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Bushveld Minerals positioning itself within global vanadium market

The South African Bushveld-focused group has two anchor projects in the vanadium arena

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A dweller on the Bushveld - the firm has vanadium in its sights

Bushveld Minerals’ (LON:BMN) aim to position itself within the global vanadium market continues apace and its latest news concerned energy storage.

Subsidiary Bushveld Energy was launched in January this year to develop Vanadium Redox Flow Batteries (VRFB). It is separate to the group's own vanadium project and its planned acquisition of the Vametco vanadium mine in South Africa.

Alongside South Africa’s Industrial Development Corporation (IDC), the subsidiary has now closed tenders for market studies of such batteries and potential sites are being assessed for VRFB installations to demonstrate the technology.

Notably, the state funding institution has committed ZAR 14bn to support renewable energy projects in the past five years.

Lover of the Bushveld..

The South African Bushveld-focused group has two anchor projects in the vanadium arena, one of which is the  Mokopane vanadium project – a 300 million tonne outcropping resource where a prefeasibility study is currently underway.

The project was boosted in late September when its environmental impact assessment was green-lighted - part of the mining permit application (MRA) process, which was triggered almost two years ago.

The next step will be approval of the company's mine works programme and social and labour plan.

In April, Bushveld agreed a deal to extend its vanadium interests, to buy the  Vametco vanadium mine next door to its own deposit at Brits in South Africa.

Brits hosts the continued strike of the mineralisation from Evraz’s Vametco and boasts vanadium grades in excess of 2% vanadium pent oxide.

Bushveld chief executive Fortune Mojapelo described the Vametco orebody is also “one of the richest you find anywhere and you’d be hard pushed to find a better investment than this in the vanadium space”.

Demand for vanadium will grow, he believes, underpinned by its use as hardening agent in high quality steels and its potential in the energy storage sector.

In July, an amendment to the original terms were set out. Bushveld was to 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, but that was reduced to US$16.4mln.

The whole deal is now scheduled to  complete on or before March 31 next year which is around three months earlier than the previous long stop date of  July 15, 2017.

Bushveld will have 45% of BVL, a special purpose vehicle established to act as a holding company for Strategic Minerals, while Yellow Dragon will hold the other 55%, but Bushveld has said it remains focused on completing the 78.8% interest acquisition in SMC as originally planned.

Plenty of vanadium in reserve

Ore reserves at Vametco are 27mln tonnes (JORC), sufficient for 24 years at current production levels with 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.

Significantly, bearing in mind recent news, in addition to vanadium nitride for the steel industry, Vametco produces a vanadium oxide product more suited to vanadium batteries.

Brownfield a fraction of cost of new site

Buying a brownfield site makes more  economic sense for a company of Bushveld’s size, Mojapelo has told Proactive Investors.

“Buying a brownfield site accelerates the path to production by several years and significantly reduces the capex requirement.”

While maintenance cost may be higher for an older plant it still won’t be anywhere the ten times extra a new plant would cost, he says.

Strings to the bow

Vanadium may be the current focus, but Bushveld has other strings to its bow including iron ore, titanium, tin and coal.

In no particular order, Bushveld has the P-Q iron and tin project in South Africa with a JORC compliant 939Mt  VTM deposit.

As well, the tin project at Mokopane has an estimated 18.500t and there is more potential tin at Marble Hall.

In Madagascar, Bushveld’s acquisition of Lemur Resources brought with it the Imaloto coal deposit.

Quick facts: Bushveld Minerals Ltd

Price: 18.6149 GBX

LSE:BMN
Market: LSE
Market Cap: £217.46 m
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