Bushveld Minerals upbeat about year ahead

22nd January 2018 By: Megan van Wyngaardt - Creamer Media Contributing Editor Online

JOHANNESBURG (miningweekly.com) – Aim-listed Bushveld Minerals made “tremendous strides” during the fourth quarter of 2017, which was marked by a strong financial performance from its Bushveld Vametco operations.

Supported by a strong vanadium price environment – the ferrovanadium price averaged $33/kg for the 12 months to December 31 – a revenue increase of 44% and a 553% increase in earnings before interest, taxes, depreciation and amortisation were realised at the operations, CEO Fortune Mojapelo outlined in an operational update on Monday.

Vametco produced 2 694 metric tonnes of vanadium (MTV) in the form of Nitrovan from magnetite concentrate during the 2017 calendar year; however, vanadium production decreased by 7.2% relative to the 2016 calendar year, owing to increased maintenance downtime.

Vanadium production for the December quarter decreased by around 19.4% relative to the September quarter owing to the kiln riding ring repair and kiln upgrades. The intervention on the kiln has allowed increased kiln feed, as part of the second phase of the expansion project.

Bushveld Minerals expects to produce 3 680 MTV this year, comprising 3 050 t of Nitrovan and 630 t of ferrovanadium.

The increased production will be supported by the ramp-up of the second phase of the expansion project, which is expected to increase Vametco's production capacity from the current 3 035 MTV/y to 3 750 MTV/y by June.

A further two phases of expansion will increase production to over 5 000 MTV/y by the end of 2019, with the completion enhancing Vametco's existing competitive position in a structurally sparse market.

Meanwhile, Bushveld Minerals’ Bushveld Energy operations, in joint venture with the Industrial Development Corporation, have completed a locational study for a vanadium electrolyte production plant in South Africa.

The dual locational strategy for electrolyte production is the preferred option, as it will shorten the environmental approval process, reduce upfront capital requirements and enable the plant to take advantage of local government incentives.

Jointly with Bushveld Vametco, Bushveld Energy produced initial, laboratory batches of vanadium electrolyte using Vametco's intermediary product as feedstock. In-house and international testing confirmed the viability of using the Vametco feedstock to produce various types of battery-grade electrolyte.

Bushveld Energy CEO Mikhail Nikomarov noted that the fourth quarter was “extremely productive” for Bushveld Energy. “The year [ahead] will be an exciting growth year for our company, building on results initiated in the December 2017 quarter."

Meanwhile, the group’s coal and power platform Lemur Resources said it would focus on obtaining the concession for its Madagascar-based Imaloto project, following the signing of a 30-year power purchase agreement with the country’s Jiro sy Rano Malagasy (Jirama) utility.

Lemur is now embarking on an environmental- and social-impact assessment (Esia) study, which is a requirement before starting mining or construction activities on site.

The company has already started early-stage discussions with select parties regarding funding and said it would focus on securing offtake agreements with other power users to supplement the demand from Jirama.

It would also seek to conclude coal offtakes with third parties. Although the coal mine is viable when supplying only Jirama, the supply of coal to third parties will provide early cash flow prior to the commissioning of the power plant.

“We plan to start the Esia study in the first quarter and continue progressing the bankable feasibility study,” Lemur CEO Prince Nyati highlighted.

Majopelo added that the decision to increase the scope of the project from a pure coal mine to a fully integrated power project has not only increased the size of the Imaloto project, but also significantly derisked the project by guaranteeing offtake of the coal produced.

“This gives us various options on the approach and timing of advancing the project,” he noted.