How are Vanadium Companies Faring in Today's Low Price Environment?

As the vanadium price continues to face downward pressure, companies working in the sector are looking at survival options. The metal’s price is currently hovering between $2.90 and $3.15 per pound, according to Metal Bulletin, and greater weakness could be in the cards in Q4.
The latest company to feel the sting of sliding prices is Largo Resources (TSXV:LGO), which is reviewing various capital restructuring programs to ensure it can survive in the event of a prolonged price dip. Up until now, news from Largo has been fairly positive, as the company has continued to ramp up its Maracas Menchan mine to commercial production and even hit daily production records in August.
Largo has also fared well on the financial front, completing a $75.2-million financing in May, as well as receiving final approval for the restructuring of its debt facilities in June. Nevertheless, the historically low vanadium price is below the company’s production costs, and that has been reflected in Largo’s share price.
“We do have cash in the bank — we were very fortunate to have raised C$75.2-million in May and to restructure our Brazilian Development Bank loans to be more advantageous. We are now in discussions to potentially restructure that further – potentially looking at high-yield bonds — so that we can take the principal payments being paid today and try to push it out to the future to try and help our cash position,” Largo President and CEO Mark Smith told Mining Weekly.
At present, Largo’s average production cost is around $3.55 per pound with a sales price of $3 per pound, meaning it’s seeing losses despite its low cost of production. However, Smith said that once the operation reaches its sustained nameplate capacity, which is expected in December, costs should fall into the range of $3.10 to $3.20 per pound.

Evraz Highveld business rescue

Those interested in the vanadium space have likely also been following Evraz Highveld Steel and Vanadium (OTCMKTS:HGVLY), which began business rescue proceedings in April.
As part of those proceedings, the company has ceased steel production and issued a proposed restructuring notice to cut half its workforce. Evraz plans to restructure to a “curtailed operating mode,” allowing for startup on a limited basis when market conditions improve and adequate funding is obtained.
Meanwhile, companies have been bidding to buy Evraz as part of the business rescue process; in September, Hong Kong-based International Resources Limited was named the successful bidder. Evraz creditors voted in favor of the buyout, and of the business rescue as a whole, last week.

Bushveld moving forward despite prices

While some vanadium companies have had to go into survival mode, others are continuing forward with projects. One example is Bushveld Minerals (LSE:BMN), which has not been deterred from developing its 300-million-tonne Mokopane vanadium project in Limpopo. The company said it sees potential for the use of vanadium in the steelmaking process as well as for vanadium redox flow batteries.
Earlier this month, Bushveld provided an update for the project, including a maiden mineral resource estimate of 12.5 million tonnes at an in-situ grade of 0.7 percent vanadium pentoxide for the AB zone.
 
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article. 
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