Vametco Mine Visit

January 2019


3 February 2019

Last week I had the great pleasure of taking part in a site visit to Bushveld's Vametco mine, near Brits in South Africa.

To find out more about the remarkable back-story behind the  purchase of this highly strategic primary vanadium producing asset please read the previous article on Vametco

Our party consisted of 35 high profile visitors including private investors from the UK and SA, institutional investors, mining analysts and representatives of BMN brokers SP Angel, Alternative Resource Capital and BMO Capital Markets.

Upon arrival, we were picked up at O.R. Tambo International Airport in Johannesburg and transported through the captivating landscape of The Bushveld to reach the Vametco mine, some 80km away. Having left a bitterly cold British winter only 18 hours earlier the hazy sunshine, warmth and near-cloudless sky of a South African summer in full swing, made a very welcome change.

After being welcomed with refreshments and the issuing of suitable PPE, our group was escorted to the operating mining areas. On the way to the mine discussion with Works Manager William Steinberg revealed some interesting information regarding the haulage of rock from the mine floor to the crushing circuit (as described in Ophidian's outline of Vametco processing).

Notably, this work is undertaken by external contractors operating on a per hour contract basis. This strategically efficient approach has the benefit of ensuring contractors are deployed only when needed. Trucking cycle times are constantly monitored to ensure reliable and cost-effective operation of these contractors. This is in contrast to the digger drivers who load the trucks, who are employees of Vametco and experienced in knowing how to select only the most appropriate rock material for transport to the ROM pad.

Looking at the open-cast pit, the seams to be extracted can be seen in the photo below - these are the mid-grey rock faces shown running horizontally through the middle of the picture.  Towards the west end of the strike is, I believe, the 15m thick intermediate seam, which averages about 30% magnetite. The darkness of the grey rock is a useful indicator of the magnetite content as the magnetite is black, in contrast to the other minerals, such as titanium dioxide which are much lighter in colour. This explains the different colours of the two large waste piles to the east of the Vametco processing plants - the light colour diamond shaped structure is the non magnetite rock, whilst the clenched-fist shaped pile to its west is almost black as it is primarily magnetite (black) with the vanadium removed.

(As well as iron and titanium dioxide, this heap does have a little residual vanadium in it – any interested parties wishing to pay 1 cent per tonne should contact Vametco management. 1 million tonnes minimum order, buyer must collect.)

As well as highlighting scale and geology, this picture also shows our own intrepid colleague, Ninjamagic, striving to achieve the perfect composition of light, landscape and of course, the star of the show, vanadium.

Moving from the east end of the strike it is worth quickly recapping on the Vametco stratigraphy. Complimenting a very rich thin upper seam are many more massive intermediate and lower seams which comprise the bulk of the trucking operations. During processing mined material from each of these three of these resources is blended and subjected to grinding, separation, roasting and subsequent vanadium extraction. 

Currently the mine is only about 60m deep. As seam material is removed the mine face will move north and the pit will become deeper, following the strata at an angle of about 20 degrees. There are approximately 40 years of mine resources left within the current Vametco pit based upon current rates of extraction, making Vametco one of the world's largest and highest quality vanadium resources.

Our discussions moved on to the subject of Evraz and the fact they had traditionally augmented ore extracted from the Vametco mine with much higher grade vanadium slag taken from the Highveld steel plant smelting operation.

During the 10 years between 2007 and 2017 it appears that Evraz had concluded that it was not possible to make the Vametco mine profitable purely using vanadium extracted from magnetite ore and that vanadium slag would always be needed to increase the overall vanadium content of the material being fed into the roasting and processing circuits. That, of course, was back in 2016 when vanadium prices were at all time lows, having fallen to around 15 USD/KgV - they are now many times higher.

This observation explains one of the nagging questions that may have previously concerned investors; 'why would Evraz sell such a high quality asset?'. Clearly Evraz disposed of Vametco because they believed that without Highveld it would not be profitable. Improved geological mapping and control has now demonstrated that Vametco can be made profitable purely on vanadium from magnetite - this represents a very real transformation for Vametco and is at the heart of the strategy behind Bushveld Minerals' successful acquisition of the asset.

The west end of the strike is shown above. The fence separating Vametco from Brits is approximately 500m behind us.

Alongside Bushveld management and geological expertise this transformation is being led internally at Vametco by Works Manager, William Steinberg, (wearing the light blue shirt in the first photo and within the image below), and COO Lyndon 'Taff' Williams, (shown below in the foreground answering questions). Taff, moved from Evraz's Highveld steelworks during the period of Evraz' ownership and understands implicitly what steelmakers want and need. Both Taff and William are very engaging characters,  aware of past operational limitations at Vametco and both clearly genuinely excited about the extensive transformation currently taking place under the stewardship of Bushveld Minerals. 

Read on for part two ...

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