Ferro-alloy Re. Regulatory News (FAR)

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This announcement is an advertisement for the purposes of the Prospectus Rules and not a prospectus. Neither this announcement nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in the prospectus (the "Prospectus") published by the Company (as defined below) in connection with the admission of the Company's ordinary shares of no par value (the "Ordinary Shares") to the Official List of the Financial Conduct Authority (the "FCA") (Standard Listing Segment) and to trading on the Main Market for listed securities of the London Stock Exchange plc (the "London Stock Exchange"). This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States, Australia, Canada, Japan, the Republic of South Africa or in any other jurisdiction.

Ferro-Alloy Resources Limited / Index: LSE / Epic: FAR / Sector: Natural Resources

28 March 2019

Ferro-Alloy Resources Limited

("Ferro-Alloy" or "the Company")

Admission to Trading on the Main Market and First Day of Dealings

Ferro-Alloy Resources Limited, the Guernsey vanadium mining and mineral processing company with operations based in Southern Kazakhstan, is pleased to announce that its entire issued ordinary share capital will commence trading on the standard listing segment of the Official List of the Financial Conduct Authority and on the Main Market of the London Stock Exchange at 8.00 a.m. today under the ticker FAR.L and ISIN GG00BGDYDZ69 ("Admission"). The Company is dual listed on the Kazakhstan Stock Exchange (KASE).

As part of the Admission process, the Company has successfully raised £5.2 million (before expenses) from institutional shareholders through a Placing and Subscription of 7,507,761 new ordinary shares of no-par value (the "Ordinary Shares") at a placing price of 70p each, implying a market capitalisation of £219.1 million on Admission. Following Admission, the total number of Ordinary Shares in the Company in issue will be 312,978,848 each with equal voting rights.

Company Highlights

· Established and profitable vanadium producer in Southern Kazakhstan focused on expanding and developing the Balasausqandiq Vanadium Project ("Balasausqandiq" or the "Balasausqandiq Deposit")

· Operations located at the Balasausqandiq site with two main business activities:

o the Balasausqandiq Vanadium Project (the "Project"), which has a reserve of over 70 million tonnes estimated on the locally required basis, of which ore-body number one (of five) has estimated reserves on a JORC basis of 23 million tonnes. There is significant upside potential from exploration; and

o an existing profitable vanadium concentrate processing operation (the "Existing Operation")

· Raised £5.2 million to be used to further develop and expand production at Balasausqandiq;

o initiate Phase 1 of the development of the Project, giving annual production of 5,600 tonnes vanadium pentoxide; and

o expanding production at the Existing Operation to around 1,500 tonnes per annum

· Unusual sedimentary deposit allows for much lower processing costs than usual, being only around 40% of the operating costs of typical primary vanadium producers

· Existing road access, nearby rail and power availability, together with a simple processing route, make for very low capital costs per annual tonne of vanadium, around 40% of other typical projects

· Low capital and high margin give the project an NPV of $2 billion at a long term forecast vanadium pentoxide price of $7.50/lb (or $3.6 billion at the current price)

· Staged development plan allows for the development of later phases to be substantially paid for from earnings, with only very small shareholder dilution

· Targeted overall annual production is c. 23,000 tonnes of vanadium pentoxide

· Surge in demand for vanadium driven by steel producers that utilise it for its strengthening qualities and the emerging use of vanadium in clean energy storage in the form of vanadium redox flow batteries

· Strong pricing backdrop: vanadium pentoxide price up +450% in three years to circa $14/lb as at 22 March 2019

· Highly experienced board and senior management team with proven track records

Nick Bridgen, CEO, commented: "Today marks a significant milestone for Ferro-Alloy with the completion of our successful listing on the London Stock Exchange. We're excited to be entering the next phase as we look to advance Balasausqandiq; this unique project has the potential to be one of the world's largest and lowest cost producing mines. Given our existing production and defined development path to build a low capex mine and production facility, Ferro-Alloy offers a fantastic opportunity to gain exposure to the growing vanadium market, the fundamentals of which continue to strengthen in line with the emergence of vanadium batteries used in clean energy storage. With incomparable economics in tandem with a world-class team of scientists and technicians, we aim to be at the forefront of this market. I would like to welcome our new shareholders to our register and thank existing shareholders for their continued support. We look forward to the future with optimism."

For further information, including the Company's prospectus, visit www.ferro-alloy.com or contact:

Further information about Ferro-Alloy Resources Limited

Operations

The Company's operations are all located at the Balasausqandiq Deposit in Kyzylordinskaya oblast in the South of Kazakhstan. Currently the Company has two main business activities:

(a) the high grade Balasausqandiq Vanadium Project; and

(b) an existing profitable vanadium concentrate processing operation

The Project

Balasausqandiq is a very large deposit, situated in Kyzylordinskaya Oblast in Southern Kazakhstan. The ore contains vanadium as the principal product, together with by-products of carbon, molybdenum, uranium, rare earth metals, potassium, and aluminium (the last two of which can be extracted as potassium alum for sale or can be further processed into alumina and potassium fertilizers).

The geological resource has progressively been delineated by a number of exploration phases since its discovery in 1940 by Soviet era geo-scientists. More recently, Ferro-Alloy has carried out further exploration drilling, trial open-pit mining operations, and pilot plant optimisation studies using alternate metallurgical and mineral process treatment technologies. A full feasibility study in accordance with local Kazakhstan requirements has been completed and the reserve and resource estimates and financial appraisal have been prepared on both the locally required GKZ basis and on the Australasian JORC basis.

The resource is divided into five ore bodies, although only the first has been explored sufficiently, and sufficient records remain, to put it into the resource category under the JORC 2012 system of classification. This single ore-body is estimated to contain 24.3 million tonnes which, with normal mining dilution, is sufficient for the first eight years of operations. Ore-bodies 2 - 5 have been classified in the JORC 2012 system in the category of Exploration Targets and although further exploration is required to bring these into JORC resource categories, a total Vanadium JORC resource of over 100 million tonnes is considered to be a rational prediction by the consulting geologists in the Competent Person's Report. 100 million tonnes could contain the equivalent of around 670,000 tonnes of Vanadium Pentoxide, equal to almost five times the annual world production of 2017.

A reserve on the JORC 2012 basis has been estimated only for ore-body number 1 which amounts to 23 million tonnes, not including the small amounts of near-surface oxidised material which is in the Inferred resource category. On the GKZ basis, the Reserves are estimated to be over 70m tonnes in ore-bodies 1 to 5 but this does not include the full depth of ore-bodies 2-5.

The deposit is sedimentary in origin, containing low levels of iron and other acid-consuming minerals. The proposed process methods therefore do not include concentration or roasting steps usual for vanadiferous titano-magnetite deposits. Instead the vanadium and by-product metals are brought into solution by pressure oxidation in sulphuric acid at relatively low temperature and pressure, followed by ion exchange onto resin.

Existing Operation

The existing concentrate processing operation is situated at the site of the Balasausqandiq Deposit. The production facilities were originally created from a 15,000 tonnes per year pilot plant which was constructed to test the proposed process which will be employed to treat the ore mined at Balasausqandiq. The pilot plant was then adapted to treat low-grade concentrates and is now in the process of being expanded and further adapted to treat a wider variety of raw-materials.

Currently, two main types of raw material are being processed, namely vanadium-containing low-grade concentrates and higher grade concentrates which contain vanadium from the demetallisation of oil in refineries.

The Company has already completed the first steps of a development plan which is expected to result in annualised production capacity increasing gradually to around 1,500 tonnes of contained vanadium pentoxide. The development plan includes upgrades to infrastructure, an extension to the existing factory and the installation of equipment to increase the throughput and to add the facilities to convert AMV into vanadium pentoxide.

Company Strategy

The strategy of the Company is to develop both the Existing Operation and the Project in parallel. Although they are located on the same site and use some of the same infrastructure, they are separate operations.

Expanding the Existing Operation will be simpler and quicker to accomplish. It is already profitable and yielding a small operating cash flow surplus. Production levels will be raised incrementally without major shutdowns and the plant is expected to reach its target annualised sustainable production of around 1,500 tonnes per year of vanadium pentoxide by the end of the first quarter of 2020. Further development of the Existing Operation is likely but will depend upon trading conditions at the time.

The Project will take longer to develop and in spite of the size of the deposit, the Directors have decided to adopt a gradual development plan so that:

· expansions can take place in step with increases in world demand;

· technological risk is reduced; and

· shareholder dilution is reduced prior to the generation of substantial cash flows that can be used to fund later expansions

Infrastructure

The site is already well served with road access, power and water but some further development is required, including connection to the nearby high capacity power-line, provision of railway sidings and employee accommodation.

Vanadium Market

Currently, the main use of vanadium is in the production of high strength low alloy steel where small quantities of vanadium are added to steel to increase its strength. In future, it is expected that increasing quantities will be used as the electrolyte in vanadium flow batteries.

There are several reasons for anticipating large annual increases in the world demand for Vanadium. Firstly, there is expected to be an increase in the number of countries mandating the use of high-strength low alloy steels for construction. China mandated the use of high strength low-alloy steels several years ago but has recently tightened the required specifications. This is expected to have the effect of forcing the industry to use more vanadium. Other countries which currently do not use such steels are expected to follow. Secondly, vanadium is already being used for batteries for electrical storage and this use is expected to grow markedly over the coming years. For these and other reasons available forecasts indicate an expectation of rising demand and continuing high prices.

The Board

On Admission, the board of the Company shall comprise the following directors:

Nicholas Bridgen, Chief Executive

Mr. Bridgen started his career in 1975 as a Chartered Accountant at KPMG (formerly Peat Marwick Mitchell). In 1979, he moved to the Rio Tinto Group, becoming senior group accountant in 1981, before moving to Business Evaluation Department for the Group in 1985 and Group Planning Manager for the RTZ Pillar Group which held the engineering, building products and chemical companies. Nick spent 14 years in all with Rio Tinto. In the mid-1990s, he was a finance director at Bakyrchik Gold Plc. and in 1998, Mr Bridgen 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, Nicholas has been a director and more recently, CEO of Ferro-Alloy Resources Limited. He holds a bachelor's degree with honours from Exeter University, is a Chartered Accountant and has also studied corporate finance at London Business School. He is a fluent Russian speaker.

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 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. Andrey has been the general director of TOO Firma Balausa since 2006. He holds a Specialist's degree in electrical engineering from Bauman Moscow State Technical University and a PhD in non-formal mathematical logic. He has also studied management at Coventry University.

Chris Thomas, Non-executive Director

Chris Thomas has nearly 35 years' experience in the communications industry. He has 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 BBDO role to pursue his other business. He also served as a non-executive director on the board of Hambledon Mining from 2004 to 2011.

James Turian, Non-executive Director

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 2000's. 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.

Total Voting Rights

Following Admission, the total number of Ordinary Shares in the Company in issue will be 312,978,848 each with equal voting rights. The total voting rights figure can be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify their interest in, or a change of their interest in, the Company under the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.