TIDMBMN
RNS Number : 6070Y
Bushveld Minerals Limited
14 May 2021
Market Abuse Regulation ("MAR") Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
14 May 2021
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Q1 2021 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated
primary vanadium producer and energy storage solutions provider,
with ownership of high-grade assets in South Africa, ("Bushveld"),
is pleased to provide an operational update for the three months
ending 31 March 2021.
The Company also announces that going forward Bushveld Energy
updates will be issued separately as standalone announcements.
Key Highlights
Bushveld Vanadium
-- Q1 2021 Group production of 688 mtV (Q1 2020: 880 mtV)
affected by the previously announced 35-day planned maintenance
shutdown at Vametco, which was successfully completed on time and
within budget, during the quarter.
- Vanchem production in Q1 2021 of 293 mtV was 34 per cent
higher than Q1 2020 (Q1 2020: 219 mtV) and 12 per cent higher than
Q4 2020 supported by improved operational stability.
-- Q1 2021 Group sales of 788 mtV(1) (Q1 2020: 1,080 mtV) due to
lower production volumes as a result of the planned maintenance
shutdown at Vametco.
-- 2021 Group guidance expected towards the lower end of 4,100
mtV and 4,350 mtV, although risks to this guidance exist as a
consequence of Vametco's challenges in achieving consistent plant
performance, the slower-than expected ramp-up following the
maintenance shutdown, the recent industrial action, as well as
risks associated with the ramp-up of Vanchem's first phase
refurbishment.
-- The procurement phase of the Bushveld Electrolyte Plant has
commenced, with commissioning expected in H2 2022.
-- Q1 2021 Total Injury Frequency Rate ("TIFR") of 8.54 (Q1
2020: 14.14).
-- Currently no active Covid-19 cases among employees.
1: Reported as final sales to customers.
Vanadium market
-- Vanadium prices continued to increase during Q1 2021 after a
strong start to the year.
-- Prices had risen in China in the midst of the Spring Festival
while in Europe, prices increased due to strong demand and tight
inventories.
-- Lengthening of the supply chain/logistics disruptions
supporting prices.
-- Vanadium demand remains robust, and prices are expected to
remain stable for the remainder of Q2 2021.
-- In Q1 2021 the London Metal Bulletin ("LMB") Ferrovanadium
price averaged US$30.9/kgV (Q1 2020: US$26.5/kgV). The current
market price for LMB Ferrovanadium is approximately US$32/kgV.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"After a year of uncertainty, I am pleased to say that we are
seeing a stabilisation of Covid-19 cases in South Africa. We are
proud to announce that we currently have no active cases and
continue to be vigilant in our approach to tackle the spread of the
virus.
"Although Group production was lower this quarter than in Q1 and
Q4 of 2020, the Company was able to carry out the previously guided
essential maintenance at Vametco. Vanchem meanwhile had a solid
quarter of production.
"We recognise that Vametco has underperformed at times and work
such as the 35-day maintenance shutdown is expected to improve on
the reliability and performance issues experienced in the past.
Since the industrial action and ramp-up we have seen a stable
period of normalised production levels. Various workstreams remain
underway to maintain this stability, including maximizing safety
and house-keeping initiatives, better managing process system
constraints and optimizing preventative maintenance programmes. In
light of Vametco's challenges in achieving consistent plant
performance during Q1 2021 as well as risks associated with the
ramp-up of Vanchem's first phase refurbishment, Group guidance is
expected towards the lower end of 4,100mtV to 4,350mtV, albeit
there are risks to achieving this target.
"Positively, the vanadium price has continued to rise following
a strong start to the year with increased demand in Europe and US
on the back of a post-Covid period of growth. As the world
continues to open up, we have confidence in the demand side of the
vanadium market."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo, and
Finance Director, Tanya Chikanza will host a conference call at
09:00 am UK time (10:00 am SAST) today to discuss the quarterly
update with analysts. Participants may join the call by
dialling:
Tel: United Kingdom: +44 (0) 330 336 9126; South Africa: +27 11 844 6054
Pin: 4166478
A replay of the conference call will be available on the
Company's website post the call.
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 in South Africa.
Q1 2021 Q1 2021 Q1 2021 vs
Group Unit vs Q4 2020
Q1 2020
Production mtV(1) 688 -21.8% -28.7%
-------- -------- --------- -----------
Sales mtV(1) 788 -27.0% -37.1%
-------- -------- --------- -----------
1. mtV = metric tonnes of vanadium.
As part of the Group's effort to improve its reporting
standards, the Company will now provide additional production
metrics at Vametco and Vanchem.
This is the Company's second year of managing the two
operations. In parallel to the capital work that we are carrying
out at Vanchem, we continue to work on rightsizing and improving
the operational performance and maximising the synergies between
Vametco and Vanchem, to enable both operations to sustainably and
consistently produce at a competitive rate in the medium to long
term.
Vametco
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Description Unit Q1 2021 Q1 2021 Q1 2021
vs vs
Q1 2020 Q4 2020
Ore mined Tonnes 314,573 +20.5% +10.5%
--------- -------- -------- --------
Total mined Tonnes 617,113 +70.0% -1.0%
--------- -------- -------- --------
Ore grade (in Whole % V(2)
Rock) O(5) 0.62 0.0% 0.0%
--------- -------- -------- --------
Concentrate produced Tonnes 77,459 -10.6% -23.7%
--------- -------- -------- --------
Concentrate grade % V 1.04 -0.3% +0.9%
--------- -------- -------- --------
Recovery from Kiln
to MVO % 74.3 -2.4% -3.5%
--------- -------- -------- --------
Production (Nitrovan,
FeV) mtV(2) 395 -40.2% -43.9%
--------- -------- -------- --------
Production cash cost
(C1) (3) ZAR/KgV 396 +33.4% +21.1%
--------- -------- -------- --------
Production cash cost
(C1) (3) US$/KgV 26.51 +36.9% +26.8%
--------- -------- -------- --------
1. Based on provisional, unaudited figures. Bushveld's net
attributable interest of the above figures is approximately 74 per
cent. Production cash cost is based on vanadium produced.
2. mtV = metric tonnes of vanadium.
3. Excludes depreciation, royalties and selling, general &
administrative expenses and cost associated with Covid-19.
Production cash cost is based on vanadium produced. Production cash
cost (C1) measure does not have any standardized meaning prescribed
by IFRS and differs from measures determined in accordance with
IFRS. This measure is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. This
measure is not necessarily indicative of net earnings or cash flow
from operating activities as determined under IFRS.
-- Q1 2021 production of 395 mtV was 40 per cent below Q1 2020
(Q1 2020: 660 mtV) and 44 per cent below Q4 2020 (Q4 2020: 703 mtV)
due to lower production as a result of the planned 35-day
maintenance shutdown during the quarter.
- A planned 35-day annual maintenance shutdown was undertaken
during February and March 2021 to increase the reliability of
critical segments of the plant. All work was completed on time and
within budget.
-- Q1 2021 production cash cost of US$26.51/kgV was 37 per cent
higher than Q1 2020 (Q1 2020: US$19.36/kgV) and 27 per cent higher
than Q4 2020 (Q4 2020: US$20.90/kgV) due to lower volumes as a
result of the planned maintenance shutdown and a stronger ZAR:USD
exchange rate.
-- Vametco has not achieved consistent plant performance during
the quarter. The 35-day maintenance shutdown is expected to improve
the reliability and performance issues experienced in the past.
However, various workstreams remain underway to enhance and
maintain this stability, including maximizing safety and
house-keeping initiatives, identifying and solving process system
constraints and optimizing preventative maintenance programmes.
Management continues to monitor plant performance and keep
production guidance under review, however, it is currently
anticipated that Vametco production will be towards the lower end
of guidance of between 2,700 mtV and 2,850 mtV and the higher end
of its production cash cost (C1) of between US$20.0/kgV and
US$21.30/kgV (ZAR320/kgV and ZAR340/kg).
Projects
-- Technical studies associated with the Vametco Phase III
Pre-Feasibility Study ("PFS") are progressing and are expected to
conclude during Q2 2021. Details on the ramp-up profile and capital
expenditure will be provided once the PFS has been completed.
Metallurgical Engineering Technology and Construction are
conducting the studies.
Impact of unprotected industrial action
-- On 19 April 2021, the Company reported an unprotected
industrial action at its Vametco operation which temporarily
stopped production with effect from the morning of 16 April 2021.
The unprotected industrial action was resolved on 21 April 2021
when the Company and the Association of Mineworkers and
Construction Union announced that a resolution was reached, and
workers had started returning to work.
-- The plant has been safely ramping back up to sustainable
production levels, with an estimated loss of production of
approximately 65 mtV.
Vanchem
Table 2: Operational highlights for Vanchem
Description Q1 2021 Q1 2021 Q1 2021
Unit vs vs
Q1 2020 Q4 2020
Ore Milled Tonnes 47,305 +17.9% +81.1%
----------------------- ------------- -------- --------- ---------
Ore Grade (in Whole
Rock) % V(2) O(5) 1.38 -2.2% -1.5%
----------------------- ------------- -------- --------- ---------
Concentrate produced Tonnes 33,349 -4.4% +87.6%
----------------------- ------------- -------- --------- ---------
Concentrate Grade % V 0.94 +2.2% -0.9%
----------------------- ------------- -------- --------- ---------
Vametco concentrate
to kiln Tonnes 5,233 +100% -63.7%
----------------------- ------------- -------- --------- ---------
Recovery: Kiln to
Final Product % 81.1 +11.6% +3.8%
----------------------- ------------- -------- --------- ---------
Chemicals mtV(1) - -100% -100%
------------- -------- --------- ---------
Flake mtV (1) 132 +1.5% +223%
------------- -------- --------- ---------
FeV mtV (1) 45 -35.9% -69.7%
------------- -------- --------- ---------
Nitrovan(2) mtV(1) 116 +100% +100%
------------- -------- --------- ---------
Total production mtV (1) 293 +33.6% +12.2%
------------- -------- --------- ---------
Weighted average
production cash cost
(C1)(3) ZAR/kgV 459.1 +17.2% +14.3%
------------- -------- --------- ---------
Weighted average
production cash cost
(C1)(3) US$/kgV 30.7 +20.3% +19.6%
------------- -------- --------- ---------
1. mtV = metric tonnes of vanadium.
2. Includes 124.3 mtV of ammonium metavanadate (AMV) toll
treated at Vametco to produce Nitrovan which was sold through
Vametco's normal marketing channels.
3. Excludes depreciation and selling, general &
administrative expenses and cost associated with Covid-19.
Production cash cost is based on vanadium produced. Production cash
cost (C1) measure does not have any standardized meaning prescribed
by IFRS and differs from measures determined in accordance with
IFRS. This measure is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. This
measure is not necessarily indicative of net earnings or cash flow
from operating activities as determined under IFRS.
-- Production in Q1 2021 of 293 mtV was 34 per cent higher than
Q1 2020 (Q1 2020: 219 mtV) and 12 per cent higher than Q4 2020 (Q4
2020: 261 mtV) supported by improved operational stability.
- Produced 116 mtV of Nitrovan to support production at Vametco
during the maintenance shutdown.
- Production numbers are provided at the time of reporting,
after which, based on customer demand, chemicals and flake may be
further processed to the required finished product, which will
result in production and cost adjustments in line with the demand
profiles of the various products.
-- The weighted average production cash cost (C1) for the
quarter was US$30.70/kgV, 20 per cent higher than Q4 2020 (Q4 2020:
US$25.70/kgV), mainly attributable to working capital movements
arising from post year end audit adjustments, higher raw materials
and maintenance costs, as well as a stronger ZAR:USD exchange
rate.
-- Due to heightened risks associated with the ramp-up of the
first phase refurbishment, production is now expected towards the
lower end of guidance of between 1,400 mtV and 1,500 mtV and the
higher end of its production cash cost (C1) of between US$26.20/kgV
and US$26.70/kgV (ZAR419/kgV and ZAR427/kg).
-- Vanchem continues to utilise ore obtained at acquisition as
feedstock to the plant. Vanchem has a strategy of sourcing
feedstock ahead of the Mokopane Mine becoming its primary supplier
as follows:
- Sourcing either ore or concentrate from Vametco; and/or
- Procuring ore from third parties on an ongoing basis, the process of which has commenced.
Refurbishment programme
-- Phase one of the refurbishment programme continues and is on
track.
- The extension of the Waste Disposal Facility is still on track
for completion in Q2 2021. Studies, together with some basic design
work for the electrical infrastructure upgrade project, are
expected to be completed in Q3 2021.
- The kiln-3 refurbishment project commenced in Q1 2021 and is
expected to be completed in Q4 2021.
Bushveld Electrolyte Company
-- The development of the 200MWh electrolyte manufacturing plant
is progressing according to plan. The remaining environmental
permits and safety risk assessments were successfully applied for
and conducted respectively during Q1 2021.
-- The procurement phase of the Bushveld Electrolyte Plant has
commenced with the ordering of major long lead items. The signing
of the lease agreement with the Industrial Development Zone in East
London and ground-breaking for the construction of the property is
due to occur during Q2 2021, while the installation of major
equipment is planned for during Q3 2021. Commissioning of the plant
is expected in H2 2022.
-- Including the ZAR36 million spent to date (approximately
US$2.1 million), capital expenditure for the construction of the
electrolyte plant has been revised to ZAR217 million (approximately
US$13.6 million), originally US$10 million.
-- Bushveld's capital expenditure investment commitment for
plant construction has been amended to ZAR81 million (approximately
US$5.1 million) through 2024. The remaining balance of ZAR136
million (approximately US$8.5 million) will be funded through
equity and debt instruments in terms of the agreement signed
between Bushveld Energy and its partner, the Industrial Development
Corporation of South Africa.
-- As the project progresses into procurement and construction,
Bushveld will transfer its interest in the electrolyte
manufacturing plant company, Bushveld Electrolyte Company, to its
vanadium production operations, alongside Vametco and Vanchem.
S
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 / Charlie
Bouverat
Grant Baker / Richard Parlons
+44 (0) 20 7418
Peel Hunt Limited Joint Broker 8900
Ross Allister / Alexander
Allen
Tavistock Financial PR
Charles Vivian / Gareth Tredway
/ +44 (0) 207 920
Edward Lee 3150
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, vertically integrated primary
vanadium producer. It is one of only three operating primary
vanadium producers, owning 2 of the world's 4 operating primary
vanadium processing facilities. The Company produced more than
3,600 metric tonnes of Vanadium in 2020. The Company is funded to
grow its production to more than 6,800 mtVp.a. by 2025 (almost
double the achieved production in 2020), and could, subject to
funding, increase its production to more to 8,400 mtVp.a. over the
same period.
Bushveld Minerals owns a diversified vanadium product portfolio
serving the needs of the steel, energy and chemical sectors.
Bushveld Minerals participates in the entire vanadium value chain
through its two main pillars: Bushveld Vanadium, which mines and
processes vanadium; and Bushveld Energy, an energy storage
solutions provider. 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.
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 , 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.
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.
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