Ferro Alloy Resources Seals Funding Deal With Former Xstrata Boss Mick Davis

Davis will become chairman of the company, and has pledged further funds in due course

Anglo American PLC -
Ferro Alloy Resources Limited (LON: FAR), the vanadium mining and processing company with operations based in Southern Kazakhstan, entered into a subscription agreement for up to US$12.6mln with Vision Blue Resources, a company led and founded by former Xstrata chief executive Sir Mick Davis and a limited number of co-investors.

Sir Mick Davis will join the Ferro Alloys board as chairman following completion of the initial raise.

The new equity is priced at 9p per share and includes an initial investment in two stages of up to US$3.1m by Vision Blue, and the co-investors, including Tony Trahar, former chief executive of Anglo American PLC (LON:AAL).

The transaction structure provides a pathway for VBR to acquire 21.29% of Ferro Alloys.

The proceeds will be used to complete the expansion of the existing, cashflow generating, processing facilities, and to complete the bankable feasibility study for Ferro Alloys’ large-scale, low-cost Balasausqandiq vanadium project.

“I am delighted to announce a multi-stage strategic investment into Ferro Alloy Resources by Vision Blue, led by Sir Mick Davis, as well as his proposed appointment as chairman of the board,” said Nick Bridgen, chief executive of Ferro Alloy Resources.

Mick Davis was also enthusiastic.

“The Ferro Alloy Resources investment case is compelling, has an attractive risk profile and many qualities that are difficult to find in other mining investment opportunities,” he said.

“The Balausa project has the potential to become the lowest cost producer of vanadium globally and to deliver highly attractive returns to its shareholders. This long-life asset benefits from access to excellent existing power and logistics infrastructure and has clear potential to achieve net-negative cash production costs – a unique quality in this industry.”

Separately, Ferro Alloy Resources also announced an operational and production update, which showed a 57% boost in vanadium pentoxide production for 2020.