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Aim-listed Bushveld Minerals achieved a solid set of numbers from its two production assets for the third quarter ended September 30, CEO Fortune Mojapelo said in a statement on November 24.
He said stability around the pandemic and operations allowed the company to proceed with its growth plans, supported by the funding that Orion Mine Finance had committed to provide both through a production financing agreement and convertible loan note as announced in recent weeks.
Mojapelo noted that news around a Covid-19 vaccine and the world returning to “normal” would bode well for demand from the underlying steel market in Europe and the US − the economies that have been the hardest hit by the virus.
Bushveld Vanadium is a low-cost, vertically integrated primary vanadium producer.
Group production for the third quarter of 1 019 t of vanadium was 31% higher than the 778 t produced in the second quarter, owing to the lifting of the nationwide lockdown.
Group production for the nine months to September 30 of 2 667 t was 37% higher year-on-year as a result of the inclusion of the Vanchem processing assets for the full nine-month period.
Group sales for the nine months of 2 987 t was 74% higher than year-on-year as a result of the inclusion of sales from Vanchem.
Severe weather events at the beginning of November resulted in an unexpected longer than normal power outage at Vametco, impacting on the refinery section.
Despite this incident, and assuming there are no further stoppages, the group still expects to meet the lower end of its full-year production guidance range of between 3 660 t and 3 950 t.
Production for the third quarter, in the form of nitrovan and ferrovanadium, was 725 t, 29% higher year-on-year as a result of reduced commissioning and ramp-up time following the tie-in of the kiln off gas, compared with the 2019 maintenance shutdown.
Production was also 28% higher compared with the second quarter owing to the lifting of the nationwide lockdown.
Production for the nine months to September 30 was 1 942 t.
Despite the recent power outage, assuming there are no further extraneous incidents, Vametco expects to meet the lower end of its full-year production guidance range of between 2 700 t and 2 850 t.
Production for the third quarter was 294 t, 39% higher quarter-on-quarter.
Production for the nine months was 725 t.
The operation is on track to meet full-year production guidance of 960 t to 1 100 t.
Subsidiary company Bushveld Energy is an energy storage component manufacturer and project developer that is focused on vanadium-based energy storage systems called vanadium redox flow batteries (VRFBs).
Increased Chinese demand during the third quarter resulted in price disparities between China and the rest of the world for a short period. This de-synchronisation between China and the rest of the world translated into temporary price premium for vanadium products, Bushveld reported.
As a result, Chinese imports surged and inventory levels increased. The vanadium prices in China have since retracted to similar levels seen across other regions owing to increased supply of vanadium products.
The increased infrastructure spending in China has resulted in higher steel production, supporting vanadium demand, with China having been a net vanadium importer during July, August and September.
The weak demand in Europe as a result of further lockdown measures being introduced, as well as constrained demand in the US, is expected to continue until the end of this year.
However, Bushveld expects increased deployment of VRFB demand, as governments focus on accelerating the energy transition to a low-carbon energy future, which will increase vanadium demand.
In October, Bushveld announced that it had received exchange control authorisation from the South African Reserve Bank's Financial Surveillance department, a key condition for the completion of the $30-million production financing agreement with Orion Mine Finance.
Progress is being made with regard to the outstanding material conditions, the company said.
In November, Bushveld announced that it had successfully raised $35-million through a convertible loan note instrument with Orion Mine Finance.
Orion has agreed to subscribe for up to the entire $35-million of convertible loan notes under the instrument.
As an adjustment to the previously announced terms of the instrument the conversion price of the convertible loan notes has been set at 17p. All other terms remain unchanged.
The proceeds from the issue of the convertible loan notes will go towards the first phase of Vanchem's critical refurbishment programme and debt repayment.