LONDON (ShareCast) - (Sharecast News) - Vanadium producer Bushveld Minerals reported first quarter group production of 688 metric tonnes on Friday, down from 880 metric tonnes a year earlier, affected by a 35-day planned maintenance shutdown at Vametco, which was completed on time and within budget.
The AIM-traded firm said Vanchem production in the first quarter was up 35% year-on-year at 293 metric tonnes, and 12% higher than the fourth quarter of 2020, which the board said was supported by improved operational stability.

Group sales in the period totalled 788 metric tonnes, down from 1,080 metric tonnes a year earlier, due to lower production volumes as a result of the planned maintenance shutdown.

Looking at the rest of the year, Bushvend said it was expecting to land towards the lower end of its guidance of between 4,100 metric tonnes and 4,350 metric tonnes.

The board said risks to that guidance did exist as a result of Vametco's challenges in achieving consistent plant performance, the slower-than expected ramp-up following the maintenance shutdown, recent industrial action, as well as risks associated with the ramp-up of Vanchem's first phase refurbishment.

It also reported that the procurement phase of the Bushveld electrolyte plant had started, with commissioning expected in the second half of 2022.

The company's total injury frequency rate was 8.54 for the quarter, down from 14.14 a year earlier, while the board said there were currently no active Covid-19 cases among employees.

Looking at the vanadium market, Bushveld said prices continued to increase during the period after a "strong start" to the year.

Prices had risen in China in the midst of the Spring festival, while in Europe, the firm said prices increased due to strong demand and tight inventories.

A lengthening of the supply chain and logistics disruptions were supporting prices, while vanadium demand remained "robust", with prices expected to remain stable for the rest of the second quarter.

In the first quarter, the London Metal Bulletin's ferrovanadium price averaged $30.9 per kilogram, compared to $26.5 per kilogram a year earlier, while the current price stood at around $32 per kilogram.

"Although group production was lower this quarter than in the first and fourth quarters of 2020, the company was able to carry out the previously guided essential maintenance at Vametco," said chief executive officer Fortune Mojapelo.

"Vanchem meanwhile had a solid quarter of production.

"We recognise that Vametco has underperformed at times and work such as the 35-day maintenance shutdown is expected to improve on the reliability and performance issues experienced in the past."

Mojapelo said that, since the industrial action and ramp-up, the company had seen a stable period of normalised production levels.

"Various work streams remain underway to maintain this stability, including maximising safety and housekeeping initiatives, better managing process system constraints and optimising preventative maintenance programmes.

"In light of Vametco's challenges in achieving consistent plant performance during the first quarter as well as risks associated with the ramp-up of Vanchem's first phase refurbishment, group guidance is expected towards the lower end, albeit there are risks to achieving this target."

Mojapelo said that on the positive side of things, the vanadium price had continued to rise following a strong start to the year, with increased demand in Europe and the US on the back of a post-Covid period of growth.

"As the world continues to open up, we have confidence in the demand side of the vanadium market."

At 1001 BST, shares in Bushveld Minerals were down 2.91% at 16p.

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