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
Half-year results on 30 September showed a robust performance in the face of weaker vanadium prices.
On revenues off modestly at US$78mln, the South Africa-focused group delivered profit after tax US$2.3mln higher at US$30.8mln for the six months ended June.
Free cash flow advanced to US$23.3mln from US$16.4mln at the same point last year and the company had just over US$66mln in the bank at the period-end.
The ferrovanadium price averaged US$56.3 per kilogram, down from US$65.5 in 2018.
Looking ahead, the transformation programme at the Vametco operation should see output rise to 3,400 metric tonnes of vanadium, up from the current 2019 guidance of 2,800-2,900 tonnes.
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 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, 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 owns vanadium battery technology investment platform, which will see it take stakes in OEMS and funnel investments towards other VRFB manufacturers.
In October, it announced the second of these investments, saying it is leading a consortium to acquire Austrian group Enerox for €11mln, one of the world's foremost makers of vanadium redox flow batteries (VRFB).
In December, the buyers signed an initial sale and purchase agreement and acquired, in equal proportions, 24.9% of the Enerox for €150,000 from CellCube Energy Storage Systems.
In addition, they invested €600,000 in Enerox to fund ongoing working capital, with three further monthly payments of €300,000 to February which will bring the total initial investment to €1.65mln.
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".
“We believe that BMN debt of less than US$20m for the purchase gives the company plenty of room for expedited expansion works,” analysts said.
On long-term prices, they said Vanchem's longer-term potential for underlying earnings (EBITDA) is "at least equal to that of 2018".
Marking to market for changes in ferrovanadium prices, this reduces 2019 EBITDA forecast 23% to £57mln but increased the 2020 estimate 10% and made changes closer to 20% for the two years after.
House broker SP Angel reduced their assumed vanadium price to $60 per kg for 2019 and 2020 due to lesser compliance with the new Chinese regulations than expected, though they expect "punishment of Chinese officials to create better compliance this year".
But it said the Vanchem acquisition offsets these lower prices.