TIDMBMN
RNS Number : 5947Y
Bushveld Minerals Limited
22 August 2018
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
22 August 2018
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Bushveld Vanadium Q2 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM listed, integrated
primary vanadium producer, with ownership of high grade vanadium
assets, is pleased to provide an operational update in respect of
its Vanadium platform, which consists of Bushveld Vametco Limited
("Vametco"), the Mokopane Project ("Mokopane") and the Brits
Vanadium Project ("Brits").
Key Highlights
(Note: Figures shown on a 100% basis, Bushveld's net
attributable interest in the following production and financials is
approximately 59.1%.)
-- Sales revenue and EBITDA for H1 2018 increased by 139.1% and
429.6% respectively to ZAR 1,050 million (H1 2017: ZAR 439.1
million) and ZAR 521 million (H1 2017: ZAR 98.4 million) compared
with H1 2017, supported by higher vanadium prices.
o The Metal Bulletin FeV mid average price for H1 2018 was
US$65.5/ KgV, an increase of approximately 150% relative to the H1
2017 average price of US$26.2/ KgV.
-- Phase Two of the Vametco expansion project, comprising the
commissioning of the third primary mill and secondary crusher, was
successfully completed within budget and on time. This phase of the
expansion project increases annualised production capacity to 3,750
mtV, from 3,035 mtV achieved in Phase One, which was completed in
Q3 2017. We expect to see gradual increases in output over the
course of H2 2018 as the operation ramps-up to the 3,750 mtV
rate.
-- Vanadium production for Q2 2018 was 629 mtV in the form of
Nitrovan(R) from magnetite concentrate (Q2 2017: 794 mtV), a
decrease of approximately 13.9% relative to Q1 2018 (Q1 2018:731
mtV). The production decrease was due to (a) planned kiln
maintenance programme, (b) the installation and commissioning of
the mill and crusher as part of Phase Two of the expansion, and (c)
work stoppages as a result of unprotected industrial action.
o The maintenance programme is part of productivity initiatives
and Vametco's continued improvement across the supply chain. These
'de-bottlenecking' activities are planned to increase volume at the
roast / leach circuit which will become evident during the course
of H2 2018.
o During June 2018, the operation experienced two and a half
days of unprotected industrial action, resulting in no production
being achieved out of the plant during that period. The matter was
fully resolved on the third day of the industrial action and all
labour commenced work immediately thereafter.
-- Vanadium production for H1 2018 was thus 1,360 mtV. This is
less than the anticipated volumes for this period per the Company
guidance. The shortfall was due to: (a) lower than expected
vanadium grades in magnetite from run of mine material, (b) lower
produced magnetite volumes during the installation and
commissioning of the mill and crusher as part of Phase Two of the
expansion project (c) production interruptions due to the
unprotected industrial action which took place in June 2018 and (d)
lower than expected recoveries across the extraction process.
During the course of Q3, Vametco experienced further production
interruptions due to a protest by members of the local community,
in addition to the ramp-up to the annualised production rate of
3,750 mtV being slower than expected.
-- Consequently, Vametco production guidance for the year has
been revised downwards to between 2,850 and 3,000 mtV. The upper
range would represent a 13% increase in production over 2017.
-- The constraints experienced in H1 2018 are well understood by
our management team and are being addressed accordingly.
Consequently, the Company expects to see production rates
increasing towards the annualised production rate of 3,750mtV in
the coming months.
-- The Company has commenced an exploration programme at the
Vametco mine to increase geological confidence and grade continuity
of the ore mined. This is aimed at upgrading Inferred Mineral
Resources to Indicated Mineral Resources.
-- The Company continues its exploration programme at the Brits
Project, which has to date shown positive drilling results, with
intersections of Lower Seam, Intermediate Seam and Upper Seam
intervals similar to mineralisation at Vametco Mine, and vanadium
grades in magnetite of 1.54-2.09% V(2) O(5) , similar to grades
mined at the Vametco mine. These assay results portray the
excellent potential for an eastward extension of the current
orebody being mined at Vametco.
-- Through its expansion initiatives at Vametco, as well as
targeted brownfield opportunities, Bushveld Minerals remains on
track with its strategy to expand production to 5,000 mtV by the
end of 2019.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"Bushveld Vametco's operating performance during the first six
months under Bushveld Minerals control and a new management team
has benefitted from a rising vanadium price resulting in
significantly higher profit margins relative to the first half of
2017.
"I am pleased to see the completion of Phase Two of the Vametco
multi-phased expansion project, which was successfully completed on
time and within budget, bringing Vametco's annual production run
rate to 3,750 mtV. The slower than expected ramp up to this
production capacity has been disappointing contributing to the
revised production guidance. Notwithstanding the 2018 production
guidance revision, we remain confident that the Company's expansion
efforts remain on track to grow Vametco's production capacity to
5,000 mtV per annum to further strengthen our competitive position
in a favourable market environment.
"Meanwhile, we are very pleased with the recent positive
drilling results at the Brits Vanadium Project, which has shown
similar mineralisation to Vametco with vanadium grades in magnetite
of 1.54-2.09% V(2) O(5) ."
Bushveld Vametco Limited
Production
-- Sales revenue and EBITDA for H1 2018 increased by 139.1% and
429.6% respectively to ZAR 1,050 million (H1 2017: ZAR 439.1
million) and ZAR 521 million (H1 2017: ZAR 98.4 million) compared
with H1 2017, supported by higher vanadium prices.
-- In June 2018 Vametco successfully completed Phase Two of the
expansion project. This phase of the expansion project will
increase the annual production capacity from 3,035 mtV, achieved in
Phase One, to 3,750 mtV, through self-funded capital expenditure of
US$2.5 million.
-- Vametco produced 1,360 mtV in the form of Nitrovan(R) from
magnetite concentrate during H1 2018 (H1 2017: 1,441 mtV), a
decrease of approximately 5.7% relative to H1 2017.
-- Nitrovan(R) production of 629 mtV for Q2 2018, decreased by
approximately 13.9% relative to Q1 2018 (Q1 2018: 731 mtV),
primarily due to an annual planned kiln maintenance programme, in
addition to installation and commissioning of the mill and crusher
as part of Phase Two of the expansion, and a two and half days
unprotected industrial action during which the plant ceased
operations.
o The maintenance programme is part of Vametco's continued
improvement across the supply chain and productivity initiatives.
These 'de-bottlenecking' activities are planned to increase volume
at the roast / leach circuit which will become evident during the
course of the second half of the year.
o During the months of June and July 2018, Vametco experienced
the following production interruptions, in this the plant ceased
operations completely:
-- Two and a half days unprotected industrial action in June,
related to historic compensation structures prior to Bushveld's
involvement. The industrial action was resolved to both parties'
satisfaction and all labour returned to work immediately
thereafter; and
-- Four days protest by members of the local community in July
2018, which is part of a widespread action where protesters are
targeting several mining operations around Brits. Bushveld Minerals
is working with the local community representatives to address the
community's grievances and deepen the positive relationship
established when the Company took over from the previous mine
owners.
-- As a result of the production interruptions during the months
of June and July 2018, the slower than expected ramp-up to the
operation's expanded capacity of 3,750 mtV and the lower vanadium
grades, Vametco production guidance for the year has been revised
downwards to between 2,850 and 3,000 mtV. The upper range would
represent a 13% increase in production over 2017. The reduced
volumes and higher inflation have therefore resulted in a unit cost
guidance revision to between ZAR 240/KgV and ZAR 250/KgV.
Table 1: Operational and financial highlights for Vametco (on a
100% basis)(1) :
Description Q2 CY18 Q2 CY18 H1 CY18
Unit Q2 CY18 H1 CY18 vs vs vs
Q1 CY18 Q2 CY17 H1CY17
Vanadium (Nitrovan(R)
plus FeV) produced mtV(3) 629 1,360 -13.9% -20.8% -5.7%
--------- ---------- ---------- --------- --------- --------
Vanadium sold mtV(3) 713 1,403 +3.2% +2.2% +4.6%
--------- ---------- ---------- --------- --------- --------
Average MB vanadium
price(2) US$/KgV 69.2 65.5 +11.9% +156.0% +150.3%
--------- ---------- ---------- --------- --------- --------
USD/ZAR average exchange
rate(4) US$:ZAR 12.6 12.3 +5.6% -4.4% -7%
--------- ---------- ---------- --------- --------- --------
Revenue ZAR'm 623.2 1,050 46.1% 163.5% 139.1%
--------- ---------- ---------- --------- --------- --------
EBITDA ZAR'm 331.6 521 75.1% 518.4% 429.6%
--------- ---------- ---------- --------- --------- --------
Production costs(5) ZAR/kgV 268.18 248.39 +15.9% +32.1% +22.4%
--------- ---------- ---------- --------- --------- --------
1. Based on provisional, unaudited estimates. Bushveld's net
attributable interest of the above production and financials is
approximately 59.1%.
2. The vanadium price is based on the FeV mid average price for
the period, published by Metal Bulletin. Vametco realised price is
based on an average one month prior to sale.
3. mtV = metric tonnes of vanadium.
4. Source: Bloomberg. The achieved USD/ZAR average exchange rate may vary.
5. Excludes depreciation, royalties, selling, general, & administrative expenses.
Multi-phased expansion project
-- In 2017, Vametco commenced a three-phased expansion project
with the aim of increasing annualised production capacity to more
than 5,000 mtV during 2019.
-- Phase One of the expansion plan was successfully completed on
time and on budget in the September 2017 quarter, during which
Vametco reached an annualised production capacity of 3,035 mtV.
-- Phase Two of the expansion plan was successfully completed on
time and on budget in June 2018, which will increase Vametco's
production rate to 3,750 mtV.
-- Phase Three of the expansion plan is scheduled to increase
Vametco's annualised production capacity to over 5,000 mtV by the
end 2019.
-- Completion of the expansion project will enhance Vametco's
existing competitive position in a structurally challenged market.
In addition, the presence of an integrated platform will allow the
development of downstream operations whilst achieving product
diversification.
Table 2: Multi-phased expansion project
Project Investment(1) Scope Progress
Multiphase expansion US$0.5m Increase Vametco 100% completed
project - Phase 1 annual production in September
run rate to 3,035 2017.
mtV.
-------------- ------------------- -------------------
Multiphase expansion US$2.5m Increase Vametco 100% completed
project - Phase 2 annual production in June 2018.
run rate to 3,750
mtV by June 2018.
-------------- ------------------- -------------------
Multiphase expansion US$15 Increase Vametco In process
project - Phase 3 m annual production of collecting
capacity to over the required
5,000 mtV during documentation
2019. for environmental
approvals.
-------------- ------------------- -------------------
1. Shown on a 100% basis, Bushveld Minerals effective interest is 59.1%.
Other projects underway
-- Tailings facility expansion: to maintain deposition capacity
for depositing the calcines (which need to be deposited on a H:H
liner) as part of ongoing operations will be completed by end of Q3
2018 and deposition commence during Q4 2018.
-- Kiln off-gas project: has been initiated to comply with
regulatory requirements and further increase kiln feed throughput.
Commissioning planned for end of Q1 2019.
Exploration at Vametco
Following the completion of the initial phase of drill work on
the Brits Project, the Company has commenced an exploration
programme at Vametco with the aim of upgrading Inferred Mineral
Resources to Indicated Mineral Resources. The work is particularly
targeting the Upper and Intermediate Seams to increase geological
confidence and grade continuity at the mine. During Q2 2018 the
Company completed 13 diamond drillholes within the mine boundary,
totalling 1,506.35 metres, as per the table below.
Table 3: Vametco Mine Ore Seam Intersections for Boreholes VM001
to VM013
Drillhole Total Depth (m) Targets Intersected
VM001 90.35 LS, US
----------------------------- ---------------------------------
VM002 97.86 LS, US
----------------------------- ---------------------------------
VM003 120.34 LS, IS
----------------------------- ---------------------------------
VM004 117.88 LS, IS, US
----------------------------- ---------------------------------
VM005 125.01 LS, IS, US
----------------------------- ---------------------------------
VM006 160.78 LS, IS, US
----------------------------- ---------------------------------
VM007 75.79 LS, IS, US
----------------------------- ---------------------------------
VM008 118.86 LS, US
----------------------------- ---------------------------------
VM009 133.94 LS, IS, US
----------------------------- ---------------------------------
VM010 146.62 LS, IS, US
----------------------------- ---------------------------------
VM011 103.52 LS, US
----------------------------- ---------------------------------
VM012 108.36 LS, US
----------------------------- ---------------------------------
VM013 107.04 LS, IS, US
----------------------------- ---------------------------------
Total 1506.35
----------------------------- ---------------------------------
LS = Lower Seam, IS = Intermediate Seam, US = Upper Seam
Brits Vanadium Project
The Company continues with the second phase of the exploration
programme at the Brits Project, with the aim of delineating a
maiden Mineral Resource Estimate at the Brits project. Following
completion of the initial phase drilling (drillholes BVL001 to
BVL008) during Q1 2018, the second phase drilling commenced in June
2018 with an additional eight diamond drillholes completed thus far
and total metres drilled of 1,274.86 metres as at 10 July 2018. The
Lower Seam (the primary orebody mined at the adjacent Vametco Mine)
has been intersected in all drillholes in the second phase, and the
Intermediate Seam has been intersected in BVL011.
Table 4: Brits Vanadium Project Ore Seam Intersections for
Boreholes BVL001to BVL016
Drillhole Total Depth (m) Targets Intersected
BVL001 70.76 LS
----------------------------- ---------------------------------
BVL002 79.35 LS
----------------------------- ---------------------------------
BVL003 77.32 LS
----------------------------- ---------------------------------
BVL004 40.35 LS
----------------------------- ---------------------------------
BVL005 99.36 LS, IS
----------------------------- ---------------------------------
BVL006 173.10 LS, IS
----------------------------- ---------------------------------
BVL007 141.44 LS, IS
----------------------------- ---------------------------------
BVL008 151.40 US, IS, LS
----------------------------- ---------------------------------
BVL009 45.40 LS
----------------------------- ---------------------------------
BVL010 33.02 LS
----------------------------- ---------------------------------
BVL011 101.62 LS, IS
----------------------------- ---------------------------------
BVL012 42.23 LS
----------------------------- ---------------------------------
BVL013 72.75 LS
----------------------------- ---------------------------------
BVL014 39.86 LS
----------------------------- ---------------------------------
BVL015 77.56 LS, IS
----------------------------- ---------------------------------
BVL016 29.34 LS
----------------------------- ---------------------------------
Total 1274.86
----------------------------- ---------------------------------
Note Drillholes BVL001 to BVL008 were reported in the Q1
operational update.
LS = Lower Seam, IS = Intermediate Seam, US = Upper Seam
Table 5: Assay results and intersections for Brits Vanadium
Project Drilling
Drillhole Intersection* Magnetite V(2) O(5) %
% (in magnetite)
4.32-12.91
BVL001 LS1 m 49.11 2.09
------- ------------------------- ---------- ----------------
13.31 - 14.70
BVL004 LS1 m 80.08 1.94
------- ------------------------- ---------- ----------------
29.00 - 32.32
BVL006 US2 m 34.77 1.75
------- ------------------------- ---------- ----------------
34.35 - 41.00
US1 m 38.40 1.63
------- ------------------------------------- ---------- ----------------
98.00 - 100.35
IS2 m 29.17 1.70
------- ------------------------------------- ---------- ----------------
106.00 - 108.5
IS1 m 30.02 1.68
------- ------------------------------------- ---------- ----------------
117.00- 119.00
LS8 m 36.56 1.64
------- ------------------------------------- ---------- ----------------
125.60 - 127.00
LS7 m 41.62 1.65
------- ------------------------------------- ---------- ----------------
131.85 - 133.10
LS6 m 57.62 1.66
------- ------------------------------------- ---------- ----------------
135.00 - 138.00
LS5 m 44.26 1.70
------- ------------------------------------- ---------- ----------------
140.20 - 141.10
LS4 m 53.82 1.66
------- ------------------------------------- ---------- ----------------
160.00 - 161.75
LS3 m 46.79 1.54
------- ------------------------------------- ---------- ----------------
165.00 - 167.73
LS2 m 39.65 1.79
------- ------------------------------------- ---------- ----------------
168.15 - 171.36
LS1 m 65.89 1.78
------- ------------------------------------- ---------- ----------------
*Note that depths are intersected depths and do not represent
true thicknesses
LS = Lower Seam, IS = Intermediate Seam, US = Upper Seam
The sample analysis results in the new intercepts in boreholes
BVL001, BVL004 and BVL006 demonstrate the consistent nature in
grade and thickness of the Lower Seam (LS), Intermediate Seam (IS)
and Upper Seam (US) Layers at the Brits Vanadium Project, which is
the eastern strike extension of the orebody currently being mined
at Bushveld Vametco Alloys Mine. Boreholes BVL001 and BVL006 have
weighted average V(2) O(5) grades in magnetite for the LS is
between 1.94% to 2.09% V(2) O(5) %. The weighted average grades in
magnetite of the LS, IS and US are 1.70%, 1.69% and 1.67% V(2) O(5)
respectively in borehole BVL006. The grade of the LS is marginally
lower than that mined at Vametco, but still represents excellent
vanadium grades. These new intercepts from the Brits Vanadium
project provide evidence of continuity of ore grades and
thicknesses similar to the adjacent operating Bushveld Vametco
Alloys mine. These assay results portray the excellent potential
for an eastward extension of the current orebody being mined at
Vametco. Samples for the boreholes BVL002, BVL003, BVL005, BVL007
and BVL008 have been submitted to the laboratory for analysis and
currently awaiting results.
Mokopane Vanadium Project
The Mokopane Vanadium Project is a key part of Bushveld's
vanadium strategy. The project comprises one of the world's largest
primary vanadium resources hosted in the three adjacent layers of
the Main Magnetite Layer ("MML"), the Main Magnetite Layer-Hanging
Wall ("MML-HW") and the AB Zone. The MML hosts high in-situ grades
of 1.4% V2O5 (1.75% V2O5 grades in-concentrate) on which a
Pre-Feasibility Study was completed in January 2016. An application
for a New Order Mining Right was lodged in March 2015 and is
currently being processed by South Africa's Department of Minerals
Resources. The Company is in ongoing discussions with the
Department of Mineral Resources and expects the New Order Mining
Right to be granted shortly. The Company has also been progressing
consultations with the local community. As previously discussed,
the Company continues to evaluate potential routes to bring the
asset into production in the most cost-efficient manner possible.
Efforts are also underway to find strategic partners to progress
the project.
The intention remains securing the mining right and developing
the greenfield project into a vanadium mine and processing plant.
For the time being the Company continues to explore means to supply
ore from the project to plants in China and / or elsewhere in the
world.
Enquiries: info@bushveldminerals.com
Bushveld Minerals +27 (0) 11 268 6555
Fortune Mojapelo, Chief Executive
Officer
Chika Edeh, Head of Investor
Relations
SP Angel Corporate Finance
LLP Nominated Adviser & Broker +44 (0) 20 3470 0470
Ewan Leggat
Richard Morrison
Alternative Resource Capital Joint Broker
Rob Collins +44 (0) 207 186 9001
Alex Wood +44 (0) 207 186 9004
Tavistock Financial PR
Charles Vivian / Gareth Tredway +44 (0) 207 920 3150
Lifa Communications Financial PR (South Africa)
Gabriella von Ille +27 (0) 711 121 907
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low cost, integrated, primary vanadium
producer, with ownership of high grade vanadium assets.
The Company's flagship vanadium platform includes a 59.1 per
cent controlling interest in Bushveld Vametco Alloys (Pty) Ltd, a
primary vanadium mining and processing company; the Mokopane
Vanadium Project and the Brits Vanadium Project.
Bushveld's vision is to become a significant, low cost,
integrated primary vanadium producer through owning high grade
assets. This incorporates development and promotion of the role of
vanadium in the growing global energy storage market through
Bushveld Energy, the Company's energy storage solutions provider.
Whilst the demand for vanadium remains largely anchored in the
steel industry, Bushveld Minerals believes there is strong
potential for an imminent and significant global vanadium demand
surge from the fast-growing energy storage market, particularly
through the use and adoption of Vanadium Redox Flow Batteries.
While the Company's focus is on vanadium operations and the
development and promotion of VRFBs, it has additional investments
in coal, power and tin.
The coal platform comprises the wholly-owned Imaloto Coal
Project, which is being developed as one of Madagascar's leading
independent power producers. The Company's tin interests are held
through its shareholding in AIM listed AfriTin Mining Limited.
The Company's approach to project development recognises that,
whilst attractive project economics are imperative, they are
insufficient to secure capital to bring them to account. A clear
path to production within a visible timeframe, low capital
expenditure requirements and scalability are important factors in
ensuring a positive return on investment. This philosophy is core
to the Company's strategy in developing projects.
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com
About Vametco
Vametco is located near Brits on the Western Limb of the
Bushveld Complex. The integrated operation comprises a vanadium ore
mine and a processing plant that produces Nitrovan(R) , a trademark
product sold in major steel markets across the world. The mine lies
adjacent to the Brits Vanadium Project, which will in future serve
as an alternative source of near surface run of mine (ROM) ore feed
to the Vametco plant.
The Vametco mining operation uses open pit bench mining methods
to mine a well-defined orebody. The deposit is continuous with
limited faulting and dips in a northerly direction at approximately
19 degrees.
ROM ore is fed into a primary, secondary and tertiary crushing
circuit, followed by milling and magnetic separation to produce
magnetite concentrates. The magnetite concentrates are fed into the
extraction process which includes the kiln for roasting followed by
leaching and precipitation. Thereafter the precipitated vanadium as
ammonium metavanadate is converted to modified vanadium oxide (MVO)
in rotary calciners. MVO is fed into the mixplant and finally into
the shaft furnaces to produce Nitrovan(R) .
Qualified Person
The technical information in this regulatory announced has been
read and approved by Dr Luke Longridge, consulting geologist. Dr
Longridge has a PhD in Geology (2012) and over 6 years' experience
working on vanadiferous magnetite deposits in the Bushveld Complex.
He is a member of the Geological Society of South Africa and is a
registered Professional Natural Scientist (Pr Sci.Nat.) in South
Africa. Dr Longridge has sufficient experience relevant to the
style of mineralisation and type of deposit under consideration and
to the activity which he is undertaking to qualify as a Competent
Person as defined under the JORC Code (2012). Dr Longridge consents
to the inclusion in this announcement of the matters based on his
information in the form and context in which it appears.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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