Bushveld Minerals Limited Solid performance in H1 2019

Bushveld Minerals Limited (LON:BMN), the AIM listed, integrated primary vanadium producer, with ownership of high grade vanadium assets, today provided an operational update for the three months ending 30 June 2019 (Q2 2019), in respect of Bushveld Vanadium, Bushveld Energy and Lemur Holdings, as well as other corporate activities.

Key Highlights


·     Transformation programme successfully delivering higher production rates with Q2 2019 production recording the highest quarterly production rate in over two years.

·     Production for Q2 2019 was 742 mtV in the form of NitrovanTM from magnetite concentrate, a 14 per cent increase relative to Q1 2019 (Q1 2019: 649 mtV), and an 18 per cent improvement relative to Q2 2018 (Q2 2018: 629mtV).

·     Improvements in mine production scheduling and vanadium grade in kiln feed continues, together with an increase in the hourly feed rate to the kiln and recovery. Overall plant recovery continues to improve.

·      Production for H1 2019 was 1,392 mtV, a 2 per cent increase relative to H1 2018 (H1 2018: 1,360 mtV).

·     On target to meet current 2019 production guidance of 2,800 mtV to 2,900 mtV which remains unchanged, underpinned by the continued implementation of several productivity initiatives during the course of H2 2019.

·     Unit production cost for H1 2019 was US$17.40/KgV, a 14 per cent reduction relative to H1 2018 (H1 2018: US$20.2/KgV), supported by a weaker ZAR relative to the USD during H1 2019, higher volumes and cost reductions.

·     Unit production cost guidance of US$18.90/KgV to US$19.50/KgV for the 2019 calendar year remains unchanged due to the anticipation of a stronger ZAR relative to the USD during H2 2019.

·     H1 2019 Revenue of US$74.3 million (H1 2018: US$81.2 million) and H1 2019 EBITDA of US$48.6 million (H1 2018: US$42.4 million).

·     Vametco achieved an EBITDA margin in excess of 50 per cent, underpinned by strict controls on unit cost and a weaker ZAR.

·     At current vanadium prices Vametco remains cash flow positive. During H2 2019 the business will continue to focus on cost control and reduction.

·     Successfully completed the wage and benefits negotiations with the Association of Minerals Workers and Construction Union (“AMCU”) for the 3-year period 1 July 2019 to 20 June 2022.

Bushveld Energy

Electrolyte Plant

·     The Environmental Impact Assessment (“EIA”) for the proposed plant in East London, South Africa has passed the public participation stage and is on track to be completed this year.

·     The first batch of electrolyte was successfully produced using Vametco’s feedstock, with the samples being sent to vanadium battery companies for testing.

Vanadium electrolyte rental model

·     Implementation of the first rental contract was announced with Avalon Battery Corporation and its customer, Sandbar, in the United States.

Eskom VRFB project

·     The Vanadium Redox Flow Battery (“VRFB”) installed with Eskom was commissioned and continues to operate.

Vametco based Solar Mini-Grid Project

·     Commenced a number of activities including an Environmental Assessment, a grid connection and geotechnical studies. Procurement for the project will commence in the third quarter of 2019.


Vanchem acquisition

·     Completion of the Transaction announced on 01 May 2019 in respect of the acquisition of Vanchem (as defined below), will now occur on 31 October 2019, due to certain conditions precedent having not yet been fulfilled. Fulfilment of those conditions are on track so that transaction closure can take place by 31 October 2019.

Johannesburg Stock Exchange Listing

·     The application for the listing of the Company’s shares on the Johannesburg Stock Exchange (“JSE”) will now occur in calendar year 2020. The revised timing is due to the completion of the Vanchem acquisition now being scheduled to occur on 31 October 2019.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: 

“Results from work under the Transformation Programme at Vametco, aimed at establishing operational excellence and stability, continue to be reflected in the operating performance with Q2 2019 being a record quarter since the same quarter in 2017. In addition, Vametco generated an EBITDA of US$49 million in the first half of the year and an EBITDA margin in excess of 50%.

“We are pleased to report that we are on course to meet Vametco’s production guidance of 2,800 mtV to 2,900 mtV for the 2019 calendar year, with several further productivity initiatives to be implemented during the course of H2 2019, from where we can continue to build towards our target of 3,400mtv per annum during the course of 2020.

“We are delighted to announce the successful completion of the wage negotiations with AMCU for the next three years, which eliminates the risks of strikes relating to wage negotiations and highlights the ongoing cooperative relationship with our workforce and AMCU. We continue to work on finalising an Employee Share Ownership Participation structure, which will allow our workforce to share in the success of the Company.

“The Company is working to complete the acquisition of Vanchem, however certain conditions precedent remain outstanding and we now expect to complete the acquisition on the second target date being 31 October 2019. 

 “We continue to make progress on several fronts within Bushveld Energy, including the production of the first batch of electrolyte from Vametco feedstock, which has been sent for testing at various battery producers. In addition, we delivered our first vanadium battery rental product, which was developed in conjunction with and sold by Avalon Battery Corporation of Fremont, California.

“I am pleased by the solid performance the Group has achieved during this first half of the year and I look forward to an even stronger second half.”

Bushveld Vanadium


Table 1: Operational highlights for Vametco (on a 100% basis)1

DescriptionUnit Q2 CY 19H1 CY19Q2 CY19 vsQ1 CY19Q2 CY19 vsQ2 CY18H1 CY19 vs H1 CY18 
Vanadium (NitrovanTM plus FeV) producedmtV27421,39214.3%18.0%2.4%
Vanadium soldmtV26071,11519.6%-14.8%-20.5%
Average MB vanadium price3US$/KgV39.456.3-46.3%-43.1%-13.9%
Underlying production costs4US$/KgV16.417.4-11.7%-22.6%-13.7%

1.     Based on provisional, unaudited estimates. Bushveld’s net attributable interest in Vametco is 74%.

2.     mtV = metric tonnes of vanadium.

3.     The vanadium price is based on the FeV mid average price for the period, published by Metal Bulletin. Vametco realised price is based on the prior month’s average price.

4.     Excludes depreciation, royalties, selling, general, & administrative expenses.

5.     Revenue reported net of all sales commissions.

DescriptionUnit Q2 CY19Q1CY19 Q2CY18 H1CY19 H1CY18 
USD/ZAR average exchange rate1US$: ZAR14.414.012.614.212.3

1.     Source: Bloomberg. The achieved USD/ZAR average exchange rate may vary.

·     Vametco’s solid operational performance is underpinned by the execution of the productivity initiatives identified as part of the Transformational Programme which includes: a) improvement in mine production scheduling; b) increased vanadium grade in kiln feed; c) increased hourly feed rate; and d) improvement in the recovery across the plant.

·     Vametco commenced a 24-day planned maintenance programme in July, which is expected to be completed in August and will not affect annual guidance.

·     An updated Mineral Reserve and Resource Estimate for Vametco was published during the quarter. This comprised an Indicated and Inferred Mineral Resource of 186.7 Mt (100 per cent Gross Basis) with 138.1 Mt (74 per cent Net Attributable Basis) and a Probable Mineral Reserve of 48.4 Mt (100 per cent Gross Basis) with 35.8 Mt (74 per cent Net Attributable Basis).

– Indicated Resources increased by 187 per cent. to 965,900 tonnes of V2O5 in magnetite (previously 336,604 tonnes V2O5 in magnetite).

– Probable Ore Reserves more than doubled to 279,100 tonnes V2O5 in magnetite (previously 137,152 tonnes V2O5 in magnetite), while the grade has increased by 3 per cent to 2.02 per cent V2O5 (previously 1.96 per cent V2O5).

Multi-phase expansion project

The implementation delivery office headed by the Chief Transformational Officer has commenced several improvement initiatives at Vametco. These initiatives are intended to support Vametco achieving its full potential with a single kiln operation targeting 3,400 mtVp.a. (which represents 90 per cent of the 3,750 mtVp.a. name plate capacity) during the course of 2020, with no additional capital expenditure. Since the inception of these transformation initiatives good progress has been made on stabilising and improving production. This was achieved by:

·      Improving kiln reliability through improved maintenance scheduling;

·      Optimising the annual shutdown to improve the quality of work and to ensure the shortest possible production interruption;

·      Stabilising kiln wet magnetite feed rate;

·      Stabilising overall recovery throughout the plant; and

·      Improving mine production scheduling to stabilise vanadium grade into the kiln.

The Company continues to review the timing and required investment to further increase the production nameplate capacity to 5,000 mtVp.a., which we expect to generate a steady state production in excess of 4,200 mtV.

During 2019, Vametco will continue to progress environmental approvals for Phase 3 of the multi-phased expansion project. In addition, detailed design work and capital estimation will commence with a view to targeting the commencement of construction in 2020.

Other projects underway

·     Tailings facility expansion, in order to maintain deposition capacity for calcines, completed on time and budget during Q2 2019.

·     A kiln off-gas project has been initiated to comply with regulatory requirements and further increase kiln feed throughput. Commissioning is planned to be completed during 2020.


A Maiden Mineral Resource statement for Brits was published during the quarter. This comprised an Indicated and Inferred Resource of 66.8 Mt (100 per cent Gross Basis) with 41.8 Mt (62.5 per cent Net Attributable Basis) with an average grade of 1.58 per cent V2O5 in magnetite.


On 1 May 2019, the Company announced a conditional agreement to acquire the primary vanadium processing assets of Vanchem Vanadium Plant (Pty) Limited, the ferrovanadium production business of South African Japan Vanadium (Pty) Ltd as a going concern, and a 100 per cent of the outstanding shares of Ivanti Resources (Pty) Limited, a subsidiary of Duferco Participations Holding S.A, (collectively “Vanchem”).

·     The transaction remains on track; however, whilst progress has been made in achieving the conditions precedent for completion, shareholders should note that the first possible date for completion, being 31 July 2019, has not been met as the Company is yet to receive approval from the Competition Commission.

·     Good progress is being made in achieving the conditions precedent, being approval from the Competition Commission, the cession of specific commercial agreements and South African Reserve Bank approval. Bushveld Minerals is confident that these will be met by the second target date for completion, being 31 October 2019.

·     Negotiations with local banks for debt facilities are progressing. Further updates and progress on the debt facilities will be provided as appropriate.

Mokopane Vanadium Project

A definitive feasibility study has commenced for the development of the Mokopane mine.  Mokopane is intended to become a primary source of feedstock for Vanchem and its development will be accelerated as a result of the Transaction. The capital expenditure requirements associated with developing Mokopane are significantly reduced to approximately US$20 million (based on current estimates). The Mokopane-Vanchem business model will create a fully integrated business in a shorter time and at a lower cost than developing Mokopane as a standalone operation.

Bushveld Energy


Electrolyte Plant

·      The EIA has passed the public participation stage and it is on track to be completed this year.

·      The first batch of electrolyte was successfully produced using Vametco’s feedstock.

·      These samples are being sent to vanadium battery companies for assessment and approval.

Vanadium electrolyte rental model

·     Implementation of the first rental contract was announced with Avalon Battery Corporation and its customer, Sandbar, in the United States.

·     Bushveld Energy and Avalon Battery worked together to structure and design this specific rental product.

·     Renting the underlying metal rather than selling it upfront is a characteristic unique to this storage technology given the lack of degradation by vanadium while in use inside a redox flow battery.

·     This rental is the first of three steps in Bushveld Energy’s strategy to establish a dedicated vanadium electrolyte rental fund, which are:

1.   Balance-sheet financing for the rental solution, while key legal and structuring aspects are “de-risked” and is limited to smaller transactions.

2.   The introduction of bank debt funding for larger vanadium electrolyte rental contracts, several of which are under consideration.

3.   The creation of a dedicated fund financed through larger long-term debt instruments.

·     In total, the product allows for the significant reduction in the upfront costs of the battery, creates a sustainable and circular process of using but not consuming vanadium and ensures the long-term viability of VRFB technology.

VRFB Manufacturing

The Company continues to increase its activities and options for VRFB manufacturing. This includes investment or further partnerships directly with VRFB manufacturers globally and South Africa-based facilities. The intent is also to establish local VRFB manufacturing capacity in collaboration with the Industrial Development Corporation of South Africa and such identified global VRFB manufacturers.

Battery Deployment

Eskom VRFB project

The VRFB installed with Eskom, co-funded with the Industrial Development Corporation of South Africa, was commissioned and continues to operate. Analysis and monitoring of the system’s performance under various operational profiles also continues.

Vametco based Solar Mini-Grid Project

During the first half of 2019 the Company commenced a number of activities including an Environmental Assessment, a grid connection and geotechnical studies. Procurement for the project will commence in the third quarter of 2019.


·     Completed the Mine Bankable Feasibility Study gap analysis involving a more detailed study aimed at optimising the mine by including an underground operation.

·     The Revised Bankable Feasibility Study that includes both the opencast and underground is expected to start in Q3 2019.

·     Completed technical and minimum functional requirements for the Imaloto transmission line and subsequently issued a request for proposals (“RFP”) to qualified respondents selected from the Expression of Interest process. The RFP process is expected to be completed by Q4 2019.

·     The Social and Environmental Impact Assessment fieldwork is ongoing but expected to extend beyond the initially envisaged completion target date of Q2 2019 in order to accommodate the transmission line RFP bidding process. Submission to the Ministry of Energy is still expected during Q4 2019.

·     Engagement with potential lenders for project finance is still progressing.  

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