22nd Aug 2018 16:26
LONDON (Alliance News) - Bushveld Minerals Ltd said Wednesday revenue and earnings from its vanadium platform were significantly ahead in the first half of 2018 due to higher prices.
The platform includes Bushveld Vametco Ltd, the Brits vanadium project, and the Mokopane project. In combination, these recorded revenue of ZAR1.05 billion in the six months to June 30, more than twice the ZAR439.1 million revenue the year before.
Bushveld's interest in the vanadium platform is approximately 59.1%, meaning that its share of this revenue was roughly ZAR620.6 million.
Earnings before interest, taxation, depreciation, and amortization for the period came to ZAR521 million, over four times the ZAR98.4 million recorded the prior year. Based on the 59.1% figure, Bushveld's share of this was ZAR307.9 million.
The price of vanadium was the main force behind these increases. The Metal Bulletin ferrovanadium mid average price in the first half of 2018 was USD65.5 per kilogram of contained vanadium, two and a half times the USD26.2 per kilogram average price the year before.
The expansion project at Vametco completed its second phase during the period, bringing yearly production capacity to 3,750 tonnes of vanadium from 3,035 tonnes. The company expects a gradual increase in output at Vametco in the second half of 2018 at it ramps up to match this new capacity, though this process has faced delays.
This expansion and the difficulty in achieving full capacity, in addition to industrial action and a kiln maintenance programme, meant that vanadium production dropped 14% in the second quarter to 629 tonnes from 731 tonnes in the first. This resulted in total first half production below company guidance at 1,360 tonnes.
Consequently, Bushveld has revised its production guidance for 2018 downwards to between 2,850 and 3,000 tonnes of vanadium.
"I am pleased to see the completion of phase two of the Vametco multi-phased expansion project...bringing Vametco's annual production run rate to 3,750 tonnes of vanadium. The slower than expected ramp up to this production capacity has been disappointing contributing to the revised production guidance," said Bushveld Chief Executive Fortune Mojapelo.
"Notwithstanding the 2018 production guidance revision, we remain confident that the company's expansion efforts remain on track to grow Vametco's production capacity to 5,000 tonnes of vanadium per annum...Meanwhile, we are very pleased with the recent positive drilling results at the Brits vanadium project, which has shown similar mineralisation to Vametco," Mojapelo added.
Shares in Bushveld were down 7.1% at 24.38 pence on Wednesday.
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