Through the purchase of the stake held by Sojitz Noble Alloys, Bushveld has increased its interest in Strategic Minerals Corporation (SMC) to 100%.
SMC owns 75% of Vametco, so Bushveld’s stake in the vanadium group is also now 75% compared to 59.1% previously.
Bushveld will pay Sojitz US$20mln for its 21.2% share in SMC, which values the venture at US$94mln in total.
Shore Capital said the price Bushveld has paid looks good.
"Very simplistically, Bushveld’s c.£210m market cap would have implied a value for 100% of c.US$463m (ignoring cash and other assets and liabilities), or c.US$98m for Sojitz’s 21.22% interest.
"Seen in that light, Bushveld would appear to have scored a very good deal. The company’s corporate structure is simplified and exposure to Vametco’s cash generation is increased."
Traditionally used to strengthen steel, vanadium prices have soared recently on hopes batteries using the metal as an electrolyte can be a long-term option to store electricity.
In the past 12 months alone, the price of the metal has risen 200%.
Vametco is one of only three producing primary vanadium operations in the world and has 3% market share.
Fortune Mojapelo, Bushveld's chief executive, said: This acquisition is a significant achievement as it fulfils the company's undertaking to simplify its corporate structure in order to increase exposure to the underlying cash flows at Vametco.
"Vametco's strong cash generation capabilities are demonstrated by the Revenue and EBITDA generated in H1 2018 of R1.05bn (US$70mln) and R521mln (US$38mln) an increase of 139% and 429% respectively, compared to H1 2017."
Production at Vametco
Production at Vametco has been halted recently due to industrial action by AMCU members at the mine over claims for a payment related to a legacy employee share option scheme.
Bushveld says the workers were paid R20,000 each in May to settle the issue and the latest claim has no merit.
The company has been granted an order by South Africa’s labour court for all striking workers to return to work and all harassments and obstruction of access to the mine and plant to stop,
Bushveld added it remains committed to having an ESOPS (share option) structure for workers and has commenced constructive negotiations with national leadership of AMCU in this regard.
Mojapelo added: “While the ESOPS issue is a historical issue that pre-dates Bushveld Minerals' acquisition of Vametco, we are determined to resolve it through negotiations in a manner that is both respectful and mutually acceptable.”
Shares in Bushveld rose 18% to 22.5p.