TIDMBMN
RNS Number : 4243B
Bushveld Minerals Limited
30 January 2020
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
30 January 2020
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Full Year 2019 and Q4 2019 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated
primary vanadium producer, with ownership of high grade vanadium
assets, is pleased to provide an operational update for the 3
months ("Q4 2019") and 12 months ending 31 December 2019
("FY2019"), in respect of Bushveld Vanadium and Bushveld Energy, as
well as other corporate activities.
Key Highlights
Bushveld Vanadium
Vametco
-- Record annual production of 2,833 mtV in the form of
Nitrovan(TM) achieved in FY2019, in line with guidance of 2,800 mtV
to 2,900 mtV; represents an 11 per cent increase relative to 2018
(FY2018: 2,560 mtV).
-- Record quarterly production achieved at Vametco in Q4 2019 of
880 mtV; represents a 32 per cent increase relative to Q4 2018 (Q4
2018: 665 mtV).
-- Achieved FY2019 production cash cost of US$18.10/kgV
(ZAR261/kgV), a 5 per cent reduction relative to FY2018 (FY2018:
US$19.11/kgV), beating FY2019 guidance of US$18.90/kgV to
US$19.50/kgV.
-- Production cash cost of US$15.2/kgV in Q4 2019, a 20 per cent
reduction relative to Q3 2019, supported by higher volumes during
the quarter.
-- Generated unaudited underlying EBITDA of US$42.4 million for
FY2019 despite a 35 per cent reduction in the average vanadium
price received.
Vanchem
-- The acquisition of the Vanchem processing plant (100 per cent
interest) was completed in November 2019.
-- Commenced the critical refurbishment programme to meet
regulatory standards and improve productivity.
-- Work to finalise the expected capital expenditure plans
together with the production ramp-up profile is currently underway.
The Company will provide guidance to the market once the assessment
is complete.
Mokopane
-- On 29 January 2020 the Department of Mineral Resources and
Energy ("DMRE") in South Africa executed the 30 year mining right
in favour of the Company's subsidiary, Pamish, in respect of the
five farms that make up the Mokopane Project: Vliegekraal 783 LR,
Vogelstruisfontein 765 LR, Vriesland 781 LR, Schoonoord 786 LR and
Bellevue 808 LR.
FY2020 Guidance
Vametco
-- Expected to produce between 3,000 mtV and 3,200 mtV, a 6 per
cent to 13 per cent increase relative to FY2019, with volumes
weighted towards H2 2020.
-- Vametco expected to commence production of Ferrovanadium
through Vanchem processing facility.
-- FY2020 production cash cost guidance of between US$17.20/kgV
and US$17.70/kgV (ZAR257/kgV and ZAR265/kg), representing a 2 per
cent to 5 per cent reduction relative to FY2019.
Vanchem
-- Vanchem expected to produce between 960 mtV and 1,100 mtV of vanadium from stockpiles.
-- Diversification of products expected in FY2020 with Vanchem's
Ferrovanadium and Chemicals production to supplement existing
production of Nitrovan(TM) from Vametco.
The Group will be reporting all vanadium production on a metric
tonne of vanadium produced.
Bushveld Energy
-- Launched the VRFB Investment Platform ("VIP") as part of its
strategy for partnering with Vanadium Redox Flow Batteries ("VRFB")
companies.
-- As previously reported, two initial investments were made
under the VIP, one to support the proposed merger of Avalon Battery
Corporation and redT Energy Plc and, as part of a consortium, the
acquisition of a minority stake in Enerox GmbH ("Enerox").
2020 priorities
-- Advance construction of the vanadium electrolyte plant.
-- Implement additional, larger electrolyte rental contracts.
-- Advance VIP and identify further VRFB companies for investment.
-- Prove business case for VRFB deployments, including delivery
of the Vametco mini-grid as a funded independent power
producer.
-- Submit bids for Battery Energy Storage Systems opportunities
as part of South Africa's Integrated Resource Plan.
Market outlook
-- Vanadium prices have begun to recover from the lows seen in
December 2019 of US$22/kgV, with European prices experiencing the
strongest rebound relative to the other regions. The London Metal
Bulletin ("LMB") price is currently trading at approximately
US$27/kgV(1) (2020 Year to date average LMB price of US$24/kgV(1)
).
-- From a demand perspective, recent data indicates that China
has been a net vanadium importer in recent months. This is a result
of the increased intensity of vanadium consumption driven by the
enforcement of the Rebar standard introduced in November 2018.
-- The supply of vanadium from stone coal production, an
important vanadium-bearing resource in China, is expected to
continue to reduce as stone coal producers are uneconomical at
current price levels. Furthermore, the incentive to substitute
vanadium with ferroniobium is significantly diminished at current
prices.
-- The supply and demand dynamics point to a positive outlook,
supported by reduced supply and increased intensity of use of
vanadium in steel from emerging markets, as well as the growing
demand for VRFB contributing to increased demand of vanadium.
1. LMB price as at 24 January 2020.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"The final quarter of 2019 was a very important one for
Bushveld. The acquisition of Vanchem was transformational as it
gives us the diversification and operational base to achieve our
near and medium term growth plans. I am delighted that Bushveld is
in the strong position of owning two of the four operating primary
processing facilities globally.
Just as important, our improved organisational structure meant
we were able to retain our strong focus at Vametco, growing output
and reducing costs. Vametco finished 2019 in a solid position, with
an 11 per cent production increase, underlying production cash
costs down 5 per cent to U$18/kgV, and generating an underlying
EBITDA of US$42 million despite the realised price falling 35 per
cent year on year. All of this was achieved through the
implementation of productivity initiatives identified as part of
the Transformational Programme. We expect to see additional
benefits realised and improved operational stability at Vametco
during the course of 2020.
That said, we are not resting on our laurels and are focused on
disciplined cost control across the whole Group to ensure that all
operations are run on a sustainable basis in the current price
environment.
Elevated production from Vametco, inaugural production from
Vanchem and the execution of the Mokopane mining right is to be
welcomed, however, one cannot just grow for growth's sake. We will
make sure that we will continue to be conservative in how we invest
capital and ensure that any production increase is profitable,
especially while the current price environment prevails. In FY2020,
we will continue to ensure that Vametco maintains its competitive
edge by continuing to innovate, invest for the future and optimise
margins, while at the same time providing the team at Vanchem with
the resources necessary to replicate Vametco's achievements. This
will allow us to build a business that is resilient throughout the
commodity cycle and ready to capture the benefits of a price
recovery.
By doing so, we aim to become an even lower cost producer of
vanadium, with an increasingly diversified product range, allowing
us to see through short term weakness, make decisions with the
longer term in mind and provide a stable environment for the
development of new downstream demand sources, such as energy
storage.
During 2020, we anticipate synergies accruing from both Vanchem
and Vametco as we bring the businesses together while we carry on
operating in a prudent manner and keep our focus on what we can
control: safety, volumes and costs.
Our scalable and low cost production base gives Bushveld a solid
platform to implement its vertically integrated business model,
through Bushveld Energy, our downstream vanadium-based energy
storage business. In 2019, Bushveld Energy made significant
progress across all its key areas of focus - advanced the
development of electrolyte production capacity, deployment of its
electrolyte rental model, development of energy storage mandates
and launched the VIP as part of its strategy of developing
partnerships for VRFB assembly/manufacturing. Investing in the
development and deployment of VRFB technology is a key part of
Bushveld's strategy for two key reasons. Firstly, it will assist to
increase the scale of adoption of VRFBs, which will increase demand
for vanadium. Secondly, it provides a natural hedge for the Company
against vanadium price volatility. Our downstream and upstream
targets will grow the Business and generate value for
shareholders.
Lastly, we are encouraged to see prices in Europe recovering,
which is in line with our view that market fundamentals remain
attractive, supported by the increased intensity of use of vanadium
in steel, as well as the growing demand for VRFB which is expected
to signi cantly contribute to increased demand of vanadium."
Bushveld Vanadium
Bushveld has one of the largest, high-grade primary vanadium
resource bases in the world. The Company's vanadium resource base
currently consists of three mineral assets, Vametco, Brits and
Mokopane, and its processing facilities consist of Vametco and
Vanchem which are all situated within the Bushveld Complex in South
Africa.
Vametco
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Description Unit Q4 2019 2019 Q4 2019 Q4 2019 H2 2019 FY19
vs vs vs vs
Q3 2019 Q4 2018 H1 2019 FY18
Vanadium (Nitrovan(TM)
plus FeV) produced mtV(2) 880 2,833 56.8% 32.0% 3.6% 10.7%
--------- -------- ------ --------- --------- --------- -------
Vanadium sold mtV(2) 673 2,392 11.5% 16.6% 14.5% -7.0%
--------- -------- ------ --------- --------- --------- -------
Average LMB vanadium
price(3) US$/kgV 23.1 41.6 -25.0% -78.6% -52.3% -48.7%
--------- -------- ------ --------- --------- --------- -------
Average CRU RN vanadium
price(3) US$/kgV 26.1 49.2 -25.4% -78.0% -55.1% -43.0%
--------- -------- ------ --------- --------- --------- -------
Average Asian Metals
price(3) US$/kgV 25.5 36.8 -22.3% -75.4% -34.5% -45.8%
--------- -------- ------ --------- --------- --------- -------
Underlying production
cash cost(4) ZAR/kgV 223.4 261 -20.2% -18.2% -8.6% 3.2%
--------- -------- ------ --------- --------- --------- -------
Underlying production
cash cost(4) US$/kgV 15.2 18.1 -20.4% -20.6% -11.6% -5.4%
--------- -------- ------ --------- --------- --------- -------
Unaudited Revenue(5
6) US$'m n/a 111.1 n/a n/a -49.6% -39.4%
--------- -------- ------ --------- --------- --------- -------
Unaudited Underlying
EBITDA(6) US$'m n/a 42.4 n/a n/a -98.3% -60.7%
--------- -------- ------ --------- --------- --------- -------
1. Based on provisional, unaudited figures. Bushveld's net
attributable interest of the above figures is approximately
74%.
2. mtV = metric tonnes of vanadium.
3. The vanadium price is based on the FeV mid average price for
the period, published by LMB for sales to Europe, CRU Ryan's Note
("CRU RN") for sales to the United States and Asian Metals for
sales to Asia. Vametco realised price is based on the prior month's
mid average price.
4. Excludes depreciation, royalties and selling, general & administrative expenses.
5. Revenue reported net of sales commission.
6. The financial figures are based upon unaudited management accounts.
-- Vametco achieved a record annual production of 2,833 mtV (100
per cent basis) in the form of Nitrovan(TM) from magnetite feed
only, meeting FY2019 guidance of 2,800 to 2,900 mtV.
-- This is an 11 per cent increase relative to FY2018 (FY2018:
2,560 mtV), reflecting a robust operational performance underpinned
by the Transformational Programme, with the full benefits expected
to be realised in FY2020.
-- During Q4 2019, Vametco achieved record production of 880
mtV, an increase of 32 per cent relative to Q4 2018 (Q4 2018: 665
mtV), supported by improved operational performance as part of the
Transformational Programme.
-- Vametco's Q4 2019 production increased by 57 per cent
relative to Q3 2019 (Q3 2019: 561 mtV), underpinned by the
successful completion of the annual maintenance programme during
the prior quarter and subsequent improved kiln performance.
-- Vametco beat FY2019 production cash cost guidance of
US$18.90/kgV to US$19.50/kgV, achieving FY2019 production cash cost
of US$18.10/kgV (ZAR261/kgV).
-- This is a 5 per cent reduction relative to FY2018 (FY2018:
US$19.11/kgV), underpinned by a weaker ZAR: USD relative to 2018,
as well as higher production volumes and a cost reduction programme
which were offset by a higher inflation rate.
-- During Q4 2019, Vametco achieved a production cash cost of
US$15.2/kgV, a reduction of 20 per cent relative to Q3 2019,
supported by higher production and cost containment initiatives
during the quarter.
-- Vametco generated an unaudited underlying EBITDA of US$42.4
million for FY2019 despite a 35 per cent reduction in the average
vanadium price received.
-- Vametco is expected to produce between 3,000 mtV and 3,200
mtV (100 per cent basis) in FY2020, an increase of between 6 per
cent and 13 per cent relative to FY2019.
-- Volumes are weighted towards H2 2020 and it is expected to
achieve a production run rate of 3,400 mtVp.a. during H2 2020.
-- A 10 day planned maintenance programme is scheduled in Q2
2020. The reduced maintenance period relative to the 22 days in Q3
2019 is a result of Vametco's improvement in equipment efficiency,
reduced downtime and operational stability.
-- During FY2020, in addition to Nitrovan(TM) , Vametco is
expected to commence production of Ferrovanadium through the
Vanchem processing facility.
-- Vametco production cash cost guidance for FY2020 of between
US$17.20/kgV and US$17.70/kgV (ZAR257/kgV and ZAR265/kg).
-- Vametco sells the majority of its product to the United
States, Europe and Asia, with an average delivery period of 8 to 12
weeks to the final customer(1) . The timing of deliveries that
occur on or around half year and year-end impacts the timing and
quantum of revenue recognised for commodity sales in each financial
period.
-- A JORC compliant Competent Persons Report ("CPR") for the
updated Mineral Reserve and Resource Estimate for Vametco will be
published today on the Company's website.
1. FY2019 Vametco geographic sale split: 50% the US, 20% to
Europe, 10% to China and 20% to the rest of the World.
Other projects underway at Vametco
-- A kiln off-gas project has been initiated to comply with
environmental regulatory requirements and further increase kiln
feed throughput. Commissioning is planned to be completed during H1
2020.
Vanchem
-- Operations at Vanchem were re-started during Q4 2019 as
production had stopped prior to our acquisition on 7 November 2019.
Our focus was on safely powering up the operation. A total of 98
mtV, in the form of Ferrovanadium and Vanadium Chemicals, was
produced during the first period under Bushveld Minerals'
control.
-- Operations were affected by the power rationing during Q4
2019, however, it did not materially impact Vanchem's production.
The team is exploring possible solutions to mitigate the impact of
power rationing.
-- Commenced the critical refurbishment programme to meet
regulatory standards and improve productivity.
-- The Company is finalising its plans for the expected capital
expenditure and production ramp up profile and will update the
market accordingly once the assessment is complete.
-- Expected to produce between 960 mtV and 1,100 mtV of vanadium in FY2020 from stockpiles.
-- The Group continues to refine its plans for Vanchem, and it
will provide FY2020 production cash cost guidance in the Q1 2020
Operational update.
Mokopane
-- On 29 January 2020 the DMRE in South Africa executed the 30
year mining right in favour of the Company's subsidiary, Pamish, in
respect of the five farms that make up the Mokopane Project:
Vliegekraal 783 LR, Vogelstruisfontein 765 LR, Vriesland 781 LR,
Schoonoord 786 LR and Bellevue 808 LR. The execution of a granted
mining right in South Africa means that legal permission is given
by the DMRE to proceed with physical mining activities, as defined
in the Mining Works Program, and that all other legal requirements,
such as rehabilitation guarantees, have been met.
-- A definitive feasibility study ("DFS") to mine the Main
Magnetite Layer and provide a resources and reserves assessment has
commenced and will be focussed on Mokopane as the primary feedstock
supplier to Vanchem. The DFS is expected to be completed during H2
2020.
Brits
-- A JORC compliant CPR for the Maiden Mineral Resource will be
published today on the Company's website.
Bushveld Energy
Manufacturing
-- The Company announced its strategy for partnering with
Original Equipment Manufacturers ("OEMs") of VRFB technology
spanning supply of vanadium and electrolyte, deployment of systems
in Africa and investment.
-- This included the establishment of a VIP to lead investments
in VRFB OEMs with attractive upside potential. Progress on this has
been achieved with two initial investments into leading VRFB
OEMs:
-- Funding of US$5 million to support the merger of Canada-based
Avalon Battery and UK-based redT Energy. The convertible loan will
give Bushveld the opportunity to acquire a strategic interest in
the merged energy storage company.
-- As part of an investment consortium, the acquisition of an
initial 24.9 per cent of Austria-based Enerox from CellCube and
initiation of a due diligence process. The intent is for the
consortium to acquire 100 per cent of Enerox for EUR11,000,000 with
working capital financing of EUR1.5 million. The due diligence and
transaction are expected to be completed in Q1 2020.
-- In all these investments through the VIP, the Company expects
to have significant minority interests without direct operational
involvement in the business beyond the supply of vanadium and
electrolyte.
Other activities
-- The Company, together with the Industrial Development
Corporation, completed the basic design and issued a tender for the
Engineering, Procurement and Construction ("EPC") contract for the
vanadium electrolyte manufacturing plant in the East London
Industrial Development Zone. Selection of the bidder and tender of
the award are expected in Q1 2020.
-- Providing the vanadium electrolyte rental product and
deploying the solar plus VRFB mini-grid at Vametco remain
priorities for the Company. Both activities continue to
advance.
Eskom industrial power rationing
Eskom, South Africa's national utility, during Q4 2019
implemented industrial power rationing. During this period, Vametco
did not experience any periods of total power loss but implemented
load curtailment which required a reduction of total power
consumption of 12MW to 10MW between the hours of 8am and 6pm each
day.
Vametco's operational bottleneck is not affected by these
periods of load curtailment and there is no impact on the plant's
production performance. It is a priority for the management of
Vametco to build on the strong relationship with the Eskom regional
management and customer relations officer in order to continuously
engage on proactive methods to reduce any impact it might have. In
doing so, management feels confident that the situation will
continue to have no impact at Vametco.
The Company is working with energy policy makers to support
initiatives to reverse the downward trajectory of South Africa's
power system. At the same time, the Company is de-risking its
operations through its Bushveld Energy subsidiary by increasing its
preparedness should the power system continue to deteriorate. This
includes the completion of grid connection and geotechnical studies
and the commencement of a procurement process for a solar plus
energy storage mini grid at the Vametco mine. The project, which
will use a VRFB, can be expanded in the future to reduce its
dependence on the electric power grid.
The Company is also reviewing the energy needs and self-supply
opportunities at its other existing and greenfield sites. The
Company believes that there are significant and rapidly growing
opportunities for other such projects in South Africa and across
the continent.
ENDS
Enquiries: info@bushveldminerals.com
+27 (0) 11 268
Bushveld Minerals Limited 6555
Fortune Mojapelo, Chief Executive
Officer
Chika Edeh, Head of Investor
Relations
SP Angel Corporate Finance Nominated Adviser +44 (0) 20 3470
LLP & Broker 0470
Richard Morrison / Stephen
Wong
Abigail Wayne / Richard Parlons
+44 (0) 20 7236
BMO Capital Markets Limited Joint Broker 1010
Tom Rider / Michael Rechsteiner
/
Neil Elliot
+44 (0) 20 7418
Peel Hunt Limited Joint Broker 8900
Ross Allister / James Bavister
Tavistock Financial PR
Charles Vivian / Gareth Tredway
/ +44 (0) 207 920
Edward Lee 3150
Brunswick Financial PR (South
Africa)
+27 (0) 11 502
Miyelani Shikwambana 7300
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, integrated, primary vanadium
producer, with ownership of high-grade vanadium assets.
The Company's flagship vanadium platform includes a 74 per cent
controlling interest in Bushveld Vametco Alloys (Pty) Ltd, a
primary vanadium mining and processing company; 100 per cent of
Bushveld Vanchem, a primary vanadium processing facility with a
beneficiation plant; the Mokopane Vanadium Project and the Brits
Vanadium Project.
Bushveld's vision is to become a significant, low-cost,
integrated primary vanadium producer through owning high grade
assets. Whilst the demand for vanadium remains largely anchored in
the steel industry, Bushveld Minerals believes there is strong
potential for an imminent and significant global vanadium demand
surge from the fast-growing energy storage market, particularly
through the use and adoption of Vanadium Redox Flow Batteries.
Bushveld Energy, the Company's energy storage solutions provider,
plays a leading role in the development and promotion of the role
of vanadium in this market.
While the Company's focus is on vanadium operations and the
development and promotion of VRFBs, it has additional investments
in coal, power and tin.
The Company's approach to project development recognises that,
whilst attractive project economics are imperative, they may be
insufficient to secure capital to bring them to account. A clear
path to production within a visible timeframe, low capital
expenditure requirements and scalability are important factors in
ensuring a positive return on investment. This philosophy is core
to the Company's strategy in developing projects.
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com.
About Vametco
Vametco is located near Brits on the Western Limb of the
Bushveld Complex. The integrated operation comprises a vanadium ore
mine and a processing plant that produces mostly Nitrovan(TM) , a
trademark product sold in major steel markets across the world. The
mine lies adjacent to the Brits Vanadium Project, which will in
future serve as an alternative source of near surface run of mine
("ROM") ore feed to the Vametco plant.
The Vametco mining operation uses open pit bench mining methods
to mine a well-defined orebody. The deposit is continuous with
limited faulting and dips in a northerly direction at approximately
19 degrees.
ROM ore is fed into a primary, secondary and tertiary crushing
circuit, followed by milling and magnetic separation to produce
magnetite concentrates. The magnetite concentrates are fed into the
extraction process which includes the kiln for roasting followed by
leaching and precipitation. Thereafter the precipitated vanadium as
ammonium metavanadate is converted to modified vanadium oxide
("MVO") in rotary calciners. MVO is fed into the mix plant and
finally into the shaft furnaces to produce Nitrovan(TM) .
About Vanchem
Vanchem is situated at Ferrobank Industrial Park in Emalahleni
Local Municipality, Mpumalanga Province in the Republic of South
Africa. Vanchem is a primary vanadium producing facility with a
beneficiation plant capable of producing various vanadium oxides,
ferrovanadium and vanadium chemicals. Vanchem uses the salt roast
beneficiation process, similar to the one used at Vametco. The
plant comprises: a core salt-roast processing plant, including 3
roasting kilns, an electric smelting ferrovanadium converter, an
alumino-thermic smelting facility, also located at Highveld, a
vanadium chemical plant; and a rail siding linking the plant with
Bushveld deposits and additional potential supply sources through
the national rail network.
About Bushveld Energy Limited
Bushveld Energy is a leading energy storage solutions provider,
focusing on the African market. Bushveld Energy recognises that
electricity in Africa intersects paramount potential for social
transformation with an immense commercial opportunity.
Bushveld Energy is focused on developing and promoting the role
of vanadium in the growing global energy storage market through
application in vanadium redox flow batteries. Its near term
strategy is to deploy several VRFB systems as part of its longer
term vision to become a significant electricity storage provider in
Africa, meeting the demand for utility scale energy storage in
Africa by leveraging South Africa-mined and beneficiated
vanadium.
http://www.bushveldenergy.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDGZGFMLGNGGZG
(END) Dow Jones Newswires
January 30, 2020 04:17 ET (09:17 GMT)
Bushveld Minerals (AQSE:BMN.GB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Bushveld Minerals (AQSE:BMN.GB)
Historical Stock Chart
From Jul 2023 to Jul 2024