TIDMBMN
RNS Number : 3385J
Bushveld Minerals Limited
26 April 2022
Market Abuse Regulation ("MAR") Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
26 April 2022
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Q1 2022 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM quoted integrated
primary vanadium producer and energy storage solutions provider, is
pleased to provide an operational update for the three months
ending 31 March 2022.
Key Highlights
-- Production increase on the back of continued operational
stability and enhanced safety
- Q1 2022 Group production of 972 mtV, one per cent higher than Q4 2021 of 962 mtV
- Q1 2022 Total Injury Frequency Rate ("TIFR") improved by 37 per cent to 5.38 (Q1 2021: 8.54)
-- Vametco's C1 cost improved on the back of higher throughput
while Vanchem was impacted by lower production
- Vametco's production cash cost (C1) of US$22.1/kgV improved by
17 per cent on Q1 2021, as a result of the higher throughput.
- Vanchem's production cash cost (C1) of US$38.6/kgV increased
by 26 per cent on Q1 2021, as a result of the lower Q1 2022 volumes
and increase in raw materials and maintenance costs, and are
expected to normalise in line with guidance, on the back of the
expected higher throughput for the rest of the year with Kiln 3
coming on stream.
-- Managing a challenging domestic and international logistics
chain.
- Q1 2022 Group sales of 857 mtV (1) , were nine per cent higher
than the previous year (Q1 2021: 788 mtV), but three per cent lower
than Q4 2021 (Q4 2021: 880mtV) .
- The challenging logistics chain has resulted in a marginal
inventory build-up of 25 mtV (Q4 2021: 278 mtV), with finished
products cumulative inventory of 850 mtV (Q4 2021: 825 mtV),
throughout the logistics chain (stock at site, transit to Port,
sea-borne and in-country warehouses).
- Post quarter end, t he recent disastrous floods in Kwa-Zulu
Natal, South Africa have severely affected operations at the Port
of Durban with shipments being delayed by between 14 and 21 days.
To mitigate this, Bushveld is in the process of diverting exports
through alternative South African ports, including Cape Town. The
current elevated stock levels throughout the logistics chain are
cushioning the negative effects this natural disaster may have on
Group sales.
-- Unaudited cash and cash equivalents of US$12.7 million as at
31 March 2022 (31 December 2021 : US$15 million). Positive cash
generation from operations impacted by, among others, capital
expenditure, loan repayments and increasing working capital
requirements.
-- On track to meet 2022 production and cash cost guidance.
- The Group production guidance of between 4,200 mtV and 4,400
mtV is weighted towards the second half of the year, based on the
commissioning of Kiln 3 which has commenced. Kiln 3 will more than
double Vanchem's production run rate once fully ramped up, with
Bushveld targeting an annualised steady state production run rate
of between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022.
1. Reported as final sales to customers.
Vanadium market
-- London Metal Bulletin ("LMB") FeV price averaged US$46.1/kgV
in Q1 2022 relative to Q1 2021 (Q1: 2021: US$30.9/kgV) with the
year to date average increasing to US$47.4/kgV as at 22 April
2022.
-- The current LMB FeV price as at 22 April 2022 of US$49.0/kgV
is above the yearly average although off its peak of US$62.0/kgV
seen in mid-March 2022.
-- The stronger prices in 2022 have a positive impact on
Bushveld's cash flow generation.
-- Demand for vanadium in major markets remains buoyant. Prices
across the three major markets (North America, Europe and Asia) are
expected to converge around Asian benchmark prices over the
remainder of Q2 2022.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"I am pleased to report a strong start to the 2022 financial
year, with another solid set of quarterly operating results.
Notwithstanding the challenges at the beginning of the previous
year, we have successfully produced four quarters of consistent
performance, building on the operational improvements and enhanced
safety initiatives, which facilitated and entrenched operational
stability from Q2 2021 onwards. The stable, achievable production
level provides the platform to support growth and sustainable
volume increases.
"The commissioning of Kiln 3 has commenced, and we are on track
to significantly increase the Group's production run rate to
between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of this year,
with an annual guidance of between 4,200 mtV and 4,400 mtV. This
will be a significant increase from the total production of 3,592
mtV recorded in 2021 and demonstrates the growth potential of our
assets. This reinforces our confidence to pursue further growth
through the exploitation of our substantial resource portfolio,
which is one of the largest, high-grade primary vanadium resource
bases in the world, with many decades of mining potential.
"Growth in production volumes reduces unit costs and is key to
margin expansion, increased profitability and long term sustainable
cash generation throughout the commodity cycle, given the historic
volatility of the Vanadium price. We continue to pursue cost
improvement initiatives.
"Demand for vanadium in Bushveld's major markets remains
buoyant, however challenging South African and International
logistics chains and the scheduled June shut-down at Vametco, which
will require careful in-country stock management, have restricted
sales volumes. Sales volumes are expected to increase from Q2 2022,
to reflect greater Vanchem production with stock levels reducing to
steady state levels."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo will
host a conference call at 10:00 am UK time (11:00 am SAST) today to
discuss the quarterly update with analysts. Participants may join
the call by dialling:
Tel: United Kingdom: +44 (0) 330 165 4012; South Africa: +27 11 844 6136
Pin: 5693200
A replay of the conference call will be available on the
Company's website post the call.
Health and Safety
-- Q1 2022 TIFR of 5.38, an improvement of 37 per cent on Q1
2021 of 8.54, as a result of emphasis and focus on hazard
identification awareness and continuous risk assessments ahead of
performing tasks, planned task observations, and increased visible
felt leadership.
-- A marked decline in COVID-19 cases at both operations, with
one case per month recorded at Vametco only. Vaccination rates have
increased to levels above 66 per cent in Q1 2022.
Bushveld Vanadium
Q1 2022 Q1 2022
vs vs
Group Unit Q1 2022 Q1 2021 Q4 2021 Q1 2021 Q4 2021
Production mtV(1) 972 688 962 41.3% 1.0%
-------- -------- -------- -------- --------- ---------
Sales mtV(1) 857(2) 788 880 8.8% -2.6%
-------- -------- -------- -------- --------- ---------
1. mtV = metric tonnes of vanadium.
2. The Group sales mix for Q1 2022 was as follows:
- Nitrovan framed contracts and spot sales account for 61 per
cent and 11 per cent of Group sales respectively. Sales of AMV to
electrolyte converters account for 3 per cent. FeV and V(2) O(5)
contributed to13 and 4 per cent respectively whilst Chemicals
accounted for 7 per cent.
- The Bushveld Group has the ability to optimise its product
sales mix at its two production facilities (both intra-plant and
between the plants) between the aforementioned product types to
benefit from price advantages between geographic markets and
product types.
Vametco
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Q1 2022 Q1 2022
vs vs
Description Unit Q1 2022 Q1 2021 Q4 2021 Q1 2021 Q4 2021
Ore mined Tonnes 425 834 314,573 347,439 35.4% 22.6%
-------- ------- ------- -------- -------- --------
Total mined (ore
+ waste) Tonnes 882 024 617,113 630,475 42.9% 3 9.9 %
-------- ------- ------- -------- -------- --------
Ore grade (in % V(2)
whole rock) O(5) 0.80 0.62 0.87 29.0% -8.1%
-------- ------- ------- -------- -------- --------
Concentrate produced Tonnes 99 559 77,459 105,753 28.5% -5.9%
-------- ------- ------- -------- -------- --------
Concentrate grade % V 1.05 1.04 1.08 1.0% -2.8%
-------- ------- ------- -------- -------- --------
Recovery from
Kiln to MVO % 71.3 74.3 72.7 -4.0% -1.8%
-------- ------- ------- -------- -------- --------
Production (Nitrovan,
FeV) mtV(2) 749 395 700 89.6% 7.0%
-------- ------- ------- -------- -------- --------
Production cash
cost (C1) (3) ZAR/KgV 337.0 396.1 353.4 -14.9% -4.6%
-------- ------- ------- -------- -------- --------
Production cash
cost (C1) (3) US$/KgV 22.1 26.5 22.9 -16.6% -3.5%
-------- ------- ------- -------- -------- --------
Foreign exchange
rate ZAR: USD 15.2 14.9 15.4 1.9% -1.3%
-------- ------- ------- -------- -------- --------
1. Based on provisional, unaudited figures. Bushveld's net
attributable interest of the above figures is approximately 74 per
cent. Production cash cost is based on vanadium produced.
2. mtV = metric tonnes of vanadium.
3. Excludes depreciation, royalties and selling, general &
administrative expenses and cost associated with COVID-19.
Production cash cost is based on vanadium produced. Production cash
cost (C1) measure does not have any standardized meaning prescribed
by IFRS and differs from measures determined in accordance with
IFRS. This measure is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. This
measure is not necessarily indicative of net earnings or cash flow
from operating activities as determined under IFRS.
-- Q1 2022 production of 749 mtV was 90 per cent higher than Q1
2021, which was affected by the 35 day planned maintenance shutdown
(Q1 2021: 395 mtV), and 7 per cent higher than Q4 2021 (Q4 2021:
700 mtV) underpinned by continued operational stability and
improved plant performance.
- An 11-day unscheduled kiln refractory repair was performed in
January 2022. The now reduced planned annual maintenance shutdown
is scheduled for 26 days in June 2022.
-- Q1 2022 production cash cost (C1) of US$22.1/kgV was 17 per
cent lower than Q1 2021 (Q1 2021: US$26.5/kgV), as a result of the
higher production volumes.
-- Production guidance maintained to between 2,450 mtV and 2,550
mtV and production cash cost (C1) guidance to between US$22.7/kgV
and US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV).
Vanchem
Table 2: Operational highlights for Vanchem(1)
Q1 2022
Q1 2022 vs vs
Description Unit Q1 2022 Q1 2021 Q4 2021 Q1 2021 Q4 2021
Ore milled Tonnes 45,771 47 305 45,297 -3.2% 1.0%
------- ------- ------- -------- ---------- --------
% V(2)
Ore Grade (in Whole Rock) O(5) 1.35 1.38 1.53 -2.2% -11.8%
------- ------- ------- -------- ---------- --------
Milled ore to kiln Tonnes 33,381 32,912 35,551 1.4% -6.1%
------- ------- ------- -------- ---------- --------
Milled Ore Grade % V 0.97 0.94 0.90 3.2% 7.8%
------- ------- ------- -------- ---------- --------
Vametco concentrate to
kiln Tonnes 5,461 5,233 2,632 4.4% 107.5%
------- ------- ------- -------- ---------- --------
Concentrate Grade % V 0.95 1.06 1.06 -10.4% -10.4%
------- ------- ------- -------- ---------- --------
Recovery: Kiln to Final
Product % 60.6 81.1 73.4 -25.3% -17.4%
------- ------- ------- -------- ---------- --------
Chemicals mtV(2) 36- - 9 - 300.0%
------- ------- ------- -------- ---------- --------
Flake mtV(2) 7 132 26 -94.7% 73.1%
------- ------- ------- -------- ---------- --------
FeV mtV(2) 181 45 204 302.2% -11.3%
------- ------- ------- -------- ---------- --------
Nitrovan mtV(2) - 116 23 -100.0% -100.0%
------- ------- ------- -------- ---------- --------
Total production mtV(2) 224 293 262 -23.5% -14.5%
------- ------- ------- -------- ---------- --------
Weighted average production
cash cost (C1)(3) ZAR/kgV 587.7 459.1 567.3 28.0% 3.6%
------- ------- ------- -------- ---------- --------
Weighted average production
cash cost (C1)(3) US$/kgV 38.6 30.7 36.8 25.7% 4.9%
------- ------- ------- -------- ---------- --------
Foreign exchange rate ZAR:USD 15.2 14.9 15.4 1.9% -1.3%
------- ------- ------- -------- ---------- --------
1. Based on provisional, unaudited figures.
2. mtV = metric tonnes of vanadium.
3. Excludes depreciation , royalties and selling, general &
administrative expenses and cost associated with Covid-19.
Production cash cost is based on vanadium produced. Production cash
cost (C1) measure does not have any standardized meaning prescribed
by IFRS and differs from measures determined in accordance with
IFRS. This measure is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. This
measure is not necessarily indicative of net earnings or cash flow
from operating activities as determined under IFRS.
-- Q1 2022 production of 224 mtV was 24 per cent lower than Q1
2021 of 293 mtV and 15 per cent lower than Q4 2021 (Q4 2021 262
mtV), impacted by the following :
- The refractory condition of Kiln 1, reducing online time,
negatively affecting recoveries . A 5-day temporary refractory
repair on Kiln 1 was conducted in March 2022, which will last until
Kiln 3 is online. Kiln 1 was reaching the end of its useful life,
and commissioning of Kiln 3 has commenced, and is expected to be
online in May 2022.
- The use of Upper Seam ore spilling over from Q4 2021, which
negatively impacted recoveries. The issues experienced during the
ramp up of the Upper Seam project were resolved in February, as
detailed in the section on the Upper Seam Project below.
- Load shedding negatively affecting plant stability.
-- Q1 2022 production cash cost (C1) of US$38.6/kgV was 26 per
cent higher than Q1 2021 (Q1 2021: US$30.7/kgV), and five per cent
higher than Q4 2021, impacted by the lower production volumes as
stated above, increase in usage of raw materials due to the lower
yield combined with an increase in the cost of raw materials and
the higher maintenance cost arising from the refractory repair.
- The unit costs are expected to normalise in line with guidance
on the back of the higher throughput, with t he increase in volume
from Kiln 3 diluting the fixed costs.
- Chemical products at including specialist V(2) O(5) powder,
are produced at higher unit cost than that of V(2) O(5) flake and
FeV, including higher packaging and logistics costs; and hence the
production costs at Vanchem will be comparatively higher than at
Vametco. These products however attract commensurate premiums to
the prevailing V(2) O(5) price.
-- 2022 production guidance maintained to between 1,750 mtV and
1,850 mtV, and production cash cost (C1) of between US$27.7/kgV and
US$28.4/kgV (ZAR422.8/kgV and ZAR433.5/kgV).
Growth Projects
Feasibility and pre-feasibility studies at Vametco and Vanchem
were completed to determine the nature and scope of growth beyond
the current production capacity plus the capacity of Kiln 3 of
5,000 - 5,400 mtV. The studies, currently under review, provide a
well-structured long term growth path to an installed processing
capacity of 8,000 mtV per annum, ensuring a permanent and reliable
feedstock to both Vametco and Vanchem, and included testing the
economics of the various stages and options to provide the best
return on investment going forward. It must be emphasised that the
new growth plans to expand beyond the capacity of 5,000 - 5,400 mtV
will only be pursued when full funding has been secured. An
announcement will be made in the near future, on completion of the
review and approval process.
The Upper Seam Project
The Upper Seam project was developed to supply ore to Vanchem
(magnetite in ore > 80 per cent, V(2) O(5) grade in magnetite
>1.65 per cent). The project consists of crushing, screening and
dry magnetic separation. The plant was commissioned in Q4 2021 with
the final installation of the dry magnetic separator in December
2021. During commissioning and ramp-up ore quality was at times
below requirements due to heavy rain and mining constraints, which
resulted in operational challenges in the Vanchem kiln, affecting
recoveries. The project team has now optimised the plant
performance during February 2022 to meet Vanchem ore specification
requirements and the Vanchem milling plant has been reconfigured to
treat Upper Seam ore efficiently.
Bushveld Vanadium production profile
-- Bushveld Vanadium is targeting to materially grow its
vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by
the end of 2022.
-- We continue to prioritise operational stability at Vametco to
achieve a sustainable and consistent output of 2,800 mtVp.a.
-- Vanchem's production run rate is expected to more than double
from 1,100 mtVp.a. to a run rate of 2,600 mtVp.a. by the end of
2022, supported by the commissioning of Kiln 3 and associated
downstream refurbishment. Kiln 3 commissioning has commenced and
expected to be online in May 2022.
S
Enquiries: info@bushveldminerals.com
+27 (0) 11 268
Bushveld Minerals Limited 6555
Fortune Mojapelo, Chief Executive
Officer
Andrew Mari, Investor Relations
Nominated Adviser +44 (0) 20 3470
SP Angel Corporate Finance LLP & Broker 0470
Richard Morrison / Charlie Bouverat
Grant Baker / Richard Parlons
Tavistock Financial PR
Gareth Tredway / Tara Vivian-Neal +44 (0) 207 920
/ Adam Baynes 3150
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, vertically integrated primary
vanadium producer. It is one of only three operating primary
vanadium producers, owning 2 of the world's 4 operating primary
vanadium processing facilities. In 2021, the Company produced 3,592
mtV, representing approximately three per cent of the global
vanadium market. With a diversified vanadium product portfolio
serving the needs of the steel, energy and chemical sectors, the
Company participates in the entire vanadium value chain through its
two main pillars: Bushveld Vanadium, which mines and processes
vanadium ore; and Bushveld Energy, an energy storage solutions
provider. Bushveld Vanadium is targeting to materially grow its
vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a by
the end of 2022, from projects currently being implemented. Beyond
that, pre-feasibility studies are in progress to determine the
optimal path to increase production even further to a steady state
production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in
the medium-term and to a steady state production run rate of 8,400
mtVp.a in the long term.
Bushveld Energy is focused on developing and promoting the role
of vanadium in the growing global energy storage market through the
advancement of vanadium-based energy storage systems, specifically
Vanadium Redox Flow Batteries ("VRFBs").
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com
About Vametco
Vametco is located near Brits on the Western Limb of the
Bushveld Complex. The integrated operation comprises a vanadium ore
mine and a processing plant that produces mostly Nitrovan, a
trademark product sold in major steel markets across the world. The
mine lies adjacent to the Brits Vanadium Project, which will in
future serve as an alternative source of near surface run of mine
("ROM") ore feed to the Vametco plant.
The Vametco mining operation uses open pit bench mining methods
to mine a well-defined orebody. The deposit is continuous with
limited faulting and dips in a northerly direction at approximately
19 degrees.
ROM ore is fed into a primary, secondary and tertiary crushing
circuit, followed by milling and magnetic separation to produce
magnetite concentrates. The magnetite concentrates are fed into the
extraction process which includes the kiln for roasting followed by
leaching and precipitation. Thereafter the precipitated vanadium as
ammonium metavanadate is converted to modified vanadium oxide
("MVO") in rotary calciners. MVO is fed into the mix plant and
finally into the shaft furnaces to produce Nitrovan.
About Vanchem
Vanchem is situated at Ferrobank Industrial Park in Emalahleni
Local Municipality, Mpumalanga Province in the Republic of South
Africa. Vanchem is a primary vanadium producing facility with a
beneficiation plant capable of producing various vanadium oxides,
ferrovanadium and vanadium chemicals. Vanchem uses the salt roast
beneficiation process, similar to the one used at Vametco. The
plant comprises: a core salt-roast processing plant, including 3
roasting kilns, an electric smelting ferrovanadium converter, an
alumino-thermic smelting facility, also located at Highveld, a
vanadium chemical plant; and a rail siding linking the plant with
Bushveld deposits and additional potential supply sources through
the national rail network.
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