Aim-listed Bushveld Minerals has entered into a business and share purchase agreement with Vanchem Vanadium Products (VVP) and South African Japan Vanadium (SAJV) to conditionally acquire VVP’s vanadium production business and SAJV’s ferrovanadium production business in South Africa.
The company will acquire these assets, collectively known as the Vanchem business, plus 100% of the outstanding shares of Ivanti Resources, which has economic rights to certain secondary vanadium units treated within VVP’s vanadium production business, for $68-million.
Vanchem comprises a primary vanadium producing facility with a beneficiation plant capable of producing various vanadium oxides, ferrovanadium and vanadium chemicals. It is located about 200 km from Bushveld’s Mokopane vanadium project.
Bushveld on Thursday said Vanchem provides it with immediate production growth, adding an estimated 960 t of vanadium on an annualised basis using one of the three kilns on site and is expected to achieve a steady-state production of 4 200 t/y of vanadium yearly following refurbishment.
Refurbishment costs are expected to be about $45-million and will be incurred over a five-year period from the completion of the transaction.
Mokopane is intended to become a primary source of feedstock for the business and its development will be accelerated as a result of the transaction.
Capital expenditure (capex) requirements associated with developing Mokopane are estimated to be $20-million.
Bushveld plans to finance the consideration and associated capex requirement from its existing cash resources, future cash flows, as well as, to the extent necessary, debt facilities which are currently being negotiated.
Bushveld CEO Fortune Mojapelo commented that conditionally acquiring another brownfield operating asset in South Africa’s Bushveld Complex would cement the company’s position as one of the leading vanadium producers globally and set it on the path to achieving its 10 000 t/y vanadium production capacity target.
“This highly strategic transaction combines our existing portfolio of high-grade low-cost primary vanadium resources, including the Mokopane greenfield deposit, with an established production facility. This substantially reduces the capital required to bring the Mokopane project into production, while also bringing it on line in a much shorter timeframe than if we were to construct a new plant.”
He indicated that Vanchem added immediate scalable processing capacity and also had a three-kiln configuration which provided important flexibility in terms of the company’s production throughput, without compromising its cost efficiencies.
Moreover, he indicated that Vanchem’s attractive suite of vanadium products complemented the Nitrovan produced at Vametco. These include ferrovanadium, vanadium pentoxide, vanadium trioxide and vanadium chemicals.
The vanadium chemicals capability would be particularly key as the company grew its exposure to the emerging stationary energy storage industry through vanadium redox flow batteries.
“This acquisition is core to our growth strategy of becoming a leading, low-cost, vertically integrated producer and our ability to adequately supply the burgeoning energy storage sector.”