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Bushveld Minerals sets plans for long-term vanadium presence

Snapshot

Bushveld is hoping to increase vanadium production significantly following completion of Vanchem deal

vanadium

Quick facts: Bushveld Minerals Ltd

Price: 13.75 GBX

LSE:BMN
Market: LSE
Market Cap: £158.53 m
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  • Bushveld is a low-cost integrated miner of vanadium

  • Vametco vanadium mine and processing plant in South Africa is currently in phase 2 development

  • Mining rights granted for Mokopane vanadium project, in which Bushveld is the majority stakeholder

  • Acquired industrial group Vanchem to diversify activities into batteries

  • Set up a battery maker investment platform to create a vanadium 'vertical'

 

How it is doing

Bushveld turned in record annual production of 2,833 mtV in the 12 months to end 2019, in line with guidance. In the fourth quarter, the company's Vametco operation achieved record quarterly production. 

Overall production cash costs for 2019 were of US$18.10/kgV, a 5% reduction relative to 2018.  

The company generated unaudited underlying EBITDA of US$42.4mln in 2019.

Looking ahead, the transformation programme at the Vametco operation should see output rise to 3,400 metric tonnes of vanadium, up from the current 2019 guidance of 2,800-2,900 tonnes.

In March the company temporarilly shut down its operations due to the coronavirus crisis.

Vanadium strategy

Bushveld has doubled down on vanadium with the acquisition of Vanchem, which has producing vanadium assets in South Africa plus extensive downstream capability.

Vanchem should allow Bushveld to boost production to 10,000mtV per year as it already produces approximately 960mtV on an annualised basis, utilising only one of the three kilns on site.

The Vanchem acquisition also unlocks the potential supply of the feedstock from the company’s Mokopane vanadium project, significantly reducing the potential capital outlay and accelerating the development schedule.

In November 2019, Bushveld invested US$5mln in Avalon Battery Corporation to help it complete its merger with redT Energy.

The investment also kick-started the miner's own vanadium battery technology investment platform, which will see it take stakes in OEMS and funnel investments towards other VRFB manufacturers.

In October, it announced the second of these investments, saying it is leading a consortium to acquire Austrian group Enerox for €11mln, one of the world's foremost makers of vanadium redox flow batteries (VRFB).

In December, the buyers signed an initial sale and purchase agreement and acquired, in equal proportions, 24.9% of the Enerox for €150,000 from CellCube Energy Storage Systems.

In addition, they invested €600,000 in Enerox to fund ongoing working capital, with three further monthly payments of €300,000 to February which will bring the total initial investment to €1.65mln.

Analyst comment

Analysts at Peel Hunt said the Vanchem addition provides for a production growth factor of 1.8 times over the medium term while creating a "significantly more sustainable cash flow profile", with the acquisition offering potential for "further upside".

 

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