Ferro-alloy Resources Ltd. · LSE:FAR
Ferro-alloy Resources — Investor Presentation (March 2019)
29 slides from Ferro-alloy Resources's investor presentation, March 2019
Slide 1: Expanding vanadium producer in Kazakhstan
Expanding vanadium producer in Kazakhstan MARCH 2019
Slide 2: Disclaimer
Disclaimer This document (the “Document”) has been prepared by Ferro-Alloy Resources Limited (the “Company”) based on Company information and publicly available information provided by sources that the Company believes to be reliable. This Document is for distribution in the UK only to persons who:
Slide 3: Corporate snapshot
Corporate snapshot Ferro-Alloy Resources Ltd Board Guernsey registered company CEO - Nicholas Bridgen Director of Operations - Andrey Kuznetsov All projects 100% owned Non-Executive director - Chris Thomas Already a commercial vanadium producer Non-Executive director - James Turian Over 140 employee
Slide 4: Overview
Overview Ferro-Alloy Resources Group (“FAR”) FAR is already a vanadium producer Two major projects at the same Balasausqandiq site, with combined NPV of $2 billion ($4.5 billion at the current price) 1. Expansion of current processing operations (NPV 10% US$73m, or $216m at current price): Operation
Slide 5: Balasausqandiq project – the real prize
Balasausqandiq project – the real prize Development of the giant Balasausqandiq vanadium project NPV (10%) $2.0 billion, IRR 89%, at forecast $7.50/lb V2O5 Balasausqandiq Project Total 25,000 22,000 tpa V2O5 New standalone plant to be operated in parallel with the existing V2O5 tonnes per annum proc
Slide 6: An NPV of $2 billion for $35m new equity
An NPV of $2 billion for $35m new equity Current processing Balasausqandiq Balasausqandiq operation Phase 1 Phase 2 US$m US$m US$m Equity 5 28 Retained earnings 5 14 225 Corporate debt/bond issue 58 Total capital required 10 100 225 Source: Competent Person’s Report 12 November 2018; concept plan de
Slide 7: Why FAR is special – in a nutshell
Why FAR is special – in a nutshell What’s different from Largo, Bushveld and other primary vanadium producers? Balasausqandiq is not a titano-vanadiferous magnetite deposit – nearly all others are Our ore contains very low levels of iron oxide and carbonates (i.e. acid-consuming components) That mea
Slide 8: What else is good?
What else is good? Orebodies 1-4 Not all vanadium deposits were created equal Outcrops at surface, open pit with no pre-strip required Very large, with huge exploration potential Constant grade with little tectonic alteration, visible geological cut-off makes for easy mining Simple, low risk flow-sh
Slide 9: Vanadium – used in steel but also Energy Storage
Vanadium – used in steel but also Energy Storage Vanadium Redox Flow Batteries (“VFBs”) are the solution to large scale, long discharge, energy storage The replacement of fossil fuels with solar and wind power requires energy storage to cope with intermittency Typical use is for charging in the day
Slide 10: Balasausqandiq – resources and potential
Balasausqandiq – resources and potential JORC Resource is based on only one orebody (OB1) Substantial JORC Exploration target based on additional orebodies (OB2-OB5) – all of which outcrop Orebody Category (JORC 2012) Tonnes (Mt) V2O5 (%) MoO3 (%) U3O8 (%) REM (ppm) C (%) V2O5 (tonnes) V2O5% equiv.
Slide 11: Balasausqandiq - reserves
Balasausqandiq - reserves JORC - Ore body 1 only: Reserve Category Mean grade V₂O₅ [%] Tonnes (000) Probable 22,938 0.59 Note that the economic analysis contained in the Competent Person’s Report by GBM of 12 November 2018 includes inferred by-product grades of carbon, uranium oxide, molybdenum oxid
Slide 12: Valuable by-products
Valuable by-products As well as being low in deleterious elements, Balasausqandiq’s ore contains valuable by-products: Carbon-silica – carbon can be concentrated to make By-products at Balasausqandiq have the potential to boost revenue carbon black, used in the manufacture of rubber, $12bn per tonne
Slide 13: Balasausqandiq processing
Balasausqandiq processing Straightforward process flowsheet, tested in a 15,000 tonnes per year pilot-plant Carbon, silica Crushing & Thickening and Autoclave De-carbonisation Grinding Filtration Leaching Circuit Precipitation, Crystallisation, Desorption Adsorption Filtering Ammonia Dissociation Va
Slide 14: Leadership
Leadership Nicholas Bridgen Chief Executive Chartered Accountant, lives in Kazakhstan and speaks fluent Russian. Nick has led Ferro-Alloy Resources Limited since 2010 14 years with Rio Tinto group in various roles, finally as Group Planning Manager with the Pillar engineering and chemical companies
Slide 15: Management
Management Alexander Fofanov Technical director TOO Firma Balausa Degree in Chemistry, PhD in the research and development of vanadium extraction. Expert in the technology of vanadium production Tenure with the Central Research Metallurgical Institute in Moscow, MD of Tula Vanadium Previously Direct
Slide 16: Location
Location Excellent regional infrastructure ✓ Brownfield: as FAR has an operating vanadium plant, significant site infrastructure is already in place ✓ Logistics: excellent links to China, Russia and Europe ✓ Power: connected to grid , now connecting to nearby HV line ✓ Water: readily available sourc
Slide 17: Attractive operating environment
Attractive operating environment Kazakhstan is an attractive jurisdiction Stable democratic government Already a major exporter of metals and minerals Attractive fiscal regime – 20% corporate profits tax No requirement for government free-carry or local ownership Subsoil use law updated in 2018 base
Slide 18: 79% operating margin
79% operating margin Base-case financial analysis shows that Balasausqandiq will be a highly profitable operation Base-case uses $7.50/lb V2O5, well below the current low price of $16.25/lb (1 February 2019) Highly competitive cash costs Balasausqandiq cash operating cost (inc. royalties and G&A) pe
Slide 19: Current processing operations
Current processing operations FAR currently operates a vanadium processing plant which treats purchased vanadium-containing concentrates and raw materials. Currently profitable at small scale $10m expansion of the current operation is underway to expand production, allow the plant to treat a wider r
Slide 20: Financial analysis (combined projects)
Financial analysis (combined projects) NPV10% for combined projects $2.0billion (at $7.50/lb V2O5 from 2021) $16.25/lb Overall project IRR = 96% Driven by high-margins Current low NPV 10% $4.5 billion at current low vanadium price of $16.25/lb V2O5 price 5.0 NPV US$bn (10% discount rate) $4.5bn 4.5
Slide 21: Combined development plan
Combined development plan Balasausqandiq Balasausqandiq Expansion of Current Stage 1 Stage 2 current operation 1Mtpa 4Mtpa Additional production: 1,356 tpa V2O5 5,600 tpa V2O5 16,400 tpa V2O5 Total production: 144 tpa V2O5 1,500 tpa V2O5 7,100 tpa V2O5 23,500 tpa V2O5 Total Capex: - $10m $100m $225m
Slide 22: Development timeline
Development timeline To Q1 2020 H1 2019 2019-2020 H2 2020 2021 2022-2023 H2 2023 Expansion Phase 1 Phase 1 Phase 1 Phase 2 Phase 2 Phase 2 of current Engineering construction commissioning Engineering construction commissioning operations & design & design 144 tpa V2O5 7,100 tpa V2O5 23,500 tpa V2O5
Slide 23: Vanadium and its uses
Vanadium and its uses 3.5% 1.2% 4.3% Steel Alloy Vanadium is a soft grey ductile transition metal 153kt Main products Vanadium Pentoxide (V2O5) and Ferro-vanadium V2O5 Titanium Alloy Vanadium 2017 demand Characteristics end-use Chemical catalyst One of the highest strength to weight ratios of all me
Slide 24: Vanadium demand - steel
Vanadium demand - steel Steel demand remains robust Intensity of vanadium demand in steel Demand remains robust for structural steel and speciality steels in the automotive & aerospace industries - specifically the high-strength low-alloy (HSLA) steels which utilise vanadium. 0.10 China lags the RoW
Slide 25: Vanadium demand - VFBs
Vanadium demand - VFBs VFBs - increasing impact on vanadium demand Growing application in Vanadium Flow Batteries The VFB roll-out is happening Primarily used for grid-scale mass energy storage Peak-shaving and grid stability Dovetails with the buildout of renewable energy – wind, solar Application
Slide 26: Vanadium supply issues
Vanadium supply issues The vanadium “problem”… Supply dominated by China and Russia Supply is extremely concentrated - 72% of global production derived as Mine production from Russia & South Africa declining, partially offset by a co-product from steel plants using magnetite iron-ore Brazil (Largo R
Slide 27: Vanadium outlook & pricing
Vanadium outlook & pricing Vanadium pentoxide Europe price ($/lb) (TTP Squared) V2O5 prices have been volatile, peak $35/lb in 2005, cyclical low in 2015 $2.38/lb 30.00 V2O5 10-year chart Currently over $16.25/lb – nearly 7 x increase in last 2.5 years 25.00 V2O5 Price ($/lb) Structural deficit, low
Slide 28: Investment summary
Investment summary Already a vanadium producer with a low-capex expansion of existing operations already underway Developing the huge Balasausqandiq project to be one of the biggest and lowest cost producers Minimal equity dilution – low capex and phased development using mostly retained earnings No
Slide 29: Contact
Contact: Ferro-Alloy Resources Ltd Nick Bridgen CEO – Ferro-Alloy Resources Ltd [email protected] Nick Price Shard Capital Partners LLP [email protected] Mobile: +44 7767 263154 29
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