Date: Sep 14, 2018
Bushveld Minerals Limited (LON:BMN) has strengthened its grip on South African vanadium producer Vametco.
Through the purchase of the stake held by Sojitz Noble Alloys, Bushveld has increased its interest in Strategic Minerals Corporation (SMC) to 100%.
SMC owns 75% of Vametco, so Bushveld’s stake in the vanadium group is also now 75% compared to 59.1% previously.
READ: Bushveld Minerals reports “unprotected industrial action” at vanadium mine
Bushveld will pay Sojitz US$20mln for its 21.2% share in SMC, which values the venture at US$94mln in total.
Shore Capital said the price Bushveld has paid looks good.
“Very simplistically, Bushveld’s c.£210m market cap would have implied a value for 100% of c.US$463m (ignoring cash and other assets and liabilities), or c.US$98m for Sojitz’s 21.22% interest.
“Seen in that light, Bushveld would appear to have scored a very good deal. The company’s corporate structure is simplified and exposure to Vametco’s cash generation is increased.”
Traditionally used to strengthen steel, vanadium prices have soared recently on hopes batteries using the metal as an electrolyte can be a long-term option to store electricity.
In the past 12 months alone, the price of the metal has risen 200%.
Vametco is one of only three producing primary vanadium operations in the world and has 3% market share.
Fortune Mojapelo, Bushveld’s chief executive, said: This acquisition is a significant achievement as it fulfils the company’s undertaking to simplify its corporate structure in order to increase exposure to the underlying cash flows at Vametco.
