Ferro-Alloy Resources Ltd (LSE:FAR)’s supply problems have prompted a revision of its numbers by house broker Shore Capital, though it still believes the Balasausqandiq project is a world-class and more importantly, a very commercial vanadium deposit.
In an update this morning, the company warned that the disruption would have a material impact on this year’s results, but as Balasausqandiq in theory can have negative costs of production it remains the main driver of FAR’s valuation.
“Given Balasausqandiq’s sedimentary origin, low-cost vanadium extraction is possible through leaching rather than expensive pre-concentration or roasting as is the case with FAR’s peers.”
Vanadium prices have fallen but at US$7.4/lb are in line with the broker’s long-term price and should be well supported, adds Shore Cap, despite weaker demand in the Chinese construction market, given the global increase of installations of vanadium flow batteries.