A summary of analyst coverage
30 December 2017
Summary of Analyses
SP Angel - Target Increase to 87p
Lack of Vanadium threatens Global Construction Growth
Valuation: Our valuation for Bushveld Minerals rises to US$1.6bn assuming an 8% discount rate and a long-term exchange rate of ZAR14/USD or 90p/s on our new vanadium price and production rate assumptions. We assume production rises to 10,000tpa in 2023.
- The rise in ferro-vanadium prices in China and Europe indicate a severe shortage of available material indicating development of a significant market deficit.
- Our ferro-vanadium price assumptions rise to US$85/kgV for 2018, 2019 and 2020 and to US$55/kgV for 2021 and US$45/kgV for 2022 and thereon
Alternative Resource Capital - Q3 Update
Q3 update: price strength offsets lower production
Strike-induced downtime at Bushveld’s Vametco operation in South Africa saw quarterly vanadium output fall 15% in Q3 2018, temporarily frustrating efforts to grow annualised run rates following expansion initiatives.
We have updated our model for the revised operational guidance, but also for an increase in our vanadium pricing assumptions. FeV rose sharply across Q3 2018, averaging US$86/kg (up 24% vs Q2), and hit a decade high of close to US$130/kg in late October.
SP Angel - Target Increase to 37p
Vanadium prices continue to rise on shortage of vanadium pentoxide as new rules on vanadium in steel come into force in China
Valuation: we have raised our valuation to 37p from 34p on higher than expected ferrovanadium prices for this year and raised expectations for ferro-vanadium through 2019.
- Ferro-vanadium prices jumped another 6% higher to US$112-116/kgV in Western Europe this week according to Metal Bulletin.
- Asian Metals also report a vanadium of US$117.5/kgV for ferrovanadium in China.
- The Metal Bulletin report US$104-110/kgV for China.
Alternative Resource Capital - H1-18 results
H1 results underline company transformation
H1 revenue jumped from £26m at Vametco in 2017 (prior to Bushveld taking majority ownership) to £62m in 2018, reflecting vanadium’s sharp ascent over the past year on constrained supply and firming demand.
Were we to upwardly adjust our 2018 FeV price assumption by projecting forward current market prices for the remainder of the year, our consolidated EBITDA estimate would rise by 20% (which would put Bushveld on an attributable EV/EBITDA multiple of just 4.0x).
SP Angel - Target Increase to 34.2p
The team agreed $17.5m for the 20% stake in holding company, Special Metals Corporation, which raises Bushveld’s stake in Vametco to 75% from 59.1%.
The acquisition of the SOJITZ stake adds some 3.1p/s to Bushveld by our estimation.
BUY – Target price rises to 34.2p from 30.55p post the H1 production results
Theoretically, if the vanadium price were to remain at current, elevated, price levels then Bushveld Minerals should be worth just over a pound more in share price terms by our modelling
SP Angel - Target Increase to 33.6p
Strong vanadium prices combine with weak South African rand to lift earnings expectations for Vametco
BUY – Target price rises to 33.6p from 24.94p
Scenario 2) If we assume the current vanadium price through the first seven-months of the year $66/kg is repeated through the second half and remain with the spot South African rand rate then we get:
• EBITDA = ~US$146m
• Attributable EBITDA ~US$86m
Other scenarios are considered both with higher targets quoted.
Alternative Resource Capital - FY17 Update
A transformational year, with more to come
2017 was a landmark year for Bushveld, the company transforming from explorer to producer with a significant share of the global vanadium market through its acquisition of a 59.1% interest in the Vametco operation in South Africa...
We will review our pricing assumptions and forecasts in due course given continued vanadium market tightening on rising demand and constrained supply amid new standards for Chinese steel rebar.
SP Angel - Target Increase to 24.94p
Strong production lowers unit costs
BUY – Target price rises to 24.94p from 18.28p
we are raising our valuation and target price to 24.94p from 18.28p today on confirmation of stronger vanadium production and on raised expectations for higher average ferro-vanadium prices through 2018 and thereafter.
Alternative Resource Capital - Upgraded Target 19.8p
Balance sheet strengthened, vanadium marches on
Bushveld’s recent US$22m equity placing strengthens the group’s balance sheet as it looks to simplify its organisational structure to improve exposure to the underlying cash flow of its majority-owned Vametco vanadium operation in South Africa. Moreover, it has added institutional and mining-specialist investors to a previously retail-investor dominated shareholder register....
Our resultant 20p sum-of-parts valuation represents >30% upside to Bushveld’s share price, a valuation gap we think should narrow as Bushveld further executes its expansion plans for Vametco and begins drawing up surplus cash flow.
Alternative Resource Capital - Initial Target 14p
Right commodity, right asset, right time
Bushveld’s recently-acquired Vametco operation in South Africa offers direct exposure to vanadium, one of the best performing metals over the last two years with prices surging four-fold from the lows of late 2015...
we see substantial valuation upside potential on vanadium price (FeV is currently trading around double our US$30/kg long-term (from 2020) assumption)
SP Angel - Target Decrease to 14p
Bushveld accelerates expansion to capitalise on higher vanadium price levels
BUY – Target price adjusted to 14 from 14.3p
We will continue to work through our forecasts in relation to higher vanadium prices and our rand rate assumptions and will update the market in due course.
SP Angel - Target Increase to 14p
Vanadium prices drive profits higher as management target expansion
Bushveld Minerals recently acquired control of the Vametco vanadium mine and process plant in South Africa. The deal paid for itself within four months of its acquisition and is significantly profitable. The company also have a stake in the Uis tin/lithium project in Namibia through Greenhills Resources as well as an integrated power project in Madagascar in Lemur Resources ....
SP Angel - Initial Target Price Set to 11.6p
Persistence, ‘Fortune’ and Good Luck
Bushveld Minerals is developing a world-class vanadium platform based around the Vametco processing plant in the Bushveld region of South Africa.
The combination of the existing Vametco mine and processing plant with new licenses to the north east will enable Vametco to confidently expand production. ....
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Why does Hallgarten (19th Nov 2017) refer to opaque accounting practises ?
... when it's a fact that Vametco profit could surely not be counted as BMN profit before Yellow Dragon was bought out
What figure are SP Angel currently using for the V2O5 price
... and what will it take for them to increase the assumed price ?