Bushveld Minerals Can Double Again20 Dec 2018 17:37
Bushveld Minerals
Bushveld Minerals is an AIM-listed vanadium production company with a market cap of £443 million. It has benefited greatly from a rising vanadium price, supported by China's new high-strength rebar standard which came into effect on 1 November 2018.
Bushveld shares have now risen over 400% since the lows of this year with the share price today hitting a high of 42.3p.
Back in september, we got confirmation that the unofficial 16-day stoppage at the Vametco vanadium plant and seven days of unplanned maintenance, meant ferro-vanadium production was down 14.6% in the third quarter versus the second quarter at 537mtV (metric tonnes of vanadium).
Because of the stoppages, Vametco's 2018 production guidance has been revised lower from 2,850-3,000 mtV to between 2,600 mtV and 2,650 mtV.
However, there's lots to like following the acquisition in September of Sojitz's interest in Vametco for $20 million, increasing Bushveld’s effective interest to 74%.
SP Angel analyst John Meyer thinks the share price could reach 87p in time, more than double the current price, underpinned by supply and demand characteristics of vanadium.
"The few primary producers in the market appear wholly incapable of expanding to meet demand in the next two years with so much by-product, slag, production removed from the market," writes Meyer, who also expects production costs to fall, assuming no further unplanned stoppages.
"We are struggling to see how the market may supply demand for vanadium in the next two years and we feel vanadium prices should settle at a higher price level than previously envisaged for the longer term."
Bushveld chief Fortune Mojapelo said: "With the completion of most of the corporate action aimed at maximising Bushveld's ownership of Bushveld Vametco, the company can accordingly now focus on ensuring maximised production output and efficiencies at Vametco.
"Accordingly, we are pleased to have commenced with Phase 3 of our expansion plan, which will increase capacity at Vametco to 5,000 mtV per annum. Phase 3 will also benefit from advancement of the Brits vanadium project, which has yielded encouraging drilling results".
Bushveld Minerals is the second biggest riser in AIM, with the production company benefiting from a rising vanadium price and the shortage of supply for a mineral used extensively in the steel industry.
Energy storage is another big market opportunity for vanadium producers, helping to drive the price up by 400% between December 2015 and May 2018.
Bushveld shares are close to a record high at 46.7p, having risen by more than 400% this year. Last month, we quoted SP Angel analyst John Meyer, who said he thought the share price could reach 87p.
"We are struggling to see how the market may supply the demand for vanadium in the next two years and we feel vanadium prices should settle at a higher price level than previously envisaged for the longer term."
All quoted directly from
Sign In
Follow the stocks
