BUSHVELD Minerals CEO Craig Coltman warned the company would put more focus into maintenance than usual in the first six months of 2024 in order to produce higher levels of vanadium in the second half of the year.
“We will spend more funds than historically to get the assets up to a level of reliability for higher production in H2,” Coltman said in a third quarter call to analysts. “We want to improve the probability for higher output,” he said.
A 10% increase in vanadium would be “a massive positive cash balance on the bottom line”, he said. This could potentially flow from a 5% improvement on asset reliability.
A four day shutdown for maintenance had been completed at Bushveld’s Vanchem plant, in South Africa’s Mpumalanga province, this month following a nine day shutdown earlier this year. “We are really sweating the asset at the moment and there are risks,” said Coltman. Bushveld also produces vanadium, a steel feed mineral, from Vametco in the North West province.
Earlier today Bushveld announced third quarter production of 1,000 metric tons of vanadium (mtV), 19% higher than in the previous quarter. The company has targeted total production of 3,700 and 3,900 mtV for the year which Coltman said was in now in the company’s sights. Bushveld had previously guided to 2023 production of 4,500 tons.
The market responded well to the production number, which had the result of lowering cash costs to $25.5 per kilogram of vanadium (kgV) (Q2: $27.4/kgV and $29.3/kgV in Q3, 2022). Shares in the company gained 17% on the London Stock Exchange, the first real rally in valuation since investors started selling the stock in March, when it was trading at more than five pence apiece.
Another risk, however, was the impact of above-average rainfall on the barren dam at Vametco. The barren dam is part in the latter end of the vanadium processing pipeline. “We have to find a way to keep the rain off,” said Coltman.
A new dam could be built in theory, but in practice it would take 18 months to two years to complete and involve more capital than Bushveld has presently.
Bushveld is a company in crisis. In the third quarter it received just over $8m in working capital as part of $70m to $77.5m recapitalisation by unknown investment firm, Southern Point Resources. Southern Point Resources will take a significant stake in the business in return.
Critical to this process, however, is agreeing a new conversion price for convertible notes with Orion Mine Finance, one of Bushveld’s lenders, initially priced at 6 pence/share. Coltman said he was hopeful this would be finalised before the December 21 deadline.
There was a cash outflow of $2.7m as at end-June. That was less than the $7.1m in the previous year, but cash had dwindled to $3.7m nonetheless.
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