The producer of vanadium saw its share price soar on Monday after announcing it is ramping up to full production last week and investors hunt for growth stocks amid the Covid-19 crisis.

Aaran Fronda | Financial writer, London | Tuesday 12 May 2020 00:50

Bushveld Minerals saw its share price close more than 6% higher on Monday after announcing it is ramping up to full production last week, with investors on the hunt for growth stocks amid the Covid-19 crisis.

The producer of vanadium has told investors that despite challenging market conditions, it remains on track to meet its 2024 target of 8,400 tonnes of production.

‘We used the lockdown period to strengthen our health and safety protocols together with business continuity measures, conducted maintenance and processed intermediary stockpiles, as per the guidelines received from our authorities,’ Bushveld Minerals CEO Fortune Majapelo said.

‘We are pleased that both Vametco and Vanchem are safely increasing production to normal levels,’ he added.

Not only is production looking strong, but the company’s balance sheet remains healthy despite the challenging environment, with the business establishing cash preservation measures to manage near-term liquidity, while preserving the long-term sustainability of its assets.

The company continues to review and limit operational expenditure where necessary as well as deferring growth associated (non-critical) capital expenditure.

Bushveld Minerals closed at 13p per share on Monday.

Bushveld Minerals 2020 outlook remains unclear

2020 production and cost guidance for both Vanchem and Vametco remains under review and will remain so until the company is in a position to quantify the impact of the Covid-19 pandemic and the South African nation-wide lockdown, the company said in its first quarter (Q1) trading update.

‘This update comes in the midst of the global Covid-19 pandemic that has not only changed our world but will continue to change it in ways we have not fully understood yet,’ Mojapelo said.

‘I am pleased that these difficult circumstances found Bushveld Minerals in a sound state financially, with a set of quality low-cost production assets,’ he added.

Despite the impact of Covid-19 crisis, the vanadium price has been resilient. China’s Purchasing Manufacturing Index indicated improved rebar production and demand driven by the restart in the construction sector, with China’s rebar consumption tracking up 10% year-on-year as well as the country being a net vanadium importer during the month of March.

‘Looking ahead we expect vanadium demand to remain robust in the medium to long term spurred on by supportive fiscal stimulus and increased infrastructure investments,’ the company said.

The optimism surrounding Bushveld Minerals remains high among analysts too, with Peel Hunt reiterating its ‘buy’ rating for the stock in May.

How much does it cost to buy UK shares with IG?

There are three ways to ‘buy’ UK shares with IG: spread betting, trading CFDs or buying physical shares. The cost will depend on which method you choose. The table below illustrates how the costs to get exposure to £10,000 of Lloyds stock, which is equivalent to 16,000 shares (quoted at 62.5p a share).

Remember, spread bets and CFDs are derivatives, which come with higher risk and reward than investing.

www.ferroalloynet.com