Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated primary vanadium producer and energy storage provider, with ownership of high-grade assets in South Africa, is pleased to announce its full year results for the year ended 31 December 2020 and an update on 2021 guidance.
FY2020 Operational and Financial Highlights
· An improved safety record achieving a Total Injury Frequency Rate (“TIFR”) at Vametco of 18.21, an improvement of 22 per cent (2019: 23.49), and a TIFR of 5.26 at Vanchem.
· Record Group production of 3,631 mtV (2019: 2,931 mtV), primarily as a result of the inclusion of Vanchem for a full year.
· Record Group sales of 3,842 mtV (2019: 2,392 mtV), as a result of the full year contribution of sales volumes from Vanchem.
· Revenue of US$90.0 million, a 23 per cent reduction relative to 2019 (2019: US$116.5 million) as a result of a 52 per cent decline in the average realised price, partly offset by an increase in sales volumes.
· Group cost per unit sold of US$29/kgV (2019: US$37/kgV), reduction is supported by the dilution of fixed costs through the acquisition of Vanchem and increase in its production.
· EBITDA loss of US$14.9 million, (2019: US$32.6 million) largely due to a decline in vanadium prices, and partly offset by a reduction in other operating and administrative costs.
· Entered into a transaction with Orion Mine Finance under which we successfully secured US$65 million in funding. The financing provides support to the Group to achieve a steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022.
· Ended the year with cash and cash equivalents of US$50.5 million held at 31 December 2020 (2019: US$34.0 million).
· Continued progress in implementing the Company’s strategy in the growing stationary energy storage sector through Bushveld Energy:
§ Successfully completed investments in Vanadium Redox Flow Batteries Original Equipment Manufacturers Invinity Energy Systems plc (“Invinity”) and Cellcube.
§ Signed an electrolyte rental contract between Pivot Power, part of EDF Renewables, and Vanadium Electrolyte Rental Limited, a joint venture established with Invinity.
Post period events
· Group Unaudited cash and cash equivalent of approximately US$31.0 million as 27 June 2021.
· Successfully renegotiated the covenant testing terms required under the ZAR125 million Revolving Credit Facility (“RCF”).
§ Nedbank has agreed to waive the covenants for the June 2021 period and relax the December 2021 Group net debt to EBITDA ratio from 2.50 times to 4.0 times. A condition of the waiver is that the RCF is amortised by ZAR5 million (approximately US$0.3 million) per month from 6 August 2021, with a bullet payment of ZAR50 million (approximately US$3.4 million) due on the maturity date of 6 November 2022.
· Positive renegotiations with Duferco Participations Holding S.A (“Duferco”) on the remaining balance US$11.5 million of convertible balance, to result in US$5 million being payable in November 2021 and the remaining US$6.5 million being converted into Bushveld shares.
· Commenced construction of the 200 MWh electrolyte plant in June 2021.
· Monetised investment in Invinity and realised approximately US$13 million.
2021 Guidance
Bushveld Vanadium
· Group production guidance revised to between 3,400 mtV and 3,600 mtV.
· As reported in the Q1 2021 operational update, Vametco’s performance was impacted by slower than expected ramp up post the successful completion of the 35-day planned maintenance shutdown. There were more unforeseen mechanical breakdowns after start-up, followed by six-days of unprotected industrial action in April 2021. Due to this:
· Vametco’s 2021 guidance has been revised to between 2,300 mtV and 2,400 mtV, previously between 2,700 mtV and 2,850 mtV.
· Production cash cost (C1) has been revised to between US$23.7/kgV and US$24.20/kgV (ZAR339/kgV and ZAR345/kgV), previously US$20.0/kgV and US$21.30/kgV (ZAR320/kgV and ZAR340/kg).
· Due to delays in securing steel supplies for the Kiln 3 refurbishment schedule, Vanchem’s 2021 guidance has been revised to 1,100 mtV and 1,200 mtV, previously 1,400 mtV and 1,500 mtV.
· Production cash cost (C1) has been revised to between US$30.3/kgV and US$31.1/kgV (ZAR434/kgV and ZAR444/kgV) previously, between US$26.20/kgV and US$26.70/kgV (ZAR419/kgV and ZAR427/kg).
· Vamchem’s capital expenditure for the year associated with the refurbishment programme has been revised to US$11.3 million, previously US$15.7 million with most of the cost being ZAR-denominated.
· The Company is to grow its vanadium production to a production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022, following completion of the refurbishment and ramp up of Kiln 3 at Vanchem, which is of a similar scale and capacity to Vametco, and will see Vanchem produce at an annual steady state production run rate 2,600 mtV.
· Pre-feasibility studies are under way at Vametco and Vanchem to increase Group production run rate to between 6,400 mtVp.a. and 6,800 mtVp.a. in the medium-term and to 8,400 mtVp.a. in the longer term. Completion of the studies in Q4 2021 will allow a capital efficient sequencing of the growth phases between Vametco and Vanchem.
· Implement the cost savings programme in order to achieve costs savings of approximately US$2.5 million to US$4 million per year, starting from 2022.
Bushveld Energy
· Progress construction of the electrolyte plant, with an initial 200 MWh capacity.
· Scale up the vanadium electrolyte rental product with new contracts.
· Support and fund the growth of Cellcube, together with the other shareholders.
· Attain financial close and commence construction of the Vametco hybrid mini-grid.
Group Capital Expenditure
· Capital expenditure expected for 2021 of approximately US$26.8 million, of which we have already spent US$8.6 million as at 31 May 2021, with most of the cost being Rand-denominated. The Capital expenditure includes the following
· Vametco approximately US$6.0 million;
· Vanchem approximately U$11.3 million; and
· Bushveld Energy, approximately US$9.5 million, including the capital of Bushveld Electrolyte Company (“BELCO”), (principally funded by Bushveld Energy’s partial asset sales of its Invinity shares in H1 2021.)
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, vertically integrated primary vanadium producer. It is one of only three operating primary vanadium producers, owning 2 of the world’s 4 operating primary vanadium processing facilities. In 2020, the Company produced more than 3,600 mtV, representing approximately three per cent of the global vanadium market. With a diversified vanadium product portfolio serving the needs of the steel, energy and chemical sectors, the Company participates in the entire vanadium value chain through its two main pillars: Bushveld Vanadium, which mines and processes vanadium ore; and Bushveld Energy, an energy storage solutions provider. Bushveld Vanadium is targeting to materially grow its vanadium production and achieve an annualised steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a by the end of 2022, from projects currently being implemented. Beyond that, pre-feasibility studies are in progress to determine the optimal path to increase production even further to a steady state production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in the medium-term and to a steady state production run rate of 8,400 mtVp.a in the long term.
Bushveld Energy is focused on developing and promoting the role of vanadium in the growing global energy storage market through the advancement of vanadium-based energy storage systems, specifically Vanadium Redox Flow Batteries (“VRFBs”).
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