Bushveld Minerals – Vametco EBITDA calculations #BMN

Bushveld Minerals – Vametco EBITDA calculations #BMN

The Bushveld Minerals (BMN) share price crashed over 10% today as the vanadium price continued to decline.

Last week, the company released its vanadium Q1 operational update. This has allowed me to do some EBITDA projections using the Vametco production guidance and expected costs.

Taking Bushveld’s low-end estimate of 2800mtV for the year with production costs of $19.50, I’ve charted Vametco’s EBITDA (earnings before interest, taxes, depreciation and amortization) in relation to the vanadium price as follows:

Vanadium price

(source: vanadiumprice.com)

Given the current price of vanadium at $41 (taking the average between both markets), I believe that Vametco’s earnings can be estimated at about $60 million or £47 million. Every $10 move in the vanadium price currently affects Vametco’s profitability by $28 million.

Bushveld at an ask of 23p has a market cap of £257 million. Looking purely at Vametco EBITDA, that market cap would be too expensive for me given current cash generation (as I highlighted when I sold out of Bushveld).

However, I bought back in with a smaller stake when the company announced the Vanchem plan acquisition. Since then, the vanadium price has continued to slide along with the BMN share price. CEO Fortune Mojapelo has stated that he believes vanadium market fundamentals remain robust (Vanchem acquisition call – fast forward to 25 minutes 50 seconds).

 

At the time of publication the author holds a long position in BMN

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