AMN - SOUTH AFRICA: Vanadium prices benefit Bushveld

Bushveld Minerals will proceed with the expansion of its Vametco vanadium plant in South Africa to take advantage of soaring demand, and improved prices, for vanadium. The expansion will enable the company to maximise production output and plant efficiencies.

Ferrovanadium prices increased by 24% during the three months to September 30 to US$85.8 per kilogram and have increased by 137% in the past 12 months.

Output from the operation during the quarter was, however, disrupted by industrial and community action. Production of Nitrovan, or vanadium nitride, was almost 15% lower quarter-on-quarter at 537 tonnes of vanadium (mtV).

Due to the disruptions, annual production guidance at Vametco has been reduced from between 2850 and 3000 mtV to between 2600 and 2650 mtV. The company has now settled the dispute with AMC Union which should see production return to normal levels.

Production costs in the quarter were up 11% due to the lower volumes, and the full year estimate has also been revised to between R250/KgV and R255/KgV.

Bushveld’s chief executive Fortune Mojapelo said: "While higher vanadium prices partially mitigated the impact of the production shortfall, with the company expected to generate healthy cash flows, Bushveld intends to use this opportunity to sustainably maximise production volumes and drive operating costs down.

“Accordingly, we are pleased to have commenced with phase 3 of our expansion plan, which will increase capacity at Vametco to 5,000 tonnes per annum.

“Phase 3 will also benefit from the advancement of the Brits Vanadium Project, which has yielded encouraging drilling results.

"We continue to benefit from a rising vanadium price supported by China's new high-strength rebar standard which came into effect on 1 November 2018.”

Bushveld's integrated primary vanadium production strategy includes Bushveld Vametco Limited, the Brits Vanadium Project and the Mokopane project.

Consolidation of Vametco ownership, following the acquisition of Sojitz's underlying effective 16% interest in Vametco Alloys (Pty) Ltd for US$20 million in September 2018, increased Bushveld Minerals effective interest to 75%. This was subsequently reduced to 74% following completion of the sale of 1% to its Black Economic Empowerment shareholders, in line with the requirements of the mining regulations of South Africa.

Bushveld has received all assays results for phase 1 of its exploration program at the Brits project, which has to date shown positive drilling results. Sampling results of phase 2 drill holes are expected to be received in the first quarter of 2019.

Mokopane is a key part of Bushveld's strategy and the intention remains to secure the mining right and develop the greenfield project into a vanadium mine and processing plant. The company continues to explore means to supply ore from the project to plants in China and/or elsewhere in the world.

www.bushveldminerals.com