TIDMBMN
RNS Number : 6299Z
Bushveld Minerals Limited
26 January 2022
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.
26 January 2022
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Q4 and Full Year 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 fourth quarter and 12 months
ending 31 December 2021 ("Q4 2021" and "12M 2021").
Key Highlights
-- Q4 2021 Total Injury Frequency Rate ("TIFR") of 8.57, an
improvement of 1.9 per cent on Q3 2021 (Q3 2021: 8.74).
-- Achieved Group production for the 12M 2021 of 3,592 mtV , at
the upper end of 2021 guidance of between 3,400mtV and 3,600mtV.
Production was marginally lower than 12M 2020 (12M 2020: 3,631
mtV(1) ).
- H2 2021 Group production of 2,018 mtV was 28.2 per cent higher
than H1 2021 (H1 2021: 1,574 mtV), on the back of the operational
improvements implemented after the production target rebasing in H1
2021.
-- Vametco production cash cost (C1) for the 12M 2021 of
US$24.0/kgV, in line with guidance of between US$23.7/kgV and
US$24.2/kgV.
-- Vanchem production cash cost (C1) for the 12M 2021 of
US$30.6/kgV, in line with guidance of between US$30.3/kgV and
US$31.1/kgV.
-- 12M 2021 Group Sales of 3,314 mtV (compared to production of
3,592 mtV), impacted by challenges in international logistics
channels arising from COVID-19, the unrest in South Africa and
disruptions at local ports in July and August. Consequently, the
Company was unable to ship some of the product produced during
2021, resulting in a build of finished products inventory of 278
mtV.
-- Unaudited cash and cash equivalents as at 31 December 2021 of
US$15 million (30 September 2021 : US$25 million). The cash outflow
includes amortising circa US$1.4 million of the Nedbank Revolving
Credit Facility, retirement of Duferco convertible of US$2.5
million and final payment of deferred consideration for Vanchem of
US$2.2 million.
1. 12M 2020 production of 3,361 mtV is made up of Vametco
production of 2,654 mtV (includes 15 mtV sold to Vanchem) and
Vanchem production of 990 mtV (includes 13 mtV from Vametco).
During consolidation of group figures, 13 mtV of AMV produced from
Vametco is eliminated.
2022 Guidance and Capital Expenditure
-- Group production of between 4,200 mtV and 4,400 mtV in 2022,
with volumes weighted towards the second half due to ramp up, on
commissioning Kiln 3 at Vanchem.
- On track to commission Kiln 3 in Q2 2022, which is expected to
increase Vanchem's annual production from 1,100 mtV to an annual
run rate of 2,600 mtV by the end of 2022.
-- Vametco's production guidance of between 2,450 mtV and 2,550
mtV, and production cash cost (C1) of between US$22.7/kgV and
US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV).
-- Vanchem's production guidance of between 1,750 mtV and 1,850
mtV, and production cash cost (C1) of between US$27.7/kgV and
US$28.4/kgV (ZAR422.8/kgV and ZAR433.5/kgV).
Group Capital Expenditure
-- Capital expenditure expected for 2022 of approximately ZAR260
million (circa US$17 million) (2021: US$29 million, including
US$10.5 million investment into Enerox Holdings Limited), with most
of the cost being Rand-denominated:
- Vametco ZAR78 million (circa US$5.1 million);
- Vanchem ZAR127 million (circa US$8.3 million);
- Mokopane ZAR3 million (circa US$0.2 million).
-- Bushveld Electrolyte Company ("BELCO") ZAR37 million (circa
US$2.4 million)
-- Bushveld Energy ZAR10 million (circa US$0.7 million)
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"I am pleased to report another solid set of quarterly operating
results, this time for the final quarter of 2021. Our focus on
stable, achievable production levels on the back of the operational
improvements and enhanced safety helped us reach the upper end of
the full year revised guidance and meet the unit cost guidance,
pursuant to the rebasing in H1 2021.
"We continue to invest in sustaining and growth capital to
maintain the stable production base we have worked hard to achieve
from the existing operations and provide the platform to support
the volume increase in 2022.
"We look forward to the year ahead on the back of the strong
foundation we have set and the production growth mostly
attributable to the Kiln 3 commissioning in 2022. Production growth
is key to unit cost reduction and margin expansion, as reflected in
the guidance for 2022.
"Demand for vanadium in the US, Europe and Rest of the world
remains buoyant and Ferrovanadium prices have strengthened and
currently trade at an average of approximately US$35/kgV across
markets."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo and
Finance Director, Tanya Chikanza will host a conference call at
10:30 am UK time (12:30 pm SAST) today to discuss the quarterly
update with analysts. Participants may join the call by
dialling:
Tel: United Kingdom: +44 (0) 330 336 9125; South Africa: +27 11 844 6136
Pin: 7302955
A replay of the conference call will be available on the
Company's website post the call.
Health and Safety
-- Q4 2021 TIFR of 8.57, an improvement of 1.9 per cent on Q3
2021 of 8.74, as a result of integrating safety into all work
through a structured planning process.
-- Whilst there was an increase in the number of COVID19 cases
during the reporting period compared to Q4 2020 due to the
transmissibility of the Omicron variant, all affected employees
have recovered. Employees are encouraged to continue adhering to
the health and safety protocols.
Bushveld Vanadium
Q4 2021 12M 2021 Q4 2021
12M vs vs vs
Group Unit Q4 2021 2021 Q4 2020 Q4 2020 12M 2020 Q3 2021
Production mtV(1) 962 3,592 951 1.1% -1.1% -8.9%
-------- -------- ------ -------- --------- ---------- ---------
Sales mtV(1) 880 3,314 1,254 -29.8% -13.7%(2) 6.5%
-------- -------- ------ -------- --------- ---------- ---------
1. mtV = metric tonnes of vanadium.
2. 12M 2021 Group Sales of 3,314 mtV were 13.7 per cent lower
than 12M 2020 (12M 2020 3,842 mtV), impacted by not being able to
ship some of the product we produced during the second half of
2021, resulting in a build-up of inventory.
Vametco
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Q4 2021 12M 2021 Q4 2021
vs vs vs
Description Unit Q4 2021 12M 2021 Q4 2020 Q4 2020 12M 2020 Q3 2021
Ore mined Tonnes 347,439 1,219,163 284,740 22.0 % - 1.5 % -4.6 %
-------- -------- ---------- ------- -------- --------- --------
- 29.7
Total mined Tonnes 630,475 2,993,701 623,362 1.1 % 32.1 % %
-------- -------- ---------- ------- -------- --------- --------
Ore grade (in % V(2)
whole rock) O(5) 0.87 0.77 0.55 58.0% 26% 6.0%
-------- -------- ---------- ------- -------- --------- --------
Concentrate produced Tonnes 105,753 387,801 101,474 4.2% -0.6% -7.0%
-------- -------- ---------- ------- -------- --------- --------
Concentrate grade % V 1.08 1.06 1.03 4.9% 2.9% 0.9%
-------- -------- ---------- ------- -------- --------- --------
Recovery from
Kiln to MVO % 72.7 72.2 71.0 2.4% 1.3 % -3.5%
-------- -------- ---------- ------- -------- --------- --------
Production (Nitrovan,
FeV) mtV(2) 700 2,453 703 -0.4% -7.5% -8.4%
-------- -------- ---------- ------- -------- --------- --------
Production cash
cost (C1) (3) ZAR/KgV 353 354 328 7.6% 17.6% 8.2%
-------- -------- ---------- ------- -------- --------- --------
Production cash
cost (C1) (3) US$/KgV 22.9 24.0 21.0 9.0% 31.1% 2.7%
-------- -------- ---------- ------- -------- --------- --------
Foreign exchange
rate ZAR: USD 15.4 14.8 15.6 -1.3% -10.2% 5.5%
-------- -------- ---------- ------- -------- --------- --------
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.
-- Q4 2021 production of 700 mtV was in line with Q4 2020
production (Q4 2020: 703 mtV).
-- 12M 2021 production of 2,453 mtV was eight per cent lower
than 12M 2020 (12M 2020: 2,654 mtV), due to lower production in H1
2021, pursuant to the production rebasing in H1 2021.
-- Q4 2021 production cash cost (C1) of US$22.9/kgV was nine per
cent higher than Q4 2020 (Q4 2020: US$21.0/kgV), as a result of
increased maintenance and contract mining costs.
-- 12M 2021 production cash cost (C1) of US$24.0/kgV was 31 per
cent higher relative to 12M 2020 (12M 2020: US$18.3/kgV), impacted
by the stronger ZAR:USD exchange rate, 12M 2021 production cash
cost (C1) in local currency of ZAR354.0/kgV was 18 per cent higher
relative to 12M 2020 (12M 2020: ZAR302/kgV).due to production
rebasing which led to increased expenditure on costs such as
planned maintenance, which will unwind as production increases over
time .
Vametco 2022 production guidance and capital expenditure
-- Production guidance of between 2,450 mtV and 2,550 mtV, an
increase of 4 per cent at the upper end relative to 2021
production, demonstrating the continued operational stability at
Vametco.
-- Production cash cost (C1) guidance of between US$22.7/kgV and
US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV
-- Total capital expenditure expected for 2022 of ZAR78 million
(circa US$5.1 million), with most of the cost being
Rand-denominated includes :
- ZAR61.0 million (circa US$3.8 million) of sustaining capital;
- ZAR13.0 million (circa US$0.9 million) of environmental capital.
Vanchem
Table 2: Operational highlights for Vanchem(1)
Q4 2021 12M 2021 Q4 2021
vs vs vs
Description Unit Q4 2021 12M 2021 Q4 2020 Q4 2020 12M 2020 Q3 2021
Ore milled Tonnes 45,297 186,552 26,125 73.4% 25.4% -14.9%
------- -------- ---------- --------- -------- --------- --------
Ore Grade (in Whole % V(2)
Rock) O(5) 1.53 1.43 1.40 9.6% 1.5% 5.8%
------- -------- ---------- --------- -------- --------- --------
Milled ore to kiln Tonnes 35,551 1,133,808 18,739 89.7% 8.6% -3.0%
------- -------- ---------- --------- -------- --------- --------
Milled Ore Grade % V 0.90 0.93 0. 95 -5.3% -2.1% -2.9%
------- -------- ---------- --------- -------- --------- --------
Vametco concentrate
to kiln Tonnes 2,632 19,116 14,431 -81.8% -12.1% -52.2%
------- -------- ---------- --------- -------- --------- --------
Concentrate Grade % V 1.06 1.06 1.06 0.3% -0.3% 1.0%
------- -------- ---------- --------- -------- --------- --------
Recovery: Kiln to
Final Product % 73.4 79.8 82.3 -10.8% 8.3% -2.9%
------- -------- ---------- --------- -------- --------- --------
Chemicals mtV(2) 9 187 72 -88.5% 36.0% -91.0%
------- -------- ---------- --------- -------- --------- --------
Flake mtV(2) 26 284 41 -36.3% -32.1% -55.7%
------- -------- ---------- --------- -------- --------- --------
FeV mtV(2) 204 509 148 37.9% 17.3% 45.6%
------- -------- ---------- --------- -------- --------- --------
Nitrovan mtV(2) 23 158 - 100% 100.0% 100%
------- -------- ---------- --------- -------- --------- --------
Total production mtV(2) 262 1,138 261 0.3% 15.0% -9.9%
------- -------- ---------- --------- -------- --------- --------
Weighted average production
cash cost (C1)(3) ZAR/kgV 567 453 402 41.2% 22.6% 42.3%
------- -------- ---------- --------- -------- --------- --------
Weighted average production
cash cost (C1)(3) US$/kgV 36.8 30.6 25.7 43.1% 36.5% 34.7%
------- -------- ---------- --------- -------- --------- --------
Foreign exchange rate ZAR:USD 15.4 14. 8 15.6 -1.3% - 10.2% 5.5%
------- -------- ---------- --------- -------- --------- --------
1. Based on provisional, unaudited figures.
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.
-- Q4 2021 production of 262 mtV was in line with Q4 2020 of 261
mtV and 10 per cent lower than Q3 2021 (Q3 2021 291 mtV), due to
challenges arising from the introduction of the ore from the Upper
Seam project. Higher than expected clay and silica levels resulted
in kiln ring formation and resulted in unplanned downtime to remove
same; these issues are being resolved, as detailed in the section
on the Upper Seam Project below.
-- 12M 2021 production of 1,138 mtV, in line with 2021 guidance
of between 1,100 mtV and 1,200 mtV, and 15 per cent higher than 12M
2020 production of 990 mtV due to Vanchem ramping up production in
2020 and running at capacity in 2021.
-- Q4 2021 production cash cost (C1) of US$36.8/kgV was 43 per
cent higher than Q4 2020 (Q4 2020: US$25.7/kgV), impacted by
challenges arising from the introduction of the ore from the Upper
Seam project. 12M 2021 production cash cost (C1) in local currency
of ZAR453/kgV, was 23 per cent higher than 12M 2020 (12M 2020:
ZAR369/kgV), and p roduction cash cost (C1) for 1 2M 2021 of
US$30.6/kgV was 37 per cent higher than 12M 2020 (12M 2020:
US$18.30/kgV), impacted by the stronger ZAR:USD exchange rate.
- The unit cost of production reflects the weighted average
across all various product categories. Unit costs vary across these
product categories. Nitrovan is produced at Vametco converting
Vanchem ammonium metavanadate on a toll treatment basis. Chemical
products, including specialist V(2) O(5) powder are produced at
significantly higher unit cost than that of V(2) O(5) flake and
FeV. These products however attract commensurate premiums to the
prevailing V(2) O(5) price. FeV has a higher unit cost than V(2)
O(5) flake due to conversion costs and yield effects.
- The proportion of FeV and chemical product sales in 2021 was
significantly greater than in 2020 which resulted in a commensurate
increase in average unit costs of production, including higher
packaging and logistics components thereof.
Vanchem 2022 production guidance and capital expenditure
-- P roduction guidance of between 1,750 mtV and 1,850 mtV.
- Production guidance includes expected production from Kiln 3
which is on track to commission in Q2 2022 to increase annual
production from 1,100 mtV to a run rate of 2,600 mtV by the end of
2022.
-- Production cash cost (C1) of between US$27.7/kgV and
US$28.4/kgV (ZAR422.8/kgV and ZAR433.5/kgV
- The reduction in cost is expected as production volumes
increase as kiln 3 comes online which is expected to be
commissioned in Q2 2022. The full production benefit of kiln 3 will
be realised in 2023.
- The unit cost at Vanchem will continue to be higher than at
Vametco as the product mix, including FeV and chemical products,
has a higher cost of production, and in turn attracts premium
pricing.
-- Total capital expenditure expected for 2022 of ZAR127 million
(circa US$8.3 million), with most of the cost being
Rand-denominated includes:
- ZAR38.0 million (circa US$2.5 million) of sustaining capital;
- ZAR13.0 million (circa US$0.9 million) of environmental capital and;
- ZAR69.0 million (circa US$4.3 million) of growth capital.
Growth Projects
The Feasibility and Pre-feasibility studies at Vametco and
Vanchem were completed in Q4 2021 and are currently under review,
which includes testing the economics of the various stages and
options to develop a well-structured growth journey that will
provide the best return on investment going forward. An
announcement will be made in due course, on completion of the
review and approval by the board.
The Upper Seam Project
The Upper Seam project was developed to supply ore to Vanchem
(magnetite in ore > 80 per cent, V(2) O(5) grade in magnetite
>1.65 per cent). The project consists of crushing, screening and
dry magnetic separation. The plant was commissioned in Q4 2021 with
the final installation of the dry magnetic separator in December
2021. During commissioning and ramp-up ore quality was at times
below requirements due to heavy rain and mining constraints, which
resulted in operational challenges in the Vanchem kiln. The project
team will continue to optimise the plant performance during ramp-up
to meet Vanchem ore specification requirements. In addition, the
Vanchem plant is being reconfigured to treat Upper Seam ore
efficiently.
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.
- We continue to prioritise operational stability at Vametco to
achieve a sustainable and consistent output of 2,800 mtVp.a.
- Vanchem's production run rate is expected to more than double
from 1,100 mtVp.a. to a run rate of 2,600 mtVp.a. by the end of
2022, supported by the commissioning of Kiln 3 and associated
downstream refurbishment. Kiln 3 is expected to be commissioned in
Q2 2022.
Vanadium market
-- Demand in the US, Europe and Rest of the world remains
buoyant.
-- Q4 2021 London Metal Bulletin FeV price averaged US$33/kgV,
14 per cent lower than Q3 2021 (US$38.2/kgV) and 32 per cent higher
than Q4 2020 (US$24.4/kgV).
-- The 2022 year to date average FeV price is approximately
US$35/kgV for London metal bulletin and CRU Ryan's Note, Asia
Metals is US$33/kgV as at 22 January 2022.
ENDS
Enquiries: info@bushveldminerals.com
+27 (0) 11 268
Bushveld Minerals Limited 6555
Fortune Mojapelo, Chief Executive
Officer
Andrew Mari, Investor Relations
Nominated Adviser +44 (0) 20 3470
SP Angel Corporate Finance LLP & Broker 0470
Richard Morrison / Charlie Bouverat
Grant Baker / Richard Parlons
Tavistock Financial PR
Gareth Tredway / Tara Vivian-Neal/ +44 (0) 207 920
Adam Baynes 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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