A strong vanadium market has ensured that Aim-listed Bushveld Minerals’ Vametco operation, which forms part of Bushveld’s vanadium platform, generated healthy cash flow, despite its operational performance falling below expectations during the fourth quarter ended December 31.

Even though the vanadium producer is benefiting from high vanadium prices at the moment, CEO Fortune Mojapelo on Wednesday said the company remained mindful of the imperative to drive Vametco towards operational excellence and realise its true potential.

The company’s transformation programme, which has been initiated at Vametco, is designed to achieve that exact target. Subsequently, Bushveld expects to see an improved production performance this year.

Bushveld has started the implementation of the transformation programme and expects production levels in the current year to be higher than 2018.

The company said it remained confident that, with the implementation of the operational transformation programme, Vametco would be able to achieve its future production targets and efficiencies while being one of the lowest-cost vanadium producers.

“The deposit hosts exciting potential and our drilling programmes at Vametco and the Brits vanadium project have been carefully designed to ensure that we extract the wealth of the minerals in our portfolio and extract them in the most cost efficient, sustainable way,” Mojapelo explained.

Recent exploration results at the Brits deposit, which is located in the North West province, in South Africa, have continued to prove the deposit as a future source of additional production tonnages, he added.

Considering that this is an election year for South Africa, Mojapelo also noted that the company expected continued stability and positive sentiment that would allow it to focus on its operations and make long-term investment decisions for the benefit of all stakeholders, including employees, local communities and shareholders.

Sales revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) for Vametco for the 2018 financial year increased by 142.7% and 349.2%, respectively, to $192.2-million and $107.5-million.

This, the company highlighted on Wednesday, was underpinned by higher vanadium prices.

Vametco’s production for the financial year reached 2 560 t in the form of Nitrovan from magnetite concentrate, compared with the guidance of between 2 600 t and 2 650 t.

Production was impacted on by an unplanned maintenance and repairs programme in the fourth quarter at the refractory and cooler girth sections of the plant.

Phase 2 of the multiphase project, Bushveld said, was completed in June last year, thereby increasing Vametco’s production capacity to 3 750 t.

However, during the commissioning phase, production of the new milling circuit was unable to ramp up to nameplate capacity.

Concurrently, there was a reduction in the run-of-mine ore vanadium grades. These events led to a reduced concentrate production, lower recoveries and plant instability, resulting in the plant not meeting its capacity target, Bushveld commented.

The diagnostic review highlighted that no additional capital expenditure is required to achieve a sustainable production of about 3 400 t, which represents 90% of nameplate capacity.

To achieve the production target management will be primarily focused on, among others, increasing the vanadium grade in crushed ore through improved mine scheduling, which will result in an increased exposure to ore of higher vanadium content and magnetite.

Additionally, the focus will also be on increasing the vanadium grade in kiln feed through improved silica liberation, as well as increasing kiln availability through improved engineering practices and production throughput.

During the third phase of the multiphase project, the diagnostic assessment highlighted that additional targeted investment is required for the kiln, and the leach and crushing circuits to reach Phase 3 capacity.

The company will continue to explore several improvement initiatives to further increase the production capacity to 5 000 t.

During this year, Vametco will continue to progress environmental approvals for Phase 3 of the multiphased expansion project. In addition, detailed design work and capital estimation will commence with a view to construction commencing in 2020. 

Additionally, an employee share participation scheme will be implemented at Vametco during the first quarter of this year, which will more closely align Vametco’s workforce to its operational targets.

Meanwhile, with regard to the company’s tailings facility expansion, in order to maintain deposition capacity for depositing the calcines, part of the ongoing operations will be completed during the first quarter of this year and deposition will start during this period.

The kiln off-gas project has also been initiated to comply with regulatory requirements and further increase kiln feed throughput. Commissioning is planned for end of the first quarter.