TIDMBMN
RNS Number : 0406Z
Bushveld Minerals Limited
15 May 2019
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.
15 May 2019
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Bushveld Vanadium Q1 2019 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 for the three
months ending March 2019 ("Q1 2019"), in respect of its Vanadium
business which consists of Bushveld Vametco Limited ("Vametco"),
the Brits Vanadium Project ("Brits") and the Mokopane Project
("Mokopane"). Post-period end, the conditional acquisition of
Vanchem was announced and which will, subject to completion, form
part of Bushveld Minerals' Vanadium business.
Key Highlights
-- Vametco's production for Q1 2019 was 649 mtV in the form of
Nitrovan(TM) from magnetite concentrate, which was consistent with
Q4 2018 (Q4 2018: 657 mtV).
-- During Q1 2019 the Company commenced several productivity
initiatives which were identified as part of the transformation
programme announced on 30 January 2019 to enhance Vametco's
production efficiency ("Transformation Programme").
-- Vametco has seen an improvement in mine production
scheduling, vanadium grade in kiln feed, together with an increase
in the hourly feed rate to the kiln and recovery. In addition,
overall plant recovery has seen significant improvements.
-- These improvements resulted in production for March 2019 of
270 mtV, which is the highest monthly production rate achieved by
Vametco in the past 21 months.
-- Vametco production guidance of 2,800 mtV to 2,900 mtV is
expected for the 2019 calendar year, supported by improved
operating performance, representing a 9 to 13 per cent increase
relative to 2018 production (2018: 2,560 mtV).
-- Unit production cost of US$18.90/KgV to US$19.50KgV is
expected for the 2019 calendar year, underpinned by economies of
scale. This represents a two to four per cent reduction relative to
2018 unit cost (2018: US$19.70/kgV).
-- Production volumes are expected to be skewed towards the
second half of the year, due to a 24 day planned maintenance
programme during the months of June and July.
-- Vametco's production was not affected by recent power
rationing implemented by Eskom, the South African national utility,
during the month of March.
-- Bertina Symonds was appointed General Manager of Vametco.
-- An updated Mineral Reserve and Resource Estimate for Vametco
will be published once the final stages of review have been
completed.
-- The sample analysis results for the 10 boreholes from the
second phase of exploration drilling at Brits (BVL009-BVL019,
excluding BVL018) received in March 2019, indicated consistency in
grade of the Lower Seam with a weighted average V(2) O(5) grade in
magnetite concentrate of 1.66%
-- The positive results and high grades demonstrate the
deposit's ability to be a future source of raw material for the
Vametco plant and concentrate feed for Vanchem if required.
-- The Maiden Mineral Resource Estimate for Brits is expected in
Q2 2019.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"We ended the quarter on a very strong note, with the best
monthly production output from Vametco in more than 21 months. This
reflects the initial work completed under the Transformation
Programme, announced earlier this year, which resulted in
improvements in several key areas of the flow sheet, including
scheduling, feed grade and overall plant recoveries.
"Furthermore, as part of the Transformation Programme we have
undertaken several changes within the leadership team at Vametco,
including the appointment of Bertina Symonds as Vametco's General
Manager. In addition, Lyndon Williams, previously Vametco's COO,
has been appointed as Group Vanadium Specialist in support of
operations integration and technical support to the Group's product
marketing initiatives; and William Steinberg, previously Vametco's
Works Manager, has been appointed as the new Chief Transformational
Officer, responsible for driving the operations improvement
programme.
"As the Company's revenue and earnings generator and thus engine
for growth it is imperative that Vametco operates to its full
potential. It is for this reason that we initiated the
Transformation Programme, designed to ensure that we maximise
production throughput, minimise costs on the back of the
improvements implemented by our motivated and fully engaged
workforce.
"We are pleased to provide 2019 production guidance for Vametco
of 2,800 mtV to 2,900 mtV, which reflects continued expected
improvements under the Transformation Programme and represents an
overall production increase of between 9 and 13 per cent on the
previous year. This does not include any contribution from the
proposed acquisition of the Vanchem plant, which we anticipate to
complete as soon as July and no later than October.
"We are confident of steadily delivering on Vametco's
productivity targets and, with the recently announced conditional
acquisition of the Vanchem vanadium project for US$68 million,
Bushveld Minerals is on a clear path to achieving its long term
capacity target of 10,000 mtV of annual production capacity. These
initiatives will significantly enhance our competitive position in
the Vanadium market over the coming years."
Bushveld Vametco Limited
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Description Unit Q1 Q1 CY19 Q1 CY19
CY19 vs vs
Q4 CY18 Q1 CY18
Vanadium (Nitrovan(TM) plus
FeV) produced mtV(3) 649 -1.2% -11.1%
--------- ------- --------- ---------
Vanadium sold mtV(3) 508 -13.4% -26.5%
--------- ------- --------- ---------
Average MB vanadium price(2) US$/KgV 73.3 -32.1% +18.7%
--------- ------- --------- ---------
USD/ZAR average exchange
rate(4) US$:ZAR 14.0 -1.8% +17.3%
--------- ------- --------- ---------
Underlying production costs(5) ZAR/kgV 260.8 +1.8% +12.7%
--------- ------- --------- ---------
Underlying production costs(5) US$/kgV 18.6 +3.6% -3.9%
--------- ------- --------- ---------
1. Based on provisional, unaudited estimates. Bushveld's net
attributable interest of the above production and financials was
59.1% as at 12 September 2018 and approximately 74% from 13
September 2018 through a series of transactions.
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 the prior month's average price.
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.
Vametco Transformation Programme
Following the Vametco diagnostic review in the last quarter of
2018, an implementation delivery office headed by the Chief
Transformational Officer, has been created and several improvement
initiatives have been initiated. These initiatives will support
Vametco in achieving a steady state production rate of 3,400 mtV
during the course of 2020, which represents 90 per cent of the
3,750 mtVp.a. name plate capacity of Phase 2 of the multi-phase
expansion project, for no additional capital expenditure
requirement. These initiatives include:
o Improving mine production scheduling to stabilise vanadium
grade in run of mine ore and concentrate;
o Increasing crusher and mill availability and throughput rates
which will increase concentrate production;
o Increasing kiln availability, hourly feed rate and
recoveries;
o Improving leach plant recoveries; and
o Improving organisational health.
Vametco has begun to implement a number of these initiatives and
we expect all of these initiatives to be put into practice during
the course of the year.
As part of the Transformation Programme we have changed the
operational leadership at the Vametco plant, with the appointment
of Bertina Symonds as the General Manager of Vametco, being a key
part of this change. In addition, William Steinberg, previously
Vametco's Works Manager, has been appointed as the new Chief
Transformational Officer, and he will be responsible for driving
operational excellence and improvements at Vametco.
Phase 3 of the multi-phase expansion project
The Company continues to review the timing and required
investment to further increase the production name plate capacity
to 5,000 mtV per annum, which we expect to generate a steady state
production in excess of 4,200 mtV.
During 2019 Vametco will continue to progress environmental
approvals for Phase 3 of the multi-phased expansion project. In
addition, detailed design work and capital estimation will commence
with a view to construction commencing in 2020.
Stakeholder Management
Employees and local communities are an important part of the
Bushveld Minerals strategy and growth plans. As previously
communicated, Bushveld Minerals is committed to building a healthy
cooperative relationship with its employees and the local
communities in which it operates. As part of its commitments, the
Company has embarked on an Employee Share Ownership Participation
Scheme and an Employee Financial Wellness Programme.
Employee Share Ownership Participation
Bushveld Minerals' Employee Share Participation Scheme ("ESOP")
is aimed at closely aligning the interests of Vametco's workforce
to its operational targets. Further updates and progress on the
ESOP will be provided as appropriate.
Employee Financial Wellness Programme
Bushveld Minerals is developing an Employees Financial Wellness
Programme to assist in improving the financial well-being of
employees. To this end Vametco has contracted a financial services
provider which specialises in personal financial planning, debt
consolidation, debt counselling and provision of unsecured
loans.
Other projects underway
-- Tailings facility expansion, in order to maintain deposition
capacity for calcines, which need to be deposited on a H:H liner,
as part of ongoing operations, will be completed during Q2 2019 and
commence during this period.
-- A Kiln off-gas project has been initiated to comply with
regulatory requirements and further increase kiln feed throughput.
Commissioning is planned to commence at the end of Q2 2019.
Vanchem
On 1 May 2019, Bushveld Minerals announced that it had entered
into a Business and Share Purchase Agreement with Vanchem Vanadium
Products (Pty) Limited ("VVP"), a subsidiary of Duferco Vanadium
Investment Holding S.A., South African Japan Vanadium Proprietary
Limited ("SAJV"), a wholly owned subsidiary of VVP and Duferco
Participations Holding S.A. to conditionally acquire the following
vanadium production assets in South Africa:
-- The vanadium production business of VVP as a going concern ("Vanchem Plant");
-- The ferrovanadium production business of SAJV as a going concern ("SAJV Business"); and
-- 100 per cent of the outstanding shares of Ivanti Resources
(Pty) Limited ("Ivanti"), a subsidiary of Duferco Participations
Holding S.A, which has economic rights to certain secondary
vanadium units treated within the Vanchem Plant;
for an aggregate cash consideration of US$68 million.
The Vanchem Pant and the SAJV Business consists of integrated
vanadium extraction and production facilities which can produce a
range of vanadium products. The plant comprises:
-- A core salt-roast processing plant, including three roasting
kilns, that produce vanadium trioxide and vanadium pentoxide;
-- An electric smelting ferrovanadium converter, located at the
Highveld Steel & Vanadium ("Highveld") site, situated
approximately 10 km from the Vanchem Plant, which converts vanadium
trioxide into ferrovanadium;
-- An alumino-thermic smelting facility, also located at
Highveld, which converts vanadium pentoxide into ferrovanadium;
and
-- A vanadium chemical plant producing various vanadium chemical products.
In addition, the Company will acquire 100 per cent of the
outstanding shares of Ivanti which has economic rights to certain
secondary vanadium units treated within the Vanchem Plant and
generates profits from the sale of these secondary units to the
Vanchem Plant.
The acquisition, which is expected to complete no sooner than 31
July 2019 and no later than 31 October 2019, is conditional
upon:
-- South African Competition Commission approval, if required;
-- South African Reserve Bank approval;
-- The cession of specific commercial agreements; and
-- No material adverse changes to the Vanchem Business or Ivanti
during the interim period between signature and completion of the
agreements.
Mokopane Vanadium Project
Mokopane is intended to become a primary source of feedstock for
Vanchem and its development will be accelerated as a result of the
Transaction. By transporting a crushed, screened and dry magnetic
separated ore from the Mokopane deposit to Vanchem for further
beneficiation, the capital expenditure requirements associated with
developing Mokopane are significantly reduced to US$20 million
(based on current estimates). The Mokopane-Vanchem model will
create a fully integrated business in a shorter time and at a lower
cost than developing Mokopane as a standalone operation.
Enquiries: info@bushveldminerals.com
+27 (0) 11 268
Bushveld Minerals 6555
Fortune Mojapelo, Chief Executive
Officer
Chika Edeh, Head of Investor
Relations
SP Angel Corporate Finance Nominated Adviser +44 (0) 20 3470
LLP & Broker 0470
Ewan Leggat / Richard Morrison
Jonathan Williams / Richard
Parlons
Alternative Resource Capital Joint Broker
+44 (0) 207 186
Rob Collins 9001
+44 (0) 207 186
Alex Wood 9004
+44 (0) 20 7236
BMO Capital Markets Limited Joint Broker 1010
Jeffrey Couch / Tom Rider
Michael Rechsteiner / Neil
Elliot
Tavistock Financial PR
+44 (0) 207 920
Charles Vivian / Gareth Tredway 3150
Brunswick Financial PR (South
Africa)
+27 (0) 11 502
Miyelani Shikwambana 7300
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 74 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 project developer and
component manufacturer. 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 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(TM) , 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(TM) .
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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