TIDMBMN
RNS Number : 4603N
Bushveld Minerals Limited
09 August 2017
9 August 2017
Bushveld Minerals Ltd
("Bushveld" or the "Company")
Bushveld Vametco Operational Update
Bushveld Minerals Limited (AIM: BMN), a diversified mineral
development company with a portfolio of vanadium, titanium, iron
ore, tin and coal assets in Southern Africa is pleased to provide
an operational update with respect to Vametco Alloys (Proprietary)
Limited ("Vametco"), the South African vanadium mining operation
jointly acquired by the Company and Yellow Dragon Holdings Limited
("Yellow Dragon") from Evraz Group S.A. in April 2017. Bushveld
Vametco Limited ("Bushveld Vametco") has a 78.8% shareholding in
Strategic Minerals Corporation ("SMC), which is the ultimate
holding company of Vametco. Bushveld Vametco is 45% owned by the
Company and 55% by Yellow Dragon.
Operational & Financial Highlights for Vametco (on a 100%
basis): financial years ended 2015 and 2016 (audited) and first
half 2017 (unaudited):
Description Unit 6 months Year ended Year ended
ended 31-Dec-16 31-Dec-15
30-Jun-17
=================== ======== =========== =========== ===========
Vanadium produced (MTV) 1 441 2 804 2 419
=================== ======== =========== =========== ===========
Vanadium sold (MTV) 1 341 2 810 2 340
=================== ======== =========== =========== ===========
USD/ZAR exchange
rate $=ZAR 13.22 14.71 12.75
=================== ======== =========== =========== ===========
Revenue ZAR'm 439.1 760.0 629.3
=================== ======== =========== =========== ===========
EBITDA ZAR'm 85.5 47.5 15.7
=================== ======== =========== =========== ===========
Production US$/kg
costs V 15.58 14.50 17.23
=================== ======== =========== =========== ===========
Bushveld's share of the above financials is approximately 35%,
and will be accounted for using the equity method.
Vametco has a current annual plant capacity of approximately
3,000 metric tons of vanadium ("MTV") in the form of Nitrovan(R), a
trademark vanadium product used in the steel industry and modified
vanadium oxide ("MVO" or "V(2) O(3) "). Vametco produced 2,419 MTV
of Nitrovan(R) and MVO from its own magnetite concentrate
production for the financial year ended 31 December 2015. In 2016
production grew by 16% to 2,804 MTV, reflecting a 3.7% share of
global production. The half-year to 30 June 2017 saw production
levels similar to 2016 with 1,441 MTV produced. Under the oversight
of Bushveld and Yellow Dragon, Vametco has commenced a multi-phased
expansion project to increase annual production to more than 5,000
MTV over the next 3 years.
Reported revenue in the current period has improved markedly
since the 2015-16 period, largely due to improved vanadium prices.
The challenging market conditions characterised by sustained
depressed vanadium prices during 2015-16 adversely impacted
financial performance across the industry. Vanadium prices have,
however, improved materially, rising from a low of US$14.41/kgV* in
January 2016 to US$23.23/kgV* in December 2016. This price
improvement has continued into the first half of 2017, resulting in
increased revenues. This increase has been tempered by a
strengthening exchange rate at Vametco, with the South African Rand
strengthening from ZAR 14.71 to the US dollar in 2016 to ZAR 13.22
in the first half of 2017.
Supply shortages are expected to continue to drive vanadium
prices higher. By the end of July 2017, prices of above US$45/kgV
were being reported by the recognised industry platform,
Metalbulletin, in Europe, with Chinese prices in excess of
US$50/kgV.
Vametco's cash production costs of US$14.50/kgV (equivalent
US$3.55/lb V(2) O(5) ) during the year ended 31 December 2016 were
among the lowest in the world, partly driven by the 16% increase in
production volumes, placing Vametco in the bottom quartile of the
international vanadium production cost curve. During the first half
of 2017, cash production costs have increased by 7% above reported
2016-year amounts. This is a testimony to management initiatives
focussing on tight cost controls over all major components of the
production value chain.
* Metalbulletin mid-point for the month
Earnings before interest, depreciation and tax (EBITDA) for the
year 2016 was ZAR 47.5 million (US$ 3.2 million), in large part due
to the low average vanadium prices realised, reflecting a 203%
improvement from ZAR15.7 million (US$ 1.2 million) in 2015. During
the first half of 2017, EBITDA has grown to ZAR85.5 million (US$
6.5 million), an 80% increase (260% on an annualised basis).
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"Vametco is a significant Vanadium producer, with extremely
competitive production costs, that is now undergoing an expansion
initiative to deliver increasing volumes into a structurally
deficit supply market. We are extremely pleased to have concluded
the Vametco joint-acquisition at the time we did. With more than
100 years of combined industry experience within the Vametco senior
leadership team, we are very excited about the future prospects of
this investment. We look forward to continuing to work with
management in further driving down operating costs, plus delivering
on its expansion initiatives."
Description of Vametco operations:
Vametco is located near Brits on the Eastern Limb of the
Bushveld Complex, 20 kilometres from Glencore's Rhovan operations.
The integrated operation comprises a vanadium ore mine and a
processing plant to produce Nitrovan(R), a trademark product sold
in major steel markets across the world. The mine lies adjacent to
Bushveld's 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 mine's latest Mineral Resource and Ore Reserve estimates
(which were produced by VBKom (Proprietary) Limited during April
2016) are presented in the tables below.
Percentage Percentage
Resource Tonnage Percentage V in V(2) O(5) SiO(2) CaO
Category (Mt) Magnetics magnetics in magnetics (%) (%)
============== ======== =========== =========== ============== ======= =====
Measured
+ Indicated 35.17 29.63 1.62 2.49 3.70 0.53
============== ======== =========== =========== ============== ======= =====
Inferred 103.45 29.59 1.42 1.97 2.69 0.47
============== ======== =========== =========== ============== ======= =====
Total 138.62 29.60 1.47 2.10 2.95 0.48
============== ======== =========== =========== ============== ======= =====
Notes:
a. Figures reported are based on 100% of Mineral Resources;
b. Reporting is prepared on an inclusive basis - Mineral
Resources reported includes Mineral Reserves;
c. Mineral Resources tonnes and grades are reported on an
in-situ dry basis;
d. Reporting was prepared on block models developed by VBKOM in
2016;
e. Rounding of figures may cause computational
discrepancies.
Percentage Percentage
Reserve Tonnage Percentage V in V(2) O(5) SiO(2) CaO
Category (Mt) Magnetics magnetics in magnetics (%) (%)
=========== ======== =========== =========== ============== ======= =====
Proven - - - - - -
=========== ======== =========== =========== ============== ======= =====
Probable 26.77 29.76 1.63 2.55 3.56 0.49
=========== ======== =========== =========== ============== ======= =====
Total 26.77 29.76 1.63 2.55 3.56 0.49
=========== ======== =========== =========== ============== ======= =====
Notes:
1. Figures reported are based on 100% of Ore Reserve;
2. Mineral Reserves reported included in Mineral Resources
reported and should not be seen as additional tonnes;
3. Mineral Reserve tonnes and grades are reported on a dry ROM
(plant feed) basis after mining modifying factors have been applied
but before beneficiation down-stream recoveries/ losses have been
applied;
4. Reporting was prepared on block models developed by VBKOM in
2016;
5. Rounding of figures may cause computational
discrepancies.
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. Mining production is planned to maximise concentrate
production.
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
kiln (treatment plant) followed by leaching, milling and
precipitation processes and finally into the Nitrovan(R) plant to
produce vanadium products.
Enquiries: info@bushveldminerals.com
Bushveld Minerals Limited
Fortune Mojapelo +27 (0) 11 268 6555
Strand Hanson Limited (Nominated Adviser)
Andrew Emmott / Ritchie Balmer +44 (0) 20 7409 3494
Beaufort Securities (Joint broker)
Jon Bellis +44 (0) 20 7382 8300
SP Angel Corporate Finance (Joint broker)
Ewan Leggat +44 (0) 20 3470 0470
Blytheweigh (Public Relations)
Tim Blythe / Camila Horsfall +44 (0) 20 7138 3204
Gabriella von llle +27 (0) 711 121 907
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a diversified AIM listed mineral
development company with a portfolio of vanadium, iron ore, tin and
coal greenfield assets in Southern Africa and Madagascar. The
Company's flagship platform, the vanadium platform, includes the
Mokopane Vanadium Project, the Brits Vanadium Project, and the
Bushveld Iron Ore & Titanium Project. The tin platform
comprises the Mokopane Tin Project whereas the Imaloto Coal
Project, which is being developed as one of Madagascar's leading
independent power producers, makes up the Company's coal
platform.
The Company's vision is to become the largest low cost
integrated primary vanadium producer through owned low-cost
high-grade assets. This incorporates development and promotion of
the role of vanadium in the growing global energy storage market
through Bushveld Energy, the Company's energy storage solutions
provider. Whilst the demand for vanadium remains largely anchored
in a slow growing steel industry, Bushveld Minerals believes there
is a strong potential for imminent significant global vanadium
demand surge from the fast-growing energy storage market,
particularly through the use and adoption of Vanadium Redox Flow
Batteries.
Bushveld Minerals' approach to project development recognises
that whilst attractive project economics are imperative, they are
insufficient to secure capital to bring them to account. A clear
path to production with a visible timeframe, low capex requirements
and scalability are important factors in retaining an attractive
exit option. This philosophy is core to the Company's strategy in
developing projects. Detailed information on the Company and
progress to date can be accessed on the website:
www.bushveldminerals.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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