Ferro-Alloy Resources Can Unlock Potential Faster With Vision Blue Backing, Says Broker

Ferro-Alloy Resources (LON:FAR) will be able to unlock the potential of the high-grade Balasausqandiq vanadium project in Kazakhstan much faster with the aid of Mick Davis’s Vision Blue Resources (VBR), suggests house broker Shore Capital.
Ferro-Alloy is planning to expand the scope of the current feasibility study to include evaluation of the Phase 2 expansion to 4Mtpa of treated ore producing 22.4kt of V2O5 and to establish the potential value of the associated by-products to be extracted.
As such, additional drilling will now be required for upgrading the Balasausqandiq resource to account for the Phase 2 expansion to JORC standards.
The company has also announced FY2020 results from its existing activity. FAR produced 237t of vanadium pentoxide (V2O5) during FY2020, representing a 56% increase over the previous period.
Revenue increased 33% to US$2.4mln from US$1.8m in FY2019. Total capacity is now 80t per month depending on the concentrates being treated.
Stable and reliable power is expected to improve existing production significantly.
As previously noted, Ferro Alloy has established another revenue stream with the production of 20t of calcium molybdate (CaMoO4).
This is used in the production of ferromolybdenum, molybdenum-containing alloys, ceramics and direct alloying of steel and alloys with molybdenum in electric arc furnaces. The molybdenum content of calcium molybdate is sold on the pricing basis of molybdic oxide less a small discount.
“Whilst the existing operation does generate cash flow, we note that the Balasausqandiq primary mine operation and its significant by-products are the main drivers of FAR’s equity valuation, accounting for c 95% of its total amount in our view.
“VBR’s accelerated investment timetable is a sign of confidence in Ferro-Alloy’s’s management team and the potential of the giant Balasausqandiq mine in our view.
“We continue to view Balasausqandiq as a world-class vanadium deposit with significant by-product credits capable of generating negative costs of production that underpin FAR’s compelling investment case. “