(Alliance News) - Ferro-Alloy Resources Ltd on Monday warned of a "material impact" on third-quarter results from concentrate supply delays and low vanadium prices.
However, Ferro-Alloy, which produces vanadium and is developing the Balasausqandiq deposit in southern Kazakhstan, said it still expects both production and financial results for all of 2023 to be better than in 2022.
Ferro-Alloy shares were down 21% to 8.50 pence early Monday in London.
Ferro-Alloy said it has completed all of its factory upgrades but is dependent on third-party suppliers to provide a constant pipeline of concentrates to process.
So far in 2023, one major supplier defaulted on its monthly supply commitment. Ferro-Alloy said it entered contracts with additional other suppliers in response and had expected to run its factory at full operating capacity from mid-July onwards.
"However, further unanticipated supplier and transport delays have been experienced and have impacted output across the first two months of Q3 2023," Ferro-Ally said.
Disruptions to import routes caused by the war in Ukraine and by winter conditions in the Caspian Sea have the potential to cause concentrate shortfalls in the fourth quarter as well, though Ferro-Alloy said it still expects output to be at or close to planned capacity in that period.
What's more, vanadium prices have remained depressed, the company noted. The slowing economy in China has resulted in net exports of vanadium from that country, offsetting demand for the metal for energy storage batteries, it said.
Despite the supply issues and lower prices, production and financial results for all of 2023 are still likely to be "significantly better" than in 2022, the company said.
Ferro-Alloy reported a pretax loss of USD4.3 million on revenue of USD6.3 million in 2022. It produced 305.5 tonnes of vanadium pentoxide in 2022 and 172.7 tonnes in the first half of this year.
"With all plant modifications now complete and operating efficiently, these supply chain issues are disappointing," said Chief Executive Officer Nick Bridgen. "That said, the progress in the feasibility study, the main driver of the company's value, is very encouraging."
Ferro-Alloy on Monday said the feasibility study into the Balasausqandiq deposit is reaching its final stages.
By Tom Waite, Alliance News editor
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Ferro-alloy Re. (FAR)