SP Angels 82 p valuation.29 Nov 2019 10:53
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Bushveld Minerals* (BMN LN) 23p, Mkt Cap £265m – Combination of synergies and near-term production growth at Vametco and Vanchem to drive value as Bushveld Energy develops
(Bushveld Minerals owns 74% of Vametco, 100% of Vanchem, 84% of Bushveld Energy in South Africa, 100% of Lemur Holdings, 9.5% of Afritin)
Valuation 82p
* Production growth:
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* Bushveld are busy ramping up production at Vametco while planning new production growth at the newly acquired Vanchem.
* Vametco: We see Vametco production rising from around 2,900t this year to 3,149t in 2020, 3,914t in 2021 and 4,149t in 2022. We see the Vanchem plant producing around 4,200tpa in future years.
* Vanchem: we see production at Vanchem running at a consistent 80mtV per month through 2020 for 965t for the year supported by concentrates from the Vametco mine before rising to 1,519t in 2021.
* Feedstock from the new Mokopane vanadium mine will add new throughput to the plant leading to significant cost savings.
* Management also expect Vanchem to achieve 4,200tpa on completion of their 5-year refurbishment program.
* Vanadium concentrate from Mokopane should enable Vanchem to raise production to 3,305t in 2023 and have guided to 4,200mtV post a 5-year refurbishment.
* The two process plants combined with the Vametco, Brits and Mokopane mines should enable significant production synergies and further cost savings in future years.
* Group Transformation: Bushveld is transforming it’s business on five key fronts:
* Vametco – production and efficiency transformation.
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* Vanchem – acquisition and restart of idled plant capacity with new mine production and improved plant utilisation.
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* Bushveld Energy – VRFB instillation and electrolyte production.
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* VRFB investment platform (VIP) – the following investments are part of a strategy to capture more of the market for VRFB instillation and electrolyte sales
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* The investment in Enerox and Avalon/redT are in line with the strategy of establishing a ‘VIP’ VRFB Investment Platform to lead investments in VRFB ‘OEMs’ original equipment manufacturers with upside potential.
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* Enerox – Bushveld are part of a consortium to acquire Enerox for €11m and may make a potential investment of 25-49% stake costing ~US$2.75-5.39m
* Avalon / redT – Avalon acquisition of redT to enable development of new VRFB sites. Bushveld is advancing interim funding of US$5m.
Avlon/redT are looking to raise US$30m to support the rollout of VRFB contracts into Germany and the UK
* Vametco transformation: higher production rates, better grade control and better initial feedstock processing is improving Vametco’s operational performance.
* Vanchem acquisition: enables faster expansion towards a group production target of 8,400tpa (Vanchem + Vametco) at lower capital cost while improving flexibility and potentially diversifying the range of vanadium products sold
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