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Ferro-Alloy Resources warns on profits amid decreased demand

Fri 22 Dec 2023 09:46

(Sharecast News) - Vanadium producer and developer Ferro-Alloy Resources warned on Friday that fourth-quarter revenues and profitability had come in lower than expected due to metal prices and production shortfalls. Ferro-Alloy Resources noted that its existing operations, which primarily recovers and sells vanadium, molybdenum and nickel from treated bought-in concentrates, has seen market prices for all of the recovered metals deteriorate significantly during the quarter, largely due to decreased demand.

The lower demand meant Vanadium hit a recent low of $5.00 per pound, having sat at $8.00 at the start of the quarter, and also saw the prices of ferro-molybdenum and nickel hit lows of $40.00 and $15.87 per pound respectively, after entering the period at $54.50 and $20.45, respectively.

"As a result, the company has experienced a reduction in expected revenues during the quarter. Furthermore, concentrates were procured earlier in the year, on the basis of higher metal values and, therefore, trading margins have been squeezed disproportionately," said Ferro-Alloy.

Looking ahead, Ferro-Alloy said it will continue to work to maintain profitability in the current low-price environment by renegotiating concentrate costs and other contractual terms. It also said it was experimenting with new types of concentrate which, whilst producing the same quality of product, could be potentially more profitable.

Chief executive Nick Bridgen said: "One of the challenges of the vanadium industry is the extreme volatility of pricing, where the current low price for vanadium pentoxide of just over $5.00/lb is, unfortunately, beyond our control and is having a negative impact on all producers. The longer-term outlook for vanadium, regarded as a critical metal by the UK, EU and the US remains highly encouraging and we continue to make progress towards the completion of the feasibility study, with results so far supporting the very strong financial expectations of our previously announced studies."

As of 1100 GMT, Ferro Alloy Resources shares had sunk 35.69% to 5.08p.

Reporting by Iain Gilbert at Sharecast.com

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