Ferro-Alloy Resources Ltd (LSE:FAR) said it plans to raise £8.6mln, before expenses, so it can complete a feasibility study for the giant Balasausqandiq vanadium deposit in Southern Kazakhstan as soon as possible.
It proposes to raise about £8.2mln through a placing and subscriptions and the remainder from a PrimaryBid offer, all at an issue price of 12.0 pence per share, a 17.9% discount from yesterday’s closing share price.
In early London trading, the company’s shares were down 18.3% at 12.25p, still above the issue price.
Ferro-Alloy Resources said its strategic investor, Vision Blue Resources (VBR), had indicated that it intends to cornerstone the fundraising by maintain its percentage shareholding and acquiring any shortfall in demand to ensure that £8.6mln is raised.
On 1 July, the group said the scope of the feasibility study had expanded considerably since its inception.
READ: Ferro-Alloy Resources identifies thicker sections of vanadium in Kazakhstan
Following the 2021 investment from VBR, led by Sir Mick Davis who is also non-executive chairman of Ferro-Alloy Resources, the company decided to upgrade and expand the study to include Phase 2 and the more significant by-products.
"The early results of the expanded feasibility study are confirming the potential for Balasausqandiq to become a globally significant vanadium operation,” said Davis. "Installations around the world of vanadium flow batteries are increasing, which is perhaps the basis for vanadium prices remaining strong compared with historic levels."
Both the existing operation and the planned process plant for Balasausqandiq will have a strongly positive ESG impact, something critical for attracting customers and investors going forward.
In a separate statement, Ferro-Alloy Resources also reported its interim results.
Revenue grew to US$3.9mln, from US$1.5mln in the year-earlier period, on higher production, although the company said it had been impacted by the supply chain issues caused by the war in Ukraine and the after effects of Covid-19.
“Although the transport and banking issues associated with the Ukrainian invasion are largely stabilising, with little effect now on delivery schedules except as to pricing, we expect some continuing disruption,” said chief financial officer William Callewaert.
“Uncertainty remains as to the impact these issues will have on the outcome for H2 but the company expects H2 revenues to be greater than H1.”
The group saw its pretax losses narrow to US$0.7mln in the six months to end-June from US$1.1mln.