Bushveld’s savior still a no-showOnce again, Bushveld Minerals has issued a “Market Abuse Regulation Disclosure” stating that it has not received the $12.5-million it is owed by Southern Point Resources (SPR) as payment for Bushveld shares under an $18.4-million equity capital raising deal.Bushveld’s Board approved the creation of shares on Dec. 27 and the payment reportedly was due by the end of December. When Bushveld announced that it had not received payment on Jan. 3, 2024, market sources assumed the delay was an administrative glitch. Now they are not so sure SPR will make good on even the first part of a multi-part deal to invest up to $77.5-million in Bushveld. “A few days late on payment is one thing,” said an analyst, “but now we are talking two weeks. Maybe SPR is having second thoughts or maybe they are trying to negotiate different terms.”Bushveld, meanwhile, is desperate for a cash infusion and in no position to be a hard-nosed bargainer.SPR and its capital providers continue to confirm the funds will be paid, the disclosure said. SPR has cited administrative, procedural and holiday period delays to explain the non-payment.The problem is that without the payment, Bushveld “has had to constrain production, suspend certain operational activities and defer creditor payments” to manage working capital and preserve cash reserves, the disclosure said. In addition, Bushveld said that it may have to “consider suspending operations if further payment delays occur.”This shows just how much Bushveld’s Vanchem and Vametco vanadium operations in South Africa are hanging by a thread. Vanchem had particularly poor performance in December and the problems are continuing this month. Vanchem has been a high cost production facility unable to meet its production targets since 2019 when Vametco, under the leadership of Fortune Mojapelo, purchased Vanchem (which was in receivership) for $53.5-million. Mojapelo was replaced as CEO in July 2023. His replacement, Craig Coltman, has been trying to get Bushveld’s balance sheet in order ever since he took charge, and he appeared to have secured a lifeline from SPR in September. If SPR is not able to make the payment, Vanchem is likely to be the first casualty, analysts say. It had a pre-tax loss of $42.1-million in 2022 and revenues of $36.9-million. Its 2022 production was 1,137 mt of vanadium chemicals, flake and FeV, and its production cost averaged $37.20 per kg.Under the deal, SPR would acquire 50% of Vanchem. Presumably SPR has a plan for investing money to make Vanchem viable.The production constraint Bushveld mentioned in its statement is assumed to involve Vanchem, not Vametco. Vametco, sources say, is operating as usual.The combined production of Vametco and Vanchem is not large, and Bushveld lowered its 2023 guidance for production 3,700-3,900 mt in mid-2023. Bushveld’s total vanadium output was 3,842 mt in 2022, of which Vametco accounted for 2,705 mt.BY ALICE AGOOS
South African vanadium supply hanging by a thread
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