Bushveld Minerals Limited (LON:BMN) has finalised terms for the acquisition of the Vametco vanadium mine in South Africa announced three weeks ago.
The miner will pay vendor Evraz US$17.2mln in two tranches for a 78.8% stake in Strategic Minerals, the owner of the mine and the processing plant.
Vametco, which broke even at the operating level in 2015 on sales of R629 million (£30mln), has the mining right for vanadium at two licences in Brits, where it operates an open pit mine and vanadium processing plant.
The operation is adjacent to Bushveld's existing Brits vanadium project, which is a continuation of the mineralisation at the Vametco mine.
Ore reserves at Vametco are 27mln tonnes (JORC), sufficient for 24 years at current production levels at what Bushveld says are the highest in-magnetite vanadium pentoxide (V2O5) grades in the world, at 2.55% on average.
Resources overall are in excess of 135mln tonnes (Mt) at vanadium grades of 2.1%.
In 2015, Vametco produced 2,419 tonnes of vanadium but Bushveld sees scope to increase production from nameplate capacity 2,750t to 3,340t through targeted de-bottlenecking.
All–in-cash costs were US$17.33 per kg.
Fortune Mojapelo, Bushveld’s chief executive, said: "The acquisition price of US$17.2m is, we believe, attractive for a robust operating asset and is less than 10% of the replacement value.
Mojapelo said the phased structure would allow it to take advantage when vanadium prices improve.
He added that in addition to vanadium nitride for the steel industry, Vametco produces a vanadium oxide product more suited to vanadium batteries.
The first tranche will see Bushveld pay US$4.68mln cash, including the US$500,000 deposit, by 17 June for 23% of Strategic Minerals.
The remaining US$12.5mln is payable a year later for a further 55.8%.