TIDMBMN
RNS Number : 6114S
Bushveld Minerals Limited
07 November 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.
7 November 2019
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Bushveld Minerals Q3 2019 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated
primary vanadium producer, with ownership of high grade vanadium
assets, is pleased to provide an operational update for the three
months ending 30 September 2019 ("Q3 2019"), in respect of Bushveld
Vanadium, Bushveld Energy and Lemur Holdings, as well as other
corporate activities.
Key Highlights
Bushveld Vanadium
-- Today, Bushveld Minerals announced the successful completion
of the Vanchem acquisition for a total consideration of US$53.5
million, reduced from the initially agreed US$68 million.
-- Vametco's production for Q3 2019 was 561 mtV in the form of
Nitrovan(TM) from magnetite concentrate, a 24 per cent decrease
relative to Q2 2019 (Q2 2019: 742 mtV) due to a planned maintenance
programme, as previously announced.
-- The maintenance programme was completed in 22 days, two days
ahead of schedule. No further shutdowns are planned for the current
financial year.
-- Subsequent to the successful implementation of the
maintenance programme and in line with the Transformational
Programme, Vametco has completed the initiatives required to:
-- increase crusher and mill availability, and throughput
rates;
-- increase kiln availability and hourly feed rate;
-- increase recoveries; and
-- improve leach plant recoveries.
-- As a result of the improved operational performance and
stability, Vametco achieved record monthly production of circa 310
mtV during September, this is the first time that this has been
attained from the processing of only magnetite concentrate at
Vametco.
-- Vametco's production for the nine months ended 30 September
2019 was 1,953 mtV a three per cent increase from the prior
corresponding period (9M 2018: 1,897mtV).
-- Vametco is on track to meet its production guidance of 2,800
mtV to 2,900 mtV for the 2019 financial year, underpinned by its
improved operational performance.
-- Unit production cost of US$18.90/KgV to US$19.50/KgV for the
2019 financial remains on track.
-- On 21 October 2019, the Company announced that the Department
of Mineral Resources and Energy ("DMRE") approved its mining right
application in respect of the Mokopane Vanadium Project. The
Company is currently finalising the required documentations in
order to execute the mining right.
Bushveld Energy
Manufacturing - VRFB Investment Platform
-- On 1 November 2019, the Company announced its intention to
establish a VRFB Investment Platform ("VIP") to lead investments in
VRFB original equipment manufacturers ("OEMs") with attractive
upside potential. The VIP is one of multiple avenues of partnering
with OEMs.
-- The Company and its initial investment will play a catalyst
role and mobilise additional capital from third party funders to
establish an investment capital pool to support VRFB OEM
growth.
-- These partnerships support Bushveld Energy's business model, that includes electrolyte, VRFB manufacturing and deployments.
-- As part of the VIP, Bushveld announced that it had agreed to
support the merger of Avalon Battery Corporation ("Avalon") and
redT energy plc ("'redT") (the "Merger") with interim funding of
US$5 million which will give Bushveld the opportunity to acquire a
strategic interest in the merged energy storage company.
Electrolyte Plant
-- On 3 September 2019, Bushveld Energy received environmental
authorisation, following the submission of the Environmental Impact
Assessment ("EIA"), from the Environmental and Social Advisory
Services of the Eastern Cape of South Africa, for the development
of the Electrolyte Plant Facility in the East London Industrial
Development Zone ("ELIDZ"). The approval successfully passed the
20-day appeal period.
-- The tender for Engineering Procurement and Construction
("EPC") services for the Plant has since been announced and is
currently underway.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"At the core of our strategy to build a leading integrated
vanadium platform is a low cost, scalable primary production base,
of which Vametco is the flagship. Along with the newly acquired
Vanchem business, these assets provide Bushveld Minerals with a
sound base to implement our growth strategy.
In this context, I am delighted to report on the great work done
to improve Vametco's processing and production levels as a result
of the initiatives that were identified as part of the
Transformation Programme, which Vametco has now successfully
implemented.
Thanks to the recent efforts from our team on the ground, the
maintenance programme was successfully implemented ahead of
schedule. Following this work, Vametco was soon running at improved
levels, achieving record production of more than 300 mtV from
magnetite concentrate during the month of September. These
sustainable operational achievements keep us on track to achieve
our stated guidance for the year at both the cost and production
levels.
We are also excited to have secured operational control of
Vanchem, with Bushveld now owning two of the four operating primary
processing facilities globally. Alongside the Mokopane mining right
application granted recently, the completion of the Vanchem
acquisition, gives us a scalable platform that will allow us to
grow our production base towards the 8,400 mtV per annum target we
have communicated.
In addition, as announced recently, the restructuring of the
purchase price for Vanchem and the recent bank facilities secured
from Nedbank will enhance the Company's financial position as it
implements its growth strategy.
Looking at our energy division, our recently revealed intention
to establish a VRFB Investment Platform to lead investments in this
space adds another important piece to our energy storage strategy.
The platform will allow us to mobilise additional third party
financing to support VRFB manufacturers' efforts to scale up their
manufacturing capacity. The proposed merger of two proven VRFB
suppliers, Avalon and redT Energy is an exciting first investment
opportunity for the platform. The interim funding provided by
Bushveld will help advance their merger and the eventual creation
of a stronger VRFB company.
The investment platform comes at an apt time, as developments in
South Africa's energy sector point to a large local stationary
energy storage market. These include the recently announced Eskom
1,400 MWh battery tender and the South African Integrated Resource
Plan ("IRP") which include a dedicated allocation for new energy
storage deployments of over 2,000 MW over the next 10 years. We
believe that these developments will position South Africa as one
of the largest markets for energy storage in the world.
In conclusion, we have laid the key building blocks to achieve
our production target of 8,400mtVp.a while advancing Bushveld
Energy's competitive position within the energy storage
market."
Bushveld Vanadium
Bushveld has one of the largest, high-grade primary vanadium
resource bases in the world. The Company's vanadium resource base
currently consists of three mineral assets, Vametco, Brits and
Mokopane. Bushveld's processing facilities consist of Vametco and
Vanchem. The Company's mineral resources and processing facilities
are situated within the Bushveld Complex in South Africa.
Vametco
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Description Unit Q3 9MCY19 Q3 CY19 Q3 CY19 9MCY19
CY vs vs vs
19 Q2 Q3 9MCY18
CY19 CY18
Vanadium (Nitrovan(TM)
plus FeV) produced mtV(2) 561 1,953 -24.4% +4.5% +3.0%
--------- ----- ------- -------- -------- --------
Vanadium sold mtV(2) 604 1,719 -0.6% +3.4% -13.5%
--------- ----- ------- -------- -------- --------
Average LMB vanadium price(3) US$/KgV 30.7 47.8 -21.9% -64.2% -33.8%
--------- ----- ------- -------- -------- --------
Underlying production costs(4) US$/kgV 19.1 19.2 +4.9% -5.7% -3.1%
--------- ----- ------- -------- -------- --------
1. Based on provisional, unaudited estimates. Bushveld's net
attributable interest of the above figures is approximately
74%.
2. mtV = metric tonnes of vanadium.
3. 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.
4. Excludes depreciation, royalties, selling, general, & administrative expenses.
-- Vametco's planned maintenance shutdown which commenced in
July 2019 was successfully completed in 22 days, two days ahead of
schedule.
-- The maintenance programme was undertaken to increase kiln
availability, hourly feed rate and improve leach plant
recoveries.
-- Subsequent to the successful implementation of the
maintenance programme, Vametco has seen a significant improvement
in operational performance and stability, achieving, for the first
time, circa 310 mtV per month production from only magnetite
concentrate in September.
-- The Company's ongoing implementation of initiatives
identified in the diagnostic review will support Vametco in
achieving a steady state production run rate of 3,400 mtVp.a.
during the course of 2020 and run rate of 4,200 mtVp.a during the
course of 2022.
-- Successfully completed the wages and benefits negotiations
with the Association of Mineworkers and Construction Union ("AMCU")
for the three-year period from 1 July 2019 to 30 June 2022.
-- A JORC compliant Competent Persons Report ("CPR") for the
updated Mineral Reserve and Resource Estimate for Vametco will be
published along with the Q4 operational update.
-- Ferrovanadium price averaged US$30.7/kgV in Q3 2019 (Q3 2018: US$85.8/kgV).
-- October LMB mid average price of US$24/kgV.
Other projects underway at Vametco
-- A kiln off-gas project has been initiated to comply with
environmental regulatory requirements and further increase kiln
feed throughput. Commissioning is planned to be completed during H1
2020.
Brits
-- A JORC compliant CPR for Brits Vanadium Project's Maiden
Mineral Resource will be published along with the Q4 operational
update.
Vanchem
-- Today, the Company announced the completion of the Vanchem
acquisition for a total consideration of US$53.5 million, reduced
from the previously announced consideration of US$68 million.
-- The US$53.5 million consists of: US$30 million paid in cash;
US$23 million issued as Bushveld Minerals unsecured convertible
loan notes; and a further US$0.5 million plus an amount equal to
the working capital adjustment of Vanchem in cash after two
years.
-- The revised terms enhances the Group's cash position and
ensures that the Company is in a solid position to achieve its
long-term production target of more than 8,400 mtVp.a. and to build
a leading downstream vanadium-based energy storage platform.
-- With full operational control of Vanchem, the Company will
proceed with a detailed assessment of the assets acquired and
refine the refurbishment plans for the ramp-up programme to more
than 4,200 mtVp.a.
Mokopane Vanadium Project
-- On 21 October 2019, the Company announced that the DMRE had
granted a mining right to Pamish, in respect of the five farms
which make up the Mokopane Project: Vliegekraal 783 LR,
Vogelstruisfontein 765 LR, Vriesland 781 LR, Schoonoord 786 LR and
Bellevue 808 LR.
-- A definitive feasibility study ("DFS") to mine the Main
Magnetite Layer and provide a resources and reserves assessment has
commenced and will be focussed on Mokopane as the primary feedstock
supplier to Vanchem. The DFS is expected to be completed during the
second half of 2020.
Bushveld Energy
Manufacturing
On 1 November 2019, the Company announced its intention to
establish a VIP to lead investments in VRFB OEMs with attractive
upside potential. The VIP is one of multiple avenues of partnering
with OEMs. As part of the VIP investment, the Company announced
that it had agreed to support the merger of Avalon and redT with
interim funding of US$5 million which will give Bushveld the
opportunity to acquire a strategic interest in the merged energy
storage company.
The investment is in line with the Company's strategy of
building a leading downstream vanadium-based energy storage
platform, by:
-- Increasing Bushveld's exposure to the massive potential of
the stationary energy storage market, for the first time directly
with a manufacturer of VRFB technology;
-- Partnering with selective VRFB companies with attractive
upside potential, including the establishment of a VRFB Investment
Platform; and
-- Demonstrating upstream support from the vanadium industry for
the development of the VRFB sector and encouraging additional
investment into the combined company.
Electrolyte Plant
-- Bushveld Energy received environmental authorisation,
following the submission of the EIA, from the Environmental and
Social Advisory Services of the Eastern Cape of South Africa, for
the development of the Electrolyte Plant Facility in the ELIDZ.
-- Receipt of the Environmental Authorisation allows the Company
to commence construction of the facility, designed to have an
initial capacity to produce 200MWh of vanadium electrolyte per
annum (used in VRFBs) as well for easy scalability in future.
-- The capital expenditure required to build the electrolyte
plant is approximately US$10 million, which will be financed with a
combination of debt and equity by Bushveld and South Africa's
Industrial Development Corporation ("IDC"). The facility is being
co-developed by Bushveld Energy and the IDC.
-- Upcoming milestones include tendering for and selection of
the Engineering, Procurement and Construction ("EPC") contract for
the manufacturing plant, erection of the physical building to house
the plant by the ELIDZ and construction and commissioning of the
plant.
Vanadium electrolyte rental model
-- On 10 June 2019, the Company announced the successful
deployment of a rental contract with Avalon and its customer,
Sandbar, in the United States.
Vametco based Solar Mini-Grid Project
-- Completed a grid connection and geotechnical studies.
-- Commenced procurement for the project.
Energy storage market updates
The recently approved Integrated Resource Plan ("IRP") 2019 for
South Africa, includes a dedicated allocation for Energy Storage,
promising to accelerate energy storage growth in South Africa while
showcasing how storage can decrease the cost of electricity
provided.
-- The IRP allocates 2088 MW of new energy storage over two tranches:
-- 513 MW in 2022; and
-- 1,575 MW in 2029.
-- Energy storage became a lowest cost option after costs were
updated to reflect current market pricing, coupled with the "longer
gas infrastructure lead time" and the "extent of the wind and solar
Photovoltaics ("PV") option in the IRP.
-- The actual upside for storage within the IRP could be quite
higher, with three sources of potentially additional storage
co-located with:
-- Solar PV - which is expected to add a further 6800 MW in generation through 2030;
-- Wind - which is expected to add nearly a further 16000 MW in
generation through 2030;
-- Embedded generation, totalling 500 MW p.a.
Lemur
-- Preliminary findings of the coal mine optimisation study,
which looked at incorporating the underground portion earlier than
previously planned, show a favourable outcome. The DFS will
progress on this basis. Lemur is in the process of inviting
technical advisors to submit proposals to conduct the DFS.
-- Negotiations for the construction of the power station with
Sinohydro, a subsidiary of state-owned PowerChina, are at an
advanced stage and are expected to be concluded by the end of the
year.
-- In July 2019, Lemur conducted the route site survey for the
transmission line together with potential bidders for the EPC
contract for the transmission line in Madagascar. Final EPC bid
documents for the transmission line were submitted in September
2019. Lemur will select the preferred bidder during Q4 2019.
-- The Social and Environmental Impact Assessment fieldwork is
ongoing. Lemur is currently conducting the drilling programme for
the specialist studies for the SEIA. Submission to the Ministry of
Energy is still expected in Q4 2019.
-- Engagement with potential lenders for project finance is
still ongoing with the objective of achieving financial close
during the second half of 2020.
-- Bushveld Minerals is exploring various options for Lemur
Holdings to operate as a standalone coal and energy focused
platform.
Corporate activities
-- The Group secured R375 million (approximately US$25 million)
in debt facilities through its subsidiary, Bushveld Vametco Alloys
Proprietary Limited, with Nedbank Limited in the form of a R250
million loan and a R125 million revolving credit facility.
-- The R375 million is carved out from the Group's obligation,
according to the terms of the Vanchem transaction, to repay an
amount equal to 50 per cent of any debt raised over US$15 million,
provided no more than 50 per cent of the Loan Notes have been
repaid, redeemed or converted
Enquiries: info@bushveldminerals.com
+27 (0) 11 268
Bushveld Minerals Limited 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
Richard Morrison / Stephen
Wong
Abigail Wayne / Richard Parlons
+44 (0) 20 7236
BMO Capital Markets Limited Joint Broker 1010
Tom Rider / Michael Rechsteiner
Neil Elliot
+44 (0) 20 7418
Peel Hunt Limited Joint Broker 8900
Ross Allister / James Bavister
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; 100 per cent of
Bushveld Vanchem, a primary vanadium processing facility with a
beneficiation plant; 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. 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.
Bushveld Energy, the Company's energy storage solutions provider,
plays a leading role in the development and promotion of the role
of vanadium in this market.
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 may be
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 mix plant and
finally into the shaft furnaces to produce Nitrovan(TM) .
About Vanchem
Vanchem is situated at Ferrobank Industrial Park in Emalahleni
Local Municipality, Mpumalanga Province in the Republic of South
Africa. Vanchem is a primary vanadium producing facility with a
beneficiation plant capable of producing various vanadium oxides,
ferrovanadium and vanadium chemicals. Vanchem uses the salt roast
beneficiation process, similar to the one used at Vametco. The
plant comprises: a core salt-roast processing plant, including 3
roasting kilns, an electric smelting ferrovanadium converter, an
alumino-thermic smelting facility, also located at Highveld, a
vanadium chemical plant; and a rail siding linking the plant with
Bushveld deposits and additional potential supply sources through
the national rail network.
About Bushveld Energy Limited
Bushveld Energy is a leading energy storage solutions provider,
focusing on the African market. Bushveld Energy recognises that
electricity in Africa intersects paramount potential for social
transformation with an immense commercial opportunity.
Launched in 2016, Bushveld Energy is focused on developing and
promoting the role of vanadium in the growing global energy storage
market through application in vanadium redox flow batteries. Its
near term strategy is to deploy several VRFB systems as part of its
longer term vision to become a significant electricity storage
provider in Africa by 2020, meeting the demand for utility scale
energy storage in Africa by leveraging South Africa-mined and
beneficiated vanadium.
http://www.bushveldenergy.com
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END
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