Bushveld Minerals staring into the abyss, CEO acknowledges

A TURNAROUND in the vanadium price from its current lows and back up to $40 per kilogram of vanadium (kgV) would see Bushveld Minerals “printing money”, CEO Craig Coltman said. But in the short term, if it does not receive support from shareholders, there is a very real risk that the company will cease to be a going concern, he said on a conference call with investors.

The group’s plans to raise additional funds from Acacia Resources and Southern Point Resources (SPR) have hit obstacles. Acacia did not fulfil the terms of its subscription letter to provide $3.5m by end-February. The sale of 50% of the Vanchem processing plant and 64% in a subsidiary which owns Mokopane Vanadium project to SPR for a total of $25m will only be considered by South Africa’s Competition Commission in July, rather than February, as previously expected.

SPR has extended a $12.5m interest-free loan to Bushveld pending the completion of the sale transaction. Coltman said this loan has already been tapped. “Can we get another loan? I would like to think so but cannot commit to anything until we have had further engagements with them. We are liaising daily with them to find out what is possible to keep the business afloat.”

Bushveld’s current funding squeeze has arisen largely due to the recent decline in the ferrovanadium price, which averaged around $28.4/kgV in Q1 from an average of $31.6/kgV in Q4 2023. Bushveld’s weighted average production cash cost in the first quarter of this year was $28.4/kgV. Coltman warned that if this price persisted into 2025, Bushveld would need further funding.

The long-term average vanadium price was $41/kgV in Europe and 5% to 10% higher than that in the US, he said. Bushveld sells two-thirds of its production to the US.

“Shareholders have a vested interest, if they believe the price will turn, to provide further funding,” Coltman said.

“Certainly, someone will make a lot of money from these assets – at $40/kgV we are printing money. I can only believe rational thinking will prevail and shareholders with the most to gain will see the benefit of putting in more funding.”

Other funding options that the company is considering are the sale of its interests in Enerox/Cellcube and in Lemur Holdings’ coal project. Coltman said Bushveld has signed NDAs with parties interested in Enerox/Cellcube and is looking for the best possible solution. The sale of the Lemur Holdings interest to a consortium is pending an agreement by the Development Bank of Southern Africa, to which Bushveld has guaranteed a $2m loan to Lemur, to transfer the loan to the buyers.

Coltman said the bank’s investment committee is meeting next week and he is hoping for a favourable decision.

Bushveld is also due to repay $7m to Orion Mine Finance by end-June in terms of an agreement on its convertible loan note. Asked by a shareholder whether it was possible to defer this payment, Coltman said: “In all our dealings, Orion has been reasonable and pragmatic. They want us to succeed. They have investment committees, and it is something we are speaking to them about. Watch this space.”