REG - Bushveld Minerals Ld - Q2 and H1 2023 Operational Update
02/08/2023 07:00
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RNS Number : 9863H Bushveld Minerals Limited 02 August 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.
2 August 2023
Bushveld Minerals Limited
("Bushveld Minerals", "Bushveld" or the "Company")
Q2 and H1 2023 Operational Update
Bushveld Minerals Limited (AIM: BMN), the integrated primary vanadium
producer and energy storage solutions provider, is pleased to announce its
operational update for the three months and six months ending 30 June 2023.
Group Highlights
§ Craig Coltman appointed Chief Executive Officer and board member, effective
July 1, 2023.
§ H1 2023 Total Recordable Injury Frequency Rate ("TRIFR") of 3.39 (H1 2022:
8.06).
§ Q2 2023 production of 840 mtV (Q2 2022: 668 mtV).
§ H1 2023 production of 1,784 mtV (H1 2022: 1,641 mtV).
§ Improvement measures implemented at Vanchem.
§ Q2 2023 weighted average production cash cost(1) (C1) of US$27.4/kgV (Q2
2022: US$31.2/kgV).
§ H1 2023 weighted average production cash cost(1) (C1) of US$26.6/kgV (H1
2022: US$28.3/kgV).
§ Q2 2023 sales of 1,068 mtV (Q2 2022: 787 mtV), H1 2023 of 2,096 mtV (H1
2022: 1,644 mtV)
- Supported by reductions in finished product stocks.
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
§ Group production guidance for 2023 revised to between 3,700 mtV and 3,900
mtV (previously between 4,200 mtV and 4,500 mtV).
§ Group weighted average production cash cost (C1) guidance revised to
between US$26.6/kgV and US$26.9/kgV, (ZAR481/kgV and 487/kgV).
(Previously between US$26.1/kgV and US$27.0/kgV, (ZAR447/kgV and 438/kgV)).
Update on the Orion convertible loan note
§ As announced in the Final Results for the Year Ended 31 December 2022, the
closing of the refinancing of the Orion transaction is conditional on certain
conditions, including South African Reserve Bank approval, the finalisation of
definitive binding documentation and shareholders' approval. As previously
notified, the Company has made significant progress with Orion on the
restructuring. Completion of the debt restructuring remains a key priority for
Bushveld and details of a general meeting for shareholders to approve the
Orion transaction will be sent to shareholders following the completion of the
legal documentation and once approval from the South African Reserve Bank has
been received.
Craig Coltman, CEO of Bushveld Minerals Limited, commented:
"I spent my first week as the CEO on site at the Vametco and Vanchem plants as
these are the centre of Bushveld's operations. I have had the opportunity to
meet many of our employees and I am heartened by the warmth with which they
have received me as well as the passion and commitment they have for Bushveld
Minerals.
In my short time at the Company, I have seen that, while there are challenges,
there are also many positive signs and opportunities to get the most out of
Bushveld's most important asset, its people, and achieve the full potential
within the Company's operations. Getting maximum value out of Vametco and
Vanchem is my number one priority.
As part of this effort, I will review the Group's capital allocation strategy
and prioritise projects that provide higher financial benefits with manageable
risk.
With regards to guidance and after careful review, we have come to the
conclusion that, largely due to challenges at Vametco associated with the
levels of the barren dam and the Sulphate Recovery Plant, as well as Vanchem's
weak first half performance and delays in the use of the better quality ore,
the 2023 production outlook needs to be revised.
That said, a number of initiatives have already been implemented to address
production issues to ensure we get the maximum performance from our assets. I
look forward to leading the team that achieves this for all our stakeholders."
Conference call
Bushveld Minerals Chief Executive Officer, Craig Coltman and Finance Director,
Tanya Chikanza, will host a conference call at 2:30 pm UK time (3:30 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; South Africa: Toll Free: 0 800
980 512, USA Local: +1 786 697 3501
Password: Quote Bushveld Minerals when prompted by the operator.
A replay of the conference call will be available on the Company's website
post the call.
Investor session
Bushveld Minerals Chief Executive Officer, Craig Coltman and Finance
Director, Tanya Chikanza, will host an investor session on 4 August
2023 at 9:00am BST (10:00am SAST) via the Investor Meet Company platform
to discuss the operational update.
The session is open to all existing and potential shareholders. Investors can
submit questions via Investor Meet Company dashboard up until 9:00am the
day before the meeting.
Investors can sign up to Investor Meet Company for free and register for the
event via:
https://www.investormeetcompany.com/bushveld-minerals-limited/register-investor
(https://www.investormeetcompany.com/bushveld-minerals-limited/register-investor)
Investors who already follow Bushveld Minerals on the Investor Meet
Company platform will automatically be invited.
BUSHVELD VANADIUM
H1 2023 vs Q2 2023 vs Q2 2023 vs
Group(1) Unit Q2 2023 H1 2023 H1 2022 Q2 2022 Q1 2023
Production mtV(2) 840 1 784 8.7% 25.8% -11.0%
Weighted average production cash cost1 (C1) US$/KgV 27.4 26.6 -6.1% -12.4% 5.5%
Sales(3) mtV(2) 1 068 2 096 27.5% 35.7% 3.9%
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 Q2 2023 H1 2023 H1 2023 vs Q2 2023 vs Q2 2023 vs
H1 2022 Q2 2022 Q1 2023
Ore mined Tonnes 369 468 705 557 -5.2% 16.0% 9.9%
Total mined (ore + waste) Tonnes 758 003 2 054 857 22.9%% -4.1% -41.6%
Ore grade (in Whole Rock) % V(2)O(5) 0.70 0.70 -14.6% -16.7% -1.4%
Concentrate produced Tonnes 101 083 184 258 -0.2% 18.8% 21.5%
Concentrate grade % V 1.05 1.05 0.1% 0.3% 0.4%
Recovery from Kiln to MVO % 63.0 68.3 -7.9% -18.2% -14.5%
Production (Nitro Vanadium) mtV(2) 485 1 167 -4.8% 1.7% -28.9%
Production cash cost (C1)(3) ZAR/KgV 513.5 449.9 24.5% 35.5% 26.9%
Production cash cost (C1)(3) US$/KgV 27.5 24.7 5.1% 12.8% 20.6%
Foreign exchange rate ZAR: USD 18.7 18.2 18.4% 20.1% 5.2%
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
§ Q2 2023 production of 485 mtV (Q2 2022: 477 mtV), impacted by circa 200 mtV
loss due to:
- A 5-day unplanned maintenance of the Sulphate Recovery Plant ("SRP")
and unexpected high rainfall levels during the period. As the SRP and the
barren dam are interdependent, this necessitated a plant stoppage due to
barren dam level constraints.
- We are exploring both short-term and long-term capacity storage
plans to mitigate the barren dam challenges.
- Unplanned 7-day maintenance of the dust collectors at the refinery,
and power instabilities as a result of a transformer failure at the local
municipality during the end of June 2023. The issues experienced have been
resolved.
§ H1 2023 production of 1,167 mtV (H1 2022: 1,226 mtV), due to lower
production volumes in Q1 2023.
Costs
§ Q2 2023 production cash cost (C1) of US$27.5/kgV (Q2 2022: US$24.4/kgV) (Q1
2023: US$22.8/kgV), mainly due to higher raw materials costs and maintenance
costs.
§ H1 2023 production cash cost (C1) of US$24.7/kgV (H1 2022: US$23.5/kgV).
Guidance
§ Due to ongoing challenges associated with the levels of the barren dam and
the SRP, production guidance has been revised to between 2,300 mtV and 2,400
mtV (previously circa 2,700 mtV).
- 132 mtV produced in July 2023 due mainly to challenges with the
barren dam levels and the SRP. Production is anticipated to ramp up to around
200mtV per month for the remainder of the year.
§ Annual 10-days (previously 30-days) planned maintenance shutdown to be
conducted in Q3 2023.
§ Production cash cost (C1) guidance has been revised to between US$25.6/kgV
and US$25.9/kgV (ZAR463/kgV and ZAR469/kgV) in line with the expected lower
production volumes.
VANCHEM
Operational highlights for Vanchem(1)
Description Unit Q2 2023 H1 2023 H1 2023 vs Q2 2023 vs Q2 2023 vs
H1 2022 Q2 2022 Q1 2023
Ore Milled Tonnes 61 932 144 722 45.2% 14.9%% --25.2%
Ore Grade (in Whole Rock) % V(2)O(5) 1.38 1.39 8% 12.5% -1.0%
Milled ore to Kiln Tonnes 47 825 112 672 54.4% 20.7%% -26.3%
Milled Ore Grade % V 0.96 0.95 +0.5% 1.7%% 0.3%
Recovery: Kiln to Final Product % 67.3 69.4 4.0% -7.5% -6.0%
Chemicals mtV(2) 44 67 -39.9% -4.9%% -1661%
Flake mtV(2) 121 137 1780% 100.0% 1534%
FeV mtV(2) 190 413 39.5% 34.0%% -40.0%
Total production mtV(2) 355 617 48.7% 85.8%% 35.7%
Production cash cost (C1)(3) ZAR/kgV 507.3 548.9 -17.4% -32.8% -16.2%
Production cash cost (C1)(3) US$/kgV 27.2 30.1 -30.2% -44.0% -20.3%
Foreign exchange ZAR: USD 18.7 18.2 18.4% 20.1% 5.2%
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
§ Q2 2023 production of 355 mtV (Q2 2022: 191 mtV). Production increase
supported by the use of Kiln-3, partly offset by unplanned stoppages.
§ H1 2023 production of 617 mtV (H1 2022: 415 mtV), underpinned by higher
production volumes in Q2 2023.
Costs
§ Q2 2023 production cash cost (C1) of US$27.2/kgV (Q2 2022: US$48.5/kgV)
supported by higher production volumes and a weaker ZAR:USD exchange rate.
§ H1 2023 production cash cost (C1) of US$30.1/kgV (H1 2022: US$43.2/kgV).
Guidance
§ Notwithstanding the higher production during H1 2023, Vanchem's production
was materially lower than what the Company had anticipated for the period due
to unplanned plant breakdowns and unscheduled power disruptions, in turn due
to lack of reliability of the municipality's infrastructure. Furthermore,
there were delays in the use of the third-party, better quality ore, which the
Company expected to begin utilising in April 2023, with processing of this ore
only commencing in July 2023. For these reasons guidance has been revised to
between 1,400 mtV and 1,500 mtV (previously expected to be approximately
between 1,500 mtV and 1,800 mtV).
- 158 mtV produced in July 2023, supported by the better quality ore
contributing to improved production and less downtime at Vanchem.
§ Annual 25-day maintenance to be conducted in Q4 2023 (previously Q3 2023).
§ Production cash cost (C1) guidance has been revised to between US$28.1/kgV
and US$28.5/kgV (ZAR509/kgV and ZAR516kgV) in line with the expected lower
production volumes.
Vanchem improvement initiatives
§ A number of initiatives have been implemented during the month of July 2023
with the aim of getting Vanchem into a sustainable positive cashflow position
in the short-term, and a achieve stable production levels of approximately 180
mtV per month within the next 6 months. These initiatives include:
- Changing the reagent mix from 100% Sodium Sulphate to a mix of
Sodium Carbonate and Sodium Sulphate, which will reduce the silica build up at
the kiln and hence increase the kiln availability.
- Deploy a team from Vametco to Vanchem to improve knowledge sharing.
- 24/7 shift managers for supervision to ensure immediate
decision-making.
BELCO
§ During H1 2023, the construction and initial testing of the BELCO
electrolyte manufacturing plant were completed. In the same period, the hot
commissioning phase commenced. The plant will continue the hot commissioning
process during H2 2023, production will commence once suitable off-takers for
the product are secured.
VAMETCO HYBRID MINI-GRID
§ The Bushveld Vametco Hybrid mini-grid project is making progress. The 1 MW/
4 MWh VRFB system supplied by CellCube has been filled with electrolyte and
energised for the first time, marking a successful milestone. Currently, the
construction of the 3.5 MW solar PV plant is in progress, and the entire
project is expected to become fully operational in Q4 2023. Upon completion,
the plant will generate nearly 10% of Vametco's electricity requirements.
Health and safety
§ Q2 2023 TRIFR of 7.58 (Q2 2022: 8.40).
§ H1 2023 TRIFR of 3.39 (H1 2022: 8.06) a significant improvement of 58%
attributed to ongoing monitoring of leading indicators and a decrease in the
number of incidents.
Vanadium price and outlook
§ Q2 2023 Ferrovanadium prices across all markets averaged: CRU Ryan's notes
at US$40.2/kgV (Q2 2022: US$67.3kgV). London Metal Bulletin and Asian Metals
averaged US$33.5/kgV and US$29.3/kgV respectively (Q2 2022: US$43.8/kgV;
US$36.5/kgV).
§ Sales into the higher value markets (aerospace application, speciality
alloy and chemicals) and higher price markets (Nitro Vanadium in North
America) continue to be prioritised.
§ Demand for our entire range of products remains strong and we expect sales
to be in line with production volumes during H2 2023.
§ The previous logistical challenges experienced have abated. Transit times
to USA and European warehouses have been extended on occasion, this is closely
monitored, and the required actions are taken to ensure seamless supply to
customers.
ENDS
Enquiries: info@bushveldminerals.com
Bushveld Minerals Limited +27 (0) 11 268 6555
Craig Coltman, Chief Executive Officer
Chika Edeh, Head of Investor Relations
SP Angel Corporate Finance LLP Nominated Adviser & Broker +44 (0) 20 3470 0470
Richard Morrison / Charlie Bouverat
Grant Baker / Richard Parlons
RBC Capital Markets Joint Broker +44 (0) 20 7653 4000
Jamil Miah / Sahil Suleman
Tavistock Financial PR
Gareth Tredway / Tara Vivian-Neal/ James Whitaker +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 2022,
the Company produced more than 3,800 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 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 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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