TIDMBMN
RNS Number : 3803O
Bushveld Minerals Limited
31 January 2023
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.
31 January 2023
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Full Year 2022 Operational Update and 2023 Guidance
Bushveld Minerals Limited (AIM: BMN), the integrated primary
vanadium producer and energy storage solutions provider, today
provides an operational update for the three months and 12 months
ending 31 December 2022.
Group Highlights
-- Record production for the 12M 2022 of 3,842 mtV (12M 2021:
3,592 mtV), slightly below the revised guidance range of 3,900 mtV
- 4,100 mtV as a result of the continued impact of electricity load
shedding at Vanchem.
- Vametco's production of 2,705 mtV exceeded the upper end of guidance of 2,550 mtV - 2,650mtV.
- Vanchem lost approximately 200 mtV during H2 2022 due to electricity load shedding.
-- Record production for Q4 2022 of 1,184 mtV (Q3 2022: 1,016
mtV) with both Vanchem and Vametco reporting quarter-on-quarter
increases.
-- Weighted average production cash cost(1) (C1) for 12M 2022 of
US$27.7/kgV (12M 2021: US$26.1/kgV).
-- Weighted average production cash cost(1) (C1) for Q4 2022 of
US $25.1/kgV (Q3 2022: US$28.90/kgV).
1. Weighted average production cash cost (C1): is the blended
weighted average production cash cost (C1) of Vametco and Vanchem,
divided by group production.
2023 Group Guidance and Capital Expenditure
-- Group production guidance of between 4,200 mtV and 4,500 mtV,
with volumes weighted towards H2 2023.
- The Group maintains its target of a steady state production
run rate of 5,000 mtV to 5,400 mtV per annum; however, load
shedding has impacted our ability to optimise Vanchem, which has
been factored into the 2023 production guidance.
- Load curtailment solution agreed between Vanchem and the
Emalahleni municipality, targeted at reducing the future impact of
scheduled load shedding. However, in the event of unscheduled
instances of load shedding, Vanchem will continue to experience
total power loss.
- Annual scheduled maintenance to occur in Q2 2023 for Vametco and Q3 2023 for Vanchem.
-- Weighted average Group production cash cost (C1) guidance of
between US$26.1kgV and US$27.0/kgV, (ZAR447/kgV and 438/kgV).
- Costs reflect the national 18.65% electricity price increase
announced by Eskom, South Africa's national utility, coming into
effect from 1 April 2023, as well as the impact of load shedding on
production.
-- Group capital expenditure, primarily sustaining capital, of
between ZAR153 - 161 million (circa US$9.2 - 9.7 million), with
most of the cost being Rand-denominated.
STRATEGIC UPDATE
Substantive long term capital investment undertaken by the Group
over the past five years has supported Bushveld on its mission to
become a leading global low-cost, vertically integrated primary
vanadium platform. As it stands today, the Group is one of only
three operating primary vanadium producers which owns two of the
world's four operating primary vanadium processing facilities and
with a diversified vanadium product portfolio to serve its
customers globally.
This period of extensive capital investment, refurbishment and
optimisation of Vametco has resulted in it operating consistently
and producing at a steady state level, while the critical
refurbishment at Vanchem means that it is now capable of producing
at a significantly increased production level, subject to the
constraints of ongoing electricity load shedding in South
Africa.
Despite the significant challenges faced as a result of the
impact of the Covid-19 pandemic, macro-economic headwinds and the
aforementioned electricity crisis in South Africa, the Company has
increased production and is well positioned to deliver further
sustainable growth as it looks to a future in which vanadium will
have an increasingly important role as a green commodity.
Looking ahead, the strategic focus of the Group is on building a
sustainable, cash-generative, low-cost production and processing
platform to support the needs of the steel, chemical and energy
sectors. A continued focus on operating and cost efficiencies will
be largely driven by the further growth in throughput as the
Company targets a sustainable production run rate of 5,000 to 5,400
mtV over the near-term, as well as continued focus on efficiencies
and cost saving initiatives.
Bushveld Energy continues to make progress with both the Vametco
hybrid mini-grid and the Bushveld Electrolyte Company ("BELCO")
expected to be in operation during H1 2023. The commissioning of
the electrolyte manufacturing plant will be a major achievement
underpinning the Group's vertical integration strategy and opening
up a new market for our products.
Furthermore, simplification of the Group structure with the
carve-out of Bushveld Energy means that the Group is
well-positioned to optimise its financing and investment focus
whilst delivering value for shareholders.
UPDATE ON THE ORION CONVERTIBLE LOAN NOTE
On 30 September 2020 Bushveld Minerals entered into a US$65
million financing transaction with Orion Mine Finance ("Orion"),
which included a US$35 million convertible loan note ("CLN") with a
three year term, in order to support the aforementioned critical
refurbishment programme at Vanchem. As the CLN will be maturing in
November 2023, the Group has had discussions with Orion and other
potential specialist funders regarding refinancing options of the
CLN to determine a sustainable capital structure in relation to the
Group's operations and longer-term growth ambitions. Discussions
are ongoing and the Group will provide the market with further
updates in due course.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
" I am pleased to report a year of production growth and
completion of significant capital projects at Bushveld Minerals,
despite external challenges related to electricity availability and
supply chains.
Pleasingly, we achieved record production over the year, with
both Vametco and Vanchem achieving a record quarter of production
in Q4 2022. Vametco beat production guidance for the year, helped
by the fact that its electricity supply is only curtailed in
periods when the grid is under pressure, compared with the load
shedding experienced by Vanchem in these periods. To this end, we
have agreed a load curtailment solution between Vanchem and the
Emalahleni municipality in order to address the ongoing load
shedding issues and mitigate the future impact on production.
On the capital investment front, in 2022 we completed Vanchem's
Kiln 3 refurbishment. Importantly, as a result of completion of
this project, the capital expenditure budget for 2023 is primarily
related to sustaining capital.
We retain the target of achieving a production run rate of 5,000
to 5,400 mtV, however, in the near-term, the uncertain and
challenging operating environment associated with load shedding has
impacted our ability to optimise Vanchem. Consequently, we have
factored this into our 2023 Group production guidance, which is
still 13% greater than 2022 production . These difficult operating
conditions have an obvious effect on production volumes, but also
on costs, where a 19% power cost increase will be applied
nationwide from Q2 2023.
Despite these external challenges, we are committed to meeting
our operational targets, which includes optimising Vanchem in order
to achieve a steady state production run rate, and for Vametco to
continue operating in a stable manner.
BELCO construction is proceeding as planned, and progress is
being made in the qualification process with manufacturers to use
its electrolyte. We're also making good progress on Vametco's solar
plus battery storage mini-grid project.
Finally, I would like to thank the entire Bushveld workforce for
their tireless efforts during a challenging year."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo, and
Finance Director, Tanya Chikanza will host a conference call at
0.9:30 am UK time (11:30 am 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 0205; South Africa: Toll
Free: 0 800 980 512, USA Local: +1 786 697 3501
Password: Quote Bushveld Q4 when prompted by the operator.
A replay of the conference call will be available on the
Company's website post the call.
BUSHVELD VANADIUM
12M 2022 Q4 2022 Q4 2022
Group(1) Unit Q4 2022 12M vs vs vs
2022 12M 2021 Q4 2021 Q3 2022
Production mtV(2) 1,184 3,842 7.0% 23.1% 16.5%
--------- ---------- ------- ---------- --------- ---------
Weighted average
production cash
cost1 (C1) US$/KgV 25.1 27.7 6.4% -5.7% -13.1%
--------- ---------- ------- ---------- --------- ---------
Sales(3) mtV(2) 905 3,584 8.1% 2.8% -12.5%
--------- ---------- ------- ---------- --------- ---------
1. Based on provisional, unaudited figures.
2. mtV = metric tonnes of vanadium.
3. Reported as final sales to customers.
VAMETCO
Operational highlights for Vametco (on a 100% basis)(1)
Description Unit 12M 2022 Q4 2022 Q4 2022
Q4 2022 12M vs vs vs
2022 12M 2021 Q4 2021 Q3 2022
--------
1 599
Ore mined Tonnes 424 618 290 31.2% 22.2% -1.3%
-------- -------- --------- -------- --------
Total mined (ore 1 289 4 290
+ waste) Tonnes 773 225 43.3% 104.6% -2.9%
-------- -------- --------- -------- --------
Ore grade (in Whole % V(2)
Rock) O(5) 0.87 0.87 11.7% - -9.4%
-------- -------- --------- -------- --------
Concentrate produced Tonnes 99 631 390 377 0.7% -5.8% -6.1%
-------- -------- --------- -------- --------
Concentrate grade % V 1.00 1.03 -2.8% -7.4% -2.9%
-------- -------- --------- -------- --------
Recovery from Kiln
to MVO % 70.7 72.3 0.2% -3.2% 0.6%
-------- -------- --------- -------- --------
Production (Nitro
Vanadium) mtV(2) 812 2,705 10.3% 16.1% 21.9%
-------- -------- --------- -------- --------
Production cash
cost (C1) (3) ZAR/KgV 372.4 388.3 9.5% 5.4% -18.6%
-------- -------- --------- -------- --------
Production cash
cost (C1) (3) US$/KgV 21.1 23.7 -1.3% -7.9% -21.6%
-------- -------- --------- -------- --------
Foreign exchange
rate ZAR: USD 17.6 16.4 10.6% 14.2% 3.6%
-------- -------- --------- -------- --------
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. 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
-- 12M 2022 production of 2,705 mtV (12M 2021: 2,453 mtV),
outperforming 2022 guidance of between 2,550 mtV and 2,650 mtV,
supported by continued operational performance and stability.
-- Q4 2022 production of 812 mtV (Q3 2022: 666 mtV) as a result
of continued operational performance and stability.
Costs
-- 12M 2022 production cash cost (C1) of US$23.7/kgV (12M 2021:
US$24.0/kgV) was marginally higher than the upper end of guidance
of between US$22.7/kgV and US$23.5/kgV (ZAR346.9/kgV and
ZAR358.7/kgV) due to increases in raw materials and energy costs,
partially offset by higher production volumes and a weaker ZAR: USD
exchange rate.
-- Q4 2022 production cash cost (C1) of US$21.1/kgV (Q3 2022:
US$26.9/kgV), mainly due to higher production volumes during the
quarter.
2023 Guidance
-- Production is expected to be broadly in line with 12M 2022
production.
-- Production cash cost (C1) guidance of between US$23.6kgV and
US$24.0/kgV, (ZAR396/kgV and R402kgV).
-- Annual 30-day planned maintenance shutdown is expected during
Q2 2023.
2023 Capital Expenditure
US$ (million)
-------------------------- --------------
Growth -
--------------
Sustaining 3.7 - 3.9
--------------
Total capital expenditure 3.7 - 3.9
--------------
VANCHEM
Operational highlights for Vanchem(1)
Description Unit Q4 12M 2022 12M 2022 Q4 2022 Q4 2022
2022 vs vs vs
12M 2021 Q4 2021 Q3 2022
Ore Milled Tonnes 90 681 259 588 39.2% 100.2% 31.0%
--------------------- --------- ------- --------- ---------- --------- ---------
Ore Grade (in Whole % V(2)
Rock) O(5) 1.29 1.32 -8.0% -16.0% -8.5%
--------------------- --------- ------- --------- ---------- --------- ---------
Milled ore to Kiln Tonnes 61 837 185 937 39.0% 73.9% 21.0%
--------------------- --------- ------- --------- ---------- --------- ---------
Milled Ore Grade % V 0.96 0.95 2.0% 6.8% 2.6%
--------------------- --------- ------- --------- ---------- --------- ---------
Vametco concentrate
to Kiln Tonnes 0 9 689 -49.3% -100% -100.0%
--------------------- --------- ------- --------- ---------- --------- ---------
Concentrate Grade % V 0 0.98 -8.0% -100% -100.0%
--------------------- --------- ------- --------- ---------- --------- ---------
Recovery: Kiln to
Final Product % 61.7 66.4 -17.0% -16.0% -13.7%
--------------------- --------- ------- --------- ---------- --------- ---------
Chemicals mtV(2) 55 193 3.0% 570.0% 113.1%
--------- ------- --------- ---------- --------- ---------
Flake mtV (2) 211 288 1.3% 708.5% 100.0%
--------- ------- --------- ---------- --------- ---------
FeV mtV (2) 105 657 28.9% -48.5% -58.8%
--------- ------- --------- ---------- --------- ---------
Total production mtV (2) 372 1 137 -0.1% 42.0% 6.2%
--------- ------- --------- ---------- --------- ---------
Production cash
cost (C1)(3) ZAR/kgV 596.3 609.1 34.6% 5.5% 7.1%
--------- ------- --------- ---------- --------- ---------
Production cash
cost (C1)(3) US$/kgV 33.8 37.2 21.7% -7.6% 3.4%
--------- ------- --------- ---------- --------- ---------
ZAR:
Foreign exchange USD 17.6 16.4 10.6% 14.2% 3.6%
--------- ------- --------- ---------- --------- ---------
1. Based on provisional, unaudited figures.
2. mtV = metric tonnes of vanadium
3. Excludes depreciation, royalties and selling, general &
administrative expenses. 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
-- 12M 2022 production of 1,137 mtV (12M 2021: 1 138 mtV)
impacted by lower recoveries as a result of Kiln 1's refractory
reaching the end of life during H1 2022, slower than expected ramp
up of Kiln 3 in H1 2022 and electricity load shedding which has
negatively impacted the ramp up of production at Kiln 3 in H2
2022.
-- Q4 2022 production of 372 mtV (Q3 2022: 350 mtV), with higher
production volumes in the quarter supported by improved performance
of Kiln 3.
-- In November 2022, Vanchem and the Emalahleni municipality
agreed a load curtailment solution, aimed at preventing the plant
from experiencing total power loss during scheduled load shedding.
Whilst we still envisage some impact, it should reduce the effect
and enable Vanchem to continue to ramp up towards steady state
production. The Company continues to engage other parties,
including Eskom , to seek a longer-term solution. Furthermore,
similar to the Vametco hybrid-mini grid, we are developing battery
storage plus renewable energy solutions to supplement the power
requirements of Vanchem.
Costs
-- 12M 2022 production cash cost (C1) of US$37.2 (12M 2021:
US$30.6/kgV), was higher than revised guidance of $34.9/kgV -
US$35.5/kgV (ZAR534/kgV and ZAR542/kgV) mainly due to lower
production volumes and increases in raw materials and energy
costs.
-- Q4 2022 production cash cost (C1) of US$33.8/kgV (Q3 2022:
US$32.7/kgV), due to increase in raw materials, energy costs,
payroll and maintenance costs.
2023 Guidance
-- Production is expected to be higher than 12M 2022, although
the production number is highly reliant on the consistency of power
supply.
-- Production cash cost1 (C1) guidance of between US$29.7kgV and
US$30.8kgV, (ZAR498/kgV and R517kgV).
-- Annual 25-day maintenance shutdown expected during Q3
2023.
2023 Capital Expenditure
US$ (million)
-------------------------- --------------
Growth -
--------------
Sustaining 3.2 - 3.4
--------------
Total capital expenditure 3.2 - 3.4
--------------
BELCO
Construction of the BELCO electrolyte manufacturing plant is
progressing according to plan with a targeted annual capacity of 8
million litres of vanadium electrolyte. Each litre of vanadium
electrolyte will contain between 82 and 92 grams of vanadium, with
the plant using over 1,100 tons of vanadium oxide equivalent at
full production. BELCO is undergoing a qualification process with
several VRFB manufactures to use its electrolyte, for upcoming
orders. BELCO is 55% owned by Bushveld Energy, and 45% by the
Industrial Development Corporation.
2023 Capital Expenditure
US$ (million)
-------------------------- --------------
Growth 2.3 - 2.4
--------------
Sustaining
-
--------------
Total capital expenditure 2.3 - 2.4
--------------
HEALTH AND SAFETY
-- 12M 2022 Total Injury Frequency Rate ("TIFR") of 10.32 (12M
2021 : 7.78), due to increased number of incidents recorded. We
continue to focus on safety awareness through regular campaigns to
drive safety performance.
-- Q4 2022 TIFR of 5.97 (Q3 2022: 12.01), a 50% improvement
driven by continued focus on the safety improvement program.
VANADIUM PRICE AND OUTLOOK
-- 12M 2022: London Metal Bulletin ("LMB") ferrovanadium price
of US$39.2/kgV (12M 2021: US$38.2/kgV); CRU Ryan's Note of
US$52.7/kgV (12M 2021: US$37.7/kgV); and Asian Metals of
US$34.3/kgV (12M 2021: US$36.5/kgV).
-- Q4 2022: LMB Ferrovanadium prices US$33.2/kgV (Q3 2022:
US$33.8/kgV); CRU Ryan's notes US$42.9/kgV (Q3 2022: US$50.9/kgV);
and Asian Metals US$32.68/kgV (Q3 2022: US$30.4/kgV).
-- Sales are optimised to maximise returns from high value
markets. Nitro Vanadium sales into North America are prioritised
due to the higher vanadium prices realised in this region and we
continue to maximise sales into aerospace and speciality chemical
products that attract price premiums.
-- Demand remains buoyant for our suite of vanadium products,
and we continue to maintain a global footprint to ensure we are
represented in all markets to provide further diversification.
-- The continued logistical challenges being experienced
worldwide in the last period have resulted in relatively high
stocks of material being "in transit" in order to guarantee supply
to key markets.
ENDS
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 2022, the Company produced 3,842
mtV, representing approximately 3% of the global vanadium market.
Bushveld Vanadium is targeting to grow its vanadium production and
achieve an annualised steady state production run rate of between
5,000 mtVp.a. and 5,400 mtVp.a in the near term from existing
capacity. Growth plans to expand to 8,000 mtVp.a. will be pursued,
subject to funding and market conditions. 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 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
UPDEASFFDDXDEEA
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January 31, 2023 02:00 ET (07:00 GMT)
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