
Fortunately for FAR, the Balasausqandiq deposit is sedimentary and contains no iron,
what’s special about us,” Bridgen proclaims.
which means the ore can be treated directly
Sweetening the deal
with sulphuric acid in an autoclave to make a
In addition, the project’s value is further
solution without the need for a concentrator
sweetened by the presence of by-
or a roaster.
products including carbon-silica, uranium/ molybdenum and potassium alum. These
Overall recovery is expected to be over 90% and acid consumption is low. This reduces
by-products will allow FAR to utilise 100% of
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the ore for saleable products, meaning the
business environment following the break-up
company will produce no tailings from the
of the Soviet Union 27 years ago, dismantling
process plant.
red tape, reducing bureaucratic procedures and making it easier to do business.
“The by-products more than pay for the whole of the operation including mining and
FAR’s CEO adds further weight to the view
treatment. I’ve often commented that if there
of Kazakhstan as an attractive investment
were no vanadium at all in the deposit, it
destination, reporting that his company
would still be economic. Based on our long-
has experienced no difficulties operating in
term price assumptions, we expect a third of
the central Asian nation, and has received
our revenue will come from by-products.”
a significant degree of government support over the years.
Operating in Kazakhstan may once have been considered a risky choice by many Western
The company has a tax incentive agreement
investors, but this is no longer the case since
with the government, whereby it will pay 0%
the government moved steadily to reform its
income tax on its processing operations until
MINING | Ferro-Alloy Resources Group
2026 and has a property tax exemption until
grow strongly as a result of higher strength
2024. While Kazakhstan continues to face
steels being mandated for construction
legacy issues from the authoritarian Soviet
purposes, but the real upward demand
era, the political situation is described as
pressure may come from the burgeoning
stable by FAR.
energy storage industry.
“I think they have a system of government
Vanadium Flow Batteries (VFBs) have been
that suits the state of development of the
developed to support renewable energy
country and has enabled them to reform at a
facilities through storing large quantities of
very fast pace. From a business point of view
energy produced by solar and wind farms.
it’s ideal.”
The growth potential of this industry is demonstrated by a recent Adriot Market
In addition, FAR is set to benefit from
Research forecast, which stated that the VFB
excellent regional infrastructure, including
market would surpass a CAGR of 59.7% from
sophisticated road and rail networks linking
2018-25.
to markets in China, Russia and Europe and ample sources of power and water nearby.
Doubling down on demand
According to Bridgen, FAR is one of a select few primary vanadium producers that is well prepared for this potentially huge demand increase from the VFB industry.
The global steel market accounts for the lion’s share of vanadium demand, with some
“One of the good attributes of our ore and
estimates suggesting that steel applications
the process we use is that we naturally
account for over 90% of total consumption.
produce a very high purity product. It would
Demand from the steel sector is expected to
take a little more work to reach a purity
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required by the battery industry, but it’s
With the London listing ticked off the agenda
much easier to reach that standard starting
and detailed plans in place for the smaller
with our product than from the typical
and main projects at Balasausqandiq, FAR is
magnetite-derived product.”
at the beginning of an exciting period which could culminate in the transformation of the
From here, a lot will hinge on how the VFB
global vanadium market.
market develops in terms of FAR’s customers for its battery grade vanadium product.
“We certainly can ramp up our production
The company is talking to various battery
quicker and far cheaper than anybody else.
manufacturers and although at this stage the
We will go from being relatively unheard of
channels to market remain unclear, Bridgen
to a middle-sized producer over the next
is confident that FAR will play a crucial role
two years, and over the next three to four
from the supply side.
we will become one of the world’s largest producers.”
“A battery industry could potentially double demand for vanadium and it’s hard to see where that will come from apart from us, because only we can turn on the taps quickly and cheaply and produce a large amount of vanadium at a price that keeps the vanadium battery market competitive.”
KASE: GG_FERR LSE:FAR
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Published by Anderson Murray Media Ltd
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