Q3 2022 and 9M 2022 Operational Update
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.
25 October 2022
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Q3 2022 and 9M 2022 Operational Update
Bushveld Minerals Limited (AIM: BMN), the integrated primary vanadium producer and energy storage solutions provider ("Bushveld"), today provides an operational update for the three months and nine months ending 30 September 2022.
Group highlights
· Production of 2,657 mtV for 9M 2022 (9M 2021: 2,629 mtV).
· Production of 1,016 mtV for Q3 2022 (Q2 2022: 668 mtV) supported by Kiln 3 improved performance.
· Weighted average production cash cost (C1) [1] of US$28.9/kgV for 9M 2022 (9M 2021: US$25.80/kgV).
· Weighted average production cash cost (C1) of US$29.3/kgV for Q3 2022 (Q2 2022: US$31.0/kgV.)
2022 Group guidance
· Production guidance of 3,900 mtV - 4,100 mtV maintained.
· (C1) Production cash cost guidance at each asset is maintained.
· On track to achieve an annualised steady state production run rate of 5,000 mtVp.a. - 5,400 mtVp.a. by the end of 2022. .
Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:
"I am pleased to report a solid production update for the quarter to end-September, reflecting continued stability at Vametco and further ramp-up at Vanchem's Kiln 3. Despite ongoing power supply issues, the ramp-up at Kiln 3 has seen monthly production more than double from July's production. I am pleased to report that as a result of Kiln 3, total production at Vanchem has increased by 83% compared to the previous quarter.
This year, South Africa has experienced unprecedented levels of loadshedding whereby the state utility temporarily turns off the electricity to an area due to a supply shortage. Q3 2022 was notably a severe period of loadshedding since the onset of the energy crises in 2007, with 75 events totalling to 218 hours of load shedding and, in turn, lost or significantly curtailed production hours. Calendar 2022 is proving to be the worst year in the last 5 and September was so far the worst month.
The near-term prognosis from Eskom does not indicate significant improvement and at Vanchem, where we are primarily affected, we will continue to use diesel generators during loadshedding periods. Engagements with the local municipality to explore ways to mitigate the impacts are ongoing. In addition, we are exploring renewable self-generation options to supplement power requirements, similar to the mini-grid project we are constructing at Vametco.
The elevated inflationary environment globally continues to put pressure on costs, which we expect to be partially mitigated by the increase in production throughput rates, our continued efforts on cost reduction and the benefit of a weaker ZAR.
Despite these challenges, we remain on track to achieve our annualised steady state production target by the end of 2022, as well as our cost guidance for each asset."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo, and Finance Director, Tanya Chikanza will host a conference call at 12:30 pm UK time (13:30 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, Toll Free: 0808 109 0700; South Africa: +27 11 589 8302, Toll Free: 0 800 980 512
Password: Quote Bushveld 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 |
Q3 2022 |
9M 2022 |
9M 2022 vs 9M 2021 |
Q3 2022 vs Q3 2021 |
Q3 2022 vs Q2 2022 |
|
Production |
mtV2 |
1,016 |
2,657 |
1.0% |
-3.7% |
52.1% |
|
Sales3 |
mtV2 |
1,034 |
2,678 |
10.0% |
25.2% |
31.4% |
|
Weighted average production cash cost (C1) |
US$/kgV |
29.3 |
28.9 |
12.1% |
20.8% |
5.7% |
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 |
Q3 2022 |
9M 2022 |
9M 2022 vs 9M 2021 |
Q3 2022 vs Q3 2021 |
Q3 2022 vs Q2 2022 |
|
Ore mined |
Tonnes |
430 316 |
1 174 672 |
34.8% |
18.1% |
35.1% |
|
Total mined (ore + waste) |
Tonnes |
1 328 291 |
3 000 452 |
27.0% |
48.0% |
68.1% |
|
Ore grade (in Whole Rock) |
% V2O5 |
0.96 |
0.86 |
22.9% |
17.1% |
14.3% |
|
Concentrate produced |
Tonnes |
106 096 |
290 746 |
3.1% |
-6.7% |
24.7% |
|
Concentrate grade |
% V |
1.03 |
1.04 |
-1.9% |
-3.7% |
-1.9% |
|
Recovery from Kiln to MVO |
% |
70.3 |
72.9 |
1.2% |
-6.3% |
-8.7% |
|
Production (Nitro Vanadium) |
mtV2 |
666 |
1 892 |
7.9% |
-12.9% |
39.7% |
|
Production cash cost (C1) 3 |
ZAR/KgV |
457.4 |
395.2 |
11.4% |
40.1% |
20.7% |
|
Production cash cost (C1) 3 |
US$/KgV |
26.9 |
24.8 |
1.6% |
20.6% |
10.2% |
|
Foreign exchange rate |
ZAR: USD |
17.0 |
15.9 |
9.4% |
16.4% |
9.4% |
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 and social 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
· 9M 2022 production of 1,892 mtV (9M 2021: 1,753 mtV). The increase is supported by continued operational performance and stability.
- Q3 2022 production of 666 mtV (Q2 2022: 477 mtV). The annual planned maintenance shutdown was conducted in Q2 2022.
Costs
· 9M 2022 production cash cost (C1) of US$24.8/kgV (9M 2021: US$24.4/kgV). Inflationary pressures resulted in higher raw materials costs and energy costs which were partially offset by a weaker ZAR:USD exchange rate.
- Q3 2022 production cash cost (C1) of US$26.9/kgV (Q2 2022: US$24.4/kgV). The increase is attributable to the greater use of raw materials during the quarter.
· Costs are expected to normalise through the rest of the year, with 2022 production cash costs expected to be within guidance a s we keep implementing our cost containment initiatives but remain dependant on inflationary pressures not increasing even further.
2022 Guidance
· On track to meet full-year production guidance of 2,550 mtV - 2,650 mtV.
· On target to meet production cash cost (C1) guidance of US$22.7/kgV - US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV).
VANCHEM
Operational highlights for Vanchem1
|
Description |
Unit |
Q3 2022 |
9M 2022 |
9M 2022 vs 9M 2021 |
Q3 2022 vs Q3 2021 |
Q3 2022 vs Q2 2022 |
|
Ore Milled |
Tonnes |
69 237 |
168 907 |
19.6% |
30.0% |
28.5% |
|
Ore Grade (in Whole Rock) |
% V2O5 |
1.41 |
1.33 |
-5.0% |
-3.0% |
14.8% |
|
Milled ore to kiln |
Tonnes |
51 108 |
124 101 |
26.3% |
39.5% |
29.0% |
|
Milled Ore Grade |
% V |
0.93 |
0.94 |
0.0% |
0.1% |
-1.5% |
|
Vametco concentrate to kiln |
Tonnes |
2 846 |
9 689 |
-41.2% |
-48.3% |
106.0% |
|
Concentrate Grade |
% V |
0.93 |
0.94 |
-11.0% |
-12.0% |
-2.8% |
|
Recovery: Kiln to Final Product |
% |
71.4 |
68.6 |
-16.0% |
-6.0% |
-1.9% |
|
Chemicals |
mtV2 |
26 |
137 |
-23.2% |
-71.6% |
-65.4% |
|
Flake |
mtV 2 |
69 |
76 |
-70.5% |
16.8% |
100.0% |
|
FeV |
mtV 2 |
255 |
552 |
80.7% |
82.1% |
120.8% |
|
Nitro Vanadium |
mtV2 |
- |
- |
-100.0% |
0.0% |
0.0% |
|
Total production |
mtV 2 |
350 |
765 |
-12.7% |
20.4% |
83.3% |
|
Production cash cost (C1)3 |
ZAR/kgV |
574.9 |
623.5 |
48.9% |
44.2% |
-23.8% |
|
Production cash cost (C1)3 |
US$/kgV |
33.8 |
39.1 |
36.2% |
23.8% |
-30.4% |
|
Foreign exchange |
ZAR: USD |
17.0 |
15.9 |
9.4% |
16.4% |
9.4% |
1. Based on provisional, unaudited figures.
2. mtV = metric tonnes of vanadium
3. Excludes depreciation, royalties and selling, general & administrative and social 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
· 9M 2022 production of 765 mtV (9M 2021: 876 mtV). Decrease in production due to lower than anticipated recoveries associated with the Kiln 1 wind-down, electricity load shedding, and a slower than expected ramp-up post commissioning of Kiln 3, as previously mentioned.
· Q3 2022 production of 350 mtV (Q2 2022: 191 mtV). Higher production volumes, supported by improved performance of Kiln 3, with production of 61 mtV in July, 151 mtV in August and 138 mtV in September.
- Kiln 3 performance would have been even better if it had not been for electricity load shedding, with September experiencing the highest frequency and severity of load shedding.
Costs
· 9M 2022 production cash cost (C1) of US$39.1/kgV (9M 2021: US$28.7/kgV). Increase in cost due to lower production volumes, higher raw material costs and costs associated with the ramp-up of Kiln 3.
· Q3 2022 production cash cost (C1) of US33.8/kgV (Q2 2022: US$48.5/kgV). Cost reduction, supported by higher production volumes during the quarter .
· Costs are expected to normalise through the rest of the year, with 2022 production cash costs expected to be within guidance a s we keep implementing our cost containment initiatives but remain dependant on inflationary pressures not increasing even further.
2022 Guidance
· Production guidance of 1,350 mtV - 1,450 mtV is maintained, supported by Kiln 3 ramping-up as planned, although, severe load shedding poses a risk to Vanchem's ability to meet guidance.
· Production cash cost guidance of US$34.9/kgV - US$35.5/kgV (ZAR534/kgV and ZAR542/kgV) maintained.
HEALTH AND SAFETY
· Q3 2022 Total Injury Frequency Rate ("TIFR") of 12.01 (Q3 2021: 8.74) due to increased number of lost time injuries ("LTIs") of 5 vs zero in Q3 2021.
- The Group will focus its efforts on increasing inspections, plant tasks observations and engagement with employees.
ESKOM ELECTRICITY LOAD SHEDDING
The South African energy crisis deepened during Q3 2022. As Eskom, South Africa's national utility, was forced to implement several load shedding measures during Q3 2022, the power utility imposed up to stage 6 which resulted in 6000 MW of demand being curtailed across South Africa. During this period, Vametco's operational performance was not affected by these periods of load curtailment and there is no impact on the plant's production performance.
Unlike Vametco, Vanchem purchases its power through its local electricity distributor, the Emalahleni municipality. The municipality imposes periods of total power loss (and not curtailment) during load shedding, resulting in almost total shutdown of the plant, thereby impacting Vanchem's operational performance. The plant has generators to power the kiln but not the rest of the plant. The use of generators comes at a significant cost implication due to the current cost of diesel. Vanchem has been actively engaging with the local municipality to implement a load curtailment solution. A bilateral technical team from Vanchem and the municipality is preparing for necessary technical hardware to migrate to the curtailment regime that would signal a marked production improvement for Vanchem. Further to this and in collaboration with the Bushveld Energy team, we are developing battery storage and renewable energy import options to supplement the power requirements of Vanchem.
VANADIUM PRICE AND OUTLOOK
· 9M 2022 ferrovanadium London Metal Bulletin ("LMB") price of US$41.1/kgV, CRU Ryan's Note of US$56.5/kgV and Asian Metals of US$34.8/kgV (9M 2021: US$38.2/kgV, US$37.7/kgV and US$36.5/kgV) with USA prices trading at a premium to the rest of the world.
· Q3 2022 LMB Ferrovanadium prices: US$33.8/kgV, (Q2 2022: US$43.8/kgV). CRU Ryan's notes US$50.9/kgV (Q2 2022: US$67.5/kgV) and Asian Metals US$30.4/kgV (Q2 2022: US$33.7/kgV).
· Sales volumes and markets have been flexed to maximise revenue by optimising sales of Nitro Vanadium into the higher priced North American steel market and increasing premium vanadium chemical sales into aerospace and petroleum / catalyst applications.
· Demand for Bushveld Mineral's suite of vanadium products remains strong, and the flexibility afforded by the diverse product mix and wide geographic presence is a significant strength when the current reduction in steel capacity utilisation is considered, allowing emphasis on higher value products and markets. The expectation remains that sales volume will equal production volume.
ENDS
Enquiries: info@bushveldminerals.com
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Bushveld Minerals Limited |
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+27 (0) 11 268 6555 |
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Fortune Mojapelo, Chief Executive Officer |
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Chika Edeh, Head of Investor Relations |
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SP Angel Corporate Finance LLP |
Nominated Adviser & Broker |
+44 (0) 20 3470 0470 |
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Richard Morrison / Charlie Bouverat |
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Grant Baker / Richard Parlons |
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RBC Capital Markets |
Joint Broker |
+44 (0) 20 7653 4000 |
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Jonathan Hardy / Caitlin Leopold |
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Tavistock |
Financial PR |
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Gareth Tredway / Tara Vivian-Neal/ Adam Baynes |
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+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 3% 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. Growth plans to expand to 8,000 mtVp.a. will be pursued, subject to funding and market conditions.
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.
[1] Weighted average production cash cost (C1): is the blended weighted average production cash cost (C1) of Vametco and Vanchem, divided by group production.
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