TIDMBMN
RNS Number : 0012U
Bushveld Minerals Limited
28 July 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.
28 July 2022
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Q2 2022 and H1 2022 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM-quoted, integrated
primary vanadium producer and energy storage solutions provider
with ownership of high-grade assets in South Africa ("Bushveld"),
today provides an operational update for the three months and six
months ending 30 June 2022.
Highlights
-- Group production for H1 2022 of 1,641 mtV, was 4% higher than H1 2021 (H1 2021: 1,574 mtV).
- Vametco showing continued operational performance and stability.
- Vanchem production adversely impacted by lower recoveries
associated with end-of-life Kiln 1, electricity load shedding, and
a slower than planned ramp-up post commissioning of Kiln 3.
-- Group production for Q2 2022 was 668 mtV, 25% lower than Q2 2021 (Q2 2021: 886 mtV)
- Vametco completed a 26-day planned maintenance shutdown during
the quarter, following which production volumes are back to Q1 2022
levels.
- Vanchem's production impacted by the reasons mentioned above.
-- Group H1 2022 weighted average production cash cost (C1) of
US$28.32/kgV, was 6% higher than H1 2021 of US$26.71/kgV.
-- Group Q2 2022 weighted average production cash cost (C1) of
US$ 31.23/kgV, was 19% higher than Q2 2021 of US$26.33/kgV.
-- Group H1 2022 sales of 1,644 mtV, in line with H1 2021 Group sales (H1 2021: 1,608 mtV).
2022 Guidance
-- Group production guidance maintained, expected towards the
lower end of between 4,200 mtV and 4,400 mtV.
- Vametco is on track to meet the upper end of guidance.
- Vanchem's guidance is under review on account of the
slower-than-anticipated production ramp-up in June and July
following the commissioning of Kiln 3 and the impact of
unprecedented electricity load shedding.
o An update will be provided as part of the H1 2022 interims
announcement.
- Vanchem remains on track to achieve its steady state
production run rate of 2,600 mtVp.a. by the end of the year.
-- Group is on target to meet the annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by
the end of 2022.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"The focus on operational stability at Vametco is pleasingly
bearing fruit in the form of reliable production levels supportive
of Vametco meeting the upper end of production guidance for the
year.
"At Vanchem, the combination of low recoveries associated with
Kiln 1 coming to the end of its life, a slower than expected ramp
up of the refurbished Kiln 3 and extensive load shedding has had an
unfavourable impact. This has resulted in lost production and
necessitated placing Vanchem's guidance under review.
"Whilst both Vametco and Vanchem are adversely impacted by load
shedding, for Vametco this means curtailment of power usage,
however, this does not affect Vametco's production, while for
Vanchem, which is on the municipal power grid this means a complete
loss of power and reliance on standby diesel generators.
"Although it was encouraging to see the South African government
send a strong message on how it plans to overcome the country's
energy crisis, it is unfortunate that in the short term, Vanchem's
ability to operate smoothly is being affected by the ongoing
electricity load shedding, like many other industrial plants in the
country. We are hopeful that with increased maintenance efforts at
the country's power stations and the end of the winter season, we
will see reduced incidences of load shedding.
"Notwithstanding these challenges, the ramp up of Kiln 3 is
making steady progress and Vanchem is still expected to meet the
anticipated 2,600 mtVp.a production run rate by the end of the
year.
"As a Group, we remain confident in our ability to achieve a
production run rate of 5,000 - 5,400 mtVp.a. by the end of this
financial year."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo will
host a conference call at 12:30 pm UK time (1:30 pm SAST) today to
discuss the quarterly update with analysts and investors.
Participants may join the call by dialling:
Tel: United Kingdom: +44 (0) 330 551 0200, Toll Free: 0808 109
0700; South Africa: +27 11 589 8302, Toll Free: 0 800 980 512
Password: Quote "Bushveld" when prompted by the operator.
A replay of the conference call will be available on the
Company's website post the call.
BUSHVELD VANADIUM
H1 2022 Q2 2022 Q2 2022
Group(1) Unit Q2 2022 H1 2022 vs vs vs
H1 2021 Q2 2021 Q1 2022
Production mtV(2) 668 1,641 4.3% -24.6% -31.3%
-------- ---------- ---------- --------- --------- ---------
Sales(3) mtV(2) 787 1,644 2.2% -4.0% -8.2%
-------- ---------- ---------- --------- --------- ---------
1. Based on provisional, unaudited figures.
2. mtV = metric tonnes of vanadium.
3. Reported as final sales to customers.
VAMETCO
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Description Unit Q2 2022 H1 2022 H1 2022 Q2 2022 Q2 2022vs
vs vs Q1 2022
H1 2021 Q2 2021
-------
744
Ore mined Tonnes 318 523 356 46.7% 65.2% -25.2%
------- -------- -------- -------- ---------
Total mined (ore 1 672
+ waste) Tonnes 790 138 161 14.1% -6.9% -10.4%
------- -------- -------- -------- ---------
Ore grade (in Whole % V(2)
Rock) O(5) 0.84 0.82 18.8% 50.0% 12.0%
------- -------- -------- -------- ---------
184
Concentrate produced Tonnes 85 091 650 9.7% -6.4% -14.5%
------- -------- -------- -------- ---------
Concentrate grade % V 1.05 1.05 -0.9% -1.9% 0.0%
------- -------- -------- -------- ---------
Recovery from Kiln
to MVO % 77.0 74.2 5.5% 16.7% 7.9%
------- -------- -------- -------- ---------
Production (Nitro
Vanadium, FeV) mtV(2) 477 1 226 24.1% -19.6% -36.3%
------- -------- -------- -------- ---------
Production cash
cost (C1) (3) ZAR/KgV 379.0 361.4 -4.1% 4.1% 12.5%
------- -------- -------- -------- ---------
Production cash
cost (C1) (3) US$/KgV 24.4 23.5 -9.3% -5.4% 10.4%
------- -------- -------- -------- ---------
Foreign exchange ZAR:
rate USD 15.5 15.4 6.2% 9.9% 2.0%
------- -------- -------- -------- ---------
1. Based on provisional, unaudited figures. Bushveld's net
attributable interest of the above figures is approximately 74%.
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.
Production
-- H1 2022 production of 1,226 mtV, was 24% higher than H1 2021
(H1 2021: 988 mtV), as a result of continued operational
performance and stability.
-- Q2 2022 production of 477 mtV was 20% lower than Q2 2021 (Q2
2021: 593 mtV), due to the 26-day planned maintenance shutdown
during the quarter.
- Production volumes back to Q1 2022 levels of circa 750 mtV.
- In 2021, the planned maintenance shutdown was carried out during Q1 2021.
Costs
-- H1 2022 production cash cost (C1) of US$23.5/kgV, was 9%
lower relative to H1 2021 (H1 2021: US$25.9/kgV), as a result of
increased production volumes and weaker Rand/Dollar exchange
rate.
-- Q2 2022 production cash cost (C1) of US$24.4 /kgV, was 5%
lower than Q2 2021 (Q2 2021: US$25.8/kgV), as a result of the
weaker Rand/Dollar exchange rate.
2022 Guidance
-- Expected to meet the upper end of production guidance of between 2,450 mtV and 2,550 mtV.
-- On track to meet 2022 production cash cost (C1) guidance of
between US$22.7/kgV and US$23.5/kgV (ZAR346.9/kgV and
ZAR358.7/kgV).
-- On target to meet steady state production run rate of 2,800 mtVp.a by the end of the year.
VANCHEM
Table 2: Operational highlights for Vanchem(1)
Description Unit Q2 H1 2022 H1 2022 Q2 2022 Q2 2022
2022 vs vs vs
H1 2021 Q2 2021 Q1 2022
Ore Milled Tonnes 53,900 99,671 13.2% 32.4% 17.8%
--------------------- --------- -------- -------- --------- --------- ---------
Ore Grade (in Whole % V(2)
Rock) O(5) 1.23 1.29 -6.0% -10.0% -8.9%
--------------------- --------- -------- -------- --------- --------- ---------
Milled ore to kiln Tonnes 39,612 72,993 18.5% 38.0% 18.7%
--------------------- --------- -------- -------- --------- --------- ---------
Milled Ore Grade % V 0.94 0.95 1.0% -1.0% -3.1%
--------------------- --------- -------- -------- --------- --------- ---------
Vametco concentrate
to kiln Tonnes 1,382 6,843 -37.7% -76.0% -74.7%
--------------------- --------- -------- -------- --------- --------- ---------
Concentrate Grade % V 0.95 0.95 -10.0% -11.0% 0.0%
--------------------- --------- -------- -------- --------- --------- ---------
Recovery: Kiln
to Final Product % 72.8 66.7 -22.0% -19.0% 20.1%
--------------------- --------- -------- -------- --------- --------- ---------
Chemicals mtV(2) 75 111 27.6 -13.8% 108.3%
--------- -------- -------- --------- --------- ---------
Flake mtV (2) - 7 -96.5% -100.0% -100.0%
--------- -------- -------- --------- --------- ---------
FeV mtV (2) 116 297 80.0% -4.1% -35.9%
--------- -------- -------- --------- --------- ---------
Nitro Vanadium mtV(2) - - -100.0% -100.0% 0.0%
--------- -------- -------- --------- --------- ---------
Total production mtV (2) 191 415 -29.2% -34.8% -14.7%
--------- -------- -------- --------- --------- ---------
Weighted average
production cash
cost (C1)(3) ZAR/kgV 754.6 664.6 55.1% 89.7% 28.4%
--------- -------- -------- --------- --------- ---------
Weighted average
production cash
cost (C1)(3) US$/kgV 48.5 43.2 46.4% 72.6% 25.6%
--------- -------- -------- --------- --------- ---------
ZAR:
Foreign exchange USD 15.5 15.4 6.2% 9.9% 2.0%
--------- -------- -------- --------- --------- ---------
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.
Production
-- H1 2022 production of 415 mtV, 29% lower than H1 2021 (H1 2021: 586 mtV) due to:
- Lower production volumes in Q1 2022 impacted by lower
recoveries as a result of Kiln 1's refractory reaching the end of
useful life; and
- Q2 2022 production of 191 mtV, 35% lower than Q2 2021 (Q2
2021: 293 mtV), as production was impacted by electricity
loadshedding, a slower than planned commissioning of Kiln 3 and a
slower than anticipated ramp up post commissioning.
Costs
-- H1 2022 production cash cost (C1) of US$43.2/kgV, 46% higher
relative to H1 2021 (H1 2021: US$29.5/kgV).
-- Q2 2022 production cash cost (C1) of US$ 48.5/kgV, 73% higher
than Q2 2021 (Q2 2021: US$28.1/kgV), due to lower production
volumes and higher costs related to the commissioning of Kiln
3.
-- Costs are expected to normalise during H2 2022, supported by higher production volumes.
2022 Guidance
-- Due to lower production volumes in Q1 2022 impacted by lower
recoveries as a result of Kiln 1's refractory reaching the end of
useful life, a slower-than expected production ramp-up post the
commissioning of Kiln 3 and expected increased electricity load
shedding in the short-term , production guidance of between 1,750
mtV and 1,850 mtV, and production cash cost guidance of between
US$27.7/kgV and US$28.4/kgV (ZAR422.8/kgV and ZAR433.5/kgV) is
under review.
- The Group will update the market on guidance in the H1 2022 interims announcement.
-- Despite the slower than expected ramp-up of Kiln 3, Vanchem
remains on track to achieve its steady state production run rate of
2,600 mtVp.a. by the end of the year.
- This assumes forecast production volumes at Vanchem of 222 mtV by December 2022.
HEALTH AND SAFETY
-- Safety record during Q2 2022 receiving attention following an
increase in the number of medical treatment cases and lost time
injuries. Total Injury Frequency Rate ("TIFR") was 9.52 compared to
1.74 in Q2 2021.
-- Consequently, the H1 2022 TIFR, at 9.09, was higher than H1 2021's TIFR of 5.17.
ESKOM ELECTRICITY LOAD SHEDDING
Eskom, South Africa's national utility, implemented several load
shedding measures during H1 2022. During this period, Vametco did
not experience any periods of total power loss but implemented load
curtailment, as it is directly linked to Eskom's grid. Vametco's
operational performance was not affected by these periods of load
curtailment and there is no impact on the plant's production
performance.
Vanchem's operational performance was impacted by the load
shedding as it is not directly linked to the grid and instead it
receives its electricity supply from the Emalahleni municipality,
hence in the event of load shedding the plant does not have power.
Generators are in place to power the Kiln, however, as the
generators use diesel fuel there is a cost implication.
VANADIUM MARKET
-- Q2 2022 Ferrovanadium prices across all markets averaged;
London Metal Bulletin ("LMB") US$43.8/kgV, 22% higher than Q2 2021
(Q2 2021: US$36.0/kgV). CRU Ryan's notes and Asian Metals averaged
US$67.5/kgV and US$33.7/kgV (Q2 2021: US$36.0kgV; US$31.2/kgV)
respectively.
-- Year to date average LMB price of US$44.3/kgV, CRU Ryan's
Note of US$58.3/kgV and Asian Metals of US$42.1/kgV as at 22 July
2022.
-- The current market price as at 22 July 2022 for LMB
ferrovanadium is approximately US$35.3/kgV, US$54.0/kgV for CRU
Ryan's notes and US$34.5/kgV for Asian Metals.
-- Logistics delays within South Africa have now largely been
resolved. International logistic channels remain susceptible to
shipping availability constraints and Bushveld continues to monitor
the situation closely.
S
Enquiries: info@bushveldminerals.com
+27 (0) 11 268
Bushveld Minerals Limited 6555
Fortune Mojapelo, Chief Executive
Officer
Chika Edeh, Head of Investor Relations
Nominated Adviser +44 (0) 20 3470
SP Angel Corporate Finance LLP & Broker 0470
Richard Morrison / Charlie Bouverat
Grant Baker / Richard Parlons
+44 (0) 20 7653
RBC Capital Markets Joint Broker 4000
Jonathan Hardy / Caitlin Leopold
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 3% 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. Growth
plans to expand to 8,000 mtVp.a. will be pursued, subject to
funding and market conditions.
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 Nitro Vanadium.
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 concentrate is fed into the
extraction process which consists of a rotary kiln for roasting
followed by leaching and precipitation. Thereafter the precipitated
vanadium as ammonium metavanadate is converted to modified vanadium
oxide ("MVO") in a rotary calciner. MVO is fed into the mix plant
and finally into the shaft furnaces to produce Nitro Vanadium.
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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END
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