If you have followed the progression of renewable energy sources and their need for specific batteries, then you may have heard about vanadium pentoxide (V2O5), and if you have heard of that mineral, then Bushveld Mineral Ltd (LON: BMN) might be on your radar.
YOUR CAPITAL IS AT RISK
The firm is traded on the AIM London Stock Exchange and is one of the leading mining companies of vanadium ore and related storage batteries, which are in huge demand.
Renewable energy projects are constantly in the news as countries strive to lower carbon emissions. China is a major factor in these projects and is the major producer of vanadium, as well. Vanadium redox flow batteries, or ‘VRFBs’ for short, are often coupled with renewable applications, and these battery units have a larger storage capacity and can be more efficient than lithium-based alternatives.
Investing in mining companies is not for the faint of heart. Prices can skyrocket one day with a favourable discovery, only to plummet like a rock when expectations exceed reality. These firms tend to be high risk, not only because of the prices for the mineral involved but also for numerous other risks that can be financial, political, environmental, or geological.
Is Bushveld Minerals a good stock to buy at this moment?
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Who Is Bushveld Minerals Ltd?
The company derives its name from the Bushveld area of South Africa, known to be one of the world’s richest deposits of minerals such as chromium, platinum, and vanadium, among others. It was founded in 2012 and is headquartered in Johannesburg, South Africa.
Bushveld Minerals is involved in not only vanadium mining but also with vanadium energy storage systems, primarily what is known as vanadium redox flow batteries. It also supplements these businesses with energy generation and coal exploration activities.
Like others in the mining sector, Bushveld’s share prices are intrinsically tied to the vicissitudes of market prices for its primary ore.
Bushveld Minerals Ltd was incorporated in 2012 and was listed on London’s Alternative Investment Market (AIM) in March of 2012. Based upon an early study, the firm decided to focus on vanadium ore production, and today it is a vertically integrated vanadium producer. It has two operating divisions – Bushveld Vanadium and Bushveld Energy. The former is the mining component, and the latter promotes the use of vanadium-based energy storage products, i.e., Vanadium Redox Flow Batteries or VRFBs.
Although vanadium is a primary component in storage batteries and draws press attention for this very fact, nearly 90% of vanadium production on an annual basis is used by the steel industry. The primary focus of Bushveld is on the VRFB energy sector, but it also supports the steel and chemical sectors, as well.
A significant spike occurred in the ferrovanadium ore market back in 2018, hitting a peak of just under $60 per kilogram. China had upgraded its standard for vanadium density within steel rebar, causing a spike in demand while supplies lagged. Prices typically range in the $20 region.
At the time little attention had been paid at the time to Bushveld Minerals, although the company had been espousing that the market had seriously undervalued the company. Word spread, and early adopters soon drove the price up from 2p to 10p. In 2018, however, shares of BMN took off like a rocket, rushing to an All-Time-High (ATH) of 50p in a matter of months.
Over the next year, Bushveld shares fell from the stratosphere, as did prices for vanadium.
Renewable energy projects are expanding across the globe, which is creating increased demand for energy storage capacity, and some believe Bushveld is uniquely positioned to capture this coming wave since its products are considered the right fit for these storage needs.
Is Bushveld Minerals a good stock to buy now? Bullish Bushveld investors see a doubling effect from both increased vanadium ore prices, primarily driven by steel industry demand, and also from increased demand for VRFB batteries.
However, even the experts can be wrong when it comes to predicting the course of mining company share prices. Of course, this also applies to Bushveld Minerals stock predictions. Let caution be your guide.
Where Will the Bushveld Minerals Stock Price Be at the End of 2023?
Bushved’s 2022 was impacted negatively by a combination of external and internal factors, according to the company. However, it stated:
“The challenges Bushveld has faced, and the consequential disappointing financial results, mask the abundant opportunity that can be realised as the company stabilises, and in the mid-term optimises, its operations and financial platform.”
From a technical perspective, some investors believe the stock has been beaten down too far.
However, while Vanadium prices have stabilised in the last few months, it has only come after a drop near the beginning of the year. This has continued to impact the BMN share price.
What could help this stock move forward? Analysts would like to see more insider buying. According to TipRanks, the one analyst covering the stock has a Hold rating and a 5p per share 12-month price target.
Where Will Bushveld Minerals’ Stock Price Be in 1 Year?
A five-year weekly chart for the firm can be used to assess a long-term Bushveld Minerals stock forecast.
The first insight from the above plot is, of course, that the company’s share price is significantly depressed, at lows last seen in 2017. If higher prices are to happen, we will first need to see a change in the current macroeconomic outlook.
Analysts are also looking for the company to turn a profit, but with its 2022 results disappointing, the optimism has faded. The company is also said in its 2022 results that it is negotiating a restructuring of the financing provided by Orion.
However, following its disappointing results, BMN did state that it “continues to undertake various initiatives to ensure profitability in the current year, to improve the Company's capital structure.”
If all goes well according to plan, Bushveld Minerals could begin to climb higher, but of course, nothing is straightforward, and there are no guarantees, making a long-term forecast risky. Mining companies are high-risk. Anything can happen. Even the experts could be blindsided.
Is Bushveld Minerals a Good Buy?
Is Bushveld Minerals Ltd a buy or a sell? Mining companies are notoriously unpredictable. They can shine like gold, or they can just as easily fall like a lead balloon. At the moment, BMN is firmly on the riskier side of the fence. As a result, significant caution should be taken if you do decide BMN is worth the risk.
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