Ferro-Alloy Resources Ltd (LSE: FAR) saw its shares surge 13% to 6.21p after announcing substantial cost reductions and a financing breakthrough for its flagship Balasausqandiq vanadium project in southern Kazakhstan.
The AIM-listed mining company has signed an agreement with China National Chemical Engineering Sixth Construction (CC6) — one of the world’s top industrial contractors — for front-end engineering and design (FEED) work on the project.
According to the company, CC6 has provided an indicative construction cost of $261 million, cutting the total funding requirement to $311.9 million — about 40% lower than previously estimated in the project’s feasibility study.
The revised figures have significantly improved project economics, boosting Balasausqandiq’s post-tax internal rate of return (IRR) to 31% and its net present value (NPV) to $931.6 million.
Adding to the positive momentum, CC6 has arranged a conditional, non-binding loan offer worth $221.8 million from the Bank of Communications (Hubei Branch), covering 85% of CC6’s construction scope.
Discussions are also under way with Sinosure, China’s export credit agency, which could provide loan guarantees to reduce borrowing costs.
“This partnership with CC6 demonstrates the potential to significantly enhance the project’s financial returns,” said Nick Bridgen, CEO of Ferro-Alloy Resources. “It also strengthens our path to production and positions Balasausqandiq as one of the most competitive vanadium operations globally.”
The company is now in talks with potential strategic investors to fund the project’s equity component, while CC6’s FEED work — expected to last six months — will be followed by a final engineering, procurement and construction (EPC) contract once costs are finalized.
