Bushveld establishes dividend policy following ‘transitional’ 2018

23rd May 2019 By: Marleny Arnoldi - Deputy Editor Online

Bushveld establishes dividend policy following ‘transitional’ 2018

Bushveld's Vametco vanadium mine

Aim-listed Bushveld Minerals’ financial results for the year ended December 31, 2018, reflect its transition from a junior mining company to a significant vanadium producer.

The company’s flagship vanadium platform includes a 74% controlling interest in mining and processing company Bushveld Vametco Alloys, the Mokopane vanadium project and the Brits vanadium project.

The company also has investments in coal, power generation and tin.

For the reporting period, Bushveld reported adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $101-million, on the back of revenue of $192-million, compared with the revenue of $2.8-million reported for the year ended December 2017.

Vametco’s solid financial performance in 2018 was underpinned by a strong vanadium price environment, rounding up to a revenue increase of 131% to $183-million, compared with $79.1-million in 2017, and an Ebitda increase of 353% to $108-million, compared with $23.9-million in 2017.

The average ferrovanadium price increased by 149% in 2018 to $81.20/kg of vanadium, compared with $32.60/kg of vanadium in 2017.

This result was despite Vametco’s production having decreased by 3.4% year-on-year to 2 560 t, compared with 2 649 t in 2017, owing to about 38 days of stoppages and unexpected operational delays.

On the energy side, Bushveld Energy in 2018 commissioned a vanadium redox flow batteries project with State-owned power utility Eskom, including site acceptance and testing; as well as secured a $500 000 grant from the US Trade and Development Agency to support the project and the energy storage industry in South Africa.

The company also progressed the development of a 200 MWh vanadium electrolyte production facility, which will be located in the East London Industrial Development Zone. An environmental-impact assessment for the project is under way.

Meanwhile, Bushveld Minerals nonexecutive chairperson Ian Watson noted in the company’s results statement on Thursday that the group would, from 2019, establish a dividend policy.

“The dividend policy reflects Bushveld Minerals' commitment to return cash to shareholders while prioritising its stated growth strategy. The dividend policy is based on a free cash flow pay-out ratio. The board believes this distribution approach is the most suitable for the company as it takes into account both growth and acquisition capital expenditure.

“The board will review the free cash flow generated by the business, the outlook for business conditions and priorities for capital allocation on an annual basis,” said Watson.

Further, during the course of this year, FD Geoff Sproule will step down from the board, and the company has started a search for his successor.

“Th[is] year promises to be just as eventful as the previous one. The conditional acquisition of Vanchem is an exciting development for our existing, large resource base, and will add significant tonnage to our near- and medium-term production profile. This acquisition is expected to complete between July 31 and October 31,” stated Watson.