VSA Morning Miner, 10/11/21
Ferro Alloy Resources (Ferro-Alloy Resources Ltd (LSE:FAR))
Ferro Alloy Resources (Ferro-Alloy Resources Ltd (LSE:FAR)) has announced the first sale of ferro-molybdenum and that the testing of the production of ferro-vanadium has been successfully completed enabling the company to choose which products it produces to maximise margins. The move to higher value add products is a strong positive for operating margins at the existing processing operation and is an important milestone that the company has been able to execute in line with its previous announcements.
The sales of higher value products are already reflected in our forecasts, however, we highlight that the company specifically in reference to the processing operation is taking a flexible approach and optimising economics of the various purchased products rather than focusing on output targets.
FAR is now able to sell ammonium metavanadate (AMV) as it always has, vanadium pentoxide, ferro-vanadium, ferro-molybdenum and nickel concentrates meaning that the company is able to fully monetise the vanadium bearing materials which it procures. As well as greater revenue streams the product flexibility gives the company the opportunity to diversify its customer base.
We reiterate our Buy recommendation and 1.80p/sh target price.
Oliver O’Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: [email protected]
Paul Renken, Senior Geologist | T: +44 (0)20 3005 5011 | E: [email protected]
VSA Capital Research | T: +44 (0)20 3005 5000 | E: [email protected]
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