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Bushveld Minerals Shares Fell 7.12% Breaking Below Support, How Far Can They Go?

Simon Mugo trader
Updated 30 Jun 2021

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Shares of Bushveld Minerals Limited (LON: BMN) fell 7.12%, breaking below a crucial support level in place since December 2020 after the miner released its fiscal 2020 results. Will they keep falling?

The company sold a record 3,842 tonnes of Vanadium in 2020, generating $90 million, a 23% drop compared to 2019 figures. The firm attributed the lower revenues to a 53% decline in vanadium prices, partially offset by the higher sales volume.

Bushveld recorded a gross loss of $14.9 million driven by the falling vanadium prices despite the higher demand for the battery metal. Still, the company was able to secure $65 million in funding from Orion Mine Finance.

The company had cash and cash equivalents worth $50.5 million at the end of 2020. In addition, the mining company noted that it had achieved significant progress in the stationary energy storage industry via Bushveld Energy, its wholly-owned subsidiary.

Bushveld Energy invested in Invinity Energy Systems and Cellcube, two vanadium redox flow batteries (VRFB) original equipment manufacturers (OEMs), generating decent returns for the company.

The company kept working on its mini-grid project at Vametco despite the multiple challenges posed by the coronavirus pandemic. The company intends to prove the commercial viability of electricity self-generation solutions using solar and VRFB systems.

Bushveld also managed to renegotiate its R125 million revolving credit facility with Nedbank and got more favourable terms going forward. As a result, the company had $31 million in cash and cash equivalents as of June 27.

Fortune Mojapelo, Bushveld’s CEO, said: “While 2020 witnessed depressed vanadium prices, we believed, as we still do, that the market fundamentals for vanadium are robust and supportive of price upside. This market view underscored our conviction to complete the acquisition of Vanchem even in the midst of a declining price,”

After breaking below the 14.6p support level, the next support zone lies at 11.9p. Therefore, traders looking for bullish positions should stand aside until the price crosses back above the 14.6p level or bounces off the 11.9p level.

*This is not investment advice.

Bushveld Minerals share price.

IG chart of Bushveld Minerals share price 30-06-2021

Bushveld Minerals shares fell 7.12% to trade at 14.025p, dropping from Tuesday’s closing price of 15.10p.

Should you invest in Bushveld Minerals shares?

Bushveld Minerals shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Bushveld Minerals shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading