March 28, 2019 / 7:32 AM / 3 months ago

Kazakh vanadium miner is first 2019 London listing in sector

* Vanadium price off peaks, supported by power storage prospects

* Ferro-Alloy has raised 5.2 million pounds

* CEO says could be one of biggest, lowest cost vanadium mines

By Barbara Lewis

LONDON, March 28 (Reuters) - Ferro-Alloy Resources Group, which is producing vanadium in Kazakhstan, lists on the London stock market on Thursday, marking the first junior flotation in the sector this year.

Vanadium has traditionally been used for strengthening steel, but its price has risen 450 percent in three years on expectations it can also be used for large-scale power storage, which could have a major role in a more electrified economy.

As part of its admission to the London market, the company, which is also listed in Kazakhstan, has raised 5.2 million pounds ($6.9 million) and issued 7,507,761 new ordinary shares at a placing price of 70 pence each. That implies a market capitalisation of 219.1 million pounds.

Trading in London begins at 0800 GMT.

CEO Nick Bridgen says the company’s mine, which is already producing, has the lowest cash cost in the world because the nature of the deposit allows cheap processing.

“This unique project has the potential to be one of the world’s largest and lowest cost producing mines,” he said.

The money raised ahead of the flotation will help to take a first phase of the Balasausqandiq vanadium project to output of more than 5,600 tonnes of vanadium pentoxide and expand production at a separate part of the project that is already operating to 1,500 tonnes per annum.

The aim in about 3-1/2 years is to produce around 23,000 tonnes of vanadium pentoxide per year.

The project has a net present value of $2 billion, assuming a long-term vanadium pentoxide price of $7.50 per pound. The current price is around $14 per pound, compared with a peak of $35 in 2005 and a low in 2015 of $2.38 per pound.

Ferro-Alloy stands out in a sector that has been struggling to raise cash because of concerns about risk that were heightened by a Vale dam disaster in Brazil in January that killed an estimated 300 people.

As investors increasingly focus on sustainability, including the avoidance of any dangerous accumulations of waste, Bridgen said Ferro-Alloy was aiming for zero waste, with byproducts sold to China and Kazakhstan and other material being made into bricks for building.

New listings in London have more broadly been held back by uncertainty linked to Britain’s decision to leave the European Union.

Kazakhstan is also grappling with change after President Nursultan Nazarbayev unexpectedly resigned after three decades in power. Bridgen said he believed the transition would be managed and not disrupt business.

$1 = 0.7540 pounds Reporting by Barbara Lewis; Editing by Mark Potter

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