https://www.miningweekly.com

Bushveld completes Vametco acquisition, progresses towards integrated vanadium platform

19th May 2017

By: Ilan Solomons

Creamer Media Staff Writer

     

Font size: - +

Diversified mineral development company Bushveld Minerals has completed the acquisition of a 78.8% shareholding in Strategic Minerals Corporation (SMC), the ultimate holding company of Vametco Alloys, from Evraz Group.

Bushveld CEO Fortune Mojapelo notes that one of the acquisition highlights was that the $16.4-million consideration paid was substantially less than the cost of a greenfield mine and plant of the same capacity.

The acquisition was financed through mechanisms including the exclusivity fee cash payments to Evraz of $1.6-million, a bridge loan facility of $11-million provided by trade finance provider the Barak Fund, a $3-million financing facility from a sales and marketing agreement with metals trading services provider Wogen Resources and a cash contribution of $820 000 from Bushveld and financing partner Yellow Dragon Holdings.

Mojapelo tells Mining Weekly that this “transformational acquisition” is in line with Bushveld’s strategy develop a significant, vertically integrated vanadium platform and accelerates the company’s path to production by several years. He notes that the acquisition is also aligned with the company’s aspirations in the global energy storage space by providing capacity for potential electrolyte manufacturing.

Vametco Profile
Mojapelo elaborates that Vametco is a high-quality, low-cost mine that has a plant with a patented vanadium product and a global vanadium customer base. The property is located 8 km north-east of Brits, in the North West.

The project has a mining right covering vanadium and other associated minerals over Portion 1 of the farm Uitvalgrond 431 JQ and Portion 1 of the farm Krokodilwaal 426 JQ, where it operates an openpit mine supplying ore to its vanadium processing plant, located on the same properties.

Mojapelo highlights that Vametco has a Joint Ore Reserves Committee- (Jorc-) compliant resource of 27-million tons of vanadium, with some of the highest in- magnetite vanadium pentoxide grades worldwide, averaging 2.55% vanadium pentoxide in magnetite. “These ore reserves are sufficient to support the operations for 24 years at current production levels,” he notes.

Mojapelo also points out that Vametco contains vandium mineral resources exceeding 135-million tons of Jorc-compliant resources, with average vanadium pentoxide grades of 2.1% vanadium pentoxide in magnetite.

He adds that there is “significant scope” to increase this reserve base through targeted exploration of the inferred resources, as the company’s neighbouring Brits vanadium project hosts known adjacent mineralisation with similar vanadium grades.

“The Brits deposit contains outcropping mineralisation and offers an extension of the life of operations and presents cheaper near-surface ore for the Vametco processing plant,” Mojapelo states.

He points out that the plant currently has capacity to produce 2 750 t/y of vanadium in the form of Nitrovan and modified vanadium oxide. However, he remarks that there is scope to “materially expand” within a short time to 3 300 t/y of vanadium through targeted debottlenecking interventions at limited capital expenditure funded from operating cash flows, subject to the conclusion of the necessary feasibility studies.

Additionally, Mojapelo highlights that Bushveld has an established leadership team. The team members have extensive experience in vanadium, with their experience collectively covering all vanadium processing plants in South Africa.

Low-Cost Operations
Mojapelo notes that Vametco is one of the cheapest primary producers of vanadium worldwide, with all-in cash costs of $17.33/kg in 2015. The company aims to drive this down even further by implementing efficiency enhancement programmes and adopting new technologies.

He points out that this low-cost operating model enabled Vametco in 2015 to generate revenues of R629-million and an operating profit of R26.7-million in a constrained economic environment with low vanadium prices, averaging $18.60/kg for the year.

He comments that the mine’s closing cash position was R47-million in 2015 and that the positive performance continued into 2016, with operations reporting “markedly improved” results for the year, headlined by production volume increases to 2 850 t of vanadium.

Market Outlook
Mojapelo says the vanadium market presents one of the “most promising of outlooks”, characterised by a sustained structural deficit, which creates potential for upward price correction over the next five years.
Analysts, such as international metals and minerals researchers Roskill and TTP Squared, predict a 17 100 t deficit of vanadium by 2021.
Mojapelo remarks, that with steel demand expected to grow in emerging markets, this will, therefore, also drive vanadium demand growth.

He says that, with the energy storage market projected to grow to about $350-billion by 2030, this will also present significant demand upside for vanadium.

“Vanadium Redox Flow batteries are set to take up a significant share of the stationary energy storage market by 2030, owing to their long life cycles, scalability, quick response times and depth of discharge, among other benefits.

“This technology is in commercial production, with large-scale deployments globally under development or in the early operational stages,” Mojapelo concludes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION