Vanadium prices averaged US$81.20 per kilogram (kg) in 2018 – more than twice what it was a year earlier, as demand for the metal, which can be used in batteries to store energy, surged.
Vametco produced 2,560 metric tonnes – just over 2.5mln kg – of vanadium in 2018, slightly below what was produced in 2017 due to unplanned repair work at the refractory and cooler girth sections of the plant in the fourth quarter.
The higher prices more than offset the drop-off in production, though, as sales rose 143% to US$192.2mln (2017: US$79.2mln) while underlying earnings (EBITDA) climbed almost 350% to US$107.5mln (2017: US$23.9mln).
In a bid to improve its operational performance, Bushveld hired an external consultant to carry out a detailed review of the Vametco plant and it has already begun to act on some of the recommendations.
As a result, production should tick higher in 2019, and more detailed guidance will be given in the first quarter update in a couple of months’ time.
Vametco currently has a 142.4mln tonne resource, but results from a recently-completed 13-drill hole programme have provided “evidence of additional resources and reserves” and an updated resource estimate will be published later this quarter.
Performance to pick up in 2019
“The strong vanadium market ensured that Vametco generated healthy cash flows, even while its operational performance fell below expectations,” said chief executive Fortune Mojapelo.
“We are benefiting from the high vanadium prices, nevertheless, we are mindful of the imperative to drive Vametco towards operational excellence and realise its true potential.”
He added: “The transformation programme we have initiated at Vametco is designed to do just that and we are confident to see an improved production performance during 2019.”
Brits maiden resource estimate due in Q2
Elsewhere, at Bushveld’s Brits vanadium project, which is a strike extension of the Vametco mine, assay results from phase 1 of the exploration programme there have come back and are all above or in-line with management’s expectations.
Results of the phase 2 drill holes are set to be received in the coming weeks, and Bushveld hopes to publish a maiden mineral resource estimate in the second quarter.
“At the Brits deposit, the recent exploration results continue to prove the deposit as a future source of additional production tonnages,” added Mojapelo.
Bushveld shares fell 6.8% to 38p in early deals on Wednesday.