Bushveld refinances after first-half earnings slide

The South Africa-based miner has now signed a major financing deal with Orion Mine Finance that will go towards paying off debt and increasing production at the Vametco mine. Bushveld has put expansion work on hold during the pandemic, due to both the fall in the vanadium price and local shutdowns. 

On top of the debt, which will be repaid quarterly based on production and price levels, Bushveld will issue $35m (£27m) in convertible loan notes. Orion will take up to $20m of this as well, making it a large shareholder of Bushveld if converted into equity. 

Bushveld’s share price was up 7 per cent on the news, to 11.6p, although it is down 45 per cent since the start of 2020. 

Bushveld chief executive Fortune Mojapelo told Investors Chronicle the financing would see vanadium production increasing. “At this stage increasing production at Vametco and making sure the critical refurbishment at Vanchem is taken care of are absolutely the most important priorities,” he said. 

Vanchem is the newly bought operation and Vametco is the company’s established mine from which it wants to produce 4,200 tonnes (t) of vanadium a year. 

Production in the first half increased 18 per cent to 1,649t, largely thanks to Vanchem. Sales and earnings were way down on the first half of 2019, however, because the vanadium price tumbled to $25.70 per kilogram (kg) in the first half from $56.30/kg the year before. The fall started before the pandemic hit, with an average of $26.90/kg in the second half of 2019.

In the first half, Bushveld fell to a cash loss of $1m from a cash profit of $41m last year. 

Consensus forecasts compiled by FactSet see full-year cash profits at $28m, compared with $53m last year.