Full Year 2022 Operational Update & 2023 Guidance
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 cost1 (C1) for 12M 2022 of US$27.7/kgV (12M 2021: US$26.1/kgV).
§ Weighted average production cash cost1 (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
|
Group1 |
Unit |
Q4 2022 |
12M 2022 |
12M 2022 vs 12M 2021 |
Q4 2022 vs Q4 2021 |
Q4 2022 vs Q3 2022 |
|
Production |
mtV2 |
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% |
|
Sales3 |
mtV2 |
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 |
Q4 2022 |
12M 2022 |
12M 2022 vs 12M 2021 |
Q4 2022 vs Q4 2021 |
Q4 2022 vs Q3 2022 |
|
Ore mined |
Tonnes |
424 618 |
1 599 290 |
31.2% |
22.2% |
-1.3% |
|
Total mined (ore + waste) |
Tonnes |
1 289 773 |
4 290 225 |
43.3% |
104.6% |
-2.9% |
|
Ore grade (in Whole Rock) |
% V2O5 |
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) |
mtV2 |
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 Vanchem1
|
Description |
Unit |
Q4 2022 |
12M 2022 |
12M 2022 vs 12M 2021 |
Q4 2022 vs Q4 2021 |
Q4 2022 vs Q3 2022 |
|
Ore Milled |
Tonnes |
90 681 |
259 588 |
39.2% |
100.2% |
31.0% |
|
Ore Grade (in Whole Rock) |
% V2O5 |
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 |
mtV2 |
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% |
|
Foreign exchange |
ZAR: 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
|
Bushveld Minerals Limited |
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+27 (0) 11 268 6555 |
|
Fortune Mojapelo, 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 |
|
Jonathan Hardy / Caitlin Leopold |
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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 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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