Bushveld Minerals’ shares suspended amidst cashflow issues

Opinion Pieces

26

Nov

2024

Bushveld Minerals’ shares suspended amidst cashflow issues

On 18 November 18, Bushveld Mineralsuspended the trading of its shares on the London Stock Exchange’s AIM market due to financial uncertainty after unsuccessful attempts to secure additional funding.

Subsequently, Bushveld announced that its operations areseeking‘protection from legal action while their future is assessed and potential plans to rescue the business are implemented’.Earlier in November, Bushveld announced its failure to secure funds ‘to sustain its operations or meet its immediate liabilities’. 

In its Q3 operational update, Bushveld announced Q3 vanadium production at Vametcoof 485tV,and 1,387tV for the first nine months of 2024 vs 1,712tV for the same period of 2023. Production at Vanchem was 370tV in Q3 and 1,159tV for the first nine months of 2024 vs 1,072tV for the same period of 2023.  

Production at Vametco and Vanchem have been bothimpacted by maintenance works and liquidity issues. In October, Bushveld announced a ‘controlled production slowdown’ as production fails togenerate free cashflow. Production costs were US$27.50/kg in Q3 and averaged US$25.80/kg for the first nine months of the year vs US$26.50/kg and US$25.3/kg in 2023.  

The future of Bushveld remains uncertain, despite the selling of its Vanchem facilities to Southern Point Resources (SPR), a privately held company. This is primarily due to a very weak vanadium market with prices at ~US$26/kg for FeV 80 (Europe) and below US$5/lb for vanadium pentoxide. China’s vanadium consumption has been impacted by a depressed property – and construction – sector which translated into a 14.7% y-o-y drop in rebar production during the first ten months of the year. Meanwhile, demand in Europe was also hurt by a poor macro environment.   In a more ‘normal’ market environment, the supply risks which could result from the Bushveld’s financial situation would have a positive impact on prices. So should have the recent upgrade of China rebar standards and the stimulus package announced in September by the Chinese government. However, the October price uptick observedin China still appears unconvincing.  

Nevertheless, Project Blue believes that the Chinese property market is about to stabilise and that some rebound should take place over the course of 2025. We also believe that vanadium prices are bottoming out. A lower production from Bushveld, related to its financial situation, combined with a demand recovery, even modest, should translate into a more significant and sustained price rebound.





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