Bushveld Minerals, a leading source of South African vanadium, is buying the Vanchem business and Ivanti Resources for $68m, cementing its position as a large source of vanadium and setting itself up for further growth.
Bushveld, which is traded on London’s Alternative Investment Market (AIM), operates the Vametco vanadium mine and processing plant near Brits and is moving into the development of the ingredients to make large batteries as well as the supply of those batteries to utilities like Eskom.
Bushveld said on Wednesday it had agreed to the $68m purchase of Vanchem, which was recently brought back into production, and Ivanti to consolidate its position in the supply of a range of vanadium products, including ferro vanadium used in steel making.
“True to our previously stated goals, we are pleased to conditionally acquire another brownfield operating asset on SA’s Bushveld Complex, to cement our position as one of the leading vanadium producers globally and setting us on the path to achieving our 10,000 mtV (metric tonnes of vanadium) per annum production capacity target,” said CEO Fortune Mojapelo.
The first tranche of $6.8m was to be paid by the end of April and the balance between the start of August and the end of October .
Vanchem produces about 960 metric tonnes of vanadium a year, but once it is refurbished and has fresh sources of ore from another Bushveld asset, this could be lifted to 4,200 tonnes.
Bushveld will spend $45m over five years to refurbish the Vanchem plant, which will be supplied from Bushveld’s Mokopane mine some 200km away and which will be built for $20m.
Bushveld will use its existing cash and future cash to fund the three expenses as well as drawing down on debt facilities it is negotiating.
“This highly strategic transaction combines our existing portfolio of high-grade low-cost primary vanadium resources, including the Mokopane greenfield deposit, with an established production facility,” Mojapelo said.
“This substantially reduces the capital required to bring the Mokopane Project into production, while also bringing it online in a much shorter time frame than if we were to construct a new plant,” he said.
Analysts hailed the transaction as the quickest and cheapest way for Bushveld to bring the Mokopane deposit to account.
The combined total of $133m was about 45% of the estimated cost of building a mine and processing plant at Mokopane, with an accelerated feed of concentrate from the mine to Vanchem in 12 months, said SP Angel analyst John Meyer.
Vanchem can produce various vanadium oxides, ferro vanadium and vanadium chemicals and Mojapelo said this would feed into plans to build a $10m vanadium electrolyte plant in East London to not only supply Bushveld but international buyers for use in vanadium redox flow batteries.
Bushveld is testing a large vanadium redox flow battery with Eskom and will participate in the utility’s tender for stationary energy storage facilities.