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Bushveld Minerals plans for long-term vanadium presence

Snapshot

Bushveld is hoping to increase vanadium production significantly following completion of Vanchem deal

vanadium

Quick facts: Bushveld Minerals Ltd

Price: 13.375 GBX

LSE:BMN
Market: LSE
Market Cap: £154.21 m
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  • Bushveld is a low-cost integrated miner of vanadium

  • Vametco vanadium mine and processing plant in South Africa is currently in phase 2 development

  • Mining rights granted for Mokopane vanadium project, in which Bushveld is the majority stakeholder

  • Acquired industrial group Vanchem to diversify activities into batteries

  • Set up a battery maker investment platform to create a vanadium 'vertical'

 

How it is doing

Bushveld generated revenue of US$43.1mln from its South African vanadium operations during the first half of 2020, down from the US$78mln generated in the corresponding period a year ago, as lower vanadium prices and lost production due to the coronavirus crisis took their toll.

The company calculates that the total lost revenue due to coronavirus amounted to US$9.2mln, with a further US$400,000 spent on hygiene, screening, protective and preventative measures.

The loss before tax was US$10.7mln.

Separately, the company also announced a US$30mln financing deal with mining finance bank Orion, to underpin plans for the expansion of the vanadium production capabilities at Vametco.

Vanadium strategy

Bushveld has doubled down on vanadium with the acquisition of Vanchem, which has producing vanadium assets in South Africa plus extensive downstream capability.

Vanchem should allow Bushveld to boost production to 10,000mtV per year as it already produces approximately 960mtV on an annualised basis, utilising only one of the three kilns on site.

The Vanchem acquisition also unlocks the potential supply of the feedstock from the company’s Mokopane vanadium project, significantly reducing the potential capital outlay and accelerating the development schedule.

In November 2019, Bushveld invested US$5mln in Avalon Battery Corporation to help it complete its merger with redT Energy.

The investment also kick-started the miner's own vanadium battery technology investment platform, which will see it take stakes in OEMS and funnel investments towards other VRFB manufacturers.

What the boss says: Fortune Mojapelo, chief executive

"Vanadium, remains well positioned in a post-Covid-19 world that will still see a rise infrastructure spending, hence increased consumption of vanadium l and will likely continue on a decarbonisation energy transition path that will see energy storage (and with it VRFBs) grow in prominence."

"Bushveld Minerals' growth strategy will benefit South Africa by ensuring the country's natural strengths help it to become a global leader in our industry."

Analyst comment

Analysts at Peel Hunt said the Vanchem addition provides for a production growth factor of 1.8 times over the medium term while creating a "significantly more sustainable cash flow profile", with the acquisition offering potential for "further upside".

 

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