REG - Bushveld Minerals Ld - Q1 2022 Operational Update
26/04/2022 07:16
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220426:nRSZ3385Ja&default-theme=true
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, the 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
Group Unit Q1 2022 Q1 2021 Q4 2021 Q1 2022 vs Q1 2022 vs
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)
Description Unit Q1 2022 Q1 2021 Q4 2021 Q1 2022 vs Q1 2022 vs
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% 39.9%
Ore grade (in whole rock) % V(2)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$23.5/kgV
(ZAR346.9/kgV and ZAR358.7/kgV).
Vanchem
Table 2: Operational highlights for Vanchem(1)
Description Unit Q1 2022 Q1 2021 Q4 2021 Q1 2022 vs Q1 2022 vs
Q1 2021 Q4 2021
Ore milled Tonnes 45,771 47 305 45,297 -3.2% 1.0%
Ore Grade (in Whole Rock) % V(2)O(5) 1.35 1.38 1.53 -2.2% -11.8%
Milled ore to kiln Tonnes 33,381 32,912 35,551 1.4% -6.1%
Milled Ore Grade % V 0.97 0.94 0.90 3.2% 7.8%
Vametco concentrate to kiln Tonnes 5,461 5,233 2,632 4.4% 107.5%
Concentrate Grade % V 0.95 1.06 1.06 -10.4% -10.4%
Recovery: Kiln to Final Product % 60.6 81.1 73.4 -25.3% -17.4%
Chemicals mtV(2) 36- - 9 - 300.0%
Flake mtV(2) 7 132 26 -94.7% 73.1%
FeV mtV(2) 181 45 204 302.2% -11.3%
Nitrovan mtV(2) - 116 23 -100.0% -100.0%
Total production mtV(2) 224 293 262 -23.5% -14.5%
Weighted average production cash cost (C1)(3) ZAR/kgV 587.7 459.1 567.3 28.0% 3.6%
Weighted average production cash cost (C1)(3) US$/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 the 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.
ENDS
Enquiries: info@bushveldminerals.com
Bushveld Minerals Limited +27 (0) 11 268 6555
Fortune Mojapelo, Chief Executive Officer
Andrew Mari, Investor Relations
SP Angel Corporate Finance LLP Nominated Adviser & Broker +44 (0) 20 3470 0470
Richard Morrison / Charlie Bouverat
Grant Baker / Richard Parlons
Tavistock Financial PR
Gareth Tredway / Tara Vivian-Neal / Adam Baynes +44 (0) 207 920 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 (http://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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END UPDGUGDSGXDDGDLRecent news on Bushveld Minerals
See all newsREG - Bushveld Minerals Ld - Posting of Circular and Notice of General Meeting
AnnouncementREG - Bushveld Minerals Ld - Proposed conditional disposal of Vanchem
AnnouncementREG - Bushveld Minerals Ld - Q1 2024 Operational & Corporate Update
AnnouncementREG - Bushveld Minerals Ld - Mineral Resources and Reserves Annual Update
AnnouncementREG - Bushveld Minerals Ld - Further Update on Outstanding Funds
Announcement