Vertically integrated vanadium producer Bushveld Minerals has experienced a 19% quarter-on-quarter increase in production for the quarter ended September 30, resulting in what CEO Craig Coltman has described as significant improvements in cost management.
In the company’s operational update for the three months and nine months ending on September 30, released on November 6, production was marginally higher year-on-year, while the weighted average cash costs decreased, although this was counteracted by lower sales figures compared with the same period last year.
For the third quarter, Bushveld reported production of 1 000 t of vanadium, marking an improvement from the 840 t produced in the second quarter. However, this figure was slightly lower than the 1 016 t of vanadium produced in the third quarter of last year.
The weighted average production cash cost decreased to $26.50/kg of vanadium from $27.40/kg in the second quarter and $29.30/kg in the third quarter of 2022. Sales in this period amounted to 849 t of vanadium, down from 1 068 t in the previous quarter and 1 034 t a year ago.
For the first nine months, the total production of vanadium reached 2 784 t, showing a slight increase from the 2 657 t produced in the same period in 2022. The weighted average production cash cost for this nine-month period reduced to $26.40/kg from $28.90/kg in 2022. However, sales amounted to 2 945 t, up from 2 678 t last year.
Meanwhile, the total recordable injury frequency rate was noted at 5.69, a decline from 10.25 in the first nine months of 2022.
The company's guidance for the full 2023 remains on track with production expected to be between 3 700 t and 3 900 t of vanadium.
The company’s Vametco vanadium mine production is estimated to be about 200 t a month of vanadium for the remainder of the year.
Meanwhile, the Vanchem vanadium processing facility’s output is expected to be about 150 t in November and about 180 t in December.
In October, the group's production amounted to 387 t of vanadium, with Vametco contributing 209 t and Vanchem 178 t.
Additionally, the company said it remained on target to meet the group's weighted average production cash cost guidance, estimated to be between $26.60/kg and $26.90/kg.
“[The result] gives us confidence that we have made the right decisions, especially at Vanchem, with the implementation of the various initiatives and the goal now is to ensure that things stabilise and even improve further from here,” Coltman said.
In corporate updates, Bushveld reminded shareholders of the announcement of a binding term sheet with investment fund Southern Point Resources on September 11 for a cumulative proposed investment ranging between $69.5-million and $77.5-million.
So far, the company has received R150-million in interim working capital funds as part of the transaction and is in the process of finalising the remaining aspects.
Bushveld said it was also progressing various work streams to complete financier Orion Mine Finance's convertible loan note restructuring before the due date of December 21.
Bushveld entered into a nonbinding term sheet with Orion Mine Finance to refinance its pre-existing convertible loan note in May.
The proposed agreement envisaged that the convertible debt obligations of about $45-million due in November would be refinanced into a three-year term loan totalling about $27-million, repayable in escalating capital amounts. It would also see a new convertible loan note of about $13.5-million, maturing in June 2028, as well as the conversion of about $4.5-million of existing convertible loan notes into shares.
In addition, the agreement would see a supplemental production financing agreement at not more than 0.22% of gross revenues, reducing by 80% at loan maturity.
In addition to its performance during the periods under review, Bushveld revealed a post-period agreement to acquire the 26% minority interest in Bushveld Vametco Holdings, a transaction that the company considered to add value for shareholders.
“Completion of these transactions will steady the ship and ensure Bushveld is a sustainable business for the long term,” Coltman said.
