TIDMBMN
RNS Number : 9458F
Bushveld Minerals Limited
21 July 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.
21 July 2021
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Q2 2021 and H1 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, is pleased to
provide an operational update for the three months and six months
ending 30 June 2021 ("Q2 2021 and H1 2021").
Key Highlights
Bushveld Vanadium
-- Group production in Q2 2021 of 886 mtV (Q1 2021: 688 mtV),
underpinned by improved operational stability at Vametco in the
period.
- Vametco produced 278 mtV and 261 mtV for the months of May and
June respectively, as a result of improved operational stability
and performance following the 35-day maintenance shutdown in Q1
2021.
- Vametco's monthly production run-rate forecast for the rest of
the year maintained at approximately 240 mtV as a result of planned
maintenance strategy to enable operational stability.
- Vanchem produced 293 mtV in Q2 2021 in line with Q1 2021 (Q1 2021: 293 mtV).
- Vanchem is expected to maintain its current monthly production
levels of approximately between 90 mtV to 100 mtV, through the
support of feedstock from the upper seam at Vametco.
-- Group sales in Q2 2021 of 820 mtV(1) (Q1 2021: 788 mtV),
supported by higher production volumes at Vametco.
-- On track to meet 2021 Group production guidance of between 3,400 mtV and 3,600 mtV.
-- Recent unrest in South Africa, during July 2021, has not
impacted production, but the Group has experienced logistics delays
in getting final product to the port.
-- Logistics delays have now been resolved although general
international seaborne logistics pressures due to the COVID-19
pandemic remain. We continue to monitor the international logistics
situation closely. The Group expects to maintain export volumes
during Q3 2021.
-- Q2 2021 Total Injury Frequency Rate ("TIFR") of 1.74, an
improvement of 95 per cent relative to Q2 2020 (Q2 2020: 36.34), as
a result of improved risk assessment and mitigation measures.
1: Reported as final sales to customers.
Vanadium market
-- Q2 2021 London Metal Bulletin ("LMB") Ferrovanadium price
averaged US$36.0/kgV, 17 per cent and 44 per cent higher than Q1
2021 (US$30.9/kgV) and Q2 2020 (US$25.0/kgV) respectively. The LMB
Ferrovanadium price was US$40.13/kgV as at 16 July 2021.
-- The vanadium market is expected to strengthen for the
remainder of the year, according to Roskill, driven by higher
demand as well as tighter supply, as Chinese steel slag producers
are operating at close to capacity. Prices are expected to remain
strong in 2021 and gain further momentum in 2022 and 2023, given
the predicted market tightness. The Company expects the market
fundamentals to continue to support prices going forward.
-- Iron ore prices rose to their highest levels in the last five
years, exceeding the US$200/t level in May 2021, implying
continuing disincentive for vanadium co-producers to blend local
vanadium bearing magnetite feedstock with seaborne hematite ores.
Prices are anticipated to decline as the Chinese government
actively tries to control raw material prices.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"We are pleased to report a significant increase in quarterly
production in Q2 2021, albeit from a low production base in Q1
2021. More than the production volume improvements, it is positive
to see improved operational stability at Vametco, as a result of
not only the extended 35-day maintenance shutdown, but also of
several operational improvements, which include a greater
discipline in our proactive maintenance practices, process control
from the technical team and people development strategy. While
Vametco's improvements are welcome, we are retaining our monthly
production target of 240 mtV, allowing for any planned maintenance
to be executed as part of the production stability plan. We remain
on track to meet the annual Group production guidance of between
3,400 mtV and 3,600 mtV.
"In addition, we intend to complete the now expanded
prefeasibility studies ("PFS") at Vametco together with the
technical studies currently under way at Vanchem in Q4 2021. These
studies will determine the optimal path to increase production from
Vametco and Vanchem in the most capital efficient manner.
" We are pleased to see strong demand sustained by the increase
in Chinese steel production, while momentum continues to build in
the application of Vanadium Redox Flow Batteries in the growing
energy storage sector. Consequently, we expect the market
fundamentals to continue to support the vanadium price going
forward.
"In spite of our rigorous COVID-19 mitigation measures, the
third wave of the pandemic in South Africa has seen a significant
increase in infection rates among our employees with 54 active
cases currently. This has not had a material impact on our
operations, and we hope each employee achieves a speedy recovery.
Moreover, we are pleased to have commenced the vaccination
programme for both the Vametco and Vanchem employees, including
Impala Platinum kindly agreeing to collaborate on the use of their
vaccination centre for our employees at Vametco.
The recent unrest in South Africa has not impacted production.
The Group has experienced logistics delays in getting the final
product to the port, these delays have now been resolved. We are
monitoring the international logistics situation closely, given the
pre-existing COVID-19 related delays but expect the Group to
maintain export volumes during Q3 2021."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo,
Finance Director, Tanya Chikanza and Francois Naude, Director of
Operations; 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: 9724471
A replay of the conference call will be available on the
Company's website post the call.
Bushveld Vanadium
H1 2021 Q2 2021 Q2 2021
Group Unit Q2 2021 H1 2021 vs vs vs
H1 2020 Q1 2021 Q2 2020
Production mtV(1) 886 1,574 -5.2% 28.8% 13.4%
-------- ---------- ---------- --------- --------- ---------
Sales mtV(1) 820 1,608 -8.9% 4.1% 19.7%
-------- ---------- ---------- --------- --------- ---------
1. mtV = metric tonnes of vanadium.
Vametco
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Description Unit Q2 2021 H1 2021 H1 2021 Q2 2021 Q2 2021
vs vs vs Q2 2020
H1 2020 Q1 2021
--------
Ore mined Tonnes 192,868 507,440 -0.9% -38.7% -23.1%
--------- -------- ---------- -------- -------- -----------
Total mined(2) Tonnes 848,858 1,465,970 92.8% 37.6% 113.5%
--------- -------- ---------- -------- -------- -----------
Ore grade (in % V(2)
Whole Rock) O(5) 0.75 0.69 0.0% 21.0% 0.0%
--------- -------- ---------- -------- -------- -----------
Concentrate produced Tonnes 90,907 168,365 -12.1% 17.4% -13.3%
--------- -------- ---------- -------- -------- -----------
Concentrate grade % V 1.07 1.06 2.9% 2.9% 4.9%
--------- -------- ---------- -------- -------- -----------
Recovery from
Kiln to MVO(3) % 66.3 70.3 -47.0% -10.8% -64.9%
--------- -------- ---------- -------- -------- -----------
Production (Nitrovan,
FeV) mtV(4) 593 988 -19.4% 50.3% 4.9%
--------- -------- ---------- -------- -------- -----------
Production cash
cost (C1) (5) ZAR/KgV 364 377 32.7% -8.1% 35.5%
--------- -------- ---------- -------- -------- -----------
Production cash
cost (C1) (5) US$/KgV 25.8 25.9 51.5% -2.6% 72.0%
--------- -------- ---------- -------- -------- -----------
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. Repairs to the primary crusher civils enabled mining
operations to concentrate on waste mining, thereby increasing the
stripping ratio. This increase is a temporary departure from the
steady state figure.
3. Recoveries impacted by April slower start-up.
4. mtV = metric tonnes of vanadium.
5. 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.
-- Q2 2021 production of 593 mtV was 50 per cent higher than Q1
2021 (Q1 2021: 395 mtV), underpinned by improved operational
stability in Q2 2021 following the completion of the 35-day
maintenance shutdown in Q1 2021, partially offset by the
unprotected industrial action in April 2021.
-- H1 2021 production of 988 mtV, was 19 per cent lower than H1
2020 (H1 2020: 1,226 mtV), due to poor plant performance in Q1 2021
and the unprotected industrial action in April 2021 , subsequently
followed by improved performance and stability in Q2 2021.
- Since the successful completion of the shutdown, operational
stability and performance have improved owing to enhanced equipment
reliability and proactive maintenance programmes. This resulted in
May and June production of 278 mtV and 261 mtV respectively, with
notable improvements in the stability of the Kiln on-line time and
recoveries at the leach section above 85 per cent for the past 60
days.
-- Q2 2021 production cash cost (C1) of US$25.8/kgV, was three
per cent lower than Q1 2021 (Q1 2021: US$26.5/kgV), as a result of
higher volumes in Q2 2021.
-- H1 2021 production cash cost (C1) of US$25.9/kgV, a 52 per
cent increase relative to H1 2020 (H1 2020 : US$17.1/kgV), due to
lower production volumes and a stronger ZAR:USD exchange rate.
-- 2021 production guidance maintained to between 2,300 mtV and
2,400 mtV, and production cash cost (C1) of between US$23.70/kgV
and US$24.20/kgV (ZAR339/kgV and ZAR345/kgV).
- M onthly production run rate forecast for the rest of the year
maintained at approximately 240 mtV as a result of planned
maintenance strategy to enable operational stability.
Growth Projects
Vametco Phase III PFS
The scope of work of the PFS for Vametco has been extended to
include upgrading the concentrate section to a Semi-Autogenous
Grinding mill and life of mine of Open Pit with higher production
to supply both Vametco and Vanchem, making Vametco the single ore
supply for both operations for the medium-term. Details on the
ramp-up profile and capital expenditure plans will be provided once
the PFS has been completed, which is expected in Q4 2021.
The Upper Seam Project
The Upper Seam portion of the Vametco resource ("The Upper Seam
Project") has been earmarked as a near-term source of feedstock for
Vanchem to replace the ore stockpile acquired with the plant which
is expected to deplete at the end of Q3 2021. The source of the ore
will be the Upper Seam reserve and stockpile, which has a V(2) O(5)
grade in magnetite of 1.76 per cent and magnetite content of 65 per
cent in ore, superior to previous third-party suppliers. This will
be upgraded to 80-85 per cent magnetite in ore with a mass yield of
80 per cent, using the temporary ore processing unit. With a
reserve base of approximately 0.9 Mt of ore and resource base of 16
Mt , the Upper Seam Project will supply Vanchem with a significant
proportion of its ore requirement for 18 months and has the ability
to supply 34 kt of ore per month commencing at the end of Q3 2021,
removing the necessity of relying exclusively on third-party
sources of ore over this period. In addition, the Company is
investigating the potential to extend this supply beyond the
initial 18 months.
Vanchem
Table 2: Operational highlights for Vanchem
Description Unit Q2 2021 H1 2021 H1 2021 Q2 2021 Q2 2021
vs vs vs
H1 2020 Q1 2021 Q2 2020
Ore Milled Tonnes 40 708 88,013 -7.0% -13.9% 6.8%
---------------------- --------- -------- -------- --------- --------- ---------
Ore Grade (in % V(2)
Whole Rock) O(5) 1.36 1.37 -3.5% -1.4% -3.5%
---------------------- --------- -------- -------- --------- --------- ---------
Concentrate produced Tonnes 26 300 59 649 -27.7% -21.1% -20.7%
---------------------- --------- -------- -------- --------- --------- ---------
Concentrate Grade % V 0.95 0.94 1.1% 1.1% 0.0%
---------------------- --------- -------- -------- --------- --------- ---------
Vametco concentrate
to kiln Tonnes 5,750 10 983 100% 9.9% 100.0%
---------------------- --------- -------- -------- --------- --------- ---------
Recovery: Kiln
to Final Product
(1) % 89.9 85.3 13.3% 11.1% 20.0%
---------------------- --------- -------- -------- --------- --------- ---------
Chemicals mtV(2) 87.2 87.1 27.2% 100.0% 76.2%
--------- -------- -------- --------- --------- ---------
Flake mtV (2) 66.2 198.9 -0.5% -50.0% -4.3%
--------- -------- -------- --------- --------- ---------
FeV mtV (2) 120.2 165.1 -0.9% 167.7% 24.4%
--------- -------- -------- --------- --------- ---------
Nitrovan mtV(2) 18.8 134.7 100% -83.8% 100.0%
--------- -------- -------- --------- --------- ---------
Total production mtV (2) 293 586 34.7% -0.3% 35.8%
--------- -------- -------- --------- --------- ---------
Weighted average
production cash
cost (C1)(3) ZAR/kgV 437 429 27.6% -4.9% 56.6%
--------- -------- -------- --------- --------- ---------
Weighted average
production cash
cost (C1)(3) US$/kgV 30.9 29.5 46.0% 0.7% 99.4%
--------- -------- -------- --------- --------- ---------
1. Recoveries were positively impacted as a result of the
positive restatement ore stockpile levels.
2. mtV = metric tonnes of vanadium.
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.
-- Q2 2021 production of 293 mtV was in line with Q1 2021 (Q1
2021: 293 mtV), anchored to continued operational stability. H1
2021 production of 586 mtV was 35 per cent higher than H1 2020
production (H1 2020: 435 mtV), as a result of the temporary
suspension of operations in Q2 2020 due to the 21-day COVID-19
nationwide shutdown in South Africa.
- 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.
-- Q2 2021 production cash cost (C1) of US$30.9/kgV, was 0.7 per
cent higher than Q1 2021 (Q1 2021 : US$30.7/kgV), due to a
marginally stronger ZAR: USD exchange rate . H1 2021 production
cash cost (C1) of US$29.5/kgV, a 46 per cent increase relative to
H1 2020 (H1 2020: US$20.2/kgV), due to the higher cost of raw
material, increased maintenance and staff costs as well stronger
ZAR: USD exchange rate.
-- 2021 production guidance maintained to between 1,100 mtV and
1,200 mtV, production cash cost (C1) of between US$30.3/kgV and
US$31.1/kgV (ZAR434/kgV and ZAR444/kgV) .
-- At Vanchem, the ore stockpile acquired with the plant, is
expected to deplete at the end of Q3 2021. Vanchem's immediate
strategy is to source feedstock either from the Upper Seam at
Vametco, which timing coincides with depletion of the existing ore,
or to procure ore from third-parties when prices are more
competitive when compared to the Upper Seam costs or have other
operational and/or blending advantages. We have to date been
successful in procuring quantities of third-party ore and
additional opportunities are also being considered.
Vanchem Refurbishment programme - Phase I
-- Vanchem's Kiln 3 has similar properties to that of Vametco
Kiln. It has a length of 90 metres and 4.0m in diameter. In
addition, Kiln 3 covers 50 per cent of Vanchem's installed
capacity, with Kiln 2 and Kiln 1 at 25 per cent respectively. More
details of the ramp-up profile and capital expenditure plans will
be provided once the technical studies are completed in Q4
2021.
-- Vanchem's production is expected to increase from 1,100 mtV
to a production run rate of 2,600 mtVp.a. by the end of 2022,
supported by the commissioning of Kiln 3 and associated downstream
expansions.
Bushveld Vanadium production profile
-- Bushveld Vanadium is targeting to materially grow its
vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by
the end of 2022.
- Priority at Vametco is to achieve a sustainable and consistent output of 2,800 mtVp.a.
- By bringing Kiln 3 onstream Vanchem will achieve a production run rate of 2,600 mtVp.a.
-- Pre-feasibility studies are in progress at both Vametco and
Vanchem to determine the optimal path to increase production to a
steady state production run rate of between 6,400 mtVp.a. and 6,800
mtVp.a. in the medium-term and to a steady state production run
rate of 8,400 mtVp.a. in the long-term.
COVID-19 Response
-- In June 2021, the South African government, announced that
the country had entered the third wave of COVID-19 and implemented
an adjusted level 4 with additional restrictions. Bushveld Minerals
has responded by proactively implementing measures over and above
existing protocols including amongst others:
- Reduced staff on site by splitting day staff, workshops, and foreman into shifts.
- Prevent physical contact between shifts through scattered lunch breaks.
- Transferred all meetings to virtual platforms.
- Vametco also provides isolation facilities to minimise the
potential of exposure to staff family members.
-- The Group has recorded 54 active COVID-19 cases among
employees. Whilst production remains unaffected additional
protocols have been introduced to minimise infections and potential
exposures. We continue to monitor exposure and infection cases
daily.
-- We commenced the vaccination programme, during the week of 12
July 2021, for employees and contractors of over 35 and 50 age
groups.
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 / Charlie
Bouverat
Grant Baker / Richard Parlons
+44 (0) 20 7418
Peel Hunt Limited Joint Broker 8900
Ross Allister / Alexander
Allen
Tavistock Financial PR
Gareth Tredway / Annabel +44 (0) 207 920
de Morgan / Tara Vivian-Neal 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. In 2020, the Company produced more
than 3,600 mtV, representing approximately three per cent of the
global vanadium market. With a diversified vanadium product
portfolio serving the needs of the steel, energy and chemical
sectors, the Company participates in the entire vanadium value
chain through its two main pillars: Bushveld Vanadium, which mines
and processes vanadium ore; and Bushveld Energy, an energy storage
solutions provider. Bushveld Vanadium is targeting to materially
grow its vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a by
the end of 2022, from projects currently being implemented. Beyond
that, pre-feasibility studies are in progress to determine the
optimal path to increase production even further to a steady state
production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in
the medium-term and to a steady state production run rate of 8,400
mtVp.a in the long term.
Bushveld Energy is focused on developing and promoting the role
of vanadium in the growing global energy storage market through the
advancement of vanadium-based energy storage systems, specifically
Vanadium Redox Flow Batteries ("VRFBs").
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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END
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