Ferro-Alloy Resources Ltd (LSE:FAR), the vanadium miner, said it is struggling with supply chain issues impacting output levels and added that delays may also impact the completion of a feasibility study into the Balasausqandiq deposit, the group’s main focus for the financial year.
After one of its major suppliers defaulted on monthly supply commitments, Ferro-Alloy suffered delays and was forced to enter into new contracts, ultimately dampening output levels across the first two months of the third quarter, a trading update revealed.
"As a result, the Company anticipates that the concentrate supply delays experienced in Q3 2023, and continuing low vanadium prices, will have a material impact on the Company's financial results for Q3 2023," the company statement added.
Launching a bond programme last month, the Kazakhstan miner raised US$1.3 million to help fund the ongoing feasibility study until completion, with the preliminary exploration of the group’s "main value driver" reaching the final stages.
Completion of the feasibility study is currently expected by the end of the 2023 financial year, but the company noted that some consultants have cautioned that possible delays could extend the completion of the study until the first quarter of 2024.
Having previously reported the best production quarter to date last month, the group added that it has had all its factory updates completed and now expects increased production and better value from each tonne treated.
Nick Bridgen, chief executive officer, commented in a company statement: "With all plant modifications now complete and operating efficiently, these supply chain issues are disappointing. That said, the progress in the feasibility study, the main driver of the company's value, is very encouraging and I look forward to updating shareholders on its results."
Shares in Ferro-Alloy are down more than 20% in early trading on Monday morning, having opened at around 8.5p.