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Validation results
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Ferro-Alloy Resources Limited
Annual Report
2023
Ferro-Alloy Resources Limited Annual Report 2023
Contents
REVIEW OF THE YEAR
2 Operational review
5 Feasibility study review
8 Financial review
10 Sustainability review
14 Climate change disclosures
19 Principal risks and uncertainties
GOVERNANCE
21 Governance statement
24 Board of directors
26 Senior management team
27 Directors’ report
30 Directors’ responsibility statement
FINANCIAL STATEMENTS
31 Independent auditor’s report
37 Consolidatedstatementofprofitorlossandother
comprehensive income
38 Consolidatedstatementoffinancialposition
39 Consolidated statement of changes in equity
40 Consolidatedstatementofcashflows
41 Notestotheconsolidatedfinancialstatements
70 Company information
Ferro-Alloy Resources Limited
Annual Report 2023
Ferro-Alloy Resources Limited is developing the giant Balasausqandiq vanadium deposit in the
Kyzylordinskaya oblast of southern Kazakhstan. Being sedimentary in nature, unlike most other
primary vanadium deposits in the world, Balasausqandiq has the potential to have lower capital
and operating costs, as a result of the lack of need for pre-concentration and roasting of the ore,
and valuable by-products. Planned output will be increased in stages to reach a target maximum
capacity of around 24,000 tonnes of vanadium pentoxide a year.
“The development of Balasausqandiq has the potential to make a significant impact on the
world of vanadium. We intend on meeting the rapidly expanding demand from battery storage
as well as for the steel industry faster, at lower capital costs per annual tonne, and at a lower
cash production cost than other existing or planned vanadium producers.”
Nicholas Bridgen, Chief Executive Officer
Ferro-Alloy Resources Limited Annual Report 2023 1
“A low-cost vanadium producer
emerging in Kazakhstan...”
Ferro-Alloy Resources Limited Annual Report 20232
Operational Review
Whilst the main focus of the Group is on the feasibility
study of the Balasausqandiq vanadium deposit, the
Group is engaged in the business of extracting vanadium,
molybdenum and nickel from purchased concentrates.
This business resulted from the conversion and expansion
of the large-scale test-plant that was constructed to pilot
and test the metallurgical processes to be used in the main
Balasausqandiq project.
This operation is intended to provide a cash flow to assist
with the substantial ongoing costs of the preparation of the
feasibility study and to contribute to the construction costs
of the Balasausqandiq project mining operations.
A second objective is to retain the high quality technical and
operating team that developed the metallurgical processes
to be used in the main Balasausqandiq project so that they
are available to assist with the feasibility study, design and
future construction and operation of Phase 1 and Phase 2 of
the Balasausqandiq project. As a result, the Group’s work-
force is experienced and will have a high level of technical
and operational expertise prior to commissioning of the
mine, significantly de-risking the project.
Process plant
By the start of 2023, the plant had been significantly
expanded and equipment added to enable the full recovery
of all of the components of the purchased concentrates, and,
more importantly, no tailings or other residues are ultimately
left on-site.
Although the plant is designed to be flexible and able to treat
a variety of raw materials, the most common raw materials
treated are the spent catalysts used to remove impurities
from crude oil in refineries. These typically contain vanadium,
molybdenum and nickel, all of which can be recovered.
Improvements to the plant during the year have included
the construction of a dedicated area for the alumothermic
production of ferro-molybdenum, a new dissociation oven
for the conversion of ammonium metavanadate (“AMV”)
to vanadium pentoxide, two new press-filters and other
equipment to enable the re-pulpation and further vanadium
extraction from the nickel-rich residues. The main fuel for
the ovens was converted from diesel to liquid gas which is
both lower cost and lower in emissions. Various air-cleaning
equipment has been installed, considerably improving the
working environment and external emissions.
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 3
Production
During 2023, the plant has operated well, although production has been constrained by supplier defaults and delays in the
delivery of concentrates to the plant, the latter made considerably worse by the war in Ukraine.
During the year, production of vanadium pentoxide and molybdenum (in ferro-molybdenum) amounted to 310.5 tonnes
(2022: 305.5 tonnes) and 34.3 tonnes (2022: 36.0 tonnes), respectively.
Quarter
Production of
Vanadium
pentoxide
(tonnes)
Growth vs
last year
Production of
Molybdenum
(tonnes)
Growth vs
last year
Q1 31.3 -61.4% 6.5 -42.5%
Q2 141.4 +54.2% 14.1 +35.6%
Q3 47.3 -32.3% 6.4 -41.8%
Q4 90.5 +44.1% 7.4 +124.2%
2023 total 310.5 1.6% 34.4 -4.4%
The plant also produced a nickel concentrate for sale to customers during the year.
Product prices (mid-market, as published) have broadly deteriorated by between 31% and 33% during the year, as shown in
the table below:
Start of 2023
Average for
the year End of 2023
Current
(19 April 2024)
Vanadium pentoxide (US$/lb) 9.44 8.33 6.53 5.86
Ferro-molybdenum (US$/kg of Mo) 72.5 58.42 48.7 47.6
Production Outlook
The plant is capable of making significant cash flows but production to date has been restrained by a variety of factors,
including indiscipline by suppliers and logistical problems.
The Group has accumulated significant experience in the business and is now sourcing concentrates from more reliable
counterparties and has started to source some materials on a tolling basis which eliminates the risk of price movements
between the time of purchase of concentrates and the sale of the product. Whilst there is always a chance of supply
disruptions, the Directors believe that the situation will be much improved during 2024.
Vanadium prices are extremely weak, generally attributed to the slowing Chinese construction sector which is very important
for overall demand. The current price is around US$6/lb, compared with US$9.44/lb at the start of 2023. The longer-term
outlook for vanadium prices is more bullish. Foreseeable increases in demand for vanadium redox flow batteries (“VRFBs”)
as well as for vanadium-containing steels as the construction sector in China recovers exceed planned production increases
and are expected to bring about a more balanced market where prices recover. Expectations in the longer term, expressed in
current prices, are generally above US$8/lb.
Molybdenum prices are currently around US$47/kg of Molybdenum contained in ferro-molybdenum, compared with US$72.5/
kg at the start of 2023.
Ferro-Alloy Resources Limited Annual Report 20234
Grant funded Research and Development
projects
The Group has been awarded grant funding in Kazakhstan
for three research and development projects that are all
capable of delivering a significant benefit to our business.
Electrolyte for vanadium redox flow batteries
VRFBs are a means of energy storage particularly suitable
for the longer-duration storage of energy from intermittent
renewable sources. VRFBs have certain advantages over
lithium-ion technology, including being scalable, not
degrading over time and not catching fire, which make them
more suitable for bulk, longer duration, energy storage.
The worldwide roll-out of VRFBs appears to have started and
although forecasts vary, the general expectation is that the
demand for vanadium electrolyte purposes will expand to
become a significant part of overall vanadium demand.
The Company’s wholly owned Kazakhstan subsidiary,
Firma Balausa LLC, is receiving grant funding of KZT300
million (approximately US$638,000) for the development of
technology, installation of equipment and production and
sale of mixed vanadium oxides for use in VRFBs. KZT203.5
million of the grant funding had been received by the end of
2023.
The decision to award the grant was made by Kazakhstan’s
National Scientific Council which awarded the grant for the
most promising commercialisation of the results of scientific
and scientific-technical activities.
The Company announced on 2 September 2020 that it had
developed and patented technology to produce vanadium
electrolyte directly from AMV. The ability to make vanadium
electrolyte directly from AMV provides not only the required
know-how to enter this market, but also a cost advantage
over traditional processes.
After a period of testing and development, the plan is to
continue to produce and market vanadium tri-oxide and, if
there is demand in the local region, to supply electrolyte. The
aim is to position the Group to be able to supply at a large
scale into this potentially very large market when the main
Balasausqandiq project is commissioned.
Production of carbon concentrate for the
substitution of carbon black in the making of rubber
The Group is working with the National Engineering Academy
of the Republic of Kazakhstan on a technological project
covering the industrial production and usage of carbon-silica
fillers in the making of rubber. The aim of the project is to
construct a pilot plant, substantially funded by government
grants, on the Group’s existing processing site to concentrate
the Group’s carbon tailings to provide over ten tonnes of
fine-ground carbon-silica concentrate per month for testing
and marketing. The expectation is that construction of the
new pilot plant will be completed around the end of 2024 or
early 2025, allowing test marketing and offtake negotiations
for the product well in advance of the commissioning of the
first Phase 1 module of the main Balasausqandiq project.
Production of rare metal concentrates from
vanadium-containing ore
The Group has been awarded grant funding as a private
partner to a Satbayev University programme for the
development of new metallurgical technologies.
Operational Review continued
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 5
Feasibility Study Review
The main objective of the Group is to bring into production
the Balasausqandiq deposit and to build a processing plant
to treat 1.1 million tonnes of ore per year (Phase 1) mined
from Ore Body 1 (“OB1”) and later increase to a total of four
million tonnes per year (Phase 2) through the additional
mining of Ore Bodies 2, 3 and 4 (“OB2, 3 and 4”). The plans
for Phase 2 may be amended to be staged in terms of
additional modules at the same or similar scale to Phase 1.
Balasausqandiq deposit
The Balasausqandiq deposit is exceptional in a number of
ways. Primarily, it is not a typical vanadiferous magnetite
deposit but a sedimentary deposit and is expected to have
lower capital and operating costs.
Furthermore:
• The ore is amenable to a whole-ore pressure acid leach
process which gives a higher metallurgical recovery than
conventional magnetite extraction;
• Pre-concentration of the ore and high temperature
roasting are not required;
• There are potentially valuable by- or co- products within
the ore, principally carbon, which can be easily recovered
without significant additional processing;
• Major infrastructure items of power and road and rail
connections already exist on site or nearby; and
• The Balasausqandiq deposit is a very large deposit and is
easily mined from an open pit. Phases 1 and 2 combined
envisage production of 24,000 tonnes per year of
vanadium pentoxide, over 10% of current world supply.
The development of the deposit is planned to be in two
phases, Phase 1 and Phase 2. Phase 1 will involve the
construction and operation of an initial process plant
treating one million tonnes per year of ore, followed, as
soon as commissioning has been successfully concluded, by
a Phase 2 operation for a further three million tonnes per
year. The staging is to allow for the reduction of engineering
scale-up risk and to also allow time for the development of
markets as production increases. The staged development
also reduces the amount of capital that has to be raised for
the initial development, with the second stage to be largely
financed by the earnings of the first.
Exploration
There are six known ore-bodies in the deposit and there is
some evidence of a seventh. Of these, only OB1 has now
been explored sufficiently to declare a resource under the
CRIRSCO approved standards.
A revised mineral resource estimate was issued by the
Company’s consultants SRK in April 2023 and included the
following highlights:
• An Indicated Mineral Resource of 32.9 million tonnes
for OB1, at a mean grade of 0.62% vanadium pentoxide
(“V
2
O
5
“), reported at a marginal cut-off grade of 0.4% V
2
O
5
– equating to 203,364 contained tonnes of V
2
O
5
• An increase of 8.6 million tonnes (35.4%) of mineral
resource and an increase of 38,058 tonnes (23%)
of contained V
2
O
5
by comparison with the estimate
contained in the Company’s 2018 Competent Persons
Report
• The results of the previously reported infill drilling and
trenching programmes completed during 2021/22 have
been successful in converting 100% of the Resources to
Indicated for the OB1 deposit. No Measured or Inferred
Resource are stated
• A total of 75 diamond core holes and 88 trenches were
used to define the Resource (a reduction of drill section
spacing to 250 metres from the original 500 metres
increased confidence)
• Confirmation that there are reasonable prospects for
eventual economic extraction by constraining the Mineral
Resources to an optimised open pit shell (50 degree
slopes and a revenue factor of 1) using a selling price for
98% V
2
O
5
flake of US$9.82 /lb
Ferro-Alloy Resources Limited Annual Report 20236
Feasibility Study Review continued
Summary Report for April 2023 MRE OB 1 Resource
Classification Zone Tonnage (Mt) %V
2
O
5
%Mo %U %C
Indicated Oxide 1.57 0.67 0.014
0.0047 7.16
Transitional 1.25 0.66 0.014
0.0045 7.17
Fresh (Sulphide) 30.08 0.61 0.015
0.0052 8.83
Total 32.90 0.62 0.015 0.0051
8.69
OB2, 3 and 4
The drilling of OB2, 3 and 4 has been completed and receipt of the final assay results and corresponding mineral resource
estimate are awaited. Due to topography, some 25% of the planned exploration area has proved to be difficult and expensive
to access and as a result has not been drilled (albeit the Company does not expect the area to create difficulties for actual
mining).
The mineral resource estimate for OB2,3 and 4 will exclude the area of difficult topography, however, based on semi-
quantitative XRF analysis carried out on cores by the Company, the amount drilled is expected to provide ample ore to provide
a relatively long life for the Phase 2 development.
Open pit geotechnical drilling
The open pit geotechnical study has been completed and the results will be used to confirm the open pit slope design.
Open pit hydrogeological drilling
Open pit hydrogeological drilling for OB1 has been completed and the hydrogeological study will be concluded as a part of the
mine planning study.
Water supply hydrogeological drilling
A water bore drilling investigation for the water supply has been completed with the results awaiting final reporting.
Tailings management
The tailings management facility site selection study has been completed and a ground investigation programme of boreholes
and test pits undertaken. The soil samples collected during the ground investigation are currently undergoing a programme of
geotechnical testing at a soil investigation laboratory in Kazakhstan.
Processing
Metallurgy
Extraction of vanadium during acid leaching, following initial pilot and subsequent testing, continues to be between 94-97%
vanadium extraction into solution.
Metallurgical testing including engineering tests, solid liquid separation tests, tailings product assessment and vanadium
recovery to a saleable product continued at SGS Canada Inc (“SGS”) managed by Tetra Tech Limited (“Tetra Tech”).
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 7
Carbon and ferro-silicon feed products from
tailings
Test-work on the extraction of a carbon concentrate and on
its use as a substitute for carbon black has been included
within the scope of the Phase 1 feasibility study. Flotation
tests show that the necessary >40% concentrate can be
made with good overall carbon recovery. Testing of the
product for use in making rubber by substitution for carbon
black has been successfully completed and a further test
programme to produce tyre industry normative data has
been commissioned.
Transport logistics studies and further test programmes
aimed at facilitating marketing and product qualification are
planned. Test-work on alternative uses for the carbon-rich
tailings as feed to ferro-silicon smelting is also ongoing.
Process design
The process plant design by Tetra Tech is focussed on
employing the results of the SGS laboratory test work to
initially design the comminution, leaching circuit and full
process design criteria for the Phase 1 plant.
Conclusion
The Company expects the publication of the Phase 1
feasibility study in the fourth quarter this year to significantly
raise awareness of the emergence of this new addition to
the global vanadium market at the time of growing investor
appreciation for rising vanadium use in the construction and
green energy economy.
Discussions with various potential investors and debt
funders have already been initiated but the publication of
the feasibility study is expected to trigger the advancement
of these discussions.
Ferro-Alloy Resources Limited Annual Report 20238
Financial Review
Earnings
The Group reported revenues of US$6.16m for the year
compared to US$6.77m in 2022, reflecting a 9% decrease in
sales over the period.
US$’000 2023 2022
Revenue from shipments recorded at the
price at time of dispatch
6,164 6,773
Adjustments to revenue after final price
determination and fair value changes
(448) (502)
Total revenue 5,716 6,271
Revenue is recognised at the time of transfer of control of
the Group’s products to the customer but, as is common in
the industry, the final pricing determination is often based
on assay and prices after arrival of the goods at the final
port of destination, particularly with respect to the sale of
vanadium pentoxide products. The adjustments to revenue
reflect these final pricing determinations which occur after
the relevant revenue is initially recognised.
Recorded revenues for the year have decreased in
comparison to the previous year primarily due to
falling market prices, for both vanadium pentoxide and
molybdenum, as well as concentrate supply issues impacting
production and, therefore, sales at the Group’s existing
operation.
As a result of the general downward trend in the pricing
of vanadium pentoxide during the year, a number of
the Group’s sales contracts were subject to a negative
final pricing determination upon arrival at the final port
of destination leading to an overall negative revenue
adjustment of c. US$0.45m for the year (2022: US$0.50). The
average published 2024 price of vanadium pentoxide to the
date of this report is US$5.65/lb.
Cost of sales decreased to US$6.8m from US$7.5m in 2022,
primarily reflecting the stabilisation of reagent and fuel costs
in the CIS region following the Russian invasion of Ukraine at
the start of 2022. The largest part of the cost of sales is the
purchase of raw materials, the price for which is determined
as a percentage of the value of the content of vanadium at
the prices prevailing at the time of purchase.
Administrative expenses of US$3.4m (2022: US$2.5m) have
increased by approximately US$0.9m during the year as a
result of increased wages and salary costs of US.04m as well
as general increased expenditure as the Group expands in
preparation for the financing and construction of the Phase
1 mining facilities at the Balasausqandiq deposit.
The Group incurred other expenses during the year
of US$0.47m (2022: US$0.43m) comprising currency
conversion losses (representing transactional foreign
exchange differences), a write down of slow moving /
obsolete stocks held at the existing plant and raw material
stock adjustments.
The Group made an overall loss for the year of US$5.25m
(2022: loss of US$4.29m).
Cashflow
Net cash outflows from operating activities, before
changes in working capital, for the year totalled US$4.3m
(2022: US$3.7m) following adjustments for depreciation,
amortisation, inventory write-downs and net finance losses.
Changes in trade and other receivables increased by US0.2m
(2022: US$1.0m) as a result of product sales recorded at
the conclusion of the year (received after the year-end) and
adjustments made to recoverable VAT due from the Kazakh
authorities at the year end. Changes in trade payables
decreased by US$0.62m (2022: increase US$1.56m) mainly
as a result of concentrate suppliers being paid down during
the ordinary course of business.
Net cash outflows from investing activities totalled US$3.9m
(2022: US$4.3m) and included US$0.98m (2022: US1.47m)
of capital expenditure associated with the expansion and
upgrade of the processing operation’s production facilities
and US$2.93m (2022: US$2.87m) of expenditure on the
Phase 1 feasibility study capitalised as an exploration and
evaluation asset (see Note 13).
Net cash inflows from financing activities for the year were
US$6.5m (2022: US$9.2m), representing the proceeds of the
sale of two tranches of bonds under the Kazakhstan bond
programme summarised below. Other financing activities
include the repayment of existing bondholders of US$1.1
(2022: US$0.3m) and interest payable to the Company’s
bondholders of US$0.16m (2022: US$0.08m).
The Group held cash of US$1.95m at 31 December 2023
(2022: US$4.331m).
Balance sheet review
Total non-current assets increased to US$14m from
US$10.93m principally due to the continued capitalisation of
the feasibility study as an exploration and evaluation asset.
Current assets decreased from US$8m to US$6m, driven
mainly by a US$2.4m reduction in cash and cash equivalents
held by the Group at the year end.
Total non-current liabilities increased by approximately
US$7.39m during the year from US$0.03m to US$7.42m as a
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 9
result of the issue and sale of the two tranches of corporate
bonds noted above.
Current liabilities decreased during the year from US$3.5m
to US$2.4m mainly as a result of the maturity and repayment
of the Company’s corporate bonds in existence prior to the
launch of the Kazakhstan bond programme. At the year end,
the Company recognised US$0.1m of deferred income in
relation to the award of a government grant with respect to
the manufacture of vanadium oxide variants.
Corporate
During July 2023, the Company launched a new phased
US$20 million exempt offer bond programme on the Astana
International Exchange (the “AIX”) in Kazakhstan (the “Bond
Programme”).
The salient features of the Bond Programme are as follows:
– the Bond Programme will comprise one or more tranches
of bonds, each listed on the AIX;
– the total nominal value of all tranches issued under the
Programme will not exceed US$20 million;
– each tranche of the Bond Programme will be offered
only to accredited investors based in Kazakhstan and
governed by the laws and regulations of the Astana
International Financial Centre;
– bonds issued under the Bond Programme will be
denominated in either US dollars or Kazakhstan tenge
with interest payable to bondholders bi-annually;
– all bonds issued will rank as unsecured debt obligations
of the Company;
– the applicable coupon rate, duration, issue price and
other relevant terms of any bonds issued under the Bond
Programme will be defined and determined by the terms
and conditions of each tranche of bonds issued; and
– the Bond Programme will be valid until 31 July 2033.
Prior to the year end, the Company issued and sold two
tranches of bonds under the Bond Programme for net
proceeds of US$7.8m. See Note 21 for further details.
During November 2023, the Company received notice from
Vision Blue Resources Limited (“Vision Blue”) to convert the
outstanding convertible loan notes into ordinary shares.
Accordingly, 33,520,088 ordinary shares were issued to
Vision Blue taking their total shareholding in the Company
to 111,071,783 ordinary shares representing 22.99% of
the Company’s issued share capital at the year end (2022:
77,551,695 ordinary shares / 17.3%). See Note 20 for
furtherdetails.
Key performance indicators
The Group is in a period of development and its current
operations, the processing of bought-in secondary
vanadium-containing materials for extraction of vanadium
and other metals, are relatively small in comparison with the
main objective of the Group to develop the Balasausqandiq
deposit and processing facility. Moreover, the current
operations are themselves undergoing a significant change
which means that operations are not in a steady state
capable of meaningful inter-period comparisons. The
Directors are, therefore, of the opinion that key performance
indicators may be misleading if not considered in the
context of the development of the operation as a whole for
which the information for shareholders is better given in a
descriptive manner than in tabular form.
The existing processing business of the Group is complex.
The Group’s business model has been developed to allow
maximum flexibility in the type of raw materials treated
so that the most profitable materials can be selected for
treatment at any given point in time. Nevertheless, the
Directors consider that the main indicator of performance,
although subject to interpretation as described above, is the
level of production (refer to the Operational Review at page 2
for further information).
Ferro-Alloy Resources Limited Annual Report 202310
Sustainability Review
Our approach
The Company aims to maximise value for its investors and
all stakeholders from the responsible, efficient, and low-cost
production of vanadium and other commodities from
the Balasausqandiq deposit. We seek to re-use or recycle
wherever possible and to minimise the environmental and
social impacts of our operations whilst ensuring the health
and wellbeing of the Group’s workforce.
These objectives have guided the Company’s approach
to the development of the project, where we already
produce vanadium pentoxide, ferro-molybdenum and nickel
concentrates from bought-in raw materials treated in our
expanded pilot plant, and we are carrying out a feasibility
study into the much larger development of the mine and
processing plant for Balasausqandiq itself.
Balasausqandiq is a unique vanadium deposit which also
contains a valuable mixture of carbon, uranium, molybdenum,
aluminium, potassium and rare-earth elements. Vanadium
and several of the other elements the Group already produces
will play an important role in the world’s transition to clean
energy and a more sustainable future.
The Company believes that there is both a commercial
and ethical imperative to maximise the value that can be
extracted from each tonne of raw material which is mined
and processed. The Phase 1 feasibility study underway
on the development of Balasausqandiq is, therefore,
considering the optimum approach that can maximise
resource utilisation by processing all the constituents of the
ore to the point where it becomes a saleable product.
Development of appropriate
frameworks
As an exploration and development Group, we have sought
to minimise our environmental impacts whilst ensuring
that all employees can work safely, avoiding accidents and
reducing the risk of long-term health hazards. We aim to
comply with all applicable laws, report accurately where
required, and implement appropriate governance standards.
As the Group grows to become a producer of critical
commodities, it will develop an enhanced and
comprehensive approach to address environmental, social,
health and safety issues within an appropriate governance
framework. Such an approach will need to recognise
the requirements of all key stakeholders including local
communities, governments, employees, and investors as well
as customers.
To this end, the Company has appointed independent
consultants to undertake an analysis of our existing
principles, controls, procedures, and performance metrics
by comparison to the standards they believe are reasonably
applicable to the Company and its lenders and investors, in
particular, the Equator Principles and the IFC Performance
Standards. Following their initial report, their conclusions
and recommendations are being used to guide our plans
for the development of the project and the direction of the
Stage 1 feasibility study.
The Company has also committed to comply with the
Financial Reporting Council’s reporting recommendations
contained in their publication “Streamlined Energy and
Carbon Reporting”.
Extracting full value from our production
The Group believes that there is the potential for 100% of
the raw materials it currently treats and 100% of the ore it
will mine to be recovered and sold as useful products and
we ultimately aim to produce little or no residual waste or
discharge from our existing or future operations.
The Group’s principal product, vanadium, has a significant
role in the decarbonisation of the world economy. Small
quantities of vanadium in micro-alloyed steel dramatically
improve the steel’s strength meaning lower volumes of
steel are required to achieve the same goal, for example in
structural steels for building construction. This has significant
environmental benefits along the steel production chain as it
reduces the raw materials required, cuts the energy used in
production and results in lower volumes being transported.
Furthermore, a growing source of demand for vanadium
is for VRFBs that can be used as a safe and economical
way to store electrical energy at grid scale. Such batteries
will be essential if the contribution of renewable energy to
the world’s energy mix is to rise substantially as we move
towards the decarbonisation targets of the Paris Agreement.
The Group is also already producing and selling both
ferro-molybdenum which is used in steel alloys to increase
strength, hardness, electrical conductivity and resistance to
corrosion and wear and a nickel concentrate which is again
used in the alloying of steel as well as having an important
use in the production of electric vehicle batteries.
Apart from vanadium, the main product to be produced from
the Balasausqandiq operation is a form of carbon, similar to
carbon black, which can be concentrated and used in the
production of rubber or directly used to make ferro-silicon.
The remaining tailings from Balasausqandiq have a number
of potential uses which continue to be investigated.
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 11
Minimising impacts from production
We believe that the Phase 1 feasibility study for
Balasausqandiq will confirm that any adverse environmental
impacts of our operation are likely to be significantly below
those of our peer group. We believe this can be a source
of competitive differentiation for the Company amongst
customers who are increasingly reviewing supply chain ESG
performance when sourcing vital materials.
Most of the world’s vanadium is made from titano-
vanadiferous magnetite (“TVM”). The primary production of
vanadium from TVM ore requires pre-concentration and then
roasting at approximately 1,100 degrees C to convert the
vanadium into a soluble form to enable recovery. Roasting
alone accounts for over 40% of the energy used by one
major primary producer using TVM ore. At Balasausqandiq,
the ore is different, and the proposed process does not
require pre-concentration or roasting, significantly reducing
CO
2
emissions.
The proposed production process at Balasausqandiq
involves leaching in sulphuric acid which we expect to make
by processing the sulphur that is currently removed as an
impurity from oil and gas production in Kazakhstan. The
process, which produces no CO
2
, is exothermic and requires
no significant energy input. The waste heat produced will
be used to make steam for the hydrometallurgical process,
further reducing energy requirements and CO
2
emissions.
The production of carbon from the Balasausqandiq ore
for use as carbon black in making rubber is also much
more energy efficient than competitive processes. Carbon
black is usually made by the incomplete combustion
of hydrocarbons, where only some 40% of the original
hydrocarbon input is recovered. The carbon from
Balasausqandiq is naturally occurring and avoids this
combustion of hydrocarbons and the associated emissions
of CO
2
.
Social
The Group’s operations utilise land which is unsuitable
for agricultural use and the nearest human habitation
is 16 kilometres away in the village of Aksumbe. There
are no competing land uses or requirement to re-locate
communities as we develop operations. The social impact
of the operations will, therefore, be limited. Existing
infrastructure such as access roads and available grid power
further reduces the impact on the local population.
Economic impact on the local community
Nearly all the Group’s employees are Kazakhstan nationals,
and, with the exception of specialists, most are hired from
the local villages and the nearby town of Shieli. The Group
currently employs an operating and management team of
over 200 employees. As the Group grows, it will enhance and
develop its employment policies and procedures.
The Group pays salary taxes for employees including income
tax, social security tax and pension contributions, and VAT
on purchases and in due course will pay corporation tax
and withholding taxes. In addition, under the terms of the
Subsoil Use Agreement for the Balasausqandiq deposit, the
operating company is required, during the period of mining
and based on the subsoil activity, to pay:
• 1% of annual investment on education in Kazakhstan;
• 1.5% of annual investment on local development and
infrastructure; and
• 1% of annual profits on research and development.
In addition, the Group has signed an agreement with
the Satbayev Technical University where selected post
graduate students will be given technical work experience
opportunities with respect to the Group’s operations.
Mine closure
The Company has prepared an environmental study in full
compliance with the laws of Kazakhstan and also aims to meet
international standards. As part of this study, a mine closure
plan has been prepared and the Company is required to
contribute 1% of annual mining costs to a mine closure fund
to ensure that funds are available when the time comes. The
Company will aim to back-fill the open pit with waste rock from
mining and contour surplus waste as mining progresses.
Water
Water is almost fully recycled and no discharges are made
from the site. In 2023 water consumption was 16,985 m
3
(2022: 13,204 m
3
).
A hydrogeological study is being carried out which will
assess the availability and likely sufficiency of water for
processing and human needs. Water is currently drawn using
natural pressure from a borehole. Currently, no water is
discharged from operations, although there are losses from
evaporation. Whilst there is not expected to be a shortage,
the Group already recycles as much water as possible and
plans to do the same for the Balasausqandiq project. The
Balasausqandiq project process has been designed to
operate on a low liquid: solid ratio to minimise water usage
and associated reagent use.
Ferro-Alloy Resources Limited Annual Report 202312
Performance indicators
Health and safety
During the year, the Group had no reported health and safety incidents that led to time lost, staff requiring medical treatment
or hospitalisation and no fatalities (2022: nil).
Energy and emissions
The table below discloses the Group’s greenhouse gas emissions for 2023, including both emissions resulting from activities
for which the Group is responsible e.g. the combustion of fuel (Scope 1 emissions) and emissions resulting from the purchase
of electricity, heat or steam cooling by the Group for its own use (Scope 2 emissions).
All of the Group’s emissions have been generated outside the United Kingdom and offshore area.
Scope 1 (energy generated on site)
2023 2022
KwH
CO
2
e
(tonnes) KwH
CO
2
e
(tonnes)
Process plant
Coal for heating/steam 1,645,833 452 1,828,333 502
Diesel for roasting 3,114,103 833 9,087,401 2,430
Liquid gas for roasting 1,780,100 476 - -
Diesel for other plant 23,333 6 21,532 6
Other
Coal for heating 1,719,167 472 1,577,499 433
Diesel (vehicles) 223,847 0.4 234,940 0.4
Petrol (vehicles) 22,341 0.8 22,341 0.8
Total scope 1 8,528,724 2,240 12,772,046 3,373
Scope 2 (purchased electricity)
2023 2022
KwH
CO
2
e
(tonnes) KwH
CO
2
e
(tonnes)
Process plant
Whole plant 1,505,460 *- 1,190,180 *-
Total scope 2 1,505,460 - 1,190,180 -
Total scope 1 and scope 2 10,034,184 **2,240 13,962,226 **3,373.0
* this information is currently not available in Kazakhstan
** includes Scope 1 only
Sustainability Review continued
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 13
Energy consumption
The Group has consumed 10,034,184 KwH (2022: 13,962,226
KwH) of energy during the year.
All of the Groups’s energy consumption has taken place outside
the United Kingdom and offshore area.
Intensity ratio
The Group will determine a suitable intensity ratio once all relevant
data is available.
Energy efficiency
The key energy efficiency adopted by the Group during the year
has been to continue to include energy saving initiatives within the
Group’s processing plant future development planning.
Methodology
The Group has adopted the standard methodology issued by the
Kazakhstan Ministry of Ecology.
In disclosing the Group’s emissions output and energy
consumption during the year, the Company has done so on an
equity share approach. Accordingly, given that all of the Company’s
subsidiary undertakings are wholly owned by the Company, the
activities of the entire group are included within the disclosures
made.
Ferro-Alloy Resources Limited Annual Report 202314
Climate Change Disclosures
As a responsible corporate entity operating in the natural
resources sector, the Company is committed to the
recognition and disclosure of the potential impacts of climate
change on the Company’s and Group’s business activities.
The Company supports the initiatives and recommendations
of the now disbanded Task Force on Climate-related Financial
Disclosures (“TCFD”) and has taken steps to develop climate-
related financial disclosures that it considers are consistent
and appropriate with both the recommended disclosures
of the TCFD and the current position of the Company. The
Company will review future climate change disclosures in
light of relevant IFRS issued standards.
The TCFD recommended disclosure framework comprises
four broad categories of disclosure (pillars); governance,
strategy, risk management and metrics and targets. Within
each category of recommended disclosure, the TCFD has
identified further specific disclosures that the Company
should report on. The Company has reported on this basis
below.
The Company has considered the appropriate level of detail
to be included within the various disclosures having regard
to the nature and size of the Company’s current operations
and the planned future operations following the construction
of the mine processing facilities at the Balasausqandiq
deposit.
The conclusion is that the majority of the specific disclosures
sought by the TCFD recommendations in the context of
the current operation, the purchase and treatment of
vanadium-containing concentrates, are unlikely to be
either useful or meaningful to the reader of these financial
statements but that the disclosures will have far more
relevance and applicability following the commissioning
of the main Balasausqandiq mine processing facilities.
The effects of climate change on that operation are being
considered as part of the Company’s ongoing Phase 1
feasibility study.
Accordingly, the disclosures noted below are provided
generally in the context of the operation of the bought-in
concentrate processing plant and will be expanded to cover
the main future operations upon completion of the Phase1
feasibility study into the Company’s planned mine and
associated processing facilities.
The disclosures made below are consistent with the TCFD
recommendations and recommended disclosures.
Governance
1. Oversight of climate-related risks and
opportunities
The Board is ultimately responsible for the oversight of the
risks and opportunities that are presented by the potential
effects of climate change on the Company’s business
activities. The Company’s executive directors maintain
day-to-day responsibility for the recognition and effect of
climate change on the Company’s operations.
In advance of the start of mining operations, the Company
has constituted a sustainability committee, comprising the
chairman, the chief executive officer and a non-executive
director, that will guide and support the actions of the Board
with respect to climate-related matters.
2. Assessment and management of
climate-related risks
The Board in conjunction with the sustainability committee
will consider and set appropriate Company policies that will
govern how the Company’s management will assess and
manage climate-related risks and opportunities in advance
of the commissioning of the mine.
The Company’s executive directors and Group managers will
be responsible for the implementation and monitoring of the
policies set.
The management of the current operation is responsible
for assessing and managing climate-related risks and
opportunities at the existing plant.
Risk Management
3. Identification and assessment of
climate-related risks
With respect to the existing operation, the identification and
assessment of climate-related risks and opportunities is
carried out by management on an ad-hoc basis.
As noted above, the Company is progressing a feasibility
study on the Balasausqandiq deposit. Included within the
study will be an environmental and social impact assessment
(“ESIA”) that, once completed, will identify and assess the
climate-related risks of the project and how those risks can
be managed and mitigated.
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 15
4. Processes adopted for managing
climate-related risks
With respect to the bought-in concentrate processing plant,
no specific climate change risks have been identified. The
availability of concentrates is expected to increase in the
coming years as international regulations prohibiting the
burning of low-grade fossil fuels are implemented, requiring
more use of vanadium-containing catalysts for the refining
of oil that comprise the largest part of the Group’s existing
plant feed-stock. If a climate-related risk is identified and
assessed as likely to have an impact on the operations of the
plant, the plant’s management will implement measures to
manage the impact.
In conjunction with the ESIA, an environmental and
social management system (“ESMS”) will be designed and
developed as part of the Phase 1 feasibility study and
adopted in full once the Balasausqandiq mine has been
commissioned. The ESMS will identify the relevant processes
for the management of climate-related risks arising from the
operation of the mine.
5. Integration of climate-related risk
management into the organisation’s overall
risk management
The ESIA noted above is an integral part of the Company’s
Phase 1 feasibility study and, therefore, a key element of the
Balasausqandiq project. Accordingly, the foreseen climate-
related risks of the project (and the management / mitigation
of same) will be incorporated into the Company’s overall risk
management by virtue of the adoption of the monitoring
systems and controls recommended by the ESIA and ESMS.
Strategy
6. Climate-related risks and opportunities
Opportunities
1. Vanadium
The main climate-related opportunity presented to the
Company is the predicted expansion of the global vanadium
market as a result of the transition to a lower-carbon world
economy.
The demand for vanadium is expected to be driven by two
factors – growth of long-term energy storage solutions that
use vanadium as a key component and an increased use of
vanadium in steel making, a high carbon dioxide emitting
industry, where vanadium as an alloy material can improve
the strength of steel and consequently reduce the quantity
of steel needed.
2. Carbon
A secondary climate-related opportunity for the Company
is the carbon material found within the ore of the
Balasausqandiq deposit.
The Company’s expectation is that the carbon within the ore,
once extracted, will be capable of substituting for certain
grades of carbon black used within industries such as car
tyre manufacturing.
Carbon black is usually produced by the incomplete
combustion of hydrocarbons in specific atmospheric
conditions and typically generates significant levels of carbon
dioxide during production. The carbon in the Company’s ore
can be recovered with relatively low-level emissions which
are mostly necessary for the extraction of the principal
vanadium product. Car tyre manufacturers will, therefore, be
able to cut their supplier-related emissions by the use of this
product.
Risks
The climate-related risks of the project will be identified and
evaluated by the Company’s Phase 1 feasibility study in due
course. No significant climate-change risks to the current
operation have been identified.
7. Impact of climate-related risks and
opportunities on business, strategy and
financial planning
Climate-related risks and opportunities do not materially
impact on the business, strategy and financial planning
for the bought-in concentrate processing plant given the
relatively small size of the operation.
The impact on the Balasausqandiq deposit mining
operations will be considered by the Company’s ongoing
feasibility study.
8. Resilience of the organisation’s strategy
with respect to climate-related scenarios
With respect to the bought-in concentrate processing plant,
the plant’s management have not identified any particular
climate-related scenarios that would likely have a significant
impact on its ongoing operations. The plant already operates
in an environment that is subject to extreme weather
conditions and is, therefore, considered to have a strong
resilience to existing and future climate-related scenarios.
The resilience to climate-related scenarios for the
Balasausqandiq mining operations will be identified and
evaluated during the construction and commissioning of the
mine.
Ferro-Alloy Resources Limited Annual Report 202316
Metrics and Targets
9. Climate related risk / opportunity metrics
Given the small-scale nature of the bought-in concentrate
processing plant, the Company will develop metrics to
assess climate-related risks and opportunities in line with
its strategy and risk management processes once the
Balasausqandiq mining operation has been commissioned.
10. Energy and emissions
Relevant emissions statistics are disclosed within the
Sustainability Review on page 10.
11. Climate-related risk / opportunity
performance targets
Given the small-scale nature of the bought-in concentrate
processing plant, the Company will develop performance
targets to manage climate-related risks and opportunities
in line with its strategy and risk management processes
once the Balasausqandiq mining operation has been
commissioned.
Climate Change Disclosures continued
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 17
Alignment Status
The following table provides a summary of the Group’s current alignment with the TCFD recommendations:
TCFD pillar Recommended disclosure Current status Alignment
Governance Oversight of climate-related risks and
opportunities
Oversight provided by the board of
directors. Sustainability committee
formed.
Comply
Assessment and management of
climate-related risks
Current operations: climate-related
risks assessed and managed by
incumbent management team. Main
mine climate-related risks to be
determined by the board of directors
following mine commissioning.
Partial
Risk
management
Identification and assessment of
climate-related risks
Identification and assessment of
climate-related risks for current
operations completed by incumbent
management. Identification and
assessment of climate-related risks
for the main mine to be captured by
the feasibility study ESIA.
Partial
Processes adopted for managing
climate-related risks
On an ad-hoc basis by the
incumbent management team with
respect to current operations. ESMS
being developed for the main mine
for adoption on commissioning of
the main mine.
Partial
Integration of climate-related risk
management into the organisation’s
overall risk management
Integration to occur following the
adoption of the ESIA and ESMS.
Planned
Strategy Climate-related risks and
opportunities
Identified and considered above. Comply
Impact of climate-related risks and
opportunities on business, strategy
and financial planning
No material impact on current
operations. Impact on the main mine
to be considered by the ongoing
feasibility study.
Partial
Resilience of the organisation’s
strategy with respect to climate-
related scenarios
No climate-related scenarios
identified with respect to current
operations.
Resilience of the strategy with
respect to climate-related scenarios
for the main mine will be tested
following construction and
commissioning.
Partial
Ferro-Alloy Resources Limited Annual Report 202318
TCFD pillar Recommended disclosure Current status Alignment
Metrics and
targets
Climate related risk / opportunity
metrics
To be adopted following the
commissioning of the main mine.
Planned
Energy and emissions Disclosure with respect to current
operations completed.
Comply
Climate-related risk / opportunity
performance targets
To be adopted following the
commissioning of the main mine.
Planned
Climate Change Disclosures continued
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023 19
Principal Risks and Uncertainties
Description of principal risks,
uncertainties and how they are
managed
(a) Current processing operations:
Current processing operations make up a small part of
the Company’s expected future value but are intended to
provide useful cash flows in the near term and allow the
Group to gain valuable experience of the vanadium industry.
The principal risks of this operation are the prices of its
products (vanadium, molybdenum and nickel), availability
of vanadium-bearing concentrates and the efficiency of
recovery of products from those concentrates.
The Group is constantly reviewing the market opportunities
for supplies of vanadium-bearing concentrates from reliable
suppliers that can deliver concentrates on a timely basis in
order to ensure that the Group does not incur production
shortfalls leading to reduced revenues. The Group aims to
extract all the useful components of the raw materials so
that ultimately no residues remain on site and so that the
maximum value is obtained from each tonne treated. By this
means, we aim to be one of the most efficient and lowest
cost secondary vanadium treatment plants so that our
competitive position reduces the danger of high prices for
raw materials making the operation uneconomic.
(b) Balasausqandiq project:
The Balasausqandiq project will be a much larger contributor
to the Company’s value than the current processing
operations and is primarily dependent on long-term
vanadium prices.
The project is also dependent on raising finance to meet
projected capital costs (see below) and the successful
construction and commissioning of the project’s proposed
mine processing facilities. It is not unusual for new
mining projects to experience unforeseen problems,
incur unexpected costs and be exposed to delays during
construction, commissioning, and initial production, all of
which could have a material adverse effect on the Company’s
operations and financial position. The Company has taken
steps to mitigate such potential adverse effects by engaging
globally recognised engineers and consultants to assist
with the development and design of the key elements of
the project in addition to the Group’s own highly qualified
workforce.
(c) Geopolitical situation:
While the ongoing invasion of Ukraine by Russia is not
directly impacting the Group’s operations (although current
low vanadium pentoxide prices are, in part, likely being
driven by Russian producers selling at significant discounts
to China), the Directors remain vigilant of the situation.
The continued main risk of the conflict is to the Group’s
transport routes, many of which involve transit through
Russia. Whilst these are currently operating without issue,
sanctions have been made against Russian and Belarusian
vehicles transiting through Europe (but not against vehicles
registered in other jurisdictions in the region such as
Kazakhstan). There is a risk that further sanctions might
prevent transit through Russia into Latvia, through which
the majority of the Company’s exports currently flow. The
Company continues to review alternative transit routes for
raw material imports and product exports through the West
of Kazakhstan, either via the Caspian Sea or overland south
of the Caspian Sea. Routes to China are working normally.
With respect to the global sanctions imposed on certain
Russian entities and individuals, the Group monitors the
implications of those sanctions on the Group’s trading
activities on an ongoing basis.
(d) Financing risk:
The Balasausqandiq project will require substantial funds to
be raised in debt and equity which will be dependent upon
market conditions at the time and the successful completion
of the Phase 1 feasibility study.
In March of 2021 the Company signed an investment
agreement with Vision Blue. Under the terms of this
agreement and in addition to Vision Blue’s participation in
the 2022 equity fundraise, investments totalling US$14.3m
have already been made and Vision Blue has the right to
subscribe a further US$2.5m at the original deal price of
9 pence per share at any time up to two months after the
announcement of the Phase 1 feasibility study. Vision Blue
also has further options to subscribe up to US$30m at
higher prices to partially finance the construction of the
project.
The favourable financial and other characteristics of the
project determined by studies so far completed give the
Directors confidence that the outcome of the Phase 1
feasibility study will be successful. Initial discussions with
potential providers of debt finance have been encouraging.
Ferro-Alloy Resources Limited Annual Report 202320
(e) Climate change risk:
Refer to the Sustainability Review on page 10 and the
Climate Change Disclosures on page 14.
(f) Risks associated with the developing
nature of the Kazakh economy:
According to the World Bank, Kazakhstan has transitioned
from lower-middle-income to upper-middle-income status in
less than two decades. Kazakhstan’s regulatory environment
has similarly developed and the Company believes that
the period of rapid change and high risk is coming to an
end. Nevertheless, the economic and social regulatory
environment continues to develop and there remain some
areas where regulatory risk is greater than in developed
economies.
(g) Commodity price risk:
As already noted above, the success of the Company is
dependent upon the long-term prices of the products to
be produced by the planned mine processing facilities. As a
result of there being no formally established trading markets
for the Company’s principal products from the project,
there is a risk that price fluctuations and volatility for these
products may have an adverse impact on the Company’s
future financial performance.
Principal Risks and Uncertainties continued
Ferro-Alloy Resources Limited Annual Report 2023 21
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 2023
General
As a consequence of the ordinary shares of the Company
being admitted to the standard segment of the Official List
of the London Stock Exchange, the requirements of the UK
Corporate Governance Code, published by the Financial
Reporting Council, do not apply to the Company. The
Guernsey Finance Sector Code of Corporate Governance does
not apply to the Company since the Company is not regulated
by the Guernsey Financial Services Commission. However,
the Board recognises the importance of good corporate
governance and has implemented recognised corporate
governance practices as far as is considered appropriate
by the Board whilst considering the size and nature of the
business.
The Board is responsible for the overall corporate
governance of the consolidated Group, guiding and
monitoring the business and affairs of the Company on
behalf of the shareholders by whom they are elected and to
whom they are accountable.
Composition of the Board
Having regard to the Company’s stage of development,
the Directors believe that the size of the current board
comprising seven directors, three of whom are executive and
four are non-executive, is appropriate. The Directors intend
that there will always be at least as many non-executive
directors as there are executive directors.
Board committees
Audit
The Company has created an audit committee that is
responsible for considering all financial reporting matters
and ensuring that they are properly reported and monitored.
It is also responsible for the review and assessment of the
independence of the external auditors and approval of any
non-audit services, review of the external audit strategy and
findings, assessment of whether an internal audit function is
necessary considering the activities and size of the business
and oversight of significant financial reporting matters.
The committee is chaired by James Turian and Christopher
Thomas is a member. Mr Turian has a background in
accounting, trust and management and is a director of a
firm of accountants in Guernsey which the Board considers
to be recent and relevant experience to carry out his
responsibilities as chairman.
Remuneration
The Company has also created a remuneration committee
to consider all matters related to salary and benefits of
senior staff and executive directors. The remuneration of
non-executive directors is a matter for the Board as a whole.
No director will take part in discussions concerning his own
remuneration package. Mr Thomas is the chairman of the
committee and Mr Turian is a member.
Nomination
The Directors are of the opinion that due to the nature and
size of the Company and its current Board, the functions
often carried out by a nomination committee can be more
successfully conducted by the full board of directors and so
no such committee has been created.
Sustainability
The Company has constituted a sustainability committee
comprising the chairman, the chief executive officer and
a non-executive director that will guide and support the
actions of the Board with respect to sustainability related
matters, particularly once the Company’s Phase 1 feasibility
study has been issued and construction of the mine has
commenced.
Code of conduct
The goal of establishing the Company as a significant
mining and processing company is underpinned by its core
values of honesty, integrity, common sense and respect
for people. The Company desires to be a good corporate
citizen in all the jurisdictions within which it operates, and to
appropriately balance, protect and preserve all stakeholders’
interests. In particular, the Company gives paramount
concern to the safety of its employees and the maintenance
of high environmental standards.
Shareholder communication
The Board aims to ensure that shareholders and investors
have equal access to Company information.
The Company aims to promote effective communication
with shareholders and encourage effective participation
at general meetings through a policy of open disclosure
to shareholders, regulatory authorities and the broader
community of all material information with respect to the
Company’s affairs.
Governance Statement
Ferro-Alloy Resources Limited Annual Report 202322 Ferro-Alloy Resources Limited Annual Report 2023
Internal control and risk
management systems
The Company’s accounting and finance team is relatively
small and subject to close control by the executive directors.
For this reason, the audit committee and the Board are
of the opinion that it is not yet appropriate for there to be
a separate internal control department or internal audit
function but has implemented various procedures and
internal controls to provide assurance to the Directors that
accounting and financial risks are adequately controlled.
These include:
• The preparation and regular updating of cash flow
forecasts, changes to which are closely monitored by the
executive directors who discuss necessary changes on an
almost daily basis;
• Significant contracts require approval by the Directors
and approval must follow a specified approval matrix; and
• All Group payments must be authorised by a director
and payments by the Company require two directors’
signatures on all payments over US$6,000.
Governance Statement continued
Ferro-Alloy Resources Limited Annual Report 2023 23
24
Sir Mick Davis
Non-executive Chairman
Sir Mick Davis holds a number
of directorships at private
companies and is a highly
successful mining executive
accredited with building Xstrata
plc into one of the largest mining
companies in the world prior to
its acquisition by Glencore plc.
Before listing Xstrata on the LSE
as CEO he was CFO of Billiton
plc and Chairman of Billiton
Coal which he joined from the
position of Eskom CFO.
During his career in mining he
has raised almost US$40bn
from global capital markets
and successfully completed
over US$120bn of corporate
transactions, including the
creation of the Ingwe Coal
Corporation in South Africa; the
listing of Billiton on the LSE; the
merger of BHP and Billiton; as
well as numerous transactions
at Xstrata culminating in the sale
to Glencore plc.
Sir Mick Davis is a Chartered
Accountant by profession,
and holds an honours degree
in Commerce from Rhodes
University, South Africa and an
Honorary Doctorate from Bar
Ilan University, Israel.
William Callewaert
Chief Financial Officer
William graduated in 2002 from
the University of Durham with
an honours degree in Law after
which he trained as a Chartered
Accountant in audit services
with leading tax, accounting and
business advisory firm, Blick
Rothenberg. Having qualified
in 2006, William’s career
progressed within advisory
services at Grant Thornton,
KPMG and BDO in both the UK
and offshore.
William is responsible for the
overall management of the
Group’s finances, future funding
requirements and general
statutory compliance. William
is a fellow of the Institute of
Chartered Accountants in
England and Wales.
Nicholas Bridgen
Chief Executive Officer
Nick started his career in 1975
as a Chartered Accountant at
Peat Marwick Mitchell & Co (now
KPMG). In 1979, he moved to
the Rio Tinto Group, becoming
senior group accountant in
1981. He then moved to the
Business Evaluation Department
for the Group in 1985 and was
Group Planning Manager for the
RTZ Pillar Group which held the
engineering, building products
and chemical companies. Nick
spent 14 years with Rio Tinto.
Inthe mid-1990s, he was finance
director at Bakyrchik Gold
plc and in 1998, he founded
Hambledon Mining plc which
acquired the Sekisovskoye gold
project, listing the company
on AIM and taking the project
from exploration, through
construction and into a
producing mine.
Since 2006, Nick has been a
director and more recently,
CEO, of Ferro-Alloy Resources
Limited. In the role of CEO, Nick
is ultimately responsible for
all aspects of the Ferro-Alloy
Resources Group. He holds a
Bachelor’s degree with honours
from Exeter University, is a
Chartered Accountant and has
also studied corporate finance
at the London Business School.
He speaks Russian.
Andrey Kuznetsov
Director of Operations
Andrey started his career
in 1981 as an industrial
engineer at Kirov Engineering
Plant in Almaty. After three
years he became Chief of the
Scientific Department in the
Central Committee of Youth
(Comsomol). In 1987, Andrey
became general director of the
Almaty NTTM “Kontakt” centre.
In 1995-1996, he was the CEO
of the Kazakhstan subsidiary
of Alfa-Bank. Andreyhas
been the general director of
Firma Balausa LLC since 2006.
Heholds a Specialist’s degree
in electrical engineering from
Bauman Moscow State Technical
University and a PhD in informal
mathematical logic. He has
also studied management at
Coventry University.
As Director of Operations
Andrey is responsible for the
management of operations in
Kazakhstan and execution of the
Company strategy and policies
approved by the Board.
Board of Directors
Ferro-Alloy Resources Limited Annual Report 2023
25
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Christopher Thomas
Non-executive Director
(Chairman of the
remuneration committee
and member of the audit
committee)
Chris has nearly 35years’
experience in the
communications industry.
Hehas held various high-level
management positions including
CEO of Proximity London
from 2003 to 2006 - one of
the largest direct and digital
agencies in London. In 2006,
Chris was appointed Chairman
& CEO of BBDO and Proximity
in Asia, subsequently adding
the Middle East and Africa to
his responsibilities. He worked
with major multinational
companies across the growth
markets of SE Asia, China, India
and Africa. In May 2015, Chris
moved to New York to take up
the role of CEO of BBDO in the
Americas, with responsibility for
21 agencies in the U.S., Canada
and Latin America. In February
2019 he stepped down from his
Americas role to concentrate on
his entrepreneurial interests. He
also served as a non-executive
director on the board of
Hambledon Mining from 2004
to 2011.
Chris is the chairman of the
remuneration committee which
considers and approves the
remuneration of all senior
executives including that of the
executive directors. He is also a
member of the Company’s audit
committee.
Petrus Nienaber
Non-executive Director
Peet has several decades of
experience in the mining sector,
most notably spending over
24 years with what became
Xstrata plc. At Xstrata he was
initially Head of Operations,
spearheading the earliest days of
the company, including its growth
to be the largest producer
of ferrochrome. Thereafter
he spent 10 years as CEO of
Xstrata Alloys, one of the largest
producers of ferrochrome and
a leading producer of vanadium,
with some 20,000 people under
Peet’s leadership. After retiring
from the position in 2012, Xstrata
Alloys subsequently went on to
be acquired by Glencore plc.
Peet began his career as an
engineer at Iscor Ltd before
spending several years in the
ferroalloys industry at Samancor
and Anglo American plc.
James Turian
Non-executive Director
(Chairman of the audit
committee and member
of the remuneration
committee)
James started his career in
1986 and has a background
in accounting, trust and
management. James has
previously been involved with
several mining companies
in Perth, Australia, including
assisting Cooper Energy in
their restructuring in the early
2000s. From 2000 to 2011
James owned and operated
a trust company in Guernsey
which he sold to concentrate
on accountancy and currently
is a director of “Accounts For
You Limited”, a Guernsey
accountancy firm. He holds
several other directorships.
James is a Chartered Fellow of
the Securities Institute IAQ and
is a Fellow of the Institute of
Directors.
James is the chairman of the
audit committee where he is
responsible for chairing the
audit committee meetings.
Ferro-Alloy Resources Limited Annual Report 2023
Ferro-Alloy Resources Limited Annual Report 202326
Andrey Kuznetsov
Deputy Director of
Operations
Having graduated from the
Saint-Petersburg State University
with a Masters in Mathematics
and Bachelor in Economics
Andrey started his career as a
management consultant with
boutique consultancy firm,
Strategica. Andrey then joined
Danish company Dinex, in
Russia, as a finance director
for two years before moving to
Denmark to complete an MBA
at the Copenhagen Business
School.
Post MBA, Andrey joined Danish
company ECCO where he spent
almost 8 years in various roles
across Denmark, Netherlands
and Russia. Andrey’s final role
at ECCO was General Manager
East, where he was responsible
for ECCO distribution markets
in Russia, Ukraine, Georgia,
Moldova and Bulgaria.
Andrey joined the Group in
2019 as the finance director
of the Company’s Kazakhstan
subsidiary, Firma Balausa LLC.
In 2022, Andrey was appointed
deputy general director of Firma
Balausa LLC to support the
general director with operations
and the Company’s Phase 1
feasibility study.
Anvar Moldakhanov
Finance Director
Anvar started his career in
accounting as an associate at
PricewaterhouseCoopers in
London during 2001. Since
then, he has held senior finance
positions in various industries
in Kazakhstan, including
mining, media and advertising,
manufacturing, and real estate,
with a successful track record in
both financial management and
mergers and acquisitions.
Anvar holds a Bachelor’s degree
in Economics with honours
from Warwick University as
well as having studied Applied
Mathematics at Novosibirsk
State University. He is a qualified
Chartered management
accountant.
Senior Management Team
Ferro-Alloy Resources Limited Annual Report 2023 27
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
The Directors present their report and the audited
consolidated financial statements for the year ended
31December 2023.
General
in Guernsey as a non-cellular limited company .
The Company’s principal place of business and registered
office is Noble House, Les Baissieres, St Peter Port,
Principal activity
Review of business
A review of the business during the year is included within
the Operational Review at page 2.
The Group’s business and operations and the results thereof
are reflected in the attached financial statements.
The principal risks and uncertainties facing the Company are
summarised at page 19.
Results and dividend
During the 12 months ended 31 December 2023, the
Company reported a loss of US$5.3m (2022: loss of
US$4.3m).
No dividends have been declared or paid in respect of the
years ending 2023 or 2022.
Share capital and funding
The ordinary shares of the Company were listed on the
standard segment of the main market of the London Stock
Exchange on 28 March 2019 and, on a fully fungible basis, on
the Astana International Stock Exchange on 6 January 2020.
Full details of the Company’s share capital, together with
details of the movements in the Company’s issued share
capital during the year, are set out in Note 20 to the
consolidated financial statements on page 57.
Directors
The board of directors (“the Board”) is comprised of three
executive directors and four non-executive directors.
Current directors
The directors of the Company who held office during the
year and to the date of this report are as follows:
• Sir Mick Davis
• Nicholas Bridgen
• Andrey Kuznetsov
• William Callewaert
• Christopher Thomas
• Petrus Nienaber
• James Turian
The biographical details of those directors that served during
the year are set out at pages 24 to 25.
Election and re-election of directors
In accordance with the Company’s Articles of Incorporation,
any director who has been appointed by the Board since
the date of the previous annual general meeting or who
has not previously retired at the two preceding annual
general meetings shall stand for election or re-election at the
next general meeting. However, for the purposes of good
corporate governance, all directors put themselves forward
for re-election at each annual general meeting.
At the Company’s annual general meeting held on
1November 2023, all appointed directors were re-elected to
their respective roles.
Attendance at scheduled Company board
meetings
Scheduled (5)
Sir Mick Davis
l l l l l
Nicholas Bridgen
l l l l l
Andrey Kuznetsov
l l l l l
William Callewaert
l l l l l
Christopher Thomas
l l l l l
Petrus Nienaber
l l l l l
James Turian
l l l l l
Directors’ Report
Ferro-Alloy Resources Limited Annual Report 202328
Remuneration
Salary/ fees
($’000)
Benefits
($’000)
Pension
($’000)
Bonus/other
($’000)
Total
($’000)
2022 2023 2022 2023 2022 2023 2022 2023 2022 2023
Sir Mick Davis - - - - - - - - - -
Nicholas Bridgen 340 360 36 44 - - - - 376 404
Andrey Kuznetsov 240 260 - - - - - - 240 260
William Callewaert 148 224 4 4 - - - - 152 228
Christopher Thomas 40 40 - - - - - - 40 40
Petrus Nienaber 40 40 - - - - - - 40 40
James Turian 40 40 - - - - - - 40 40
Total 848 964 40 48 - - - - 888 1,012
Director’s interests in the issued share capital of the Company
The interests of the Directors in the Company’s issued share capital at 31 December 2023 and at the date of the signing of this
report are as follows:
31 Dec 2023
Number of
Ordinary Shares
31 Dec 2023
% of
Share Capital
31 Dec 2022
Number of
Ordinary Shares
31 Dec 2022
% of
Share Capital
Sir Mick Davis
*
- -
*
- -
Nicholas Bridgen 59,472,133 12.3 53,072,133 11.8
Andrey Kuznetsov 68,517,333 14.2 68,517,333 15.2
Christopher Thomas
**
6,456,845 1.2
**
6,456,845 1.4
James Turian 500,000 0.1 444,712 0.1
* Sir Mick Davis is the Chairman of Vision Blue Resources Limited and the beneficiary of a Trust that is a shareholder in Vision Blue Resources Limited
and, therefore, he indirectly has an interest in that company’s investment in Ferro-Alloy Resources Limited arising from the investment agreement in
place between the two entities.
** including shares of Assiduous Group Limited which holds 5,912,133 ordinary shares. Assiduous Group Limited is an investment vehicle in which
Christopher Thomas is the sole shareholder and director.
Director’s interests in share options of the Company
On 12 September 2023, the Company granted share options over 250,000 ordinary shares in the Company to William
Callewaert, Chief Financial Officer. The share options have an exercise price of 9.1 pence being the closing mid-market price of
the Company’s ordinary shares as quoted on the main market of the London Stock Exchange on the last business day before
the date of grant. See Note 20 for further details.
Substantial Shareholdings
A list of shareholders who beneficially hold more than 5% of the Company’s shares at 31 December 2023 is as follows:
Name of shareholder Number of Ordinary Shares Percentage of voting rights
Vision Blue Resources Limited 111,071,783 22.99%
Andrey Kuznetsov 68,517,333 14.18%
Nicholas Bridgen 59,472,133 12.31%
Directors’ Report continued
Ferro-Alloy Resources Limited Annual Report 2023 29
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Directors’ Indemnity Insurance
During the year, Director’s and Officer’s liability insurance
was maintained for the Directors and other officers of
theGroup.
Political Donations
The Group did not make any political donations during
theyear.
Electronic Communications
The Directors are responsible for ensuring that the
Company’s annual report and financial statements are made
available on a website. Financial statements are published on
the Company’s website (www.ferro-alloy.com) in accordance
with applicable legislation in Guernsey governing the
preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company’s website is the
responsibility of the Directors. The Directors’ responsibility
also extends to the ongoing integrity of the financial
statements contained therein.
Board Diversity
In accordance with UK Listing Rule 14.3.33, the Company has
not met the required targets with respect to board diversity
given the Company’s stage of development and size. The
Directors recognise the importance of diversity in both the
workplace and at board level and will take steps towards
achieving the requirements of UK Listing Rule 14.3.33.
Going Concern
The Directors have reviewed the Group’s cash flow forecasts
for a period of at least 12 months from the date of approval
of the financial statements, together with sensitivities
and mitigating actions. In addition, the Directors have
given specific consideration to the continued risks and
uncertainties associated with the geopolitical situation with
respect to Russia and Ukraine.
The Directors are confident, having conducted relevant
analyses with respect to estimated concentrate availability
and production levels, that the Company has sufficient
resources, following the issue and sale of two tranches
bonds under the Bond Programme during year and a further
tranche after the year end, to continue as a going concern
for at least the next 12 months.
Events Occurring After the Reporting
Period
On 30 January 2024, the Company listed and sold a third
tranche of bonds with a nominal value of US$5m under the
terms of the Bond Programme on the AIX.
Auditor
Crowe U.K. LLP has expressed its willingness to continue in
office as auditor and a resolution to re-appoint Crowe U.K.
LLP will be proposed at the Company’s forthcoming annual
general meeting.
Statement as to Disclosure of
Information to Auditor
The Directors who were in office at the date of the approval
of the consolidated financial statements have confirmed
that, as far as they are aware, there is no relevant audit
information of which the Company’s auditor is unaware and
that each director has taken all the steps he ought to have
taken as a director to make himself aware of any relevant
audit information and to establish that the Company’s
auditor is aware of that information.
Approved by the Board of Directors and signed on its behalf
William Callewaert
Director
26 April 2024
Ferro-Alloy Resources Limited Annual Report 202330
The Companies (Guernsey) Law, 2008 requires the Directors
to prepare financial statements for each financial period
which give a true and fair view of the state of affairs of the
Group for that period and of the profit or loss of the Group
for that period. Under that law they have elected to prepare
the financial statements in accordance with International
Financial Reporting Standards as adopted by the European
Union and applicable law.
In preparing those financial statements the Directors are
required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgements and estimates that are reasonable and
prudent;
• State whether applicable accounting standards have been
followed, subject to any material departures disclosed
and explained in the financial statements; and
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
will continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time
the financial position of the Group and to enable them to
ensure that the financial statements have been properly
prepared in accordance with the Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets
of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confirm that they have complied with the
above requirements in preparing the financial statements.
To the best of the Directors’ knowledge:
a) the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted
by the European Union and applicable law, give a true
and fair view of the assets, liabilities, financial position and
profit or loss of Ferro-Alloy Resources Limited and the
undertakings included in the consolidation as a whole;
and
b) the management report includes a fair review of the
development and performance of the business and
the position of Ferro-Alloy Resources Limited and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
On behalf of the Board of Directors
William Callewaert
Director
26 April 2024
Directors’ Responsibility Statement
Ferro-Alloy Resources Limited Annual Report 2023 31
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Ferro Alloy
Resources Limited and its subsidiaries (the ‘Group’) for
the year ended 31 December 2023 which comprise
the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of financial
position, consolidated statement of changes in equity
and consolidated statement of cash flows and notes to
the financial statements, including significant accounting
policies. The financial reporting framework that has been
applied in the preparation of the Group financial statements
is applicable law and International Financial Reporting
Standards as adopted by the European Union (“IFRS”).
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s affairs
as at 31 December 2023 and of the its loss for the year
then ended;
• the financial statements have been properly prepared
in accordance with International Financial Reporting
Standards as adopted by the European Union; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
(Guernsey) Law 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are
independent of the group and the company in accordance
with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis
for our opinion.
Conclusions relating to going
concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s
ability to continue to adopt the going concern basis of
accounting included:
• Assessing the accuracy of forecasting by comparing
previous forecasts with actual results;
• Assessing the cash flow requirements of the Group
over the duration of the going concern period based on
budgets and forecasts;
• Understanding the forecast expenditure that is
committed, and that which could be considered
discretionary;
• Considering the liquidity of existing assets in the
statement of financial position; and
• Considering potential downside scenarios and the
resultant impact on available funds.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group’s ability to continue as a going
concern for a period of at least twelve months from when
the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept
of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions
of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the
impact of misstatements identified.
Based on our professional judgement, we determined overall
materiality for the financial statements as a whole to be
$300,000 (2022 $280,000), based on approximately 1.5% of
total assets.
We use a different level of materiality (‘performance
materiality’) to determine the extent of our testing for the
audit of the financial statements. Performance materiality
is set based on the audit materiality as adjusted for the
judgements made as to the entity risk and our evaluation
of the specific risk of each audit area having regard to the
internal control environment. Performance materiality was
set at 70% of materiality for the financial statements as a
whole, which equates to $210,000 (2022: $195,000).
Where considered appropriate performance materiality
may be reduced to a lower level, such as, for related party
transactions and directors’ remuneration.
Independent Auditor’s Report
to the members of Ferro-Alloy Resources Limited
Ferro-Alloy Resources Limited Annual Report 202332
We agreed with the Audit Committee to report to it all
identified errors in excess of $12,500 (2022: $10,000). Errors
below that threshold would also be reported to it if, in our
opinion as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding
of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material
misstatement in the financial statements. We also addressed
the risk of management override of internal controls,
including assessing whether there was evidence of bias by
the Directors that may have represented a risk of material
misstatement.
The Group operates through the Parent Company based
in Guernsey whose main function is the incurring of
administrative costs and providing funding to the operating
entities in Kazakhstan. In addition to the Parent Company,
the subsidiary Firma Balausa LLC was considered to be a
significant component.
In establishing our overall approach to the group audit, we
determined the type of work that needed to be performed
in respect of each component. A full scope audit of both
the Parent Company and Firma Balausa LLC subsidiary
was carried out principally in Kazakhstan by a local Crowe
network member firm, at the direction of instructions
provided by the Group auditor. The consolidation was
audited by the Group auditor. The remaining components
of the group were considered non-significant and these
components were subject to analytical procedures
performed by the Group auditor.
A member of the Group audit team visited Kazakhstan to
meet with local management and substantiate information
and explanations provided during the audit work.
Our involvement with component auditors
For the work performed by the component auditor, we
determined the level of involvement needed in order to
be able to conclude whether sufficient appropriate audit
evidence has been obtained as a basis for our opinion
on the consolidated financial statements as a whole. Our
involvement with the component auditor included the
following:
• Detailed group instructions were sent to the component
auditor, which included the significant areas to be covered
by the audit (including areas that were deemed to be key
audit matters as detailed below), the level of component
materiality, and set out the information required to be
reported on to the Group auditor;
• The Group auditor reviewed the component auditor’s
working papers at their offices in Kazakhstan and held
regular calls with the component auditor throughout the
engagement;
• We held calls and meetings with Group and component
management to discuss accounting and audit matters
arising.
Independent Auditor’s Report continued
Ferro-Alloy Resources Limited Annual Report 2023 33
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
We identified going concern as a key audit matter and our work in this area is detailed in the section headed ‘Conclusions
relating to going concern’, The other key audit matters we have identified are set out below. This is not a complete list of all
risks identified in the audit
Key audit matter How our scope addressed the key audit matter
1. Carrying value of Exploration and
Evaluation assets (note 13)
The Group carries Exploration and Evaluation
assets totalling $7.1m (2022: $4.2m) in relation
to the Balasausqandiq deposit in Kazakhstan.
These costs are capitalized in accordance with
the requirements of IFRS 6.
At each reporting date, the directors are
required to assess whether there are any
indicators of impairment, that would require an
impairment assessment to be carried out. The
directors concluded there were no indicators of
impairment.
The directors’ consideration of the impairment
indicators requires them to make certain
judgements, which makes this a key audit
matter.
We obtained and reviewed the directors’ assessment of the indicators
of impairment, as set out in IFRS 6 “Exploration for and evaluation
of mineral resources”. The following work was undertaken to
corroborate the director’s assessment that there were no indications
of impairment:
• We obtained a copy of the Group’s subsoil use agreement, and
confirmed that it remains valid.
• We reviewed correspondence with the government licensing body
during the year.
• We made specific enquiries of the directors and key staff involved in
the exploration work, and challenged management to demonstrate
that further exploration work in the area covered by the subsoil use
agreement was planned and had been incorporated in budgets and
forecasts.
• We reviewed the updated Competent Person’s report on the
exploration asset issued during the year for any indications that
the capitalised costs may be impaired. No such indications were
identified.
• We reviewed the adequacy of disclosures in the financial
statements in relation to the impairment consideration.
Based on our work performed, we consider the directors’ assessment,
and the financial statements disclosures to be appropriate.
Ferro-Alloy Resources Limited Annual Report 202334
Independent Auditor’s Report continued
Key audit matter How our scope addressed the key audit matter
2. Carrying value of property, plant and
equipment (note 12)
The Group holds property plant and equipment,
totalling $5.95m (2022: $5.4m) principally
relating to the processing plant.
At each reporting date, the directors are
required to assess whether there are any
indicators of impairment, that would require
an impairment assessment to be carried out.
The directors concluded there were indicators
of impairment and so an assessment was
performed.
This assessment required the directors to make
estimates in relation to a net present value
model for the plant to determine its value in use
over its expected lifetime, based on operations
using bought-in concentrate.
Given the estimates and judgements required,
this area was considered to represent a
significant audit risk and a key audit matter.
We obtained and reviewed the directors’ impairment consideration,
including the following:
• We assessed the Group’s budgeting review and approval
procedures on which the cash flow forecasts are based.
• We obtained an understanding of the Group’s processes in
preparing the impairment consideration, including how the key
assumptions are made.
• We compared the Group’s assumptions to external data for key
inputs such as commodity prices, and comparison of production
expectations to currently achieved volumes.
• We involved our specialist valuations team to assist us in assessing
and challenging the discount rate used by management.
• We reviewed the scenario-based sensitivity calculations prepared
by management to assess whether these were reasonably likely
outcomes, and their impact on the cash flow forecasts.
• We assessed whether appropriate disclosure has been made in the
financial statements in relation to the impairment consideration
performed.
Based on our work performed, we consider the directors’ assessment
of impairment to tangible assets, and the financial statements
disclosures to be appropriate.
3. Revenue recognition (note 4)
The Group generated revenues of $5.72m
(2022: $6.27m) for the year.
In considering application of IFRS 15 “Revenue
from Contracts with Customers”, particular
attention was required to:
– The identification of performance obligations
in the contract, and the point at which
performance obligations are satisfied and
when revenue is recorded, which can be
specific to each contract.
– The accounting for variable consideration
associated with estimates of quality and
quantity for sales during the year, which are
subject to final checks post year end; and
– The accounting treatment for provisional
pricing estimates that apply under the
contracts to consider the fair value of
contract assets and liabilities.
Given the estimates and judgements required,
this area was considered to represent a
significant audit risk and a key audit matter.
We performed the following procedures:
• We assessed the Group’s contracts and revenue recognition
policy against the 5-step model of IFRS 15 to consider the
appropriateness of the accounting policy.
• We obtained and reviewed sales agreements for a sample of
customers to assess the appropriateness and application of
the accounting policy. Specific consideration was given to the
identification of performance obligations and the timing and
circumstances at which these are satisfied.
• We evaluated the appropriateness of management’s accounting
treatment for the provisional pricing clauses for open sales, and for
the estimation of quality and quantity amounts, comparing these to
actual outcomes post year end.
• We obtained sales confirmation letters from the Group’s key
customers, covering 99.7% of revenue.
• We agreed a sample of revenue transactions to documentation
supporting shipping and delivery of goods, ensuring that revenue
had been recognised at the appropriate point. For a sample of sales
around the year end, we vouched to documentation supporting
their inclusion in the correct accounting period.
• We reviewed financial statements disclosures to ensure these were
compliant with FRS 15.
Based on our work performed, we consider that revenue has been
appropriately recognised in line with IFRS 15.
Ferro-Alloy Resources Limited Annual Report 2023 35
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Our audit procedures in relation to these matters were
designed in the context of our audit opinion as a whole. They
were not designed to enable us to express an opinion on
these matters individually and we express no such opinion.
Other information
The other information comprises the information included
in the annual report other than the financial statements and
our auditor’s report thereon. The directors are responsible
for the other information contained within the annual report.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read
the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of
the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Matters on which we are required to
report by exception
Under the Companies (Guernsey) Law 2008, we are required
to report to you if, in our opinion:
• we have not received all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept; or
• the financial statements are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Responsibilities of the directors for
the financial statements
As explained more fully in the directors’ responsibilities
statement set out on page 30, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect
material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and the
procedures in place for ensuring compliance. These
included the Companies (Guernsey) Law 2008, and the
significant laws and regulations in Kazakhstan including
the terms of the subsoil use agreement, tax legislation
and environmental legislation.
Ferro-Alloy Resources Limited Annual Report 202336
• As part of our audit planning process, we assessed the
different areas of the financial statements, including
disclosures, for the risk of material misstatement. This
included considering the risk of fraud where direct
enquiries were made with management and those
charged with governance concerning both whether they
had any knowledge of any actual or suspected fraud
and their assessment of the susceptibility to fraud.
We considered the risk to be greater in areas involving
significant management estimation or judgement. Based
on this assessment we designed audit procedures to
focus on these specific areas.
• We tested the appropriateness of journal entries
throughout the year by vouching a risk-based sample of
journals to supporting documentation and explanations.
• A detailed review of the Group’s year end adjusting
entries was performed. Any items that appeared unusual
in nature or amount were vouched to supporting
documentation.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that some material misstatements of the
financial statements may not be detected, even though the
audit is properly planned and performed in accordance with
the ISAs (UK). The potential effects of inherent limitations are
particularly significant in the case of misstatement resulting
from fraud because fraud may involve sophisticated and
carefully organized schemes designed to conceal it, including
deliberate failure to record transactions, collusion or
intentional misrepresentations being made to us.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as
a body, in accordance with Section 262 of the Companies
(Guernsey) Law 2008. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
Stephen Bullock
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
Date: 26 April 2024
Independent Auditor’s Report continued
Ferro-Alloy Resources Limited Annual Report 2023 37
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Note
| 2023 | 2022 | ||
| $000 | $000 | ||
Revenue from customers (pricing at shipment) | 4 | ||
| Otherrevenue(adjustmentstopriceafterdeliveryandfairvalue | 4 | ( | ( |
| changes) | |||
Total revenue | 4 | ||
Cost of sales | 5 | ( | ( |
Gross loss | ( | ( | |
Other income | 6 | ||
Administrative expenses | 7 | ( | ( |
Distribution expenses | ( | ( | |
Other expenses | 8 | ( | ( |
Loss from operating activities | ( | ( | |
Net finance (costs) / income | 10 | ( | |
Loss before income tax | ( | ( | |
Income tax | 11 | ||
Loss for the period | ( | ( | |
| Other comprehensive loss | |||
| Items that may be reclassified subsequently to profit or loss | |||
Exchange differences arising on translation of foreign operations | ( | ||
Total comprehensive loss for the period | ( | ( | |
Loss per share (basic and diluted) (US$) | 20 | ( | ( |
Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
for the year ended 31 December 2023
Ferro-Alloy Resources Limited Annual Report 202338
Note
| 31 December 2023 | 31 December 2022 | ||
| $000 | $000 | ||
| ASSETS | |||
| Non-current assets | |||
Property, plant and equipment | 12 | ||
Exploration and evaluation assets | 13 | ||
Intangible assets | 14 | ||
Prepayments | 18 | ||
Total non-current assets | |||
| Current assets | |||
Inventories | 16 | ||
Trade and other receivables | 17 | ||
Prepayments | 18 | ||
Cash and cash equivalents | 19 | ||
Total current assets | |||
Total assets | |||
| EQUITY AND LIABILITIES | |||
| Equity | |||
Share capital | 20 | ||
Convertible loan notes | 20 | ||
Additional paid-in capital | |||
Share-based payment reserve | 20 | ||
Foreign currency translation reserve | ( | ( | |
Accumulated losses | ( | ( | |
Total equity | |||
| Non-current liabilities | |||
Loans and borrowings | 21 | ||
Provisions | 22 | ||
Total non-current liabilities | |||
| Current liabilities | |||
Loans and borrowings | 21 | ||
Trade and other payables | 23 | ||
Deferred income | 24 | ||
Interest payable | 21 | ||
Total current liabilities | |||
Total liabilities | |||
Total equity and liabilities |
The notes on pages 41 to 69 form part of these consolidated financial statements.
Consolidated Statement of
Financial Position
as at 31 December 2023
Ferro-Alloy Resources Limited Annual Report 2023 39
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Consolidated Statement of
Changes in Equity
for the year ended 31 December 2023
| Share- | Foreign | ||||||
| Additional | based | currency | |||||
| Share | Convertible | paid in | payment | translation | Accumulated | ||
| capital | loan notes | capital | reserve | reserve | losses | Total | |
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | |
Balance at 1 January 2022 | ( | ( | |||||
Loss for the year | ( | ( | |||||
| Other comprehensive | |||||||
| expenses | |||||||
| Exchange differences | ( | ( | |||||
arising on translation of foreign operations | |||||||
| Total comprehensive loss | ( | ( | ( | ||||
| for the year | |||||||
Transactions with owners, recorded directly | |||||||
| in equity | |||||||
| Shares issued, net of issue | |||||||
| costs | |||||||
| Other transactions | |||||||
recognised directly in equity | |||||||
| Balance at 31 December | ( | ( | |||||
| 2022 | |||||||
Balance at 1 January 2023 | ( | ( | |||||
Loss for the year | ( | ( | |||||
| Other comprehensive | |||||||
| expenses | |||||||
| Exchange differences | |||||||
arising on translation of foreign operations | |||||||
| Total comprehensive loss | ( | ( | |||||
| for the year | |||||||
Transactions with owners, recorded directly | |||||||
| in equity | |||||||
| Shares issued, net of issue | |||||||
| costs | |||||||
| Conversion of loan notes | ( | ( | |||||
| to equity | |||||||
| Other transactions | |||||||
recognised directly in equity | |||||||
| Balance at 31 December | ( | ( | |||||
| 2023 |
Ferro-Alloy Resources Limited Annual Report 202340
Note
| 2023 | 2022 | ||
| $000 | $000 | ||
| Cash flows from operating activities | |||
Loss for the year | ( | ( | |
| Adjustmentsfor: | |||
Depreciation and amortisation | 5, 7 | ||
Write-off of property, plant and equipment | 8 | ||
Write-down of inventory to net realisable value | 8 | ||
Write-off of non-refundable VAT | |||
Share-based payment expense | 20 | ||
Net finance loss/(gain) | 10 | ( | |
| Cash used in operating activities before changes in working | ( | ( | |
| capital | |||
Change in inventories | ( | ||
Change in trade and other receivables | ( | ( | |
Change in prepayments | ( | ||
Change in trade and other payables | ( | ||
Change in deferred income | |||
Net cash used in operating activities | ( | ( | |
| Cash flows from investing activities | |||
Acquisition of property, plant and equipment | 12 | ( | ( |
Acquisition of exploration and evaluation assets | 13 | ( | ( |
Acquisition of intangible assets | 14 | ( | ( |
Proceeds on fixed asset disposal | 6 | ||
Net cash used in investing activities | ( | ( | |
| Cash flows from financing activities | |||
Proceeds from issue of share capital | 20 | ||
Transaction costs on share subscriptions | ( | ||
Proceeds from borrowings | |||
Repayment of borrowings | 21 | ( | ( |
Interest paid | 21 | ( | ( |
Net cash from financing activities | |||
Net increase in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of year | 19 | ||
| Effect of movements in exchange rates on cash and cash | |||
| equivalents | |||
Cash and cash equivalents at the end of the year |
Consolidated Statement of
CashFlows
for the year ended 31 December 2023
Ferro-Alloy Resources Limited Annual Report 2023 41
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
1 Basis of preparation
The consolidated financial statements for the year ended 31 December 2023 comprise the Company and the following
subsidiaries:
| Company’s share | |||
Company | Location | in share capital | Primary activities |
Energy Metals Limited | UK | 100% | Dormant |
Vanadium Products LLC | Kazakhstan | 100% | Performs services for the Group |
Firma Balausa LLC | Kazakhstan | 100% | Production and sale of vanadium and |
| associated by-products | |||
Balausa Processing Company LLC | Kazakhstan | 100% | Development of processing facilities |
2 Use of estimates and judgements
Preparing the financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future periods affected.
Notes to the Consolidated
Financial Statements
for the year ended 31 December 2023
Ferro-Alloy Resources Limited Annual Report 202342
Notes to the Consolidated Financial Statements continued
Carrying value of processing operations
The Directors have tested the processing operations’ property, plant and equipment (“PP&E”) for impairment (Note 12) at
31 December 2023. In doing so, net present value cash flow forecasts were prepared using the value in use method which
required key estimates including vanadium pentoxide and ferro-molybdenum prices, production including the impact of
ongoing PP&E maintenance costs and an appropriate discount rate. Key estimates included:
• Production volumes of 48 tonnes per month of vanadium pentoxide and 8.3 tonnes of molybdenum (as ferro-
molybdenum).
• Average prices of vanadium pentoxide of US$7.50/lb, ferro-molybdenum of US$47.90/kg in 2024 and thereafter, reflecting
management estimates having consideration of market commentary less a discount, and used by the Company as a long-
term assumption for other planning purposes.
• Discount rate of 14.7% post tax in real terms.
Based on the key assumptions set out above, the recoverable amount of PP&E (US$19.2m) exceeds its carrying amount
(US$5.95m) by US$13.25m and therefore PP&E were not impaired.
Sensitivity analysis
Any impairment is dependent on judgement used in determining the most appropriate basis for the assumptions and
estimates made by management, particularly in relation to the key assumptions described above. Sensitivity analysis to
potential changes in key assumptions has, therefore, been provided below.
The impact on the impairment calculation of applying different assumptions to product sales prices, production volumes and
post-tax discount rates, all other inputs remaining equal, would be as follows:
| Decrease in headroom | |
| US$’000 | |
Impact if product sales prices reduced by 10%: | (6,800) |
Impact if production volumes decreased by 10%: | (3,500) |
Impact if post-tax discount rate increased by 2 percentage points: | (2,200) |
Inventories (Note 16)
The Group holds material inventories which are assessed for impairment at each reporting date. The assessment of net
realisable value requires consideration of future cost to process and sell and spot market prices at year end less applicable
discounts. The estimates are based on market data and historical trends.
Exploration and evaluation assets (Note 13)
The Group holds material exploration and evaluation assets and judgement is applied in determining whether impairment
indicators exist under the Group’s accounting policy. In determining that no impairment indicator exists management have
considered the Competent Person’s Report on the asset, the strategic plans for exploration and future development and the
status of the Subsoil Use Agreement. Judgement was required in determining that the application for deferral of obligations
under the Subsoil Use Agreement (Note 26) will be granted and management anticipate such approvals being provided given
their understanding of the Kazakh market and plans for the asset.
Ferro-Alloy Resources Limited Annual Report 2023 43
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements and have been applied consistently by Group entities, except for the implementation of new standards and
interpretations.
Ferro-Alloy Resources Limited Annual Report 202344
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 45
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 202346
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 47
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 202348
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 49
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferro-Alloy Resources Limited Annual Report 202350
| 2023 | 2022 | |
| $000 | $000 | |
Sales of vanadium products | 3,308 | 5,163 |
Sales of ferro-molybdenum | 2,698 | 1,509 |
Sales of gravel and waste rock | 143 | 86 |
Service revenue | 15 | 15 |
Total revenue from customers under IFRS 15 | 6,164 | 6,773 |
Other revenue – change in fair value of customer contracts | (448) | (502) |
Total revenue | 5,716 | 6,271 |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 51
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
| 2023 | 2022 | |
| $000 | $000 | |
Materials | 4,832 | 5,863 |
Wages, salaries and related taxes | 1,128 | 937 |
Depreciation | 425 | 406 |
Electricity | 94 | 111 |
Other | 290 | 199 |
6,769 | 7,516 |
6 Other income
| 2023 | 2022 | |
| $000 | $000 | |
Currency conversion gain | 8 | 41 |
Other (sales of equipment) | 12 | 36 |
20 | 77 |
| 2023 | 2022 | |
| $000 | $000 | |
Wages, salaries and related taxes | 2,023 | 1,619 |
Professional services | 315 | 263 |
Taxes other than income tax | 18 | 15 |
Listing and reorganisation expenses | 155 | 162 |
Audit | 125 | 111 |
Materials | 48 | 37 |
Rent | 40 | 53 |
Irrecoverable debts | 52 | - |
Repairs and maintenance | 58 | - |
Depreciation and amortisation | 51 | 99 |
Insurance | 44 | 44 |
Staff training | 15 | - |
Research and development costs | 10 | - |
Bank fees | 23 | 23 |
Travel expenses | 89 | 16 |
Utilities | 5 | - |
Communication and information services | 30 | 12 |
Other | 270 | 91 |
3,371 | 2,545 |
Ferro-Alloy Resources Limited Annual Report 202352
8 Other expenses
| 2023 | 2022 | |
| $000 | $000 | |
Currency conversion loss | 59 | 204 |
Write-down of inventory to net realisable value | 254 | 160 |
Write-down of obsolete assets | 1 | 54 |
Share-based payment expense | 15 | 5 |
Other | 142 | 3 |
471 | 426 |
9 Personnel costs
| 2023 | 2022 | |
| $000 | $000 | |
Wages, salaries and related taxes | 3,232 | 2,569 |
3,232 | 2,569 |
During 2023 personnel costs of US $1,128,000 (2022: US$937,000) have been charged to cost of sales, US$2,023,000 (2022:
US$1,619,000) to administrative expenses and US$81,000 (2022: US$43,000) were charged to cost of inventories which were
not yet sold as at the year end.
| 2023 | 2022 | |
| $000 | $000 | |
Net foreign exchange costs / (gain) | (83) | (195) |
Interest expense on financial liabilities (bonds) | 266 | 77 |
Net finance costs / (income) | 183 | (118) |
11 Income tax
The Group’s applicable tax rates in 2023 are an income tax rate of 20% for Kazakhstan registered subsidiaries (2022: 20%) and
0% (2022: 0%) for Guernsey registered companies. The Kazakh tax rate has been applied below as this is most reflective of the
Group’s trading operations and tax profile.
During the years ended 31 December 2023 and 2022 the Group incurred tax losses and, therefore, did not recognise any
current income tax expense.
Unrecognised deferred tax assets are described in Note 15.
Reconciliation of effective tax rate:
2023 | 2022 | |||
$000 | % | $000 | % | |
Loss before tax (Group) | (5,251) | 100 | (4,286) | 100 |
Income tax at the applicable tax rate | (1,050) | 20 | (857) | 20 |
| Effect of unrecognised deferred tax assets / | 1,417 | (27) | 923 | (22) |
| (utilisation of previously unrecognised losses) | ||||
| Net non-deductible expenses/non-taxable income | (367) | 7 | (66) | 2 |
| or loss | - | - | - | - |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 53
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
12 Property, plant and equipment
| Land and | Plant and | Construction | |||||
| buildings | equipment | Vehicles | Computers | Other | in progress | Total | |
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | |
| Cost | |||||||
Balance at 1 January 2022 | 2,060 | 2,639 | 509 | 39 | 102 | 2,632 | 7,981 |
Additions | 37 | 188 | - | 10 | 89 | 1,142 | 1,466 |
Transfers | 23 | 83 | - | - | - | (106) | - |
Disposals | (23) | (9) | (17) | (4) | (10) | (41) | (104) |
| Foreign currency | (138) | (178) | (34) | (2) | (7) | (179) | (538) |
| translation difference | |||||||
| Balance at 31 December | 1,959 | 2,723 | 458 | 43 | 174 | 3,448 | 8,805 |
| 2022 | |||||||
Balance at 1 January 2023 | 1,959 | 2,723 | 458 | 43 | 174 | 3,448 | 8,805 |
Additions | - | 104 | 56 | 6 | 96 | 716 | 978 |
Transfers | 3,010 | 962 | - | - | - | (3,972) | - |
Disposals | - | (19) | - | - | (17) | - | (36) |
| Foreign currency | 46 | 52 | 8 | - | 3 | 50 | 159 |
| translation difference | |||||||
| Balance at 31 December | 5,015 | 3,822 | 522 | 49 | 256 | 242 | 9,906 |
| 2023 | |||||||
| Depreciation | |||||||
Balance at 1 January 2022 | 688 | 2,028 | 327 | 28 | 47 | - | 3,118 |
Depreciation for the period | 66 | 374 | 34 | 5 | 25 | - | 504 |
Disposals | - | (9) | (17) | (3) | (11) | - | (40) |
| Foreign currency | (46) | (137) | (22) | (2) | (4) | - | (211) |
| translation difference | |||||||
| Balance at 31 December | 708 | 2,256 | 322 | 28 | 57 | - | 3,371 |
| 2022 | |||||||
Balance at 1 January 2023 | 708 | 2,256 | 322 | 28 | 57 | - | 3,371 |
Depreciation for the period | 130 | 341 | 33 | 5 | 47 | - | 556 |
Disposals | - | (18) | - | - | (17) | - | (35) |
| Foreign currency | 13 | 42 | 6 | - | 2 | - | 63 |
| translation difference | |||||||
| Balance at 31 December | 851 | 2,621 | 361 | 33 | 89 | - | 3,955 |
| 2023 | |||||||
| Carrying amounts | |||||||
At 1 January 2022 | 1,372 | 611 | 182 | 11 | 55 | 2,632 | 4,863 |
At 31 December 2022 | 1,251 | 467 | 136 | 15 | 117 | 3,448 | 5,434 |
At 31 December 2023 | 4,164 | 1,201 | 161 | 16 | 167 | 242 | 5,951 |
During 2023 a depreciation expense of US$425,000 (2022: US$406,000) has been charged to cost of sales, excluding cost of
finished goods that were not sold at year end, US$51,000 (2022: US$98,000) to administrative expenses, and US$80,000 has
been charged to cost of finished goods that were not sold at the year end (2022: US$4,000). Construction in progress relates
to upgrades to the processing plant associated with the expansion of the facility.
Ferro-Alloy Resources Limited Annual Report 202354
13 Exploration and evaluation assets
The Group’s exploration and evaluation assets (“E&EA”) relate to the Balasausqandiq deposit. During the year, the Group
capitalised the cost of geological and geotechnical drilling work, technical design, sample assaying and project management
costs, all relating to the Company’s Stage 1 feasibility study. As at 31 December 2023 the carrying value of exploration and
evaluation assets was US$7.1m (2022: US$4.2m).
| 2023 | 2022 | |
| $000 | $000 | |
Balance at 1 January | 4,208 | 1,434 |
Additions (Stage 1 feasibility study) | 2,931 | 2,871 |
Foreign currency translation difference | 6 | (97) |
Balance at 31 December | 7,145 | 4,208 |
| Mineral | Computer | |||
| rights | Patents | software | Total | |
| $000 | $000 | $000 | $000 | |
| Cost | ||||
Balance at 1 January 2022 | 88 | 33 | 3 | 124 |
Additions | - | 1 | - | 1 |
Foreign currency translation difference | (5) | (2) | - | (7) |
Balance at 31 December 2022 | 83 | 32 | 3 | 118 |
Balance at 1 January 2023 | 83 | 32 | 3 | 118 |
Additions | - | 1 | - | 1 |
Foreign currency translation difference | 1 | 1 | - | 2 |
Balance at 31 December 2023 | 84 | 34 | 3 | 121 |
| Amortisation | ||||
Balance at 1 January 2022 | 88 | 12 | 3 | 103 |
Amortisation for the year | - | 1 | - | 1 |
Foreign currency translation difference | (5) | - | - | (5) |
Balance at 31 December 2022 | 83 | 13 | 3 | 99 |
Balance at 1 January 2023 | 83 | 13 | 3 | 99 |
Amortisation for the year | - | 1 | - | 1 |
Foreign currency translation difference | 1 | - | - | 1 |
Balance at 31 December 2023 | 84 | 14 | 3 | 101 |
| Carrying amounts | ||||
At 1 January 2022 | - | 21 | - | 21 |
At 31 December 2022 | - | 19 | - | 19 |
At 31 December 2023 | - | 20 | - | 20 |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 55
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
| 2023 | 2022 | |
| $000 | $000 | |
Temporary deductible differences | 912 | 292 |
Tax losses carried forward | 16,887 | 14,470 |
Unrecognised tax deferred tax assets | (17,799) | (14,762) |
- | - |
Expiry year | $000 |
2024 | 474 |
2025 | 228 |
2026 | 801 |
2027 | 480 |
2028 | 514 |
2029 | 2,148 |
2030 | 3,385 |
2031 | 1,564 |
2032 | 3,948 |
2033 | 3,104 |
| 16,646 |
Ferro-Alloy Resources Limited Annual Report 202356
| 2023 | 2022 | |
| $000 | $000 | |
Raw materials and consumables | 1,456 | 1,379 |
Finished goods | 517 | 216 |
Work in progress | 10 | 33 |
1,983 | 1,628 |
| 2023 | 2022 | |
| $000 | $000 | |
| Current | ||
Trade receivables from third parties | 264 | 65 |
Due from employees | 66 | 50 |
VAT receivable | 1,049 | 1,062 |
Other receivables | 4 | 10 |
1,383 | 1,187 | |
Expected credit loss provision for receivables | (67) | (36) |
1,316 | 1,151 |
| 2023 | 2022 | |
| $000 | $000 | |
| Non-current | ||
Prepayment for E&EA | 470 | 697 |
Other prepayments | 418 | 576 |
888 | 1,273 | |
| Current | ||
Prepayments for goods and services | 762 | 911 |
762 | 911 |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 57
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
19 Cash and cash equivalents
| 2023 | 2022 | |
| $000 | $000 | |
Cash at current bank accounts | 1,488 | 1,010 |
Cash at bank deposits | 417 | 3,321 |
Petty cash | 47 | - |
Cash and cash equivalents | 1,952 | 4,331 |
| Ordinary shares | ||
| 31 December | 31 December | |
| 2023 | 2022 | |
Par value | - | - |
Outstanding at beginning of year | 449,702,150 | 377,676,799 |
Shares issued | 33,520,088 | 72,025,351 |
Outstanding at end of year | 483,222,238 | 449,702,150 |
Ferro-Alloy Resources Limited Annual Report 202358
| 2023 | ||
| Weighted | ||
| 2023 | average | |
| share | exercise price | |
| options | (US$) | |
Outstanding at the beginning of the year | 500,000 | - |
Granted during the year | 500,000 | 0.091 |
Exercised during the year | - | - |
Expired/cancelled during the year | - | - |
Outstanding at the year end | 1,000,000 | 0.091 |
| Remaining | |||||
| Number of | Exercise price | contractual life | |||
options | Exercise date | per share (US$) | Expiry date | (years) | |
29 June 2022 | 250,000 | 29 June 2025 | 0.162 | 29 June 2027 | 3.5 |
22 September 2022 | 250,000 | 22 September | 0.151 | 22 September | 3.8 |
| 2025 | 2027 | ||||
12 September 2023 | 500,000 | 12 September | 0.116 | 12 September | 4.8 |
| 2026 | 2028 | ||||
| 1,000,000 |
| Share-based | |
| payment | |
| reserve (US$) | |
At 1 January 2023 | 5,000 |
Exercise of share options | - |
Issue of options | 14,863 |
At 31 December 2023 | 19,863 |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 59
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
| 12 September | |
| 2023 | |
Share price at grant date (US$) | 0.116 |
Exercise price (US$) | 0.116 |
Expected volatility* | 59.21% |
Expected life (years) | 4 |
Expected dividend yield (US$) | - |
Risk-free interest rate** | 4.64% |
Fair value per option (US$) | 0.057 |
| 2023 | 2022 | |
| $000 | $000 | |
Loss for the year, attributable to owners of the Company | (5,251) | (4,286) |
Loss attributable to ordinary shareholders | (5,251) | (4,286) |
2023 | 2022 | |
Issued ordinary shares at 1 January (after subdivision) | 449,702,150 | 377,676,799 |
Effect of shares issued (weighted) | 3,857,106 | 21,410,276 |
Weighted-average number of ordinary shares at 31 December | 453,559,256 | 399,087,075 |
Loss per share of common stock attributable to the Company (basic and diluted) (US$) | (0.012) | (0.011) |
Ferro-Alloy Resources Limited Annual Report 202360
| 2023 | 2022 | |
| $000 | $000 | |
| Non-current liabilities | ||
Bonds payable | 7,393 | - |
7,393 | - | |
| Current liabilities | ||
Bonds payable | - | 1,108 |
Interest payable | 134 | 18 |
134 | 1,126 |
| Effective | Nominal | Actual | |||||
| interest | amount | amount | Coupon | Coupon | |||
| USD Currency | rate | $000 | $000 | rate | paid | Interest | |
Bonds payable | USD | 9.2% | 3,000 | 2,898 | 9% | - | 96 |
Bonds payable | USD | 10.4% | 5,000 | 4,874 | 10% | 125 | 142 |
8,000 | 7,772 | 125 | 238 |
| 2023 | 2022 | |
| $000 | $000 | |
| Loans and borrowings | ||
At 1 January | 1,127 | 1,427 |
| Cash flows: | ||
– Interest paid | (157) | (82) |
– Repayment of loans and borrowings | (1,112) | (300) |
– Proceeds from loans and borrowings | 7,784 | - |
Total | 7,642 | 1,045 |
| Non-cash flows | ||
– Interest accruing in period | 273 | 82 |
– Bond discount / premium | (388) | - |
At 31 December | 7,527 | 1,127 |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 61
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
| 2023 | 2022 | |
| $000 | $000 | |
Balance at 1 January | 33 | 42 |
Change in estimate | (2) | (7) |
Foreign currency translation difference | - | (2) |
Balance at 31 December | 31 | 33 |
Non-current | 31 | 33 |
31 | 33 |
23 Trade and other payables
| 2023 | 2022 | |
| $000 | $000 | |
Trade payables | 1,781 | 1,889 |
Debt to directors/key management (Note 29) | 79 | 214 |
Debt to employees | 192 | 99 |
Other taxes | 72 | 171 |
Advances received | 17 | 10 |
2,141 | 2,383 |
Ferro-Alloy Resources Limited Annual Report 202362
24 Deferred income
| 2023 | 2022 | |
| $000 | $000 | |
Government grants | 102 | - |
102 | - |
During 2023, the Group was awarded grant funding by the Kazakhstan National Scientific Council for the development of
technology for the production of mixed vanadium oxides for use in vanadium redox flow batteries.
| Carrying amount | ||
| 2023 | 2022 | |
| $000 | $000 | |
Trade and other receivables, excluding amounts due from employees and VAT receivable | 268 | 75 |
Cash and cash equivalents | 1,905 | 4,331 |
2,173 | 4,406 |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 63
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
| Carrying amount | ||
| 2023 | 2022 | |
| $000 | $000 | |
Kazakhstan | 268 | 75 |
268 | 75 |
| Carrying amount | ||
| 2023 | 2022 | |
| $000 | $000 | |
| Trade receivables: | ||
Wholesale customers | 264 | 65 |
| Other receivables | ||
Other | 4 | 10 |
268 | 75 |
| Gross | Impairment | Net | Gross | Impairment | Net | |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | |
| $000 | $000 | $000 | $000 | $000 | $000 | |
Not past due | 268 | - | 268 | 75 | - | 75 |
Past due more than 180 days | 67 | (67) | - | 36 | (36) | - |
335 | (67) | 268 | 111 | (36) | 75 |
| 2023 | 2022 | |
| $000 | $000 | |
Balance at beginning of the year | 36 | 35 |
Expected gain change | 31 | 1 |
Balance at end of the year | 67 | 36 |
Ferro-Alloy Resources Limited Annual Report 202364
| Carrying | Contractual | 6 months - | ||||
| amount | cash flows | On demand | 0-6 mths | 1 year | 1-3 years | |
| $000 | $000 | $000 | $000 | $000 | $000 | |
| Financial liabilities | ||||||
Trade and other payables | 1,781 | 1,781 | - | 1,781 | - | - |
Loans and borrowings | 7,527 | 7,527 | - | 134 | - | 7,393 |
9,308 | 9,308 | - | 1,915 | - | 7,393 |
| Carrying | Contractual | 6 months - | ||||
| amount | cash flows | On demand | 0-6 mths | 1 year | 1-3 years | |
| $000 | $000 | $000 | $000 | $000 | $000 | |
| Financial liabilities | ||||||
Trade and other payables | 1,889 | 1,889 | - | 1,889 | - | - |
Loans and borrowings | 1,126 | 1,126 | - | 1,126 | - | - |
3,015 | 3,015 | - | 3,015 | - | - |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 65
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
| US$- | GBP- | EUR- | RUB- | KZT- | |
| denominated | denominated | denominated | denominated | denominated | |
| 2023 | 2023 | 2023 | 2023 | 2023 | |
| 2023 | $000 | $000 | $000 | $000 | $000 |
Cash and cash equivalents | 1,257 | 115 | - | - | 580 |
Trade and other payables | (1,104) | - | (113) | (50) | (875) |
Loans and borrowings | (7,527) | - | - | - | - |
Net exposure | (7,374) | 115 | (113) | (50) | (295) |
| US$- | GBP- | EUR- | RUB- | KZT- | |
| denominated | denominated | denominated | denominated | denominated | |
| 2022 | 2022 | 2022 | 2022 | 2022 | |
| 2022 | $000 | $000 | $000 | $000 | $000 |
Cash and cash equivalents | 22 | 3,940 | - | 5 | 3,672 |
Trade and other payables | (654) | (111) | (108) | (55) | (1,455) |
Loans and borrowings | (1,126) | - | - | - | - |
Net exposure | (1,758) | 3,829 | (108) | (50) | 2,217 |
Average rate | Reporting date spot rate | |||
| in US$ | 2023 | 2022 | 2023 | 2022 |
KZT 1 | 0.0022 | 0.0022 | 0.0022 | 0.0022 |
GBP 1 | 1.2429 | 1.2363 | 1.2704 | 1.2030 |
RUB 1 | 0.0119 | 0.0150 | 0.0111 | 0.0139 |
EUR 1 | 1.0810 | 1.0530 | 1.1049 | 1.0653 |
Ferro-Alloy Resources Limited Annual Report 202366
| 2023 | 2022 | |
| $000 | $000 | |
| Financial assets (includes cash) | ||
Trade and other receivables | 268 | 75 |
Cash at amortised cost | 1,905 | 4,331 |
2,173 | 4,406 | |
| Financial liabilities – measured at amortised cost | ||
Trade and other payables at amortised cost | 1,781 | 1,889 |
Loans and borrowings at amortised cost | 7,527 | 1,126 |
9,308 | 3,015 |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 67
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Year | Tonnes |
| 2023 | 567,700 |
| 2024 | 788,100 |
| 2025 | 1,102,300 |
| 2026 | 1,102,300 |
| 2027 | 1,102,300 |
| 2028 | 1,102,300 |
| 2029 onwards | 1,102,300 |
Ferro-Alloy Resources Limited Annual Report 202368
28 Segment reporting
The Group’s operations are split into three segments based on the nature of operations: processing, subsoil operations
(being operations related to exploration and mining) and corporate segment for the purposes of IFRS 8: Operating Segments.
The Group’s assets are primarily concentrated in the Republic of Kazakhstan and the Group’s revenues are derived from
operations in, and connected with, the Republic of Kazakhstan.
| Processing | Subsoil | Corporate | Total | |
| 2023 | $000 | $000 | $000 | $000 |
Revenue | 5,716 | - | - | 5,716 |
Cost of sales | (6,769) | - | - | (6,769) |
Other income | 15 | - | 5 | 20 |
Administrative expenses | (1,130) | (41) | (2,200) | (3,371) |
Other expenses | (456) | - | (15) | (471) |
Distribution expenses | (193) | - | - | (193) |
Finance costs | (139) | - | (44) | (183) |
Loss before tax | (2,956) | (41) | (2,254) | (5,251) |
| Processing | Subsoil | Corporate | Total | |
| 2022 | $000 | $000 | $000 | $000 |
Revenue | 6,271 | - | - | 6,271 |
Cost of sales | (7,516) | - | - | (7,516) |
Other income | 73 | - | 4 | 77 |
Administrative expenses | (763) | (24) | (1,758) | (2,545) |
Other expenses | (426) | - | - | (426) |
Distribution expenses | (265) | - | - | (265) |
Finance costs | 531 | - | (413) | 118 |
Loss before tax | (2,095) | (24) | (2,167) | (4,286) |
Notes to the Consolidated Financial Statements continued
Ferro-Alloy Resources Limited Annual Report 2023 69
REVIEW OF THE YEAR CORPORATE GOVERNANCE FINANCIAL STATEMENTS
| 2023 | 2022 | |
| $000 | $000 | |
Wages, salaries and related taxes | 1,114 | 986 |
30 Subsequent events
On 30 January 2024, the Company listed and sold a third tranche of bonds with a nominal value of US$5m under the terms of
the Kazakhstan Bond Programme on the AIX.
Ferro-Alloy Resources Limited Annual Report 202370
Ferro-Alloy Resources Limited
Company Registration Number 63449
Registered Office Noble House
Les Baissieres
St Peter Port
Guernsey
GY1 2UE
Directors Sir Mick Davis
Nicholas Bridgen
Andrey Kuznetsov
William Callewaert
Christopher Thomas
Petrus Nienaber
James Turian
Corporate Brokers
Shore Capital Stockbrokers Limited
57 St James’s Street, Cassini House
London, SW1A 1LD
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London, EC2Y 9LY
Tengri Partners Investment Banking (Kazakhstan) JSC
17 Al-Farabi Avenue
Almaty, 050059
Kazakhstan
Auditors Crowe U.K. LLP
55 Ludgate Hill
London, EC4M 7JW
Registrar Computershare Investor Services (Guernsey) Limited
1
st
Floor, Tudor House
Le Bordage
St Peter Port
Guernsey, GY1 1DB
Financial Press Relations and Investor
Relations
St Brides Partners Limited
Level 4
22 Bishopsgate
London, EC2N 4BQ
Company Information
Ferro-Alloy Resources Limited Annual Report 2023
Ferro-Alloy Resources Limited
Noble House
Les Baissieres
St. Peter Port
Guernsey
GY1 2UE
www.ferro-alloy.com