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Bushveld Minerals

CEO Q&A with Fortune Mojapelo at Bushveld Minerals Limited (LON:BMN)

Bushveld Minerals Limited (LON:BMN) Chief Executive Officer Fortune Mojapelo caught up with DirectorsTalk for an exclusive interview to discuss the updated resource statement for Vametco, key points from their final results, the recent Bushveld Energy RNS and what to look out for in the coming months.

Q1: Now, there’s been quite a bit of news flow for BMN over the last month or so and towards the end of last month, you provided an update on the Vametco Inferred and Indicated Mineral Resource. Can you just talk us through the highlights?

A1: We essentially provided an updated resource statement for Vametco. Vametco is our core producing platform and following some additional work that we did, some drilling, we are very pleased with the updated results.

These reflect the significant increase on our resource size, confirms the great quality of our resource space, so we now have a resource space that is 187 million tonnes with an average grade of 1.98% V2O5 which represents an increase of some 31%, as well as a growth in our reserve of 85% to 48.4 million tonnes.

Again, importantly, this is a growth that is not at the expense of the quality of our resource space and the reserve grade is at 2.02% V2O5 which is fantastic.  

Q2: We also saw final results for the period ended 31st December 2018, in your view what were the key points that investors should take from those results?

A2: It’s the first time that we have the results reflecting the consolidated position of the company including Vametco, which we acquired at the start of 2017 so for the first time we can see the impact of an asset like Vametco on the performance of Bushveld Minerals.

On a consolidated basis, BMN has demonstrated very solid financial figures and $92 million revenue, an EBDITA of $101 million and with a very strong cash position of $42 million.

Of course, underpinning all of this is Vametco itself which has demonstrated its attraction, its solid proposition to us as a low cost producer.

One other point that I think you will pick up on from our financial results, which is important to highlight, is the fact we reached all of these results without any debt on our balance sheet so that positions us very very well going forward.

Q3: Now, just yesterday we saw that your subsidiary, Bushveld Energy Limited, has enabled the successful deployment of an innovative vanadium electrolyte rental product in industrial-scale batteries. Obviously, this is very exciting but what does this mean for the company?

A3: So, you know we’ve got two key platforms for vanadium in our company:

Bushveld Vanadium which is really the production asset comprising three very very attractive deposits with a resource which is fantastic, the largest primary vanadium resource space of anyone with the kind of grade that I talked about earlier. Vametco is one of two production assets with Vanchem coming on board, the two of them at full production capacity would be producing the order of 8,400 tonnes of vanadium per annum.

With that kind of production platform, which is low cost, we believe that we’re very well placed to play a meaningful role also in the energy space so we’ll continue to supply to the steel sector but we also see the energy storage market as a really attractive market for us as a company to get involved with.

That’s important at three levels, the first one being that it helps strengthen and diversify vanadium demand. The second one is the fact that the stationary energy market in its own right is a very very compelling commercial opportunity for us as a company. Thirdly, we think that energy storage provides a very neat natural hedge for us as a company because if vanadium prices come lower, the attraction of vanadium flow batteries in traditional energy storage applications becomes that much more compelling.

So, that’s the underlying motivation for us to grow into this in an interesting market however, we are also mindful that one of the key hurdles to adoption for vanadium redox flow batteries is the volatility in the vanadium price. Unlike many of the battery systems, vanadium makes up a significant share of the cost of the vanadium flow batteries, we’re talking between 30% and 45% quite easily.

So, a rental product like the one we have done is our way of solving for that challenge, we believe that it takes out a significant chunk of the upfront capex of the battery systems and convert it into an opex number over what is a long life span for these batteries.

They’ve got a very long life span, a vanadium flow battery can last for about 20 years, during that period the electrolytes doesn’t degrade and because it doesn’t degrade, it has a significant residual value. At the end of the life of a vanadium flow battery, that electrolyte can easily be put into another battery and so, that’s why we thought an effective solution would be a very very key enabler for vanadium flow batteries.

We’re very pleased to have done the first contract and I should say that this is the first and we certainly hope to do a lot more going forward.

Q4: Now you’ve said the structures and documentation is now in place and forms the groundwork for future projects. Is it safe to assume then that there’s already been discussion about further projects? I guess that I’m asking what else should investors be looking out for in coming months from Bushveld Minerals?

A4: If we’re talking further projects, it depends what we’re referring to.

If we’re talking about our primary producing platform, I think that it’s fair to say that with Vametco and Vanchem, our priority is to complete the acquisition of Vanchem post, competition approvals, and to make sure that we undertake that refurbishment programme as quickly as possible to get Vanchem producing at a 4,200 metric tonne of vanadium per annum level.

Vametco, we have a clear priority to increase the production volumes there, incidentally as you increase your production volumes, you further lower your cost of production which will make our production that much more competitive.

So, those are the immediate priorities for us from a vanadium production point.

On the energy front, there are a number of initiatives that we have said that we are doing, certainly we want to grow a pipeline of the rental product and we also want to grow in our pipeline of vanadium flow battery projects. One of the things we do is try to develop mandates for large-scale energy storage solutions which we can solve through vanadium batteries.

Of course, we’ve got the electrolyte plant that we’re building up in East London and we have a solar-VRFB mini-grid that we are busy with at Vametco which we are quite excited about, which we’d like to use to demonstrate the business case for typically what you call your traditional large energy user-type customers.

So, that’s a lot of stuff that the market can expect from us.

On a corporate level, we have announced that we are looking and seeking a listing on the Johannesburg Stock Exchange, we think that we have a story that resonates very very well with the capital markets in South Africa and we’d like to create a platform for local capital markets to participate in our story.

We continue the work, of course, to expand our organisational capacity, we’ve seen tremendous growth over the last 2 years and it’s quite important to us to make sure that our capacity to manage this growth, as well as the growth that lies ahead, is strengthened and in respect of that, you will also see some news flow in the coming months.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.