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FAR Ferro-alloy Resources Limited

3.40
1.05 (44.68%)
Last Updated: 10:15:44
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Ferro-alloy Resources Limited LSE:FAR London Ordinary Share GG00BGDYDZ69 ORD NPV
  Price Change % Change Share Price Shares Traded Last Trade
  1.05 44.68% 3.40 9,365,532 10:15:44
Bid Price Offer Price High Price Low Price Open Price
3.30 3.50 3.40 2.65 2.75
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
  -
Last Trade Time Trade Type Trade Size Trade Price Currency
10:17:00 O 13,830 3.50 GBX

Ferro-alloy Resources (FAR) Latest News (4)

Ferro-alloy Resources (FAR) Discussions and Chat

Ferro-alloy Resources Forums and Chat

Date Time Title Posts
21/11/202409:42Ferro Alloy Resources - Vanadium Producer416
29/3/202214:53Ferro Alloy Vanadium 20211,206
16/1/202113:46WE ARE WATCHING YOU !1,202
16/1/202113:46Ferro Alloy Vanadium 202110
15/1/202118:21Ferro Alloy 20214

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Ferro-alloy Resources (FAR) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
10:14:543.02272,7768,224.20O
10:14:243.401,31844.81O
10:14:233.40622.11O
10:14:203.3916,350554.27O
10:14:143.3930,0001,017.00O

Ferro-alloy Resources (FAR) Top Chat Posts

Top Posts
Posted at 11/9/2023 11:56 by ttlance
Shame the share price doesn’t reflect your positivity. It’s in the doldrums due to the likelihood of further shareholder dilution and the possibility of VB pulling out.
Posted at 23/8/2023 15:56 by ttlance
Wilo101 of course the current plant is relevant. More shares issued means the company has to generate more free cash flow in order to maintain the earnings per share which ultimately dictates the company’s dividend yield. If the plant isn’t profitable by 2026 there is likely to be another 400m shares issued and that’s before further dilution that far are proposing in order to fund the build. All of these shares being issued will give a market cap today of the equivalent of circa 30p but the share price will remain at todays current 10p due to the huge amount of shares having been issued.
Posted at 23/8/2023 15:46 by ttlance
Mesb48, the problem is the uncertainties of RNSs released, one minute NB is saying all is well and a corner has been turned and then the next minute he drops an announcement like the last one. It’s certainly not helping potential investors from investing. I for one won’t be investing further until they have shown that they have consistently turned a corner. I don’t think the feasibility study release will result in a major sustained rerate in the share price, solely because of the ongoing risk of shareholder dilution until phase 1 is operational, which is likely to be late 2026, possibly 2027, if it goes ahead.
Posted at 21/8/2023 08:00 by ttlance
This isn’t irrelevant at all, as jailbird has mentioned this continual loss will result in more dilution.

The concerning thing is that phase 1 is unlikely to be operational until late 2026 at the earliest due to FARs history of not hitting timelines. This means we will have continual share dilution until then again based on FAR not hitting its production targets.

I was thinking by the time phase 1 is operational there may be 1 billion shares in issue but this could be significantly more now. I won’t be investing any more until I’ve seen at least 2 quarters of sustained high production.
Posted at 30/4/2023 19:51 by t_headder
Libernum note has the plant making 5.6M$ operating cash with which it forecasts a 50M$ financing (including warrant conversions I assume) and all the VB share rights to be executed @ 25p. Reckons ultimate share price of £1.66 is achievable with a current target price of 38p. It's on researchtree but you will need to start a free trial to view it. Not that brokers notes are super credible all the time but I like my chances here better than if I was in rockfire resources as a shot of making some serious gains over the next 7 years. Low share valuation has likely attracted a lot of speculators looking for a spike to sell into though......
Posted at 21/4/2023 20:00 by ttlance
Megaman2 and all may bang the drum about vrfb etc but if the current plant is loss making then the share price is going to get hammered. Bearing in mind if FAR doesn’t generate any free cash flow from this plant then the expected fcf is in 2026 at the earliest.
Posted at 12/4/2023 21:13 by ttlance
AGMs are in Guernsey, never been there let alone attended one of FARs AGMs.

Let’s hope there’s some good news on the current plant to stop any further shareholder dilution.

I’m basing calculations on 1 billion shares in issue at the point of phase 1 being operational (that’s as long as NB hasn’t made a complete mess of things). £75m fcf should give 75p per share during phase 1, equating to a dividend yield of 10% which is about right. Phase 2 therefore providing £300m fcf and 300p share price. Funds from phase 1 would be used for the development of phase 2, so shouldn’t require any dilution.
Posted at 15/9/2022 19:38 by jailbird
All Shares issued as part of this transaction will rank pari passu with the existing ordinary shares.

Further investment rights to VBR of up to US$9.5m

VBR has also been granted rights, at its election, to acquire up to a further US$9.5m of shares at the Issue Price of 9p per share through the extension of the CLN or issuance of Shares by the Company (the "Further Investment Rights"), based on the following terms:

a) Up to US$7.0m within a 3 month period following the later of the receipt of certain consents in Kazakhstan and Admission ("Further Investment")

b) Up to a further US$2.5m after completion of the FS ("FS Investment")
In the event that VBR acquires the full US$9.5m of shares under the Further Investment Rights outlined above, a further 75,819,248 shares will be issued to VBR and VBR's shareholding would increase to 91,781,196 shares in FAR, equating to a final investment shareholding of 21.29% of FAR's enlarged total issued share capital at that time.


Construction funding rights:

In addition to the Initial Investment and Further Investment Rights outlined above, VBR will retain the right to further invest up to US$30m in FAR based on pre-agreed share prices. These rights will only be triggered in the event that FAR launches a process to raise capital for the construction of the Balausa Project and where the Initial Investment and the Further Investment have been exercised.

A summary of the terms are outlined below:

a) Right to purchase US$10m of additional shares in FAR at a share price of 25.0 pence per share, equating to a pre-money market valuation of US$150m, at the agreed exchange rate

b) Right to purchase US$20m of additional shares in FAR at a share price of 78.0 pence per share, equating to a pre-money market valuation of US$500m, at the agreed exchange rate

This structure will support FAR in raising the appropriate balance of debt and equity capital to advance the Balausa Project to construction and production and allows VBR the certainty that it will have the ability to ensure the potential equity investment necessary for the Balausa Project to enter construction would be in place for the Company at the time that an investment decision is taken to proceed with its development.
Posted at 21/6/2022 09:39 by sage of suffolk
PS
The key of course is for the mine plan/BFS to get X% bigger, with much less than X% equity dilution... I'm confident that Mick Davies will manage to pull in a good debt package with all his contacts and credibility... It will also be very helpful if the small operation can be making decent money soon, as that will help to raise debt against it... If it's making $12M say, that should support $120M of debt on its own, plus VBR's planned equity investment which should support another $100M or so... Not far off what they need to go direct to Stage 2...
have a look at the company website, you'll see that they could be making $400M revenue (£300M) p.a. after Stage 2 construction. (22,500 tons at an $8 average V sale price).

Say £200M conservatively after tax, GA and sustaining capex... This is an enormous resource and super cheap to produce the output

On the current plan there will be 500M shares in issue, giving a likely share price of £4 at a p/e of 10... A simple 5% divi gives 20p per share (at 2x divi coverage)...
Yes, a bit back-of-a-fag-packet but the numbers add up... and I think Sir Mick Davies can deliver it...
This may all change after their updating of the BFS

As long as people are aware that it will probably take 3 years to get there. And in the fullness of time there could be a 20p dividend.

Nothing new in the Proactive interview for existing investors. Money in the bank, new world class chairman, extending already huge resources through drilling, new power connection to the small plant, working on further by-product streams from it.
they stated clearly in the RNS that they intended to do some more drilling to upgrade the resource to JORC standards- this is the reason for the BFS delay. It will all be worth it eventually. And the company now has plenty of money to get the drilling done quickly before next winter

$400M revenues, minimal cash costs, knock off some capital maintenance, central costs, taxes etc, say £250M net profits, p/e of 8, 500M shares = 400p share price. Simplistic yes, but the mine and economics are actually quite simple... And until we know their detailed plan and see the final BFS this estimate will do IMO. I'm working on 500m shares when we are in production, based on the announcement in March and allow a few extra options as you say. Hence reducing NB's optimistic eventual target share price of £10/share to about £6. Personally I am hoping/aiming for about £4 per share. Frankly I'm in this not just for capital growth, but for the eventual divis,

Delay due to bureaucracy. Mick Davies now in the driver's seat and a new impressive NED. Proper power supply connected and about to go live - allowing the small plant to make $10m p.a. profit and providing stability while the main mine is developed.

Looks like a 6-9-month delay on the BFS but for a good reason - to work out how to make it into a much bigger and more profitable mine. Great news for LTHs...

I would add that, apart from speeding up development and construction dramatically, and bringing on board a very credible major investor, another motivation for NB to do the VBR deal is that he was under legal pressure to sell some shares for personal reasons. He knew that the VBR announcement would rocket the share price and mean that he would have to sell less shares personally - as has happened (he sold at 30p rather than 10p). The fact that he and Andrey have large holdings and therefore are motivated to see the share price rise, is another confidence for me in FAR. Andrey still has 60M shares and Nick still has 45M

NB's plan was to get the small plant completed and generating $10M p.a. cashflow, which would have supported the full $100M loan for Stage 1 with minimal further dilution. As it turned out, because they screwed up the IPO and didn't raise enough money, the share price was forced down below 10p and NB's original plan was ruined. So he had to go and find another funder, and to be fair he's done that very successfully. There will be substantial but not excessive (approx 50%) further dilution as a result, which means that the eventual target share price in full Stage 2 drops from £10 down to about £5-6. Personally I am being more conservative and think that the share price will be about £4 when Stage 2 is online, albeit that is possibly 4-5 years away.

Today's market cap of $150M ($200M fully diluted for Phase 1 production) doesn't seem excessive, given the prospects here and potential NPV of over $2bn (subject to BFS confirmation), along with the credibility of Mick Davies' support. Typically miners trade at 20-30% of NPV after construction funding confirmation (which we have essentially got 'in the bag' after VBR's investment agreement), so even double today's share price doesn't seem excessive while we wait for the BFS, probably in Sept IMO.

$20M is due after the BFS is published, as part of the Stage 1 funding package (including debt). I see the BFS being published by Sept / Nov at latest, now they have millions to throw at it. Meanwhile VBR will be putting out feelers for 'heads of terms' on the debt deal, pending BFS. Once it's published then maybe 3-4 months to finalise the package IMO. So I would expect this to be all done and signed off by EOY, or early Q1 next year at latest. They will be wanting to get the Stage 1 plant completed for full operations in the spring of 2023, IMO.

I see the $10M at 25p being proposed as an immediate cash injection after the BFS is published (assuming it's satisfactory), to allow the ordering of long lead time items, without having to wait for the full funding package to be signed off.

The company will be throwing off mountains of cash just from Stage 1, easily enough to support a $200M-ish debt-only package to develop Stage 2.

The basic position with FAR is that there should be no more need for placings. All future equity fundings, and their prices, are known (including $20M at 78p). So assuming all funding is drawn down, there will be approx 480M shares in issue. We also know that raising $70M in debt will be a cakewalk with that equity funding in place, and Mick Davies leading as Chair. Stage 2 will be developed from Stage 1 cashflow.

So all we need to do is work out is how much a company making $400M p.a. in 2025 (Stage 2) will be worth, and then divide by 480M shares to get a long term target share price...

To me the only significant remaining risk is the BFS, if it should show a much less positive economic case than the (Western produced) CPR. It might possibly be 15-20% less positive.

A breather is only a concern for short term traders. We're still only at 15% of NPV (fully diluted) and funding for the mine is virtually nailed on, so we should really be at 25%+ of NPV in my view. I think 60-70p is fair value, but maybe it will take the BFS to get there. Luckily the BFS should be published in about 3-4 months IMO, now the company have money to throw at it.

There will be a lot of news in the coming 6 months:

*Initial financing completed.
*HV power connection completed.
*Arc furnace ordered.
*Mick Davies confirmed as Chairman.
*BFS updates, and publication probably Sept.
*Stage 1 debt finance package agreed, or 'heads of terms' at least.

Pensana Resources (PRE) has a market cap of £320M (was £400M recently). In my view the economic case at Pensana is broadly similar to FAR, in fact FAR is probably a bit better.

* Both have top class management (after Mick Davies has come on board)
* Both have a BFS almost complete.
* Both need relatively modest capex to build their mine.
* Both have large resource bases (I would say FAR's economic case is better due to the co-product credits).
* PRE has indicative debt funding agreements, but no equity deal yet. FAR is the other way round (better IMO as it's clearer).
* PRE is setting up a vertical integration manufacturing unit in the UK. FAR doesn't have that yet, but they have mentioned the possibility.
* Both PRE and FAR have existing transport and power infrastructure on their doorsteps.
* PRE is in a reasonable position to access markets by sea. I think FAR's position is better as it has easy access to both Europe and China (albeit rail is a bit more expensive than sea transport).
* I would say that Angola is a notch above Kazakhstan in political risk.

So given the points above, if FAR were to hit £400M cap like PRE, then even at our committed diluted shares numbers (approx 420M), that would be 95p....

420m shares after recent dilution X 50p = £210M or $270M. Typically good quality junior miners pre-construction but with funding sorted, are valued at around 20% of their NPV, which in the case of FAR is $2bn. 20% of $2bn is $400M (around 73p per share).
As mentioned, execution risk (getting the mine actually built) and political risk (Kazakhstan state corruption, dodgy dealings, resource nationalism etc) remain, in addition to the economic risk which is always present.

In terms of execution risk, I think Mick Davies will make sure the mine gets debt funding and is built successfully. Of course it's never possible to rule out any bad luck, accidents or 'black swan' events.

As for political risk, it certainly exists, but I don't think Kazakhstan is as dubious as some places which still get Western investment. Most governments are desperate for jobs and tax revenues these days, and don't want to get a reputation for poor governance and scare off Western capital. There are a number of good-sized Kazakhstan-based miners already listed on Western exchanges which all seem to be reasonably successful, and not encounter too many problems.

That leaves only the eventual economic case of the mine, which largely depends on the long term V price, and demand for the product. As for that, who knows, but the amazing thing is that with the deposit type and processing route that FAR have, they will make money at *any* credible vanadium price. As long as the mine gets built, they should *never* go bust. That is a massive safety blanket. And even at unfeasibly low V prices (say sub $5) the eventual share price should *still* be multiples of 40p.
To be clear, there is still a moderate level of risk at Ferro-Alloy. Execution risk and political risk remain. But (it seems to me) the financial/funding risk has now been eliminated. And with Mick David on board I would imagine that the execution risk is massively reduced...
I recommend reading the CPR on the company's website. It gave me confidence that the resource was real and that the IRR was genuinely astonishing. A reputable Western consultant wouldn't have put their reputation on the line by engaging in outright dodgy dealings.

The BFS is being done by a separate consultant, which is best practice, like a 'second opinion'. It is the very well regarded SRK doing it, so we can be sure it will be realistic.

Yes it's possible that the final detailed economic case (BFS) might be a bit less positive than the CPR.

if the IRR of 97% in the CPR were to drop to 70 (probably worst case IMO) then it would still be an almost unheard-of IRR. Yes the eventual share price when in production would be lower, but it would still be multiples of 40p.

And let's not forget that in some ways the IRR is now almost irrelevant - because we no longer actually need to attract (equity) investment! BVR have just agreed to invest $30M (at prices up to 78p) to deliver Phase 1, as part of a debt and equity package...
it seems perfectly feasible to go straight to Phase 2. The additional capital required would be $225M (from the CPR), but there should be some efficiency from combining the Phases. In any case, approx an extra $50M in equity would support further debt to deliver a combined Phase 1+2.

I can't see Mick Davies agreeing to let any 3rd party in cheaper than him at 78p, At 90p then $50M (£40M) is less than a 10% dilution, which is trivial. And the investors of the extra $50M would be able to look forward to a 5+ bagger in capital terms, and a potential 20%+ dividend.

I was just logging in to say exactly that but you beat me to it. There are 5 ore bodies, and the current BFS and mine plan are only addressing the first one.

At the rate of output of Phase 2, there are many decades of mine life on this project

They will want to create Phase 1 in a controlled manner and test and make sure the process all works well, before scaling up to Phase 2. Plus doing it in stages means zero further dilution because Phase 2 will be funded entirely from the big profits of Phase 1. LTHs would always want to minimise dilution even if it means an extra year or two to Phase 2. But who knows - it's certainly possible with Mick Davis behind the wheel.

Any instis wanting in, will have to buy in the market, this is a very very significant advantage to the VBR involvement. Usually PIs have to expect that there will be a discounted placing, with all the insider trading and front-running that goes on to force the share price down (eg look at EML's recent placing).

FAR will be producing 5,600 tons of vanadium by 2023, now the equity funding is guaranteed and the debt funding will follow.

Their plan then sees 23,000 tons in Phase 2, from 2025-ish.

*That's* why investors are buying FAR heavily. Because in a few short years it will become one of the world's biggest vanadium producers, and by a long way the cheapest.

Today's modest production at FAR, and production at other companies, are irrelevant.
But if you have the patience to treat FAR as an investment, consider this:

Within 4 years, if Phase 2 is fully operational, then the company could be making $400M+ operating profit each year. Say £200M after all taxes, investment, depreciation etc. Put it on a conservative p/e of 10 (given the low-risk nature and the decades of resources I would think higher but say 10). That's a market cap of £2bn - the company is throwing off so much cash that debt will probably be modest and falling fast. We already know from the funding deal that there will be approx 500M shares in issue.

* £2bn / 500M shares = 400p share price.

* If 50% of profits are distributed as divis (why not, it will be a cash cow!) then that will be £100M / 500M shares = 20p per share and a 5% yield.

But buying at today's share price that's a 50% yield in the fullness of time...

As with any project like this, the 4 key risks are:

Technical
Financial
Political
Execution

The Technical risk was already low. The original project team have developed their plans over a decade. They've created processing flowsheets and patented techniques to extract maximum value from the ore. The ore itself is amazingly accessible as direct outcropping or shallow open pit = very low risk.

The Financial risk is, after Monday's announcement, now essentially gone. The level of dilution is known. The company have already got early acceptance from the Kaz Development Bank for a debt package. This should now just be a formality after the BFS is published.

The Political risk in Kaz is higher than some countries, there is undoubtedly a level of corruption. However I understand that this is falling. In any case the original project team/BOD are well connected in the country, and Mike Davis' contacts will definitely help to keep things running smoothly! And don't forget we already have the Mining Licence for Phase 1, and a tax holiday for several years.

The Execution risk is always there, anything can go wrong building a mine. However with a simple outcropping deposit and all the infrastructure on the doorstep, and now a super credible team from VBR providing guidance, IMO surely Execution risk also has to be pretty low?!

In summary: for anyone willing to hold for a couple of years, IMO this is a low risk / high reward opportunity

I think the BFS might take a bit longer, it sounds like they're wanting to upgrade that (which is a good thing - the more details/options the better), so I personally am not expecting it before mid-summer. But in the meantime they can be working on the debt funding anyway - the BFS will be only the final step to reconfirm and sign off the debt deal. I am hoping the full package will be signed off in Q3 or early Q4.

IMO no more (equity) funds needed for Stage 1. I expect that the $10M at 25p will be the key to opening up a loan for the remainder as debt. A 90% debt funding is unusual, it's more normally 75-80% debt, but the absolutely outstanding economics of this project, combined with a 25% offtake (and probably more to come) means that banks should see it as low risk.

Worst case scenario some of the $25M at 78p could top it up.
It's said that credible junior miners with their mining licence and all their paperwork (but before closing their financing) typically have market caps of 20% of their NPV.

Ferro's NPV is $2bn according to the CPR - with an upper estimate of $3bn. But let's say $2bn. 20% makes $400M = £300M. Divided by say 450M shares = 67p.

And that's before financing. It could quite reasonably be said now that the equity component of the financing is arranged, that the debt portion should be pretty straightforward to confirm.

For FAR newbies, the "80% complete" in the interview today refers to the small existing plant, which produces vanadium from waste concentrates. Nevertheless it provides a useful cashflow to FAR, which is something most junior miners don't have. The small plant has also allowed testing and development over the last few years of the innovative (and now patented!) processes for when the company is mining ore from the adjacent massive Vanadium resources.

It had been intended that the small plant's cashflow would support a debt funding package for the Phase 1 main mine, allowing low levels of dilution to shareholders. However the equity funding announced yesterday makes the small existing plant less relevant. In effect the company have accepted a much bigger dilution than they had originally planned (but still not excessive IMO at about 50%), in order to progress and build the large main mine project as fast as possible. Clearly our new strategic investor wants that too.

Phase 1 of the mining operation (I believe it will be in operation in 2023) will yield $100M in revenue p.a. - and the amazing thing is that due to the valuable by-products in the ore, the actual Vanadium is free (This has been confirmed in the Competent Person's Report). Plus they have a tax holiday until 2026! So I would think they will be making *actual post-tax profits* of $90-100M for the first 3 years. This will fund the construction of Phase 2 directly (no further debt or dilution)

What will the market cap of a debt-free company producing possibly $400M of reliable profits each year be, when Phase 2 is in operation probably in 2025-26?
Rerating under way. Even with the extra 90M shares, the company wouldn't be sold *today* for less than 50p, and that would be a bargain... even if the management would sell - which of course they won't, why would they? They will be targeting multiples of 50p when the full Stage 2 mine is in operation - plus dividends.

As Bridgen says in the latest Proactive interview, they now have more than enough money to to everything they need to do.

I believe FAR will shortly have enough cash to start ordering long lead-time equipment even before the finalisation of a debt funding deal. This should ensure completion of Stage 1 as soon as possible.

If we now assume an eventual 500M shares in issue long-term, the current market cap at 15p is still very undervalued IMO. The company have a colossal, strategically-located, very cheap resource of an in-demand mineral... And now the money and the board expertise to exploit it! f all of the VB investment eventually takes place, it will end up being a roughly 50% dilution from the previous market cap. That's higher than my earlier estimate of 20-30%, but that's life. When the large Stage 2 operation is in production and debt paid off (perhaps 5 years' time)

IMO we will now see the following:

* The existing operation will have its power connection finalised within 6-8 weeks, as per the RNS.
* With the new cash I would expect the BFS to move to completion within 4-5 months hopefully, as visits become allowed again.
* Release of the BFS will trigger the further Vision Blue $9M investment, which will allow long lead-time capital items to be ordered.
* Then finalisation of the debt package, by Q4 IMO.
* Then full steam ahead for my earlier prediction of first production from Stage 1 in 2023.

Vision Blue clearly aim to get up to 29.9% eventually. After the various fundraisings, Bridgen's and Kuznetsov's holdings will be diluted, but I think they will still just about hold 25%+ between them - enough to prevent a takeover at an unreasonable price in future.
Posted at 03/6/2021 20:05 by zb27
Mikro - Aye Aye, totally concur with you. Just goto sit tight and be patient. Most difficult thing to do nowadays! Over time this will only head one way now. $20m option for Vision Blue @ 78p. Broker target 170p. Current NPV 300p+. With the expanded BFS announced on 1st June, these targets could well increase significantly. Also to note Vanadium price increase could fire a rocket under FAR share price. Vanadium has increased everyday for the last few weeks now. With Sir Mick and Peet onboard now, this is all systems go. Such a comfortable hold, risk/reward is tremendous. Such an exciting hold. This could fly up in a flash.
Ferro-alloy Resources share price data is direct from the London Stock Exchange

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