Ironveld (IRON ), a South Africa-based specialty metals producer, issued an operational update on recent activities across its portfolio.
At Rustenburg smelter complex, Ironveld is wrapping up refurbishments and targeting first sales for Q2 2023 and full production capacity by Q3 2023. Ironveld acquired the complex in 2022.
Following the work programme to bring Rustenberg's granulator into production, it is expected that the smelter will operate with 2 furnaces until July 2023, when the 3rd furnace will be brought online. This shouldn't have a material impact on the plan to reach full capacity by Q3 2023.
Ironveld Smelting also signed a 30-year lease with the government of South Africa for land covering c. 155 hectares on the Altona license. In the short-term, this this will be the location for ore processing activities, and in the long term it will be the location for larger smelting operations adjacent to the Limpopo mine.
On 27 January 2023, Ironveld announced the IPace joint venture, with the intention of selling DMS-grade magnetite ore directly from the mine. Ironveld said customer enquiries had been "very encouraging" with first product sales on track for mid-2023.
BurnStar Hydrogen Project
On 3 April 2023, Ironveld Energy signed an agreement with BurnStar to use the latter's 'Guilt-Free Hydrogen' technology to process LNG on site at the Rustenburg smelter.
BurnStar will install, at its own cost, a plant at the smelter complex capable of producing hydrogen from LNG at a rate of 5 kg/hr. The BurnStar hydrogen plant is expected to be operational by the end of 2023.
Ironveld intends to use BurnStar's hydrogen as the reducing agent in its smelting process. This should significantly reduce Ironveld's carbon consumption beyond the benefits of the solar-hybrid power plant due to be commissioned later this year.
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A positive operational update from Ironveld, detailing good progress at its Rustenburg smelter. Ironveld shares jumped 9% on the news.
At Rustenburg, Ironveld's 3rd furnace should come online in the coming months, bringing the complex to full capacity by Q3 2023, and producing a higher-value granulated product - high purity iron (HPI). HPI commands a c. 25% higher selling price than standard cast iron.
Additionally, the 30-year lease signed with the government of South Africa should allow for the future development of a larger-capacity smelter, supporting longer-term growth. At the same time, the agreement with BurnStar will yield a significant reduction in Ironveld's carbon footprint at no cost to the group.
Based on today's announcement, we expect Ironveld to become cashflow positive within its first year of production.
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