TIDMBMN
RNS Number : 6178D
Bushveld Minerals Limited
30 June 2021
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
30 June 2021
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Full Year Results for the Period Ended 31 December 2020 &
2021 Guidance Update
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated
primary vanadium producer and energy storage provider, with
ownership of high-grade assets in South Africa, is pleased to
announce its full year results for the year ended 31 December 2020
and an update on 2021 guidance.
Annual Report
The Annual Report for the year ended 31 December 2020 will be
available on the Company's website today at the following link:
http://www.bushveldminerals.com/financial-reports/ . Physical
copies of the Annual Report will be posted to shareholders who have
elected to receive them, during the week commencing the 12(th) of
July 2021. A further announcement will be made by the Company once
hard copies of the Annual Report have been despatched to
shareholders.
FY2020 Operational and Financial Highlights
-- An improved safety record achieving a Total Injury Frequency
Rate ("TIFR") at Vametco of 18.21, an improvement of 22 per cent
(2019: 23.49), and a TIFR of 5.26 at Vanchem.
-- Record Group production of 3,631 mtV (2019: 2,931 mtV),
primarily as a result of the inclusion of Vanchem for a full
year.
-- Record Group sales of 3,842 mtV (2019: 2,392 mtV), as a
result of the full year contribution of sales volumes from
Vanchem.
-- Revenue of US$90.0 million, a 23 per cent reduction relative
to 2019 (2019: US$116.5 million) as a result of a 52 per cent
decline in the average realised price, partly offset by an increase
in sales volumes.
-- Group cost per unit sold of US$29/kgV (2019: US$37/kgV),
reduction is supported by the dilution of fixed costs through the
acquisition of Vanchem and increase in its production.
-- EBITDA loss of US$14.9 million, (2019: US$32.6 million)
largely due to a decline in vanadium prices, and partly offset by a
reduction in other operating and administrative costs.
-- Entered into a transaction with Orion Mine Finance under
which we successfully secured US$65 million in funding. The
financing provides support to the Group to achieve a steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by
the end of 2022.
-- Ended the year with cash and cash equivalents of US$50.5
million held at 31 December 2020 (2019: US$34.0 million).
-- Continued progress in implementing the Company's strategy in
the growing stationary energy storage sector through Bushveld
Energy:
-- Successfully completed investments in Vanadium Redox Flow
Batteries Original Equipment Manufacturers Invinity Energy Systems
plc ("Invinity") and Cellcube.
-- Signed an electrolyte rental contract between Pivot Power,
part of EDF Renewables, and Vanadium Electrolyte Rental Limited, a
joint venture established with Invinity.
Post period events
-- Group Unaudited cash and cash equivalent of approximately US$31.0 million as 27 June 2021.
-- Successfully renegotiated the covenant testing terms required
under the ZAR125 million Revolving Credit Facility ( " RCF " ).
-- Nedbank has agreed to waive the covenants for the June 2021
period and relax the December 2021 Group net debt to EBITDA ratio
from 2.50 times to 4.0 times. A condition of the waiver is that the
RCF is amortised by ZAR5 million (approximately US$0.3 million) per
month from 6 August 2021, with a bullet payment of ZAR50 million
(approximately US$3.4 million) due on the maturity date of 6
November 2022.
-- Positive renegotiations with Duferco Participations Holding
S.A ("Duferco") on the remaining balance US$11.5 million of
convertible balance, to result in US$5 million being payable in
November 2021 and the remaining US$6.5 million being converted into
Bushveld shares .
-- Commenced construction of the 200 MWh electrolyte plant in June 2021.
-- Monetised investment in Invinity and realised approximately US$13 million.
2020 Summary:
US$ million (unless otherwise stated) Year ended Year ended % Change
31.12.20 31.12.19
---------- ----------
Vanadium Production(1) (mtV) 3,631 2,931 24
---------- ----------
Sales volumes (mtV) 3,842 2,392 61
---------- ----------
Average realised price (US$/kgV) 23.4 48.9 -52
---------- ----------
Revenue (US$ million) 90 116.5 -23
---------- ----------
EBITDA US$ million (14.9) 32.6 -146
----------
EPS (US cents) (3) 5.51 -154
----------
Net cash flow /(outflow) from operating
activities (17.1) 28.5 -160
---------- ----------
Net cash / (Net debt) (33.7) (7.7) 337
---------- ----------
Cash and cash equivalents 50.5 34.0 48.5
---------- ----------
2021 Guidance
Bushveld Vanadium
-- Group production guidance revised to between 3,400 mtV and 3,600 mtV.
-- As reported in the Q1 2021 operational update, Vametco's
performance was impacted by slower than expected ramp up post the
successful completion of the 35-day planned maintenance shutdown.
There were more unforeseen mechanical breakdowns after start-up,
followed by six-days of unprotected industrial action in April 2021
. Due to this:
o Vametco's 2021 guidance has been revised to between 2,300 mtV
and 2,400 mtV, previously between 2,700 mtV and 2,850 mtV.
o Production cash cost (C1) has been revised to between
US$23.7/kgV and US$24.20/kgV (ZAR339/kgV and ZAR345/kgV),
previously US$20.0/kgV and US$21.30/kgV (ZAR320/kgV and
ZAR340/kg).
-- Due to delays in securing steel supplies for the Kiln 3
refurbishment schedule, Vanchem's 2021 guidance has been revised to
1,100 mtV and 1,200 mtV, previously 1,400 mtV and 1,500 mtV.
o Production cash cost (C1) has been revised to between
US$30.3/kgV and US$31.1/kgV (ZAR434/kgV and ZAR444/kgV) previously,
between US$26.20/kgV and US$26.70/kgV (ZAR419/kgV and
ZAR427/kg).
o Vamchem's capital expenditure for the year associated with the
refurbishment programme has been revised to US$11.3 million,
previously US$15.7 million with most of the cost being
ZAR-denominated.
-- The Company is to grow its vanadium production to a
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by
the end of 2022, following completion of the refurbishment and ramp
up of Kiln 3 at Vanchem, which is of a similar scale and capacity
to Vametco, and will see Vanchem produce at an annual steady state
production run rate 2,600 mtV.
-- Pre-feasibility studies are under way at Vametco and Vanchem
to increase Group production run rate to between 6,400 mtVp.a. and
6,800 mtVp.a. in the medium-term and to 8,400 mtVp.a. in the longer
term. Completion of the studies in Q4 2021 will allow a capital
efficient sequencing of the growth phases between Vametco and
Vanchem.
-- Implement the cost savings programme in order to achieve
costs savings of approximately US$2.5 million to US$4 million per
year, starting from 2022.
Bushveld Energy
-- Progress construction of the electrolyte plant, with an initial 200 MWh capacity.
-- Scale up the vanadium electrolyte rental product with new contracts.
-- Support and fund the growth of Cellcube, together with the other shareholders.
-- Attain financial close and commence construction of the Vametco hybrid mini-grid.
Group Capital Expenditure
-- Capital expenditure expected for 2021 of approximately
US$26.8 million, of which we have already spent US$8.6 million as
at 31 May 2021, with most of the cost being Rand-denominated. The
Capital expenditure includes the following
-- Vametco approximately US$6.0 million;
-- Vanchem approximately U$11.3 million; and
-- Bushveld Energy, approximately US$9.5 million, including the
capital of Bushveld Electrolyte Company ("BELCO"), (principally
funded by Bushveld Energy's partial asset sales of its Invinity
shares in H1 2021.)
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"Following the completion of the Vanchem acquisition in November
2019, we began 2020 with a clear focus to integrate our operating
assets, implement our new operating model designed to ensure
adequate oversight over and extract the most synergies between our
assets, even as we undertook the capital expansion projects to grow
production at Vanchem and Vametco.
Yet early into the year the world found itself in the grip of a
global COVID pandemic whose disruption of everything posed an
existential threat to most businesses, ours included. Amidst the
uncertainty and disruption that continues still, I am pleased to
report that our comprehensive and agile response plan combined with
the diligence and hard work of all Bushveld's employees, helped us
find the balance between keeping our employees safe and ensuring
business continuity. Better still we were able to report record
Group production thanks to the inclusion of Vanchem production for
a full year..
While 2020 witnessed depressed vanadium prices, we believed, as
we still do, that the market fundamentals for vanadium are robust
and supportive of price upside. This market view underscored our
conviction to complete the acquisition of Vanchem even in the midst
of a declining price. I am especially grateful that our positive
outlook for vanadium and primary producers is shared by Orion Mine
Finance with whom we completed a US$65 million funding agreement at
the end of 2020. The funding secures our near-term growth plans and
strengthened our balance sheet as we were able to retire the
Nedbank term loan and repay half of the Duferco Participations
Holding S.A ("Duferco") convertible loan note with cash and
shares.
Notwithstanding the positive growth outlook for vanadium,
operating conditions in 2020 were challenging as a consequence of
not only a low price environment but also COVID-related disruptions
to operations and global supply and logistics, significantly
impacting production and costs. All of this contributed to a weak
financial performance with a Group EBITDA loss of US$14.9 million.
In this context, I am pleased that we have since successfully
renegotiated the covenant testing terms required under the Nedbank
ZAR125 million Revolving Credit Facility.
Our focus at an operational level is on attaining operational
excellence at our assets. This is especially important at Vametco
which has shown operational instability at the beginning of 2021.
In this respect I am pleased to have welcomed Mr Francois Naude,
who joined us at the start of 2021, as the Director of Operations.
Supported by a sound technical team, Francois brings extensive
operations turnaround experience and will play a key role in our
quest to extract value from our operations.
Meanwhile, the need to prioritise operational stability at
Vametco has necessitated a longer than usual 35 day maintenance
shutdown in Q1 2021 and a downward revision of our targets for the
plant's operating metrics in line with historically observed
performance metrics, resulting in an unfortunate downward revision
of production guidance for 2021. This effort has also seen us
launch a comprehensive Group-wide cost review exercise to drive
improved unit cost performance.
Our commitment to organic production growth remains, not only
for its revenue growth proposition but also for its contribution to
lowering our unit costs. Yet, in a capital constrained environment
we must sequence the multiple expansion initiatives in a way that
prioritises the cheapest next vanadium unit in our expansion
initiatives, while promoting stability at our operations. This is
the subject of current pre-feasibility studies underway at both
Vametco and Vanchem. We will provide details on the production path
and expected capital expenditure once the studies are concluded,
which we expect to complete in Q4 2021.
At Bushveld Energy, the Company made great strides in growing
the awareness and commercial competitiveness of VRFBs as a viable
energy storage alternative. Our strategy to invest in VRFB
manufacturing, which is designed to be a catalyst for mobilising
financing to build scale among VRFB Original Equipment
Manufacturers, has also been fruitful. Our US$5 million investment
in AIM-quoted Invinity, whose creation we facilitated in 2020,
delivered immediate benefits. Invinity has won several important
contracts and its share price rose by more than 300 per cent in
2020. We have since crystallised our position and realised a total
of approximately US$13 million.
Despite the challenges of the Covid pandemic, progress continued
on our mini-grid project at Vametco, where Cellcube has been
selected to supply a 4 MWh VRFB for the project. The project will
demonstrate the business case of self generation solutions using
PVsolar and VRFB systems at a time when the South African
government is creating a supportive regulatory environment for
self-generation, including lifting the cap for such projects being
developed without a generation licence to 100MW from 1MW a few
years ago.
In 2020, we started a process of developing our sustainability
strategy, which will focus on Environment, Social and Governance
("ESG") principles. We will integrate material ESG considerations
across the value chain into the business decision-making process;
report on material ESG key performance indicators; and communicate
a consistent message to stakeholders on key ESG commitments.
The successful acquisition of Vametco and Vanchem are important
pillars in our brownfields growth strategy. With a combined
acquisition cost for the two plants of approximately US$120 million
and a growth capital expenditure of approximately US$30 million we
now have the platform that will take the Group's steady state
production run rate to between 5,000 mtVp.a. and 5,400 mtVp.a, from
the projects currently being executed, with further growth ahead as
more capex is spent. As importantly, we have funded this growth
since 2016 with limited equity financing (through equity placing,
convertible and warrant instruments) (approximately US$60 million)
while the balance came from cashflows generated by the operations
and debt funding. Our task now is to match the capital efficiency
we have demonstrated in growing our asset base with operational
efficiency- realising their full production capacity and
competitive cost position. We are up to the task ."
Analyst conference call and presentation
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo and
Finance Director, Tanya Chikanza will host a conference call and
presentation at 14:00 BST (15:00 SAST) today to discuss the 2020
full year results with analysts. Participants may join the call by
dialling:
Tel: United Kingdom: +44 (0)330 336 9126; South Africa: +27 11 844 6054
Pin: 1720767
Alternatively, the presentation can be accessed as a webcast
here:
https://webcasting.brrmedia.co.uk/broadcast/60d9897e0bb2806642d65b88
S
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 / Charlie
Bouverat
Grant Baker / Richard Parlons
+44 (0) 20 7418
Peel Hunt Limited Joint Broker 8900
Ross Allister / Alexander
Allen
Tavistock Financial PR
Charles Vivian / Gareth Tredway
/ +44 (0) 207 920
Annabel de Morgan 3150
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, vertically integrated primary
vanadium producer. It is one of only three operating primary
vanadium producers, owning 2 of the world's 4 operating primary
vanadium processing facilities. In 2020, the Company produced more
than 3,600 mtV, representing approximately three per cent of the
global vanadium market. With a diversified vanadium product
portfolio serving the needs of the steel, energy and chemical
sectors, the Company participates in the entire vanadium value
chain through its two main pillars: Bushveld Vanadium, which mines
and processes vanadium ore; and Bushveld Energy, an energy storage
solutions provider. Bushveld Vanadium is targeting to materially
grow its vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a by
the end of 2022, from projects currently
being implemented. Beyond that, pre-feasibility studies are in
progress to determine the optimal path to increase production even
further to a steady state production run rate of between 6,400
mtVp.a. and 6,800 mtVp.a. in the medium-term and to a steady state
production run rate of 8,400 mtVp.a in the long term.
Bushveld Energy is focused on developing and promoting the role
of vanadium in the growing global energy storage market through the
advancement of vanadium-based energy storage systems, specifically
Vanadium Redox Flow Batteries ( " VRFBs " ).
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com .
Chairman's Statement
Dear Stakeholders,
There is no doubt that 2020 will be remembered for decades to
come as a difficult period for everyone, and for some more than
others.
It was also a year when responsibility came to the forefront.
The responsibility of governments to look after their citizens,
corporates to ensure the health and safety of their employees, and
companies like Bushveld Minerals to ensure that the value of our
tier-one assets were retained throughout the difficult period of
the COVID-19 pandemic.
As a corporate citizen in South Africa, Bushveld Minerals'
responsibilities run deep, starting with our local communities. The
sustainability of our communities is intrinsically linked to the
success and longevity of our operations.
I would like to applaud management for acting swiftly to protect
our employees early and throughout the pandemic. Management halted
operations, in line with the government's equally commendable
measures, and applied strict health and safety protocols, including
social distancing, sanitising, education and a revised shift
system, once operations were restarted.
Vanadium prices were not excluded from the pandemic's effect on
global growth, as prices of basic materials, including those needed
for steel production, dipped initially, due to weakness in key
markets.
Again, management must be commended for finding new sources of
demand in China. The country emerged from the pandemic with a
strong appetite for metals, and its demand was higher than in other
parts of the world.
Late in 2020 and in the first half of 2021, we have seen
vanadium prices continue to rise globally as growth returns after a
year of lockdowns.
Prudently, the Board and management conducted an internal review
of capital expenditure plans, ensuring the roll-out of these
planned investments matched our ability to finance them and that
they were not slowed down by short-term market dynamics.
We entered into a transaction with Orion Mine Finance, under
which we successfully secured US$65 million in funding. The
financing provides a structure that will support the Group to
achieve a steady state production run rate of between 5,000 mtVp.a.
and 5,400 mtVp.a. by the end of 2022. Studies are currently being
conducted to determine the optimal way to deploy this capital for
further growth to a steady state production run rate of between
6,400 mtVp.a. and 6,800 mtVp.a., which may include re-sequencing
some of our capital projects. Our objective is to grow production
in an efficient, sustainable manner, while avoiding any strain on
our balance sheet.
This is not a race, but a journey, and we want to make certain
that once we reach our goal, we can maintain our production rates
for decades into the future.
In the year under review, we controlled our newest asset,
Vanchem, for the full financial year. Vanchem diversifies our
product mix and delivers key brownfield growth that we previously
indicated was an important part of our strategy, given our vast
resource in the ground.
Despite the unforeseen challenges of the past year, governments
have recognised and embraced the opportunity to steer the world
towards the clean energy transition faster than was previously
evident. Many governments have put renewable energy and a focus on
reduced emissions at the centre of their stimulus programmes.
In South Africa, the government has prioritised the need to
resolve its energy supply crisis and it has taken some bold steps
since the start of 2021. Several recent announcements are promising
for the future of renewable energy and energy storage.
The first key announcement was confirmation by National Treasury
that it had agreed with Eskom on an implementation plan and
timelines for the restructuring of the utility. This will allow
competition and cost transparency in electricity generation. The
second key announcement was the increase in the threshold for
self-generation without a licence from 10 MW to 100 MW, which will
help to increase electricity supply, particularly from renewable
resources. The third was the revival of the renewable procurement
programme. This was halted in 2015 but re-prioritised under the
2019 Integrated Resource Plan. All three are important steps to
increase competition in the power sector.
These developments support Bushveld Minerals' plans to develop
its downstream operations beyond the production of end-use vanadium
products, to become a key player across the renewable energy
storage value chain. As we have repeatedly stated, the energy
storage market presents a sizeable commercial opportunity for our
Company. Our integrated strategy means we will not only benefit
from the uptick in demand arising from this opportunity, but will
also be able to participate meaningfully in the downstream
sector.
As you know, we recognised this opportunity much earlier than
most others and had already established a solid energy base. We
were able to benefit from our investment in Invinity Energy Systems
("Invinity"), the London-listed entity that resulted from the
merger between Avalon Battery Corporation and redT energy plc, as
Invinity's shares gained appreciably in value after its re-listing
in April 2020. It has subsequently secured several exciting sales
contracts. Additionally, we invested into Cellcube as part of an
investment consortium.
We have also made significant progress in our efforts towards
self-generation at Vametco. We have developed a strong platform for
externally-funded solar generation and Vanadium Redox Flow Battery
("VRFB") storage that will satisfy just under 10 per cent of
Vametco's energy requirements and reduce its carbon footprint. This
project is part of Bushveld's strategy to demonstrate the superior
technical and economical merits of long-duration VRFB systems when
paired with renewable energy, as the South African government
relaxes regulatory hurdles around energy self-generation.
Another key responsibility for us is to our shareholders. While
much of the regular in-person engagement with our investor base was
impossible in 2020, our responsibility to ensure sustainable
returns for the long term informed every decision we made. Despite
a global event that no-one had prepared for, the business was
managed appropriately through this challenging period.
To progress the Company so much under such constraints would
have been impossible without the combined efforts of our people,
who are essential to our success.
Although COVID-19 infections continue to rise by varying degrees
in different countries, we are seeing signs of progress in the
world's efforts to combat the pandemic through vaccination
programmes, including South Africa. We will continue to prioritise
the safety of our employees as we prepare the business for a global
economic recovery and an acceleration of the new energy future,
fuelled by governments' policies to encourage the transition.
I would like to thank Fortune and the entire Bushveld team for
their efforts during a very challenging year.
Finally, I pay tribute to Dolly Mokgatle, our former
non-Executive Director, who tragically passed away in early 2021.
Dolly, was an established and highly- experienced business leader
in South Africa, who will be sorely missed by all.
Ian Watson
Independent Non-Executive Chairman
Chief Executive Officer's Review
While COVID-19 was an unprecedented and unexpected challenge, I
am pleased to say we have emerged from 2020 in a robust position.
This reflects our pragmatic approach to the outbreak. We sought to
keep our employees and communities safe, while building resilience
and agility so that the Business could continue to operate while
maintaining an appropriate growth outlook.
2020 overview
I would like to begin by expressing my deep gratitude to every
individual within the Bushveld Group for their efforts to ensure
that the Company survived 2020 relatively unscathed. Our
comprehensive response to the COVID-19 pandemic, ably led by the
COVID-19 Task Team we established, was only effective because our
employees respected and followed the protocols that were
prescribed.
Our response plan operated in a context of a laudable and
decisive set of risk-adjusted actions by the government of South
Africa, which included a series of lockdowns and several other
measures that have helped the country weather the COVID storm. This
enabled its people to return to some sense of normality and
ordinary operating conditions far sooner than many other
countries.
While COVID-19 was and is an unprecedented challenge, I am
pleased to say we have emerged from 2020 in a robust position. This
reflects our pragmatic approach to the outbreak. We sought to keep
our employees and communities safe, while building resilience and
agility so that the Business could continue to operate while
maintaining an appropriate growth outlook.
This meant, in the short-term, prioritising:
-- The health and safety of our employees, to prevent and
minimise transmission of the virus in the workplace and at home. We
implemented safety protocols in the workplace, including social
distancing, supplying sanitisers, education about the virus, and
restructuring the shift system. We supported our local communities
by supplying water and sanitisers to local hospitals, police
stations and care homes.
-- Cash preservation, which entailed a review of all capital
expenditure and the deferment of several growth initiatives until
we had clarity on the expected impact of the pandemic on our
operations and markets.
-- Adapting our business to align with new operational
realities, such as disrupted supply chains and logistics, to ensure
we could still service our customers.
During the initial lockdown imposed by the South African
government in late March 2020, we were able to maintain some
scaled-down operations at Vametco. Vanchem was placed on care and
maintenance. The re-start and ramp-up to normal production levels
necessitated operational adjustments to accommodate social
distancing, COVID-19 protocols and altered shifts for the
implementation of certain projects. We continue to use an agile
remote working set-up to ensure that all employees remain
productive while we minimise any potential outbreaks in the
workplace.
At the start of 2020, execution of our previously- announced
growth strategy was well advanced.
This strategy included: the refurbishment programme at Vanchem
and the planned expansion at Vametco, targeting an increase of
production to 4,200 mtVp.a at both operations; construction of the
electrolyte manufacturing plant in East London; and making
investments in the Vanadium Redox Flow Battery ("VRFB") value
chain. Due to the pandemic, we had to review some of our
targets.
In the short-term, our decision to defer some planned growth
capital expenditure was reinforced by a declining vanadium price.
The vanadium price fell from approximately US$30/kgV to lows of
circa US$20/kgV (London Metal Bulletin prices) in part due to the
pandemic's disruptive impact on global commodities markets.
However, a review of the outlook for vanadium in a post-COVID
world highlighted a stronger case for growth in the longer term
driven by economic recovery in key global economies, several of
whom embarked on fiscal programmes targeting infrastructure
development and an accelerated energy transition investments, both
of which are favourable for vanadium demand.
Our financial stress-testing indicated that the business was in
a healthy position. However, prevailing market conditions meant we
would need external funds to support our growth plans.
Towards the end of the year, we successfully closed a US$65
million financing arrangement with Orion Mine Finance ("Orion"),
through a Production Financing Agreement and convertible loan note
issue. The funding placed us in a strong position to maintain our
growth strategy. Some of the funding was used to strengthen the
balance sheet by partially retiring existing debt facilities. We
ended the year with cash and cash equivalents of US$50.5
million.
During Q4 2020, as economies reopened, there was strong vanadium
demand, not only from China, but also from some of our more
traditional markets, such as the USA and Europe. This demand has
continued into 2021.
Bushveld generated revenue of US$90 million on the back of sales
of 3,842 mtV. However, we recorded an EBITDA loss of US$14.9
million due to a 52 per cent decline in the realised vanadium
price.
Safety
We recorded 54 COVID-19 cases among our employees in 2020, all
of whom have fully recovered. We are grateful, not only to our
colleagues working hard to ensure compliance with our safety
protocols, but also to the employees abiding by these protocols.
Post year end, however, we were sad to record two fatalities due to
COVID, underscoring the need to remain vigilant, even as the
country's mass vaccination programme is set to pick up momentum in
H2 2021.
Governments around the world are now well into the next phase of
recovery, reinvigorating parts of the economy that have been
severely affected, upping infrastructure spend, and focusing on
those sub-sectors that have a prosperous future, such as the new
energy transition. We are proud that the South African government
is on the same path.
Despite the ongoing pandemic, we were pleased to achieve a Total
Injury Frequency Rate ("TIFR") at Vametco of 18.21, an improvement
of 22 per cent from 23.49 in 2019, and a TIFR of 5.26 at Vanchem.
The safety of our workforce and all employees remains front of mind
for us.
Bushveld Vanadium: operational performance
Production for the year was 24 per cent higher than in 2019,
despite the challenging environment and 380 mtV of lost production
due to the COVID-19 pandemic. The consolidation of Vanchem for a
full-year period made up a large part of the production and sales
volume increase. Sales volumes rose 61 per cent relative to 2019,
owing to the addition of sales from Vanchem, as well as increased
demand from customers during the second half of the year. In the
early part of the year, we began diverting a larger portion of our
sales to China, as the country's economy was one of the first to
ease lockdown measures and re-start industrial production. During
2020, 23 per cent of our sales were to China, up from nine per cent
in 2019. This is in line with the Company's strategy of increasing
sales to higher-priced markets.
Strategic focus
Brownfield assets acquisition
We believe that vanadium market fundamentals significantly
favour primary producers. We are thus pleased to have been able to
acquire Vanchem in November 2019, following the acquisition of
Vametco in 2017 and 2018. This puts Bushveld in a competitive
position, as it owns two of the world's four operating primary
processing plants. The acquisitions are part of a brownfields
strategy we announced in 2016, which has seen the Company transform
from an exploration to a Vanadium mining and processing
company.
The combined acquisition cost for these two plants was
approximately US$120 million. The capital expenditure of
approximately US$30 million (including US$15 million in
Environmental compliance related capital expenditure), will take
the Group's steady state production run rate to between 5,000
mtVp.a. and 5,400 mtVp.a, from the projects currently being
executed, such as the Vanchem kiln 3 refurbishment (Phase1). We
achieved this growth by leveraging cashflows generated by the
operations, debt funding and approximately US$60 million in equity
financing (through equity placing, convertible and warrant
instruments) since 2016.
Following these acquisitions, our main focus has been to
refurbish and expand production at these assets, to integrate and
operate them efficiently, and to maximise synergies between them.
Maximising efficiencies also entails addressing the historic
under-investment in maintenance at Vanchem and Vametco, which will
deliver greater performance reliability. Where necessary, plant
reliability will be prioritised ahead of growth.
Another key focus has been aligning the operations with the
Group's operating model, culture and standards, and building the
leadership team. Our operating model is based on having strategic
control of our assets to ensure we can exercise sufficient
oversight and strategic direction. This requires building the
necessary capacity at head office, with a fit-for-purpose
organisational design, appropriate technical skills, integrated
business processes and establishing robust shared service functions
to maximise efficiencies.
This is no small task for an operation with this depth of
vertical integration in mining, crushing and milling,
concentration, pyrometallurgy and hydrometallurgy.
Meanwhile, the continuing operation and growth of Vanchem
necessitates securing its ore supply while the Mokopane project is
being developed. With the ore stockpile acquired with the plant
depleting, we anticipate replacing this supply with ore from
Vametco, which has an abundant resource base.
Specifically, we have earmarked the Upper Seam portion of the
Vametco resource through a targeted operation ("The Upper Seam
Project"). With a reserve of 0.9 Mt of in-situ ore, the Upper Seam
Project will supply Vanchem with 34 kt per month commencing in Q3
2021, removing the necessity of relying exclusively on third-party
sources of ore over this period. The Upper Seam Project resource
has similar mineralogy to the current ore used at Vanchem, and
tests conducted to date have proven its suitability for processing
at Vanchem.
The cost of supply to Vanchem will be in line with or better
than third-party suppliers. This initiative will ensure that
Vanchem has sufficient competitively-priced ore feedstock in the
short to medium term, with no significant capital expenditure
requirements. Since the total Upper Seam resource base is 16 Mt, we
are investigating the potential to extend this source of supply
beyond the initial 18 months.
Operational stability
We are mindful that over the years Vametco's performance has not
met expectations. In 2020, its output would have been 2,954 mtV, if
it were not for production lost through the effects of COVID-19.
The plant did not undertake the standard annual shutdown in an
effort to make up time. This resulted in significant operational
instability, which caused several unscheduled stoppages during Q1
2021, prior to the 35-day maintenance shutdown.
Since the successful completion of the shutdown, operational
stability and performance have improved. Sustaining this stability,
however, requires a recalibration of Vametco's monthly production
levels and a disciplined, proactive maintenance strategy over a
period of time. As a consequence, the management team has revised
the monthly production targets for Vametco to approximately 240 mtV
per month, previously 270mtV. This changes Vametco's 2021
production guidance to between 2,300 mtV and 2,400 mtV, from
previous guidance of between 2,700 mtV and 2,850 mtV. The run rate
for the remaining months of 2021 is an annualised production of
approximatively between 2,600 mtVp.a. and 2,700 mtVp.a.
We want to ensure that Vametco achieves sustainable and
consistent output of 2,800 mtVp.a. before embarking on aggressive
production growth.
Disappointingly, the commissioning of Vanchem's kiln 3, which is
currently under refurbishment and the consequent production run
rate increase of 2,600 mtVp.a. is likely to be delayed to the end
of Q4 2021 owing to among others, delays in securing steel
supplies. This requires revising 2021 production guidance to
between 1,100 mtV and 1,200 mtV, previously between 1,400 mtV and
1,500 mtV. Overall, 2021 Group full-year production guidance has
been revised to between 3,400 mtV and 3,600 mtV, previously between
4,100 mtV and 4,350 mtV.
We are also mindful of the increases in costs at Vametco over
the past three years and have initiated a review of those costs to
see where improvements are possible. Further detail is provided in
the Finance Director's Statement.
We have not taken these decisions lightly. While we retain
confidence in the plant's ability to produce above this level, our
philosophy is that growth must be built on a foundation of robust,
stable and efficient operations and must be pursued in a
capital-efficient manner.
Capital projects sequencing
Notwithstanding the production revisions, our plans to grow
output to 8,400 mtVp.a. in the long-term remain unchanged. During
the current year, the studies on the Vametco Phase III expansion
project and the Vanchem Phase II refurbishment will determine which
project will be prioritised to achieve our production targets
beyond our first production target. The decision will be guided by
the principle of capital efficiency of 'securing the next-cheapest
unit of vanadium'. As we are reviewing our production profile to
achieve optimal sequencing between Vametco and Vanchem, the scope
of the pre-feasibility study ("PFS") for Vametco has been extended.
It is now expected to be completed in Q4 2021 together with the
technical studies currently under way at Vanchem.
The stability of operations at Vanchem relative to Vametco and
the emerging view, supported by studies, that expanding production
at Vanchem is likely to be significantly cheaper than at Vametco,
has helped shape a growth outlook that comprises:
-- The current growth phase, which is being implemented, will
see production increase to a steady state production run rate of
between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022.
-- This reflects Vametco and Vanchem operating at a steady state
production run rate of 2,800 mtVp.a. and 2,600 mtVp.a.,
respectively. Vanchem's production is expected to increase from
1,100 mtV to a run rate of 2,600 mtV by the end of 2022, supported
by the commissioning of Kiln 3 and associated downstream
expansions.
-- A second growth phase to increase production to a steady
state production run rate of between 6,400 and 6,800 mtVp.a.
-- A third growth phase to a steady state production run rate of
8,400 mtVp.a., when the rest of the expansion initiatives are
implemented.
We will provide details on the production path and expected
capital expenditure once the studies are completed.
Bushveld Energy
We are delighted to see the growing global momentum behind the
energy transition away from fossil fuels to clean energy,
especially renewable energy and energy storage in particular. An
increasing number of countries are committing to reducing their
carbon footprints and increasing the share of renewable energy in
the power sector. The role of electricity continues to grow.
We are fortunate to be based in a country that has made bold
decisions on this energy transition and has grown to be the
sixth-largest residential energy storage market in the world. We
expect it to grow into the global top five utility energy storage
markets, with policies that catalyse deployment of more stationary
energy storage systems. Moreover, growing interest in increasing
the country's share of the value chain unlocks greater
opportunities for local suppliers These developments validate our
forward-thinking strategy, set in motion in 2014, to vertically
integrate downstream into the energy storage sector, through the
launch of Bushveld Energy in 2016. They come as we make significant
progress across the three areas of focus for Bushveld Energy:
electrolyte manufacturing, sales and rentals; deployment of VRFBs
in Africa; and investments into VRFB manufacturing.
During the year we made progress on our plans to build an
electrolyte manufacturing plant in East London, South Africa. With
an initial capacity of 200 MWh of vanadium electrolyte and capacity
to scale up to 800 MWh, the electrolyte plant will, be the largest
announced plant outside China.
Our strategy to invest in VRFB manufacturing, which is designed
to be a catalyst for mobilising financing to build scale among VRFB
Original Equipment Manufacturers, has also been fruitful. Our
investment in AIM-quoted Invinity Energy Systems Plc ("Invinity"),
whose creation we facilitated in 2020, delivered immediate
benefits. Invinity has won several important contracts and its
share price rose by more than 300 per cent in 2020. We have since
crystallised our position and realised a total of approximately
US$13 million, providing a significant return on capital of more
than double our initial investment of US$5 million, in just over a
year.
With a right of first refusal for supply of vanadium and
electrolyte, we have an attractive opportunity to develop a
vanadium supply relationship with Invinity. Through a joint venture
agreement with Invinity, we are now developing and deploying
vanadium electrolyte rentals to Invinity's customers.
We also played a key role in partnering with other investors to
acquire Cellcube, of which we now own 25.25 per cent indirect
interest. Cellcube, the holding company for Enerox GmbH, an
Austrian-based leading VRFB manufacturer, has a solid track record
in manufacturing grid-scale energy storage systems.
As with Invinity, we have a right of first refusal to supply
vanadium to Cellcube, creating more offtake potential for our
vanadium and electrolyte products and hedging against future
volatility in vanadium prices, as the VRFB market develops.
Despite the challenges of the Covid pandemic, progress continued
on our mini-grid project at Vametco, where Cellcube has been
selected to supply a 4 MWh VRFB for the project. The solar PV and
storage project will save nearly 114,000 tonnes of CO2 over its 20
year. The mini-grid provides an important proof of concept for
self-generation solutions in a country that has made firm
commitments to establish a supportive framework for
self-generation. In the latest development, the threshold for
self-generation without a licence will be lifted from 10 MW to 100
MW, unlocking faster growth in behind-the-meter generation and
storage.
Sustainability: Value beyond compliance
In 2020, we started a process of developing our sustainability
strategy, which will focus on Environment, Social and Governance
("ESG") principles. We will integrate material ESG considerations
across the value chain into the business decision-making process;
report on material ESG key performance indicators; and communicate
a consistent message to stakeholders on key ESG commitments.
We also initiated the process of developing an ESG Management
System ("EMS"). The purpose of the EMS is to provide the framework
to enable Safety, Health and Environmental ("SHE") and social risks
to be understood, and to develop, implement and appropriately
manage mitigation measures.
Collectively, the ESG strategy and management system will assist
us to comply with relevant authorisations, legal requirements, the
International Finance Corporation Standards and other obligations,
in a systematic and structured framework.
We are especially proud that, through vanadium, we play an
important role in global decarbonisation efforts.
-- In steel - the use of vanadium as an alloying element will
reduce the intensity of steel in construction, resulting in a
reduced carbon footprint for steelmaking.
-- Through VRFBs, vanadium plays a key role in supporting the
global energy transition to a greener mix, which is fast gaining
momentum.
Through a commitment to developing renewable energy based energy
generation solutions we will also ensure that our production
platform has a favourable carbon footprint.
Finally, through the innovative electrolyte rental solutions
that we are developing and implementing, not only will we help to
accelerate the adoption of VRFBs, but also help advance the
circular economy by ensuring vanadium is re-used through multiple
life-cycles.
Johannesburg Stock Exchange listing
We continue to monitor market conditions and engage with South
African institutional investors. However, because of the unforeseen
events of 2020, we had to redirect much of our focus towards
dealing with the pandemic, prioritising the safety of employees,
and focusing on managing our operations. This included securing
US$65 million from Orion. The Company remains interested in the
potential listing and will continue to explore the opportunity to
do so when conditions are suitable.
Appointments and integration
In 2019, we adopted our new operating model. Overall, we remain
on course to roll it out across the Group, in spite of the setbacks
of 2020. This is a key step in ensuring that we have sufficient
organisational capacity to support our growth plans.
Our priority in 2020 was to manage the impact of COVID-19, while
keeping a firm handle on initiatives
to build critical organisational capacity. We are pleased to
report that some of the work that was already under way to
implement the operating model has contributed to our ability to
manage the COVID-19 challenges more effectively. The model was
primarily designed to help us achieve operational excellence, by
ensuring that our business operations have sufficient support and
that we can achieve greater integration across the various parts of
the Group.
We have made significant strides in building our organisational
capacity. We will continue to do so, focusing on human capital,
financial resources, the operating model, and business processes
and systems.
As one of our initiatives to enhance our operational
performance, we announced the appointment of Francois Naude as
Director of Operations. Francois brings over 27 years of mining and
processing experience and he will oversee the Vametco, Vanchem and
Bushveld Electrolyte Company ("BELCO") operations, with the latter,
migrating to the Bushveld Vanadium platform. The appointment is key
to our operational strategy.
The Operations Director's mandate covers the following key
parameters: meeting the Company's production volume aspirations;
achieving cost targets; meeting
SHE objectives; maintaining our social licence to operate; and
effectively implementing capital projects on budget and in
time.
Looking forward
Our emphasis in 2021 is on achieving consistent operational
stability, enhancing operational performance and ensuring that both
Vametco and Vanchem achieve their near- and medium-term production
and cost targets, with optimal efficiency. Francois and his team
have already made significant headway, prioritising operational
stability and reliability, especially at Vametco.
While we are always mindful of achieving our growth targets, we
believe it is more prudent to invest efficiently. This could
necessitate resequencing our capital projects and potentially
revising development timelines. I am confident that we now have in
place a sound technical leadership team to ensure we succeed.
Through Bushveld Energy we have championed the place of VRFBs in
the growing energy storage space. Not only did we have the
foresight to see the opportunity, we also developed an appropriate
and agile strategy for vertical integration along the value chain
that we are pleased to see other vanadium producers adopting. Some
of our key focus items are construction of the 200 MWh electrolyte
plant, which commenced in June 2021, and obtain a generation
licence. Furthermore, we intend to achieve financial close on, and
begin construction of the Vametco hybrid mini-grid.
Overall, fundamentals for the vanadium market remain strong,
characterised by a growing intensity of use of vanadium in steel.
We expect governments across the world to adopt similar policies to
those of China, by increasing infrastructure spending to revive and
support their economies post-COVID. The energy transition will
continue, resulting in greater renewable and energy storage
deployment, in which VRFBs are expected to capture a significant
market share, increasing vanadium demand. We retain the view that
vanadium supply remains constrained and concentrated. All these
factors benefit primary vanadium producers such as Bushveld
Minerals.
We remain fully committed to our vertically-integrated growth
strategy of achieving our long-term production of 8,400 mtVp.a.
while becoming a leader in the downstream VRFB industry.
Once again, I would like to thank all of our employees and
investors for continuing to believe in Bushveld, despite an
uncertain and difficult year. We have begun 2021 in a solid
position, benefiting from increased vanadium demand and higher
prices, as the world economy recovers and accelerates its adoption
of new energy sources. We have reason to look forward to the future
with great optimism.
Fortune Mojapelo
Chief Executive Officer
Finance Director's Review
Overview
The 2020 financial year was a difficult year operationally due
to the impact of the COVID-19 pandemic, which resulted in 380 mtV
in lost production, as well as additional costs associated with
adapting our work practices to ensure our workplaces were safe for
us to continue to operate, following the first South African
Covid-19 nationwide lockdown.
Group production nevertheless increased by 24 per cent to 3,631
mtV, as Vanchem operated for a full 12 months under the Bushveld
Group umbrella, underscoring the importance of our acquisition.
Group sales increased by 61 per cent to 3,842 mtV, despite the
COVID-19 logistical challenges. This was a significant achievement,
which also reflects the inclusion of Vanchem's sales for the full
financial year, and increased customer demand in H2 2020.
2020 vs
Group Unit 2020 2019
================= ======== ====== =======
Sales mtV 3,842 61%
================= ======== ====== =======
Average realised
price US$/kgV 23.4 -52%
================= ======== ====== =======
The financial benefits of this performance were significantly
diluted by market factors, as the decline in vanadium prices
experienced in the second half of 2019 persisted throughout 2020.
Year-on-year, realised prices declined by approximately 52 per
cent, consequently eroding Group profitability and cashflows.
The Group reported revenue of US$90 million (2019: US$116.5
million), and an Earnings Before Interest, Tax, Depreciation and
Amortisation ("EBITDA") loss of US$14.9 million (2019: EBITDA of
US$32.6 million).
The Group put in place several measures to conserve cash and
protect the balance sheet in light of the uncertain operating
environment. We scaled back on our planned capital expenditure,
optimising our capital allocation process to preserve cash. From a
cost perspective, we continued to focus on cost containment even as
we integrated the two operations. We expect to realise synergies in
areas such as the shared procurement platform we established, as we
progress. The Group's focus and early wins on cost containment is
illustrated later in this report under the Cost of sales
section.
Administrative expenses were reduced by US$4.9 million to
US$19.8 million (2019: US$24.7 million) as a result of cash
preservation measures implemented by the Group. These costs are
further analysed in the administration cost section. Net cash from
operating activities was an outflow of US$17.1 million (2019:
US$28.5 million), mainly driven by the decline in price.
Despite uncertain market conditions, we successfully secured
US$65 million of funding from the mining- focused investment
business, Orion Mine Finance ("Orion"). The Group ended the year
with a strong cash balance of US$50.5 million (2019: US$34.0
million).
Orion: US$65 million financing package
In November 2020, the Company announced that it had successfully
completed and drawn down on a US$65 million financing package from
Orion. The funding comprised a US$30 million Production Financing
Agreement and a US$35 million convertible loan note. Part of the
proceeds were used to retire the Nedbank ZAR250 million term loan,
repay US$5 million of the Duferco loan notes, plus interest of
US$1.28 million, as well as to fund capital projects in Bushveld
Vanadium.
Analysis of results
Income statement summary as adjusted from "statutory" primary
statement presentation.
US$ US$
==========================
2020 2019
========================== ============ ============
Revenue 89,988,078 116,514,112
Cost of sales (73,394,608) (47,828,763)
Other operating and
administration costs (31,534,410) (36,043,392)
========================== ============ ============
EBITDA (14,940,940) 32,641,956
Depreciation (17,866,153) (10,388,145)
========================== ============ ============
Operating (loss)/profit (32,807,093) 22,253,811
Gain on bargain purchase
-
Vanchem 60,586,633
Net financing expense (4,654,258) 1,923,687
Other non-operating costs (206,066) (1,510,572)
========================== ============ ============
Profit before tax (37,667,417) 83,253,558
Income tax charge 484,654 (14,005,965)
========================== ============ ============
Profit after tax (37,182,763) 69,247,593
========================== ============ ============
Revenue
Revenue for the Group was US$90.0 million (2019: US$116.5
million). Group sales in 2020 amounted to 3,842 mtV at an average
price of US$23.4/kgV and an average exchange rate of ZAR16.46 to
the US dollar (2019: 2,392 mtV, average price US$48.7/kgV, average
exchange rate of ZAR14.5 US dollar). The geographic split of Group
sales in 2020 was 34 per cent to the United States, 24 per cent to
Europe, 23 per cent to China and 19 per cent to the rest of the
World. Sales to China in 2020 were significantly higher than the
nine per cent achieved in 2019, in line with our strategy of
creating sufficient flexibility in the business to enable the Group
to increase sales to higher-priced regions.
Cost of sales
The cost of sales excluding depreciation for the period was
US$73.4 million (2019: US$47.8 million). The increase is partially
attributable to the inclusion of Vanchem for the full financial
year as well as increase in areas such as energy and maintenance
costs at Vametco.
The material cost benefits of increasing production are
illustrated in the table below, which shows that our strategy of
growing production through the acquisition of Vanchem and
increasing its production has resulted in a lower Group cost of
US$29/kgV (including sustaining capital) relative to 2019 (2019:
US$37/kgV) as a result of the dilution of fixed costs. The effects
of the bargain purchase of US$60.6 million have been excluded from
the calculation below as it is a once off in nature and did not
contribute cash to the bottom line performance of the business in
2019. We expect to see continued cost reductions as the Group
continues to embed synergies across Vametco and Vanchem and grow
production organically.
2020 2019
=================================== ============== ==============
Total Cost
Cost of sales (direct) (73,394,608) (47,828,763)
Operating costs and admin (31,534,410) (36,043,392)
Other non-operating costs (206,066) (1,510,572)
Total income statement cost
excl. depreciation (105,135,084) 85,382,727
Total units sold 3,842 2,392
Cost income statement per
unit produced (excl. depreciated)
US$/KgV 27 36
Sustaining Capital (5,375,610) (3,652,977)
Total cost including
sustaining capital (110,510,694) (89,035,704)
Cost per unit sold including
sustaining capital US$/kgV 29 37
----------------------------------- -------------- --------------
Total Revenue
Revenue 89,988,078 116,514,112
Average price realised 23 49
----------------------------------- -------------- --------------
Cost-saving initiative
To ensure that Bushveld Minerals remains competitive at a lower
vanadium price and reaps the benefits of a higher commodity price,
the Group has introduced a cost- savings programme ("CSP"). The CSP
is aimed at ensuring continued competitiveness throughout the
commodity cycle, while enhancing the offering to markets across all
the industries in which we compete. We are targeting cost-saving
initiatives across the Group, with procurement as the first
priority. Our objective is to cut costs by approximately US$2.5
million to US$4 million per year, starting from 2022.
Other operating and administration costs Other mine operating
costs included community, social and labour plan costs at Vametco
and Vanchem. Even though the Group as a whole was not profitable,
mainly driven by the poor vanadium price, the Group still maintain
its social commitments and obligations. The idle plant costs of
US$4.2 million (2019:US$2.9 million) mainly reflects the 21-day
shutdown, as a result of the South African COVID-19 nationwide
lockdown during the first half of 2020.
Group administrative expenses reduced by US$4.9 million to
US$19.8 million (2019: US$24.7 million), due to our effective cost
control measures. The overall effectiveness of the containment can
also be noted with the full year of administrative costs associated
with the Vanchem site fully absorbed whilst still delivering a
reduction in the administrative costs when compared to 2019.
Administrative expenses included staff salaries of US$8.1
million (2019: US$9.6 million) for both the operations and head
office administration and management staff. Since the costs are not
directly attributable to the cost of production, they are recoded
under administrative expenditure based on industry practice. The
operation salaries amounted to US$4.7 million (2019: US$5.7
million), whilst the shared service and change to head office
division (including directors fees), amounted to US$3.5 million
(2019: US$3.8 million). The reduction in overall salary costs was
as a result of one-off costs incurred in 2019 associated with
Vametco legacy staff offset by a slight ramp up in staff costs for
Vanchem and capacity building of the Shared Service departments
professional fees of US$8 million (2019: US$7.6 million), are
mainly attributable to the costs associated with the Orion
transaction as well as other Bushveld Energy corporate development
initiative such as Invinity and Cellcube that were implemented in
the year.
Other costs incurred related to additional overheads on
establishing the Vanchem administrative departments as well as the
general security and maintenance of the sites.
The EBITDA reconciliation shown below illustrates the impact of
the decline in the vanadium price from the prior year. Operating
costs increased due to the Vanchem operations running for the full
year, this was offset by a declined in the mineral royalty payable
relative to sales prices. The royalties are paid by Vametco at the
Unrefined Rate of 0.5 + { EBIT / (Gross Sales x 9) } x 100 with a
seven per cent maximum royalty percentage payable on unrefined
minerals.
US$
======================= ============
2019 EBITDA 32,641,956
======================= ============
Revenue changes (26,526,033)
======================= ============
Operating cost changes (30,029,571)
======================= ============
Inventory movement 8,972,708
======================= ============
2020 EBITDA (14,940,940)
======================= ============
Balance sheet Assets
Total current assets increased during the year as a result of
the increase in value of financial assets US$22.4 million (2019
US$1.9 million) which related to the investments made in Invinity
Energy Systems ("Invinity") and Cellcube. Refer to note 21 of the
financial statements for further detail. The other material
increase was as a result of the Group cash and cash equivalents of
US$50.5 million (2019: US$34.0 million) due to the Orion financing
package offset by the settlement of the Nedbank term debts as well
as other borrowing obligations.
Non-current assets related to intangibles and property, plant
and equipment remained consistent to the prior year and changes
were mainly as a result of depreciation in the year. A deferred tax
asset was raised for the assessed loss incurred during the year,
(refer to note 16 for further details).
Equity and liabilities
Total current and non-current liabilities increased by US$48.2
million due to the Orion production financing agreement and
convertible loan notes, offset by the repayment of the Nedbank term
loan. The trade and other payable also contributed to the increase
as a result of Vanchem coming online for the full year and the
additional trade balance required as a result.
The share capital balance also increased as a result of the
Duferco convertible loan note which was exercised at the end of the
financial year.
Net debt
The net debt reconciliation below outlines the Group's total
debt and cash position.
US$ US$
================================== ============ ============
Gross Cash and Cash Equivalent 50,540,672 34,011,557
================================== ============ ============
Nedbank Term Loan and Revolving
Credit Facility (8,636,535) (18,071,342)
================================== ============ ============
Convertible Loan Notes -
Duferco (11,585,068) (23,173,288)
================================== ============ ============
Production Financing Agreement
- Orion Mine Finance (30,105,886) -
================================== ============ ============
Convertible Loan Notes Instrument
- Orion Mine Finance (33,073,699) -
================================== ============ ============
Other (845,588) (511,522)
================================== ============ ============
Net Debt (33,706,104) (7,744,595)
================================== ============ ============
Cash flows
Net cash outflow from operating activities for the year were
(US$17.1 million), a decrease of US$45.6 million compared with
2019, driven by reduced profitability on the back of sustained low
vanadium prices. Capital expenditure and investing activities for
the year were US$13.3 million, a decrease of US$36.4 million from
2019 mainly due to the cash preservation measures implemented
during the year.
Cash generation
The table below summarises the main components of cash flow
during the year.
US$ US$
------------------------------
2020 2019
------------------------------ ------------ ------------
Operating (loss)/profit (32,807,093) 22,253,811
Depreciation and amortisation 17,866,153 10,388,145
Changes in working capital
and provisions 1,253,029 4,586,737
Taxes Paid (3,452,492) (8,767,312)
------------------------------ ------------ ------------
Cash flow from operations (17,140,404) 28,461,381
Sustaining capital (5,375,610) (3,652,977)
------------------------------ ------------ ------------
Free cashflow (22,516,014) 24,808,404
Cash from other investing
activities (7,943,222) (46,077,866)
Financing activities 47,433,269 13,287,374
------------------------------ ------------ ------------
Cash (outflow)/inflow 16,974,034 (7,982,088)
Opening net cashflow 34,011,557 42,019,123
Foreign exchange (444,919) (25,478)
------------------------------ ------------ ------------
Closing net cash 50,540,672 34,011,557
------------------------------ ------------ ------------
Investing activities
Investing activities were driven by capital expenditure growth
with property plant and equipment expenditure of US$3.9 million, as
well as a payment made for the deferred consideration owed to Evraz
of US$1.7 million. Investment in Cellcube of US$1.9 million, and
US$1.5 million spent on intangibles. The costs were offset by
finance income to the tune of US$1 million for the year.
Financing activities
Financing activities of US$47.4 million include the US$65
million Orion financing package and approximately US$8 million from
the Nedbank revolving credit facility. This was partially offset by
the US$5 million repayment of the US$23 million unsecured
convertible note held by Duferco plus interest of US$1.28 million
in cash. The balance of US$6.5 million which was also due for
repayment was settled by the issue of 37,115,210 new Bushveld
shares. The Nedbank term loan of R250 million US$17 million was
also fully retired.
Financial risk management
The main financial risks faced by the Group relate to the
availability of funds to meet business needs (liquidity risk), the
risk of default by counterparties to financial transactions (credit
risk), fluctuations in interest and foreign exchange rates and
commodity prices. These factors are more fully outlined in the
notes to the accounts. They are important aspects to consider when
addressing the Group's going concern status, particularly in the
context of the COVID-19 pandemic. We are proactively managing the
risks within our control. There are, however, factors which are
outside the control of management, specifically volatility in the
ZAR:USD exchange rate as well as the vanadium price, which we do
not currently hedge and which can have a significant impact on the
Business.
Going concern and outlook
We manage liquidity risk by ensuring that the Group has
sufficient funds for all ongoing operations. Our philosophy is to
maintain a low level of financial gearing, given exposure to the
vanadium price and exchange rate fluctuations.
As part of the annual budgeting and long-term planning process,
the Group's budget and cashflow forecasting is reviewed and
approved by the Board. The forecast is amended in line with any
material changes identified during the year. Equally, where funding
requirements are identified from the cashflow forecast, appropriate
measures are taken to ensure these requirements can be satisfied.
In particular, a capital allocation framework is applied which
prioritises maintenance, critical and regulatory capital funding
requirements.
We also closely monitor liquidity risk. We regularly produce
cash forecasts and analyse sensitivities to different scenarios,
including, but not limited to, changes in commodity prices and
different production profiles from the Group's producing
assets.
The Nedbank debt facility available to Vametco is subject to
financial covenants which are EBITDA-driven. After year end, in
light of the weak vanadium price during H2 2020 and the low
production volumes now expected for H1 2021, as a result of the
35-day maintenance shutdown and the unprotected industrial action
at Vametco, we proactively engaged Nedbank. This enabled us to
successfully renegotiate the covenant testing terms required under
the ZAR125 million Revolving Credit Facility ("RCF"). Nedbank has
agreed to waive the covenants for the June 2021 period and relax
the December 2021 Group net debt to EBITDA ratio from 2.50 times to
4.0 times. A condition of the waiver is that the RCF is amortised
by ZAR5 million (approximately US$0.3 million) per month from 6
August 2021, with a bullet payment of ZAR50 million US$3.4 million)
due on the maturity date of 6 November 2022.
Since year-end, renegotiations of the Duferco convertible
balance of US$11.5 million have been positive and near conclusion.
This would result in US$5 million being payable in November 2021
and the remaining US$6.5 million being converted into Bushveld
shares.
Post year end, the investment in Invinity was realised,
resulting in capital appreciation of some 160 per cent. The
proceeds of the sale were used towards Bushveld Energy's 2021
projects, including its investment in Cellcube, as explained in the
CEO's Review.
As mentioned in the CEO's Review, we are evaluating the Group'
growth production sequencing and funding requirements for all
operations in order to determine the ideal production sequencing to
achieve our targets. Details on the Group's production path and
funding will be provided on completion of technical studies
currently underway at Vametco and Vanchem.
Although the start of the 2021 financial year has been
challenging, we are encouraged by the positive production run rate
at Vametco post-maintenance and by the upward vanadium pricing
trajectory that we have seen to date.
Vanchem is expected to make EBITDA losses for the rest of the
year, but this situation is expected to reverse after the growth
capital spending, as it will enable Vanchem to ramp up production
to a sustainable steady state production run rate of
approximatively 2,600 mtVp.a. by the end of 2022. Beyond 2021, the
Group is expected to benefit from the synergies of running both
operations, as the combined production from Vametco and Vanchem
will contribute to the Group's fixed costs.
Looking forward, we will continue to prudently manage costs and
conserve cash, as long as uncertainty lingers over the global
health and possible economic consequences of COVID-19, even though
COVID-19 vaccine programmes are being implemented globally.
The vanadium price was impacted in 2020 by lower global demand
due to the COVID-19 pandemic. Prices have significantly improved
from their lows of 2020 and are currently trading above US$40/kgV,
supported by various fiscal stimulus measures, which are expected
to drive demand for raw materials.
We will continue to prioritise financial stability through cost
containment, conserving cash and adhering to a clear capital
allocation framework, to ensure the Group's resilience through the
operating cycle.
Tanya Chikanza
Finance Director
Bushveld Minerals Limited
(Registration number 54506)
Consolidated Financial Statements for the year ended 31 December
2020
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
2020 2019
Note US$ US$
---------------------------------------------------- ------ ------------------- -----------------
Continuing operations
Revenue 5 89,988,078 116,514,112
Cost of sales (91,260,760) (56,198,919)
------------------- -----------------
Gross (loss) profit (1,272,682) 60,315,193
Other operating income 2,304,528 922,385
Selling and distribution costs (4,828,710) (7,556,687)
Other mine operating costs (4,699,892) (3,865,303)
Idle plant costs (4,152,153) (2,893,286)
Share-based payment (375,008) -
Administration expenses 6 (19,783,176) (24,668,491)
------------------- -----------------
Operating (loss)/profit (32,807,093) 22,253,811
Finance income 9 1,077,991 3,593,142
Finance costs 10 (5,732,249) (1,669,456)
Gain on bargain purchase 8 - 60,586,633
Movement in earnout estimate 26 (206,066) (1,510,572)
------------------- -----------------
(Loss) profit before taxation (37,667,417) 83,253,558
Taxation 11 484,654 (14,005,965)
------------------- -----------------
(Loss) profit for the year (37,182,763) 69,247,593
Consolidated other comprehensive income:
Items that may not be reclassified to profit or
loss:
Changes in the fair value of financial assets
at fair value through other comprehensive income 21 13,483,194 (359,045)
Other fair value movements 103,448 110,175
------------------- -----------------
Total items that may not be reclassified to profit
or loss 13,586,642 (248,870)
------------------- -----------------
Items that may be reclassified to profit or loss:
Currency translation differences (10,425,238) 6,413,737
------------------- -----------------
Total comprehensive (loss) income for the year (34,021,359) 75,412,460
------------------- -----------------
(Loss) profit attributable to:
Owners of the parent (36,680,615) 61,968,301
Non-controlling interest (502,148) 7,279,292
------------------- -----------------
(37,182,763) 69,247,593
------------------- -----------------
Total comprehensive (loss) income attributable
to:
Owners of the parent (32,640,348) 67,136,957
Non-controlling interest (1,381,011) 8,275,503
------------------- -----------------
(34,021,359) 75,412,460
------------------- -----------------
Earnings per share
Profit per ordinary share
Basic (loss) / earnings per share (cents) 12 (3.00) 5.51
Diluted (loss) / earnings per share (cents) 12 (3.00) 5.45
------------------- -----------------
- -
------------------- -----------------
Consolidated Statement of Financial Position
--------------------------------------------- ----------------------------------------------
2020 2019
Note US$ US$
--------------------------------------------- ------ ------------------- -----------------
Assets
Non-Current Assets
Intangible assets 13 59,003,825 59,408,821
Property, plant and equipment 14 167,579,993 185,269,063
Investment property 15 2,811,017 2,905,449
Deferred tax 16 5,085,154 173,892
Financial assets - investments 17 - 4,420,891
------------------- -----------------
Total Non-Current Assets 234,479,989 252,178,116
------------------- -----------------
Current Assets
Inventories 18 34,081,625 35,082,342
Trade and other receivables 19 10,425,363 4,516,287
Restricted investment 20 3,111,465 6,605,465
Current tax receivable 814,067 493,178
Financial assets at fair value 21 22,452,877 1,952,227
Cash and cash equivalents 22 50,540,672 34,011,557
------------------- -----------------
Total Current Assets 121,426,069 82,661,056
------------------- -----------------
Total Assets 355,906,058 334,839,172
------------------- -----------------
Equity and Liabilities
Share capital 23 15,858,428 15,357,271
Share premium 23 117,065,907 111,067,064
Retained income 23 46,734,823 83,415,438
Share-based payment reserve 375,008 -
Convertible loan note reserve 54,814 -
Foreign currency translation reserve 23 (11,202,236) (1,655,861)
Fair value reserve 23 12,966,294 (620,349)
------------------- -----------------
Equity attributable to owners of the parent 181,853,038 207,563,563
Non-controlling interest 32,146,712 33,527,723
------------------- -----------------
Total Equity 213,999,750 241,091,286
------------------- -----------------
Liabilities
Non-Current Liabilities
Post-retirement medical liability 24 2,076,023 2,331,325
Environmental rehabilitation liability 25 17,998,366 17,844,066
Deferred consideration 26 1,802,884 7,108,819
Loans 27 1,597,972 -
Borrowings 28 70,909,370 41,756,152
Lease liabilities 29 4,376,483 4,677,338
------------------- -----------------
Total Non-Current Liabilities 98,761,098 73,717,700
------------------- -----------------
Consolidated Statement of Financial Position
--------------------------------------------- --------------------------------------------------------
2020 2019
Note(s) US$ US$
--------------------------------------------- ---------------- ------------------- -----------------
Current Liabilities
Trade and other payables 30 22,065,601 15,809,996
Provisions 31 3,296,894 3,432,619
Borrowings 28 13,337,406 -
Lease liabilities 29 625,661 787,571
Deferred consideration 26 3,819,648 -
------------------- -----------------
Total Current Liabilities 43,145,210 20,030,186
------------------- -----------------
Total Liabilities 141,906,308 93,747,886
------------------- -----------------
Total Equity and Liabilities 355,906,058 334,839,172
------------------- -----------------
Consolidated Statement of Changes in Equity
Share Share Foreign Share-based Convertible Fair Retained Total Non- Total
capital equity
------------------
premium exchange payment loan value income attributable controlling
note to
----------------
translation reserve reserve reserve equity interest
reserve holders
US$ US$ US$ of the US$
US$ US$ US$ US$ group US$
/ company
US$
---------------- ----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Balance at 01
January 2019 14,921,079 101,003,256 (7,073,387) - - (371,479) 21,447,137 129,926,606 29,712,446 159,639,052
Profit for the
year - - - - - - 61,968,301 61,968,301 7,279,292 69,247,593
Other
comprehensive
income, net of
tax: Currency
translation
differences - - 5,417,526 - - - - 5,417,526 996,211 6,413,737
Fair value
movement
on investments - - - - - (359,045) - (359,045) - (359,045)
Other fair value
movements - - - - - 110,175 - 110,175 - 110,175
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Total
comprehensive
income for the
year - - 5,417,526 - - (248,870) 61,968,301 67,136,957 8,275,503 75,412,460
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Transaction with
owners: Issue
of shares 436,192 10,063,808 - - - - - 10,500,000 - 10,500,000
Dividends paid
to
non-controlling
interest - - - - - - - - (4,460,226) (4,460,226)
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Balance at 01
January 2020 15,357,271 111,067,064 (1,655,861) - - (620,349) 83,415,438 207,563,563 33,527,723 241,091,286
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Loss for the
year - - - - - - (36,680,615) (36,680,615) (502,148) (37,182,763)
Other
comprehensive
income, net of
tax: Currency
translation
differences - - (9,546,375) - - - - (9,546,375) (878,863) (10,425,238)
Fair value
movement
on investments - - - - - 13,483,194 - 13,483,194 - 13,483,194
Other fair value
movements - - - - - 103,449 - 103,449 - 103,449
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Total
comprehensive
Loss for the
year - - (9,546,375) - - 13,586,643 (36,680,615) (32,640,347) (1,381,011) (34,021,358)
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Transaction with
owners: Issue
of shares 501,157 5,998,843 - - - - - 6,500,000 - 6,500,000
Share-based
payment - - - 375,008 - - - 375,008 - 375,008
Equity component
of convertible
loan note - - - - 54,814 - - 54,814 - 54,814
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Balance at 31
December 2020 15,858,428 117,065,907 (11,202,236) 375,008 54,814 12,966,294 46,734,823 181,853,038 32,146,712 213,999,750
----------- ------------- ---------------- ----------- ------------ -------------- ------------ ------------- ------------- ----------------
Consolidated Statement of Cash Flows
---------------------------------------------- --------------------------------------------
2020 2019
Notes US$ US$
---------------------------------------------- ------- ----------------- ----------------
Cash flows from operating activities
(Loss)/profit before taxation (37,667,417) 83,253,558
Adjustments for:
Depreciation property, plant and equipment 14 17,866,153 10,388,145
Gain on bargain purchase 8 - (60,586,633)
Movement in earnout estimate 26 206,066 1,510,572
Finance income 9 (1,077,991) (3,593,142)
Finance costs 10 5,732,249 1,669,456
Changes in working capital 1,253,029 4,586,737
Income taxes paid (3,452,492) (8,767,312)
----------------- ----------------
Net cash from operating activities (17,140,403) 28,461,381
----------------- ----------------
Cash flows from investing activities
Finance income 9 985,901 3,593,142
Acquisition of business 8 - (30,713,500)
Purchase of property, plant and equipment 14 (9,269,924) (13,320,897)
Payment of deferred consideration 26 (1,680,459) (3,600,000)
Purchase of investments 17&21 (1,883,208) (4,420,891)
Purchase of exploration and evaluation assets 13 (1,471,142) (1,268,697)
----------------- ----------------
Net cash from investing activities (13,318,832) (49,730,843)
----------------- ----------------
Cash flows from financing activities
Net proceeds from loans 27 1,597,972 -
Finance costs (3,115,205) (108,596)
Net proceeds / (repayment) of borrowings 28 49,417,161 18,582,864
Lease payments (753,302) (726,668)
Dividends paid - (4,460,226)
Disposal of financial assets held at fair
value 286,643 -
----------------- ----------------
Net cash from financing activities 47,433,269 13,287,374
----------------- ----------------
Total cash movement for the year 16,974,034 (7,982,088)
Cash at the beginning of the year 34,011,557 42,019,123
Effect of translation of foreign rate (444,919) (25,478)
----------------- ----------------
Total cash at end of the year 22 50,540,672 34,011,557
----------------- ----------------
Notes to the Consolidated Financial Statements
1. Corporate information and principal activities
Bushveld Minerals Limited ("Bushveld") was incorporated and
domiciled in Guernsey on 5 January 2012 and admitted to the AIM
market in London on 26 March 2012.
The address of the Company's registered office is Oak House,
Hirzel Street, St Peter Port, Guernsey, GY1 3RH. The consolidated
financial statements of the Company as at and for the year ended 31
December comprise of the Company and its subsidiaries (The "Group")
and the Group's interest in equity accounted investments.
As at 31 December 2020, the Bushveld Group comprised of:
Note Equity Nature of activities
Company holding Country of
and voting incorporation
rights
Bushveld Minerals Limited N/A Guernsey Ultimate holding company
Bushveld Resources Limited 1 100% Guernsey Holding company
Mining and manufacturing
Ivanti Resources (Pty) Limited 2 100% South Africa company
Pamish Investments No 39 (Pty)
Limited 2 64.00% South Africa Mining
Amaraka Investments No 85 (Pty) Vanadium and iron ore
Limited 2 68.50% South Africa exploration
Bushveld Minerals SA (Pty) Limited 2 100% South Africa Group support services
Bushveld Vanchem (Pty) Limited 13 100% South Africa Processing company
Vanadium and iron ore
Great 1 Line Invest (Pty) Limited 2 62.5% South Africa exploration
Vanadium and iron ore
Gemsbok Magnetite (Pty) Limited 2 74% South Africa exploration
Caber Trade and Invest 1 (Pty) Vanadium and iron ore
Limited 2 51% South Africa exploration
Bushveld Vanadium 2 (Pty) Limited 2 100% South Africa Holding company
Bushveld Energy Limited 1 84.00% Mauritius Holding company
Bushveld Energy Company (Pty)
Limited 4 100% South Africa Energy development
Bushveld Vametco Hybrid Mini
Grid Company (RF) 12 100% South Africa Energy development
(Pty) Limited
Bushveld Electrolyte Company
(Pty) Ltd 12 55% South Africa Energy development
VRFB Holdings Limited 4 35% Guernsey Holding company
Vanadium Electrolyte Rental 1&4 40% & 30% UK Energy development
Limited
Enerox Holdings Limited 4 50% Guernsey Holding company
Bushveld Vametco Limited 2 100% Guernsey Holding company
Strategic Minerals Connecticut
LLC 7 100% United States Holding company
Bushveld Vanadium 1 (Pty) Limited 8 100% South Africa Holding company
Bushveld Vametco Holdings (Pty)
Limited 11 74% South Africa Mining right holder
Bushveld Vametco Alloys (Pty) Mining and manufacturing
Limited 9 100% South Africa company
Bushveld Vametco Properties
(Pty) Limited 10 100% South Africa Property owning company
Lemur Holdings Limited 1 100% Mauritius Holding company
Coal Mining Madagascar SARL 5 99% Madagascar Coal exploration
Imaloto Power Project Limited 3 100% Mauritius Holding company
Imaloto Power Project Company
SARL 6 99.00% Madagascar Power generation company
Lemur Investments Limited 3 100% Mauritius Holding company
Lemur SA (Pty) Ltd 3 100% South Africa Coal trading
====================================== ===== ============== ================== =========================
1 Held directly by Bushveld
Minerals Limited 2 Held by Bushveld
Resources Limited
3 Held by Lemur Holdings Limited
4 Held by Bushveld Energy Limited
5 Held by Lemur Investments
Limited 6 Held by Imaloto Power
Project Limited
7 Held by Bushveld Vametco Limited
8 Held by Strategic Minerals
Connecticut LLC
9 Held by Bushveld Vametco Holdings
(Pty) Limited 10 Held by Bushveld
Vametco Alloys (Pty) Limited
11 Held by Bushveld Vanadium
1 (Pty) Limited
12 Held by Bushveld Energy Company
(Pty) Limited 13 Held by Bushveld
Vanadium 2 (Pty) Limited
2. Adoption of New and Revised Standards
ACCOUNTING STANDARDS AND INTERPRETATIONS APPLIED
Definition of a Business (Amendments to IFRS 3) Amendments to
References to the Conceptual Framework in IFRS Standards and
Definition of Material (Amendments to IAS 1 and IAS 8)
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and
IFRS 7)
The new standard is aimed at resolving the difficulties that
arise when an entity determines whether it has acquired a business
or a group of assets.
The amendments clarify the definition of 'material' and to align
the definition used in the Conceptual Framework and the standards
themselves.
The new standard is aimed at resolving the potential effects the
IBOR reform could have on financial reporting.
Accounting standards and interpretations not applied
Standards, amendments and interpretations to existing standards
that are not yet effective and have not been early adopted by the
Group:
Covid-19-Related Rent The new standard provides lessees with an
exemption from assessing whether a COVID-19-related
Concessions (Amendment to rent concession is a lease
modification. IFRS 16)
Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and
IFRS 16)
Reference to the Conceptual Framework (Amendments to IFRS 3)
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37) Property, Plant and Equipment - Proceeds before Intended
Use (Amendments to IAS 16)
IFRS 17 'Insurance Contracts'
The new standard addresses issues that might affect financial
reporting after the reform of an interest rate benchmark, including
its replacement with alternative benchmark rates.
The amendments update an outdated reference in IFRS 3 without
significantly changing its requirements.
The amendments address costs a company should include as the
cost of fulfilling a contract when assessing whether a contract is
onerous.
The amendments prohibit deducting from the cost of an item of
property, plant and equipment any proceeds from selling items
produced while bringing that asset to the location and condition
necessary for it to be capable of operating in the manner intended
by
management.
.
The new standard provides a more uniform measurement and
presentation approach for all insurance contracts.
.
Classification of Liabilities as The amendments provide a more
general approach to the classification of liabilities under IAS 1
based
Current or Non-current (Amendments to IAS 1)
on the contractual arrangements in place at the reporting
date.
The Directors anticipate that the adoption of these Standards
and Interpretations, which become effective for annual periods
beginning on or after 1 January 2020, in future periods will have
no material impact on the financial statements of the Group.
3. Significant accounting policies
Basis of preparation
In accordance with Section 244 of The Companies (Guernsey) Law
2008, the Group confirms that the financial information for the
year ended 31 December 2020 is derived from the Group's audited
financial statements and that this preliminary announcement does
not include the statutory accounts and, as such, does not contain
all information required to be disclosed in the financial
statements prepared in accordance with International Financial
Reporting Standards ("IFRS").
The statutory accounts for the year ended 31 December 2020 have
been audited and approved but have not yet been filed. The Group's
audited financial statements for the year ended 31 December 2020
received an unqualified audit opinion and the auditor's report
contained no statement under section 263(2) or 263(3) of The
Companies (Guernsey) Law 2008. The financial information contained
within this preliminary statement was approved and authorised for
issue by the Board on 29 June 2021.
The financial year covers the 12 months to 31 December 2020. The
comparative period covered the 12 month period to December
2019.
The consolidated financial statements have been prepared under
the historical cost basis, except for the revaluation of certain
financial instruments and investment properties to fair value.
Historical cost is generally based on the fair value of the
consideration given in exchange for the assets. The principal
accounting policies are set out below.
Going concern
During the 2020 financial year Covid-19 introduced a significant
level of uncertainty in the market as well as multiple challenges
from an operating and logistic perspective. Our operations resumed
in early May following a 35-day national Covid-19 lockdown in South
Africa during which Vanchem was non-operational and Vametco was
classified as essential services and had limited production. This
disruption coupled with the depressed prices realised during 2020
financial year, resulted in an operating loss for the financial
period 2020. This loss has increased the financial pressure on the
business.
The Group however, closely monitors and manages its liquidity
risk, cash forecasts are regularly produced, and sensitivities run
for different scenarios including, but not limited to, changes in
commodity prices and different production profiles from the Group's
producing assets. The Group will continue to prioritise operational
performance, cost efficiencies and synergies across Vametco and
Vanchem, and will maintain a disciplined approach towards managing
capital expenditure and optimising operating margins. Based on the
current status of the Group's finances, having considered going
concern forecasts and reasonably possible investments, downside and
Covid-19 scenarios, the Group's forecasts demonstrate it will have
sufficient liquidity headroom to meet its obligations in the
ordinary course of business for the next 12 months from the date of
approval of the financial statements. This has been further
supported by the improvement in the market price of vanadium.
Further details of the group's current funding situation and
strategy are included in the Going Concern and Outlook section of
the Finance Director's Report.
Accordingly, the directors are satisfied that the Group
continues to adopt the going concern basis of accounting in
preparation of the 31 December 2020 financial statements.
3. Segmental reporting
Bushveld Minerals Limited's operating segments are identified by
the Chief Executive Officer and the Executive Committee,
collectively named as the Chief Operating Decision Makers (CODM).
The operating segments are identified by the way the Group's
operations are organised. As at 31 December 2020 the Group operated
within four operating segments, vanadium mining and production,
energy, mineral exploration activities for vanadium and coal
exploration. Activities take place in South Africa (iron ore,
vanadium and energy), Madagascar (coal), other African countries
(energy project development) and global (battery investment,
vanadium sales).
Segment revenue and results
The following is an analysis of the Group's revenue and results
by reportable segment.
Vanadium, iron Vanadium mining
ore and coal and Energy Total
exploration production
US$ US$ US$ US$
Year ended 31 December
2020
Results
------------------------- --------------------------------------- ---------------------- ----------- -------------
Segment revenue - 89,920,958 67,120 89,988,078
Segment costs - (110,750,141) (1,050,735) (111,800,876)
------------------------- --------------------------------------- ---------------------- ----------- -------------
Segmental (loss)/profit - (20,829,183) (983,615) (21,812,798)
------------------------- --------------------------------------- ---------------------- ----------- -------------
Vanadium, iron Vanadium mining
ore and coal exploration and production Energy Total
Year ended 31 December US$ US$ US$ US$
2019 Results
------------------------- --------------------------------------- ---------------------- ----------- -------------
Segment revenue - 116,442,585 71,527 116,514,112
Segment costs - (83,752,365) (530,041) (84,282,406)
------------------------- --------------------------------------- ---------------------- ----------- -------------
Segmental (loss)/profit - 32,690,220 (458,514) 32,231,706
------------------------- --------------------------------------- ---------------------- ----------- -------------
During the year there were no costs incurred for the exploration
of vanadium and iron ore as well as the coal segment. Costs
attributable to both segments were of a capital nature.
The reconciliation of segmental profit to the Group's profit
before tax is as follows:
Year ended Year ended
31 December 31 December
-----------------------------
2020 2019
US$ US$
----------------------------- ------------ -----------------
Segmental (loss)/profit (21,812,798) 32,231,706
Unallocated costs (10,994,295) (9,977,896)
- -
Gain on bargain purchase - 60,586,633
Movement in earnout estimate (206,066) (1,510,572)
Finance income 1,077,991 3,593,142
Finance costs (5,732,249) (1,669,455)
----------------------------- ------------ -----------------
(Loss)/profit before tax (37,667,417) 83,253,558
----------------------------- ------------ -----------------
Unallocated costs relate primarily to corporate costs and parent
company overheads not attributable to a specific segment.
4. Segmental reporting (continued)
Other segmental information
-------------------------------- -----------------------------------------------------------------
Vanadium
and Vanadium
iron ore mining and Coal Bushveld
exploration production exploration Energy Total
31 December 2020 US$ US$ US$ US$ US$
-------------------------------- ----------- ------------ ----------- ---------- -------------
Intangible assets - exploration
and evaluation 54,950,331 - 4,053,494 - 59,003,825
Total reportable segmental
net assets 54,950,331 168,285,858 4,053,494 21,388,618 248,678,301
Unallocated net liabilities - - - - (34,678,551)
-------------------------------- ----------- ------------ ----------- ---------- -------------
Total consolidated net assets - - - - 213,999,750
-------------------------------- ----------- ------------ ----------- ---------- -------------
Vanadium
and Vanadium
iron ore mining and Coal Bushveld
exploration production exploration Energy Total
31 December 2019 US$ US$ US$ US$ US$
-------------------------------- ----------- ------------ ----------- ---------- -------------
Intangible assets - exploration
and evaluation 56,827,085 - 2,581,736 - 59,408,821
Total reportable segmental
net assets 56,827,085 201,456,855 2,581,736 6,760,468 267,626,144
Unallocated net liabilities - - - - (26,534,858)
-------------------------------- ----------- ------------ ----------- ---------- -------------
Total consolidated net assets - - - - 241,091,286
-------------------------------- ----------- ------------ ----------- ---------- -------------
Unallocated assets and liabilities relate to corporate and
parent company assets and liabilities not attributable to a
specific segment.
5. Revenue
2020 2019
US$ US$
-----------------
Revenue from contracts with customers
Sale of goods 89,920,958 116,442,585
Bushveld Energy services rendered 67,120 71,527
---------------------- -----------------
89,988,078 116,514,112
---------------------- -----------------
Disaggregation of revenue from contracts with customers
The company disaggregates revenue from customers as
follows:
Sale of goods
Local sales of vanadium - NV12 2,161,420 4,118,063
Local sales of vanadium - NV16 1,055,785 87,076
Local sales of vanadium - MVO 370,686 2,406
Export sales of vanadium - NV12 16,452,321 17,083,662
Export sales of vanadium - NV16 61,537,773 95,011,546
Export sales of vanadium - VCM 230,248 -
Export sales of vanadium - AMV 8,112,725 139,832
---------------------- -----------------
89,920,958 116,442,585
---------------------- -----------------
Rendering of services
Bushveld Energy services rendered 67,120 71,527
---------------------- -----------------
Total revenue from contracts with customers 89,988,078 116,514,112
---------------------- -----------------
Revenue with contract customers is generated from sale of goods
and is recognised upon delivery of the goods to the customer, at a
point in time and comprises the invoiced amount of goods to
customers, net of value added tax.
2020 2019
US$ US$
6. Administrative expenses by nature
Staff costs 8,146,473 9,616,139
Depreciation of property, plant and equipment 256,929 232,131
Professional fees 6,017,782 7,619,272
Bad debts - 3,016,120
Other 5,361,992 4,184,829
---------- ----------
Total administrative expenses 19,783,176 24,668,491
---------- ----------
7. Staff costs
Details of directors' remuneration are included in note 35
(related party transactions).
8. Acquisitions
8.1 Acquisition of Bushveld Vanchem Business
On 7 November 2019, the Bushveld Group completed the acquisition
of 100% of the Vanchem Plant as well as 100 per cent of Ivanti
Propriety Limited from Duferco Investments ("Duferco").
A viable business case for Vanchem Vanadium Products "VVP" was
formulated with key focus on ore feedstock from within the Group
(Mokopane) and a refurbishment programme, and presented to the
Board of Directors ("BoD") in June 2018. The BoD approved that
Bushveld reopened negotiations with Duferco, including revised
commercial terms and an extended exclusivity period. An approach to
Duferco was made and an initial agreement was reached with Duferco
which resulted in the execution of the term sheet on 5 December
2018. The agreement was for a Transaction consideration of US$68
million. The US$68million was made up of deposit of US$6.8 million
payable when the definitive agreements had been executed (01 May
2019) with the balance of US$61.2million payable on then-envisaged
Transaction closing dates of 30 June 2019 or 30 September 2019
(long stop date). The final executed purchase price of
US$53.5million plus a working capital adjustment for the
acquisition was renegotiated in September 2019, the fair value of
the consideration price is reflected in section C below.
Acquisition rationale remained clear:
Would significantly contribute toward Bushveld's Vanadium
production growth strategy of 8 400 tVpa in the next five
years;
Brownfields expansion (total acquisition and refurbishment capex
was estimated to be around US$140 million for circa 4 200 tVpa
capacity including Mokopane mine development, this compared
favourably against the then estimated US$350 million capital
requirement to develop and build 5 400tV facility at Mokopane);
Would facilitate the expeditious development of Mokopane,
preserving the tenure of the project and ensuring the option for an
end-to-end production facility would be crystalised;
Would provide geographic diversification with Bushveld
production now in two geographic locations;
Would provide production diversification - moving from a one
kiln company to a four-kiln Group;
Would provide product diversification - moving from a single
product offering to a wider range of products comprised of
Nitrovan, FeV, V 2 O 5 and specialized chemical products;
Significant NPV at long term FeV price estimates at a
conservative long term FeV price;
Increased footprint reduces Group overhead cost structure;
Improved IP and market presence adds value with long term
off-take agreements;
Assist and expedites the development of Bushveld's own marketing
channel; and
In a benign vanadium price environment of 2018, Vanchem's 6
months annual financial statements to 31 March 2019 presented net
profit amount in excess of R200million operating at less than 20%
of capacity.
This acquisition of Vanchem demonstrates the value in the
Company's growth strategy of targeting brownfields processing
infrastructure which can be acquired at a lower price compared to
the cost of building a greenfield operation, providing a lower risk
and a quicker path to production. This has been reflected in
Bushveld agreeing and paying an amount far less than the fair value
of the assets and liabilities assumed. The Mokopane resource will
also enable Bushveld to create a fully integrated vanadium
production facility within the Group.
A. Consideration transferred
The following table summarises the acquisition date fair value US$
of each major class of consideration transferred.
Fair value consideration
Cash 30,713,500
Deferred Consideration (i) 409,323
Working Capital Adjustment (ii) 1,665,063
Convertible Loan (iii) 23,000,000
----------
Total fair value of consideration 55,787,886
----------
I. Deferred Consideration
The Group has agreed to pay the selling shareholder a deferred
payment of US$0.5 million, payable in cash 2 years post completion
of the acquisition.
II. Working Capital Adjustment
The working capital adjustment was the difference between the
original working capital included in the agreement versus the final
balances transferred to Bushveld. The amount is payable in cash
after 2 years post completion of the acquisition and disclosed as
deferred consideration.
III. Convertible loan
A payment of US$23.0 million satisfied through the issue of
Bushveld Minerals unsecured convertible loan notes ("Loan Notes")
with the following repayment, redemption and conversion terms (in
addition to customary covenants, warranties and acceleration
provisions):
Interest at a coupon of 5% per annum payable annually in arrears
or on conversion or redemption;
Repayable in cash after the second anniversary of Transaction
Closure, plus any accrued interest;
Convertible at the holder's option in two tranches of up to
US$11.5 million each, after the first and second anniversary of
Transaction Closure respectively, at a 5% discount to the
prevailing 10-day volume weighted average Bushveld Minerals share
price leading up to conversion;
Early redemption of the Loan Notes at the election of Bushveld
Minerals, subject to the condition that the holder will have an
option of converting up to 50% of the early redemption amounts into
Bushveld Minerals shares on the same terms set out above;
Scope for acceleration of redemption of up to US$5 million of
the Loan Notes 12 months after Transaction Closure if an average
ferrovanadium price of US$40/kgV is realised during any nine-month
period during the12 month period after Transaction Closure;
Obligation to repay an amount equal to 40% of any cash received
on a new share issue which raises more than US$30m, provided no
more than 50% of the Loan Notes have already been paid, redeemed or
converted;
Obligation to repay an amount equal to 50% of any debt raised
over US$15 million, provided no more than 50% of the Loan Notes
have been repaid, redeemed or converted;
Obligation to repay on a substantial sale of assets or change of
control;
The holder will not be able to divest any Bushveld Minerals
shares received for six months following conversion and be subject
to an orderly market arrangement for the following six months.
Acquisition related costs
The Group incurred acquisition-related costs of US$1,519,969.
These costs have been included in the calculation of the bargain
purchase below.
B. Identifiable assets and liabilities acquired
The following table summarises the recognised amounts of assets
acquired, and liabilities assumed at the date of acquisition:
Assets and liabilities acquired US$
Property, plant and equipment 114,668,826
Land and buildings 6,137,787
Inventories 7,480,482
Trade and other receivables 900,154
Cash and cash equivalents 10,492
Environmental rehabilitation liability (10,382,628)
Trade and other payables (906,727)
Provisions (13,899)
---------------
Total identifiable net assets acquired at Fair Value 117,894,487
---------------
Measurement of fair values
An independent valuer was appointed to determine the fair value
of the property plant and equipment. The fair values of other
assets and liabilities were estimated by the directors.
Property, plant and equipment
Marsh (Propriety) Limited was appointed for the valuation.
Marsh has been in the industry in South Africa since 1984.
Marsh's global experience coupled with professionals, who maintain
the highest certifications and advanced professional
accreditations, enable them to deliver accurate and timely
valuations. Marsh adheres to the International Valuation Standards,
strict ethical code of conduct and best practice prescribed by the
South African Council for the Property Valuers Profession, South
African Institute of Valuers, American Society of Appraisers and
the Royal Institution of Chartered Surveyors.
The determination of Fair Market Value (FMV) was based on the
estimate cost of acquiring and installing a new or similar
equivalent to the current asset at hand. Marsh then determined the
remaining life of the asset and therefore calculated the difference
obtained from the new replacement value similar or to the next
model in the market determining the effective age or life span and
minus the remaining life. This determines the economic life of the
asset which in turn is the condition rating percentage.
The cost of erecting the building, together with the cost of
ancillary site works, was estimated. This cost included relevant
professional fees and other associated expenses directly related to
the construction of the building and ancillary site works but
excluded any finance charges. The cost is then depreciated
according to physical, functional and economic conditions to give
the Depreciated Replacement Cost of the buildings.
The Market Value of the land, as if vacant, has been determined
by the comparison of recent sales of similar properties in the area
and similar areas. The sum of these values reflect the Depreciated
Replacement Value of the property.
Key procedures conducted:
Plant, Machinery & Equipment (Movable Assets)
A Fair Market valuation was performed.
A physical on-site survey was performed to inspect and value all
the assets on a per asset basis.
Production asset per location was assessed for Useful lifes,
Remaining Lives and Condition rating.
Assets were recorded per location and department.
Sufficient detail and specifications was collected in order to
value the assets according to the Fair Market
Buildings (Fixed Assets)
A Fair Market valuation was performed
Each building was individually assessed for Useful lifes,
Remaining Lives and Condition rating.
Building costs in the area was used to establish a Rate/m2
Professional fees, escalations, demolition, and debris removal
costs were included.
Land Values for the plant and waste site were included.
Valuation Process
The valuation process took place over four core components.
These components are designed to ensure the highest degree of
valuation accuracy while ensuring limited interruption to the
operations of our clients.
An overview of the four main components is as follows:
Initial Project Research and Preparation
This phase of the valuation program involved research,
information gathering and preparation by Marsh Valuation Services
to ensure a preliminary understanding of Bushveld Minerals SA (PTY)
LTD operations, locations and accounting principles.
This is a crucial stage in the valuation process ensuring
reduced time spent at each location as part of the physical
inspection.
Physical Inspection and Information Gathering
The aim of this step of the process was information gathering
and data collection while ensuring minimal impact on the
operations. The valuation process, whilst on site, was generally
undertaken via the following process:
Research, Analysis and Reporting
This phase of the valuation process involves utilising the
information gained during the inspection process, our internal
databases of information, external sources of data, recent and
planned capital expenditure details, information from suppliers and
international research to undertake the valuation calculations. The
analysis and calculations were then extrapolated and input into a
detailed valuation report.
Delivery and Findings
After the valuation research and reporting was completed, a
valuation report was provided including the list of assets
identified as well as the fair market values of those assets with
remaining useful lives.
C. Accounting for the acquisition
The acquisition has been accounted for as follows:
Vanchem Acquisition US$
Property, plant and equipment 114,668,826
Residential properties 6,137,787
Inventories 7,480,482
Trade and other receivables 900,154
Cash and cash equivalents 10,492
Environmental rehabilitation liability (10,382,628)
Trade and other payables (906,727)
Provisions (13,899)
----------------
Total identifiable net assets acquired at Fair Value 117,894,487
----------------
Fair Value of Consideration (55,787,885)
Acquisition related costs (1,519,969)
----------------
Gain on Bargain Purchase 60,586,633
----------------
IFRS 3 requires an acquirer to measure the cost of the
acquisition at the fair value of the consideration paid, and
measure acquired identifiable assets and liabilities at their fair
values, with any excess of acquired assets and liabilities over the
consideration paid (a 'bargain purchase') recognised in profit or
loss immediately. The Group engaged an independent valuation expert
to value the assets acquired using the cost approach, which we
consider to be the most appropriate fair value measurement
technique given the nature of the assets acquired and the
circumstances of the acquisition.
Where a business combination results in a bargain purchase, IFRS
3 requires the acquirer to reassess whether it has correctly
identified all of the assets and liabilities acquired and to review
the procedures used to measure the fair values recognised at the
acquisition date.
We have completed this assessment and concluded that the
recognition of a bargain purchase is appropriate. In coming to
this
conclusion we have considered the circumstances of the sale as
Vanchem was in business rescue and therefore not an open market
transaction, and the advantages of Vanchem which fit into the
Group's diversity and growth strategy, advantages of which are
disclosed above.
9. Finance income
2020 2019
US$ US$
------------------- ---------------
Bank interest 1,077,991 3,593,142
10. Finance costs
Interest on unsecured convertible loan notes 1,614,577 173,288
Interest on rehabilitation liability 1,663,602 665,738
Interest on borrowings 1,749,386 366,179
Interest on lease liabilities 466,032 463,513
Other finance costs 238,652 738
------------------- ---------------
5,732,249 1,669,456
------------------- ---------------
11. Taxation
The tax expense represents the sum of the tax currently payable
and the deferred tax adjustment for the year.
(Loss)/profit before tax (37,667,417) 83,253,558
Tax at the applicable tax rate of 30% (2019: 30%) - -
South African tax - current tax 3,237,060 13,033,205
South African tax - deferred tax (3,721,714) 267,538
USA - deferred tax - 2,665,603
USA - current tax - (1,960,381)
--------------- -----------
Taxation expense for the year (484,654) 14,005,965
--------------- -----------
Management believe that any unrecognised deferred tax assets
relating to the accumulated losses in the subsidiary undertakings
of the Group, would be immaterial to these financial
statements.
USA - current tax charge in the prior year comprises
irrecoverable withholding tax on dividends received and a tax
liability pertaining to the conversion of a subsidiary from a
corporation into a limited liability company in the United States
of America resulted in an upfront prepayment of US$5,000,000 being
payable to Internal Revenue Service (IRS) in 2018. In 2020 this
amount was subsequently refunded once the final tax calculation was
completed. Due to the conversion all tax credits including deferred
tax assets were neutralised in 2019.
12. (Loss)/earnings per share from continuing operations Basic (loss) / earnings per share
The calculation of a basic (loss)/earnings per share of (3.00)
cents (December 2019: 5.51 cents), is calculated using the total
loss for the year attributable to the owners of the company of
US$36,680,615 (December 2019: Profit of US$61,968,301) and
1,164,710,352 shares (2019:1,125,562,148) being weighted average
number of share in issue during the year.
Diluted (loss)/earnings per share
Due to the Group being loss making for the period, instruments
are not considered dilutive and therefore the diluted loss per
share is the same as basic loss per share.
13. Intangible
assets
---------------------------------------------------------------------------------------------------------------------
2020 2019
--------------------- ------------------------------------ --------------------- ---------------------------------
Cost / AccumulatedCarrying Cost / AccumulatedCarrying
Valuation value amortisation Valuation value amortisation
US$ US$ US$ US$ US$ US$
--------------------- ------------------------------------ --------------------- ---------------------------------
Vanadium and
Iron
ore 54,950,331 - 54,950,331 56,827,085 - 56,827,085
Coal 4,053,494 - 4,053,494 2,581,736 - 2,581,736
--------------------- ------------------------------------ --------------------- ---------------------------------
Total 59,003,825 - 59,003,825 59,408,821 - 59,408,821
--------------------- ------------------------------------ --------------------- ---------------------------------
Reconciliation assets -
of 2020
intangible
Opening Additions Exchange Total
balance differences
US$ US$ US$ US$
------------------------------------ --------------------- ---------------------------------
Vanadium and
Iron
ore 56,827,085 89,764 (1,966,518) 54,950,331
Coal 2,581,736 1,381,378 90,380 4,053,494
------------------------------------ --------------------- ---------------------------------
59,408,821 1,471,142 (1,876,138) 59,003,825
------------------------------------ --------------------- ---------------------------------
Reconciliation
of
intangible
assets
- 2019
Opening Additions Exchange Total
balance differences
US$ US$ US$ US$
------------------------------------ --------------------- ---------------------------------
Vanadium and
Iron
ore 55,639,067 198,319 989,699 56,827,085
Coal 1,511,358 1,070,378 - 2,581,736
------------------------------------ --------------------- ---------------------------------
57,150,425 1,268,697 989,699 59,408,821
------------------------------------ --------------------- ---------------------------------
Vanadium and
Iron
Ore
The Company's subsidiary, Bushveld Resources Limited has a 64%
interest in Pamish Investment No 39 (Proprietary) Limited
("Pamish") which holds an interest in Prospecting right 95 ("Pamish
39"). Bushveld Resources Limited also has a 68.5% interest in
Amaraka Investment No 85 (Proprietary) Limited ("Amaraka") which
holds an interest in Prospecting right 438 ("Amaraka 85").
The Department of Mineral Resources and Energy ("DMRE") granted
a mining right to Pamish Investments No. 39 (Pty) Ltd ("Pamish") on
the 28th of August 2019, in respect of the five farms Vliegekraal
783 LR, Vogelstruisfontein 765 LR, Vriesland 781 LR, Schoonoord 786
LR and Bellevue 808 LR situated in the District of Mogalakwena,
Limpopo, which make up the Mokopane Project.
Mokopane is one of the world's largest primary vanadium
resources, with a 298 Mt JORC compliant resource and a weighted
average V2 O5 grade of 1.75 per cent in magnetite (1.41 per cent
in-situ). The Mokopane deposit is a layered orebody along a 5.5 km
north-south strike at a dip of between 18 degrees and 22 degrees
west. The project comprises three adjacent and parallel magnetite
layers namely the Main Magnetite Layer ("MML"), the MML Hanging
Wall ("MML- HW") layer and the AB Zone. 298 Mt (JORC) resources and
reserves run across three parallel overlying magnetite layers with
grades ranging from 1.6 per cent to over 2 per cent V2O5 as
follows:
- MML: 52 Mt @ 1.48 per cent V2O5 (1.75 per cent V2O5 in
magnetite);
- MML-HW & Parting: 233 Mt @ 0.8 per cent V2O5 (1.5-1.6 per
cent V2O5 in magnetite); and
- AB Zone: 12 Mt @ 0.7 per cent V2O5 (greater than 2 per cent
V2O5 in magnetite).
The mining right allows for the extraction of several other
minerals over the entire Mokopane project resource area, including,
titanium, phosphate, platinum Group metals, gold, cobalt, copper,
nickel and chrome.
Brits Vanadium Project
Bushveld Minerals Limited has been granted Section 11 of the
Mineral and Petroleum Resources Development Act (MPRDA) for
acquiring control of Sable Platinum Mining Pty Ltd for NW
30/5/1/1/2/11124 PR, held through Great Line 1 Invest (Pty) Ltd and
was executed in May 2021. The company has also applied for Section
102 of the Mineral and Petroleum Resources Development Act (MPRDA)
and waiting for approval to incorporate NW 30/5/1/1/2/11069 PR into
NW 30/5/1/1/2/11124 PR.
Bushveld Minerals Limited has applied for a prospecting right
which has been accepted and environmental authorisation has been
granted under GP 30/5/1/1/2/10576 PR held by Gemsbok Magnetite
(Pty) Ltd.
A renewal application for expired Prospecting Right NW
30/5/1/1/2/11124 PR was lodged for Great 1 Line on Farm Uitvalgrond
431 JQ Portion 3. This prospecting right expired on the 3rd of
November 2019 and currently awaiting approval.
Coal
Coal Exploration licences have been issued to Coal Mining
Madagascar SARL a 99% subsidiary of Lemur Investments Limited.
The exploration is in South West Madagascar covering 11
concession blocks in the Imaloto Coal basin known as the Imaloto
Coal Project and Extension.
Notes to the Consolidated Financial Statements
14. Property,
plant Buildings Plant Motor Decommissi Right Waste Assets Total
and equipment and and of use under
other machinery vehicles ning asset stripping construction
improvements furniture assets asset
and US$
US$ US$ equipment US$ US$ US$
US$ US$
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
Cost
At 1 January
2019 1,259,049 42,878,860 241,295 1,575,896 - - 7,455,662 53,410,762
Additions 6,714,835 113,453,458 1,371,514 942,121 5,727,902 3,920,684 11,883,121 144,013,635
Disposals (414,250) (2,134,666) (239,102) - - - - (2,788,018)
Assets under
construction
capitalised 268,304 8,992,207 48,833 - - - (9,309,344) -
Foreign
exchange
differences 368,583 3,179,724 51,570 79,271 7,988 - 639,339 4,326,475
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
At 31 December
2019 8,196,521 166,369,583 1,474,110 2,597,288 5,735,890 3,920,684 10,668,778 198,962,854
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
Additions - 2,256,794 62,665 - - - 6,950,465 9,269,924
Disposals (336,491) (2,490,766) (192,023) - - - - (3,019,280)
Transfers 190,930 11,645,072 121,070 - - - (11,957,072) -
Revaluations - - - (695,244) - - - (695,244)
Foreign
exchange
differences (344,926) (6,179,154) (559,874) 33,180 (231,619) (156,242) (718,321) (8,156,956)
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
At 31 December
2020 7,706,034 171,601,529 905,948 1,935,224 5,504,271 3,764,442 4,943,850 196,361,298
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
Depreciation
At 1 January
2019 (237,758) (5,028,852) (179,873) (83,106) - - - (5,529,589)
Disposals 414,251 1,804,752 234,711 - - - - 2,453,714
Depreciation
charge
for the year (1,177,756) (5,947,944) (617,794) (848,939) (627,475) (1,168,237) - (10,388,145)
Foreign
exchange
differences (21,021) (211,965) 27,246 (22,543) (1,488) - - (229,771)
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
At 31 December
2019 (1,022,284) (9,384,009) (535,710) (954,588) (628,963) (1,168,237) - (13,693,791)
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
Disposals 336,491 2,407,463 248,586 - - - - 2,992,540
Depreciation
charge
for the year (385,785) (14,468,628) (175,976) (53,233) (434,768) (2,347,763) - (17,866,153)
Foreign
exchange
differences 3,367 301,705 (151,754) 31,352 (150,129) (248,442) - (213,901)
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
At 31 December
2020 (1,068,211) (21,143,469) (614,854) (976,469) (1,213,860) (3,764,442) - (28,781,305)
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
Net Book
Value
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
At 31 December
2019 7,174,237 156,985,574 938,400 1,642,700 5,106,927 2,752,447 10,668,778 185,269,063
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
At 31 December
2020 6,637,823 150,458,060 291,094 958,755 4,290,411 - 4,943,850 167,579,993
-------------- ------------------------------------- ---------------------- ---------------------- ------------------- ------------------ --------------------- -------------------------- --------------
15. Investment property
----------------------------------------------------------------------------
2020 2019
--------- ---------- ------------ --------- -------------- ------------
Opening Fair value Closing Opening Fair value Closing
balance movements balance balance movements balance
US$ US$ US$ US$ US$ US$
--------- ---------- ------------ --------- -------------- ------------
Investment properties 2,905,449 (94,432) 2,811,017 2,816,007 89,442 2,905,449
--------- ---------- ------------ --------- -------------- ------------
Investment properties comprise residential housing in Brits and
Elandsrand, North West Province.
Investment properties are stated at fair value, which has been
determined based on valuations performed by Domus Estate
Management, an accredited independent valuer, as at 31 December
2020. Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The following valuation techniques and key inputs were used in
the valuation of the investment properties:
-------------
i. Physical inspection of each property;
ii. Consultation with estate agencies to discuss current sales
market trends; and
iii. Comparative sales reports for locations where properties
are situated were obtained from South Africa.
-------------
16. Deferred tax
----------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------
2020 2019
US$ US$
----------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------
Deferred tax assets 5,085,154 173,892
----------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------
As at 31 December 2020 5,085,154 173,892
----------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------
The evidence supporting recognition of a deferred tax asset is
forecasts for the component to which the losses relate which
indicate with reasonable certainty the availability of sufficient
future taxable profits in the next 3 years against which the losses
can be utilised.
17. Financial assets - investments
Name of company Held by 2020 2019
US$ US$
------ ------------
Enerox Holdings Limited - 420,891
Avalon - 4,000,000
------ ------------
- 4,420,891
------ ------------
Avalon
The Company 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 would give Bushveld the
opportunity to acquire a strategic interest in the merged energy
storage company.
In July 2019, AIM-quoted energy storage provider redT and
Avalon, a North American-based vanadium redox flow battery ("VRFB")
manufacturer, announced their plans to merge. The resulting
business would be a leading player in the growing energy storage
market. Traded on AIM in London, the merged entity had a global
sales footprint, a robust near-term project pipeline, operations in
North America, Europe and Asia, market-leading technology, and a
strong management team.
Bushveld agreed to provide a convertible loan of up to US$5
million to Avalon (the "Interim Funding"), half of which was loaned
by Avalon to redT, to support the companies through the due
diligence process, finalisation of the Merger negotiation and
completion of the Fundraising. These funds also allowed both
companies to continue delivering on their current project
pipelines.
The investment was 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 the 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.
Refer to note 21 for details of the conversion of the loan into
shares, which are now classified as financial assets at fair
value.
18. Inventories
Finished goods 12,070,061 17,062,028
Work in progress 7,454,987 4,544,303
Raw materials 1,761,551 1,702,062
Consumable stores 12,795,026 11,773,949
---------- ----------
Inventories 34,081,625 35,082,342
---------- ----------
The amount of write-down of inventories due to net realisable
value provision requirement is nil (2019: nil).
19. Trade and other receivables
Trade receivables 3,854,461 2,762,448
Other receivables 1,610,261 1,753,839
Loss allowance (32,826) -
Non-financial instruments:
VAT 4,993,467 -
----------- ---------
Total trade and other receivables 10,425,363 4,516,287
----------- ---------
19. Trade and other receivables (continued) Categorisation of
trade and other receivables
Trade and other receivables are categorised as follows in
accordance with IFRS 9: Financial Instruments:
At amortised cost 5,431,896 4,516,287
Non-financial instruments 4,993,467 -
---------- ---------
10,425,363 4,516,287
---------- ---------
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. They are
generally due for settlement within 15-90 days and therefore are
all classified as current.
Other receivables consist of prepayments and deposits, which are
realised overtime.
Due to the short-term nature of the current receivables, their
carrying amount is considered to be the same as their fair
value.
Impairment and risk exposure
Information about the impairment of trade receivables and the
Group's exposure to credit risk, foreign currency risk and interest
rate risk can be found in note 32.
2020 2019
US$ US$
------------------------------------------ --------------------------------------------------- ----------------
20. Restricted investments
Rehabilitation trust fund and insurance
fund 3,111,465 6,605,465
The Group is required by statutory law in South Africa to hold
these restricted investments in order to meet decommissioning
liabilities on the statement of financial position (refer to note
25 and 33 for further details).
21. Financial assets at fair value
2020 2019
US$ US$
---------------- ---------
As at 1 January 1,952,227 2,311,272
Additions 7,304,099 -
Disposals (286,643) -
Fair value movement 13,483,194 (359,045)
---------------- ---------
As at 31 December 22,452,877 1,952,227
---------------- ---------
AfriTin Mining Limited
The Group measures the fair value of the investment in AfriTin
Mining Limited using the quoted price in an active market for that
instrument. A market is regarded as active if transactions for the
asset or liability take place with sufficient frequency and volume
to provide pricing information on an ongoing basis.
Invinity Energy Systems
On 1 November 2019, Bushveld announced it had agreed to support
the Merger with funding of US$5 million through a convertible loan
to Avalon Battery, a Canadian VRFB company, to facilitate a Merger
with redT Energy, a UK VRFB company, and a listing on the London
AIM exchange. In accordance with the terms of the convertible loan,
on successful completion of the Merger in March 2020, the loan was
converted into shares in Invinity Energy Systems (AIM: IES). The
previously provided US$5 million loan (together with the accrued
interest and commitment fee) has been converted into 302,978,063
Ordinary Shares at a price of 1.65 pence in Invinity, representing
up to 8.71 per cent of Invinity on 1 April 2020. The shares issued
to Bushveld are not subject to a lock-in arrangement. In addition
to the funding from Bushveld, Invinity has raised GBP7.9 million in
equity and GBP3 million in convertible debt through an equity
placing at 1.65 pence per share at the time. Subsequently, Invinity
raised a further GBP22.5 million through a placing and open offer
on 3 December 2020.
Post year end, the investment in Invinity was realised,
resulting in capital appreciation. The proceeds of the sale were
used towards Bushveld Energy's 2021 projects.
Enerox Holdings Limited
The investment in Enerox Holdings Limited is in line with
Bushveld Minerals' strategy of partnering with Vanadium Redox Flow
Battery ("VRFB") companies.
The Consortium, which currently includes Bushveld Energy
Limited, a private North American investor and an East Asian
Investment Holding Company, held 90% of EHL after an initial
acquisition of 24.9% under an initial sale and purchase agreement
("ISPA"). In terms of the ISPA, the members of the Consortium have
acquired, in equal proportions, 24.9 per cent of the issued share
capital of Enerox for EUR150,000 from CellCube Energy Storage
Systems Inc (the "Seller").
The investment of US$2,304,099 (2019: US$420,891) represents
Bushveld's share of the investment, which the directors consider to
equate to the fair value of the investment at the recording
date.
As of 31 December 2020, Bushveld Energy anticipates contributing
not more than 50 per cent of the funds to be invested by the
Consortium and is considering additional investors to participate
as part of the Consortium. The Enerox investment is part of
Bushveld Minerals' strategy of partnering with VRFB Original
Equipment Manufacturers ("OEMs") that includes supply of vanadium
and electrolyte, deployments and investment into the rapidly
growing energy storage market.
22. Cash and cash equivalents
2020 2019
US$ US$
Cash at hand and in bank 50,540,672 34,011,557
2020 2019
US$ US$
22. Cash and cash equivalents (continued)
Cash and cash equivalents (which are presented as a single class
of assets on the face of the Statement of Financial Position)
comprise cash at bank and other short-term highly liquid
investments with an original maturity of three months or less.
Short-term deposits include funds received from Orion Mine Finance
("Orion") under the Production Financing Agreement (PFA) and
Convertible Loan Notes Instrument (CLN). The PFA capital is
ringfenced to provide the necessary funding for the Phase III
expansion project to grow production at Vametco to more than 4'200
mtV per annum.
The total cash and cash equivalents denominated in South African
Rand amount to US$34,165,671 (2019: US$17,469, 385).
The directors consider that the carrying amount of cash and cash
equivalents approximates their fair value.
Refer to Note 28 for further information in relation to the
Production Financing Agreement and Convertible Loan Notes
Instrument.
23. Share capital and share
premium Total share
Shares Number Share premium capital
Share capital and premium
$ $ $
----------------------- --------------- ----------------------- ---------------
At 1 January 2019 1,119,727,953 14,921,079 101,003,256 115,924,335
Shares issued - Yellow Dragon
Holdings 33,914,729 436,192 10,063,808 10,500,000
----------------------- --------------- ----------------------- ---------------
At 1 January 2020 1,153,642,682 15,357,271 111,067,064 126,424,335
Shares issued - Duferco 37,115,210 501,157 5,998,843 6,500,000
----------------------- --------------- ----------------------- ---------------
At 31 December 2020 1,190,757,892 15,858,428 117,065,907 132,924,335
----------------------- --------------- ----------------------- ---------------
The Board may, subject to Guernsey Law, issue shares or grant
rights to subscribe for or convert securities into shares. It may
issue different classes of shares ranking equally with existing
shares. It may convert all or any classes of shares into redeemable
shares. The Company may also hold treasury shares in accordance
with the law. Dividends may be paid in proportion to the amount
paid up on each class of shares.
As at the 31 December 2020 the Company owns 670,000 (2019:
670,000) treasury shares with a nominal value of 1 pence.
Shares issued
Duferco Participations Holding S.A. ("Duferco")
As part of the acquisition of Vanchem on the 7 th of November
2019, Bushveld Minerals Limited subscribed to US$23million
unsecured convertible loan notes ("Loan Notes").
Duferco, the previous owner of Vanchem, agreed to accept the
partial early repayment of US$11.5 million of their US$23 million
convertible loan notes, originally issued in accordance with the
terms of the acquisition of Bushveld Vanchem as announced on 23
October 2019. Bushveld Minerals Limited repaid US$5 million of the
Duferco loan notes, plus interest of US$1.28 million, in cash and
satisfied the balance of US$6.5 million by the issue of 37,115,210
new Bushveld shares, using a conversion price of 12.97p, which is a
5 per cent discount to the prevailing 10-day volume weighted
average Bushveld Minerals share price leading up to conversion.
Refer to note 28 for details on the Convertible Loan Note
details.
Yellow Dragon
As part of the Vametco acquisition terms announced on 30
November 2017, Bushveld Minerals agreed to make further deferred
payments to Yellow Dragon as follows:
Two deferred payments of US$0.6 million each, payable following
publication of the accounts for Vametco Holdings Limited for
respectively the years ending 31 December 2018 and 31 December
2019; and
A final payment to be made on publication of the Vametco
Holdings Limited accounts for the year ended 31 December 2020 to be
calculated by reference to Vametco Holdings Limited's EBITDA for
the 2020 financial year. The payment being calculated on the
following basis 4.5 x EBITDA (as shown in the 2020 Accounts) x 5.91
per cent.
The Company paid the first of the two US$0.6 million payments,
following which the two parties agreed on an early settlement for
the balance of amounts payable to be settled as follows:
Full and final settlement of the earn out of US$13,500,000,
being an all-in total payment comprising:
- A cash component payment totalling US$3,000,000; and
- A total of US$10,500,000 payable in 33,914,729 Bushveld
Minerals Limited ordinary shares of 1.0 penny each to
be issued at a price of GBP0.24 (which favourably compared to
the 10 day volume weighted average price of GBP0.235 and the 20 day
volume weighted average price of GBP0.226, as at 22 October
2019).
The shares issued to Yellow Dragon are subject to a 6 month
lock-in arrangement and a further 6 month orderly market
arrangement which are subject to certain exceptions and may
otherwise only be waived with the consent of the Company's
brokers.
Nature and purpose of other reserves Share premium
The share premium reserve represents the amount subscribed for
share capital in excess of nominal value.
Share-based payment reserve
The share-based payment reserve represents the cumulative fair
value of share options granted to employees.
Convertible loan note reserve
This reserve represents the equity portion of a convertible
loan.
Foreign exchange translation reserve
The translation reserve comprises all foreign currency
differences arising from the translation of financial statements of
foreign operations.
Fair value reserve
The fair value reserve comprises the cumulative net change in
the fair value of financial assets at fair value through other
comprehensive income until the assets are derecognised or
impaired.
Accumulated profit/loss
The accumulated profit/loss reserve represents other net gains
and losses and transactions with owners (e.g. dividends) not
recognised elsewhere.
24. Post-retirement medical liability Benefit liability
The benefit comprises medical aid subsidies provided to
qualifying retired employees. Actuarial valuations are made
annually, and the most recent valuation was made on 31 December
2019.
Key assumptions used
Actual age 77.3 years 76.9 years
Discount rates 10.60% 9.80%
Health care cost inflation 7.30% 7.30%
Duration of liability 9.1 years 9.7 years
A one percentage point change in the assumed rate of healthcare
costs would have the following effect on the present value of the
unfunded obligation: Plus 1%: US$2.5 million; Less 1%: US$2.2
million.
A one percentage point change in the assumed interest rate would
have the following effect on the present value of the unfunded
obligation; Plus 1%: US$0.24 million; Less 1%: US$0.20 million.
25. Environmental rehabilitation liability
2020 2019
US$ US$
Provision for future environmental rehabilitation costs
17,998,336 17,844,066
The Group makes full provision for the future cost of
rehabilitating mine sites and related production facilities on a
discounted basis at the time of developing the mine and installing
and using those facilities.
The rehabilitation provision represents the present value of
rehabilitation costs relating to mine sites, which are expected to
be incurred up to 2037, which is when the producing mine properties
are expected to cease operations. These provisions have been
created based on the Group's internal estimates. Assumptions based
on the current economic environment have been made, which
management believes are a reasonable basis upon changes to the
assumptions. However, actual rehabilitation costs will ultimately
depend upon future market prices for the necessary rehabilitation
works required that will reflect market conditions at the relevant
time. Furthermore, the timing of rehabilitation is likely to depend
on when the mines cease to produce at economically viable rates.
This, in turn, will depend upon future vanadium prices, which are
inherently uncertain.
The discount rate used in the calculation of the provision as at
31 December 2020 was 10.93% (2019: 10.07%).
26. Deferred consideration
------------------- -----------------
2020 2019
US$ US$
------------------- -----------------
Opening balance 7,108,819 17,427,512
Cash payment (1,680,459) (3,600,000)
Shares settlement (see note 28) - (10,500,000)
Unwinding of discount - 34,434
Movement in earnout estimate 206,066 1,510,572
Consideration for Vanchem acquisition (see note 8) - 2,074,385
Foreign exchange (11,894) 161,916
------------------- -----------------
5,622,532 7,108,819
------------------- -----------------
Split between non-current and current portions
Non-current 1,802,884 7,108,819
Current 3,819,648 -
------------------- -----------------
5,622,532 7,108,819
------------------- -----------------
At the year-end management have updated their estimate of the
earnout payable to EVRAZ on the acquisition of the Vametco Group,
which is based on the expected EBITDA for the year ended 31
December 2020, to a maximum of US$3.53million. The remaining
balance relates to the consideration attributable to the
acquisition of Vanchem.
27. Loans
Industrial Development Corporation 1,597,972 -
The loan represents The Industrial Development Corporation's
contribution and is governed by the tripartite agreement between
Bushveld Energy Company (Pty) Ltd, Bushveld Electrolyte Company
(Pty) Ltd & The Industrial Development Corporation of South
Africa Limited. The loan represents the initial capitalised costs
of US$260,366 plus the initial subscription amount of US$1,367,559
of the total US$3,821,028 to be advanced to Bushveld Electrolyte
Company Pty Ltd. Bushveld Electrolyte Company is a South African
producer of vanadium electrolyte. The company is jointly owned by
Bushveld Energy and the IDC, with shareholding of 55% and 45%
respectively. Its first manufacturing facility is under
construction and located in East London, South Africa.
The loan is interest free, unsecured, subordinated in favour of
Bushveld Electrolyte Company's creditors and have no fixed term of
repayment in the next 12 months.
Split between non-current and current portions
Non-current liabilities 1,597,972 -
------------------- --------------
28. Borrowings
------------------- --------------
2020 2019
US$ US$
------------------- --------------
Development Bank of Southern Africa 845,588 511,522
Nedbank Term Loan and Revolving Credit Facility 8,636,535 18,071,342
Convertible Loan Notes - Duferco 11,585,068 23,173,288
Production Financing Agreement - Orion Mine Finance 30,105,886 -
Convertible Loan Notes Instrument - Orion Mine Finance 33,073,699 -
------------------- ------------
84,246,776 41,756,152
------------------- ------------
Split between non-current and current portions
Non-current 70,909,370 41,756,152
Current 13,337,406 -
------------------- ------------
84,246,776 41,756,152
------------------- ------------
Development Bank of Southern Africa - Facility Agreement
Lemur Holdings Limited, a subsidiary undertaking, entered into a
US$1,000,000 facility agreement with the Development Bank of
Southern Africa Limited in March 2019. The purpose of the facility
is to assist with the costs associated with delivering the key
milestones to the power project. The repayment is subject to the
successful bankable feasibility study of the project at which point
the repayment would be the facility value plus an amount equal to
an IRR of 40% capped at 2.5 times which ever is lower. As at 31
December 2020, only US$845 588 was drawn down.
Nedbank Term Loan and Revolving Credit Facility
Bushveld Minerals Limited secured R375 million (approximately
US$25 million) in debt facilities through its subsidiary Bushveld
Vametco Alloys Proprietary Limited ("the Borrower") with Nedbank
Limited (acting through its Nedbank Corporate and Investment
Banking division), a South African based financial institution, in
the form of a R250 million loan and a R125 million revolving credit
facility.
Key highlights of the R250 million loan which was drawn in
November 2019:
Five-year amortising loan;
Interest rate calculated using the three year or six months
JIBAR1 as selected by the Company plus a 3.4% margin;
Interest payments are due semi-annually with first payment due
in six months from financial close;
Principal repayments will be made semi-annually in arrears over
four years in eight equal installments, with first payment due 18
months after financial close.
The Nedbank term loan was retired in December 2020.
Key highlights of the R125 million revolving credit facility,
which was drawn in March 2020 (2019: undrawn):
Three-year term;
Interest rate calculated using the three year or six months
JIBAR1 as selected by the Company plus a 3.6% margin;
Interest payments are due semi-annually with first payment due
in six months from financial close.
The security provided is customary for a secured financing of
this nature, including cession of shares in the Borrower, security
over the assets of the Borrower, and a parent guarantee.
Financial Covenants undertaken
The Borrower shall ensure that for so long as any amount is
outstanding under a Finance Document or any Commitment is in force,
in respect of each Measurement Period:
the Interest Cover Ratio; and
the Net Debt to EBITDA Ratio at a Borrower level shall not
exceed 2.5 times.
Convertible Loan Note - Duferco
As part of the consideration related to the Bushveld Vanchem
acquisition, a payment of US$23.0 million is to be satisfied
through the issue of Bushveld Minerals unsecured convertible loan
notes ("Loan Notes") with the following repayment, redemption and
conversion terms (in addition to customary covenants, warranties
and acceleration provisions):
Interest at a coupon of 5% per annum payable annually in arrears
or on conversion or redemption;
Repayable in cash after the second anniversary of Transaction
Closure, plus any accrued interest;
Convertible at the holder's option in two tranches of up to
US$11.5 million each, after the first and second anniversary of
Transaction Closure respectively, at a 5% discount to the
prevailing 10-day volume weighted average Bushveld Minerals share
price leading up to conversion;
Early redemption of the Loan Notes at the election of Bushveld
Minerals, subject to the condition that the holder will have an
option of converting up to 50% of the early redemption amounts into
Bushveld Minerals shares on the same terms set out above;
Scope for acceleration of redemption of up to US$5 million of
the Loan Notes 12 months after Transaction Closure if an average
ferrovanadium price of US$40/kgV is realised during any nine-month
period during the12 month period after Transaction Closure;
Obligation to repay an amount equal to 40% of any cash received
on a new share issue which raises more than US$30m, provided no
more than 50% of the Loan Notes have already been paid, redeemed or
converted;
Obligation to repay an amount equal to 50% of any debt raised
over US$15 million, provided no more than 50% of the Loan Notes
have been repaid, redeemed or converted;
Obligation to repay on a substantial sale of assets or change of
control;
The holder will not be able to divest any Bushveld Minerals
shares received for six months following conversion and be subject
to an orderly market arrangement for the following six months.
In 2020 Bushveld Minerals Limited settled US$11.5million of the
US$23million convertible loan notes. US$5million plus interest of
US$1.28 million was settled in cash and the balance of US$6.5
million was satisfied by the issue of 37,115,210 new Bushveld
shares, using a conversion price of 12.97p, which is a 5 per cent
discount to the prevailing 10-day volume weighted average Bushveld
Minerals share price leading up to conversion.
Duferco continues to hold a total of US$11.5 million convertible
loan notes, which are due for repayment on 8 November 2021.
Production Financing Agreement - Orion Mine Finance
Bushveld Minerals Limited signed a long-term Production
Financing Agreement of US$30 million (or the "PFA") with mining-
focused investment business Orion Mine Finance ("Orion"), primarily
to finance its expansion plans at Bushveld Vametco Alloys (Pty) Ltd
and debt repayment. Exchange control authorization from the South
Africa Reserve Bank Financial Surveillance Department was granted
in October 2020.
PFA Transaction Details
The Company will repay the principal amount and pay interest via
quarterly payments determined initially as the sum of:
a gross revenue rate (set at 1.175 per cent for 2020 and 2021
and 1.45 per cent from 2022 onwards, subject to adjustment based on
applicable quarterly vanadium prices) multiplied by the gross
revenue for the quarter; and
a unit rate of US$0.443/kgV multiplied by the aggregate amount
of vanadium sold for the quarter.
Once the Company reaches vanadium sales of approximately 132,020
mtV during the term of the facility, the gross revenue rate and
unit rate will reduce by 75 per cent (i.e. to 25 per cent of the
applicable rates).
On each of the first three loan anniversaries, the Company has
the option to repay up to 50 per cent of both constituent loan
parts (each may only be repaid once). If the Company utilises the
loan repayment option, the gross revenue rate and/or the unit rate
will reduce accordingly. The PFA capital will provide funding to
continue to grow production at Vametco to more than 4,200 mtV per
annual production level and debt repayment.
Part of the proceeds of the Instrument were used by the Company
to prepay in full the Nedbank ZAR250 million term loan.
Convertible Loan Notes Instrument - Orion Mine Finance
Bushveld Minerals Limited, through an affiliate of Orion Mine
Finance, agreed to subscribe for US$35 million convertible loan
notes instrument (the "Instrument"). The conversion price of the
convertible loan notes was set at 17pence. The Instrument's
proceeds will go towards the first phase of Vanchem's critical
refurbishment programme and debt repayment.
Financing terms of the Instrument and convertible loan notes
A fixed 10 per cent per annum coupon with a three year maturity
date from the drawdown date.
All interest will accrue and be capitalised on a quarterly basis
in arrears but compounded annually.
Accumulated capitalised and accrued interest is convertible into
Bushveld ordinary shares. All interest and principal, to the extent
not converted into ordinary shares, is due and payable at maturity
date.
Funds raised are to be used for capital investment purposes for
the first phase of Vanchem's critical refurbishment programme, and
the balance for debt repayment purposes.
Conversion feature
Between drawdown and the Instrument's maturity date Orion may,
at their option, convert an amount of the outstanding debt,
including capitalised and accrued interest, into Bushveld ordinary
shares as follows:
First six months: Up to one third of the outstanding amount;
Second six months: Up to two thirds of the outstanding amount
(less any amount previously converted);
From the anniversary of drawdown until the maturity date: the
outstanding amount under the Instrument may be converted;
Bushveld also has the option to convert all, but not some, of
the amount outstanding under the Instrument, if its volume weighted
average share price is more than 200 per cent of the conversion
price over a continuous 15 trading day period, a trading day being
a day on which the AIM market is open for the trading of
securities.
At any time until the convertible maturity date, Orion may
convert the debt as above mentioned into an amount of ordinary
shares equal to the total amount available for conversion under the
Instrument divided by the conversion price of 17 pence.
The Orion and Nedbank borrowings are secured against certain
group companies and associated assets.
Bushveld Minerals Limited
(Registration number 54506)
Consolidated Financial Statements for the year ended 31 December
2020
Notes to the Consolidated Financial Statements
2020 2019
US$ US$
29. Lease liabilities
A reconciliation of total operating lease commitments to the
IFRS 16 lease liability at 31 December 2020 is as follows:
As at 1 January 5,464,909 -
Additions - 5,735,890
Accretion of interest 497,042 455,687
Payments (753,302) (726,668)
Foreign exchange (206,505) -
----------------- -----------
5,002,144 5,464,909
----------------- -----------
Non-current lease liabilities 4,376,483 4,677,338
Current lease liabilities 625,661 787,571
----------------- -----------
5,002,144 5,464,909
----------------- -----------
2020 2019
US$ US$
------------------------------- ------------------- ----------------
30. Trade and other payables
Financial instruments:
Trade payables 17,074,422 12,651,751
Accruals and other payables 4,991,179 3,069,751
Non-financial instruments:
VAT - 88,494
22,065,601 15,809,996
Trade and other payables principally comprise amounts
outstanding for trade purchases and on-going costs. The average
credit period taken for trade purchases is 30 days.
The Group has financial risk management policies in place to
ensure that all payables are paid within the pre-arranged credit
terms. No interest has been charged by any suppliers as a result of
late payment of invoices during the year.
The directors consider that the carrying amount of trade and
other payables approximates to their fair value.
The total trade and other payables denominated in South African
Rand amount to US$15,895,209 (2019: US$12,027,091).
31. Provisions
Reconciliation
of provisions
- 2020
Opening Additions Utilised Foreign Total
balance during exchange
the
US$ US$ year US$ US$ US$
Leave pay 1,193,630 504,394 - (42,567) 1,655,457
Performance
bonus 2,098,565 1,602,991 (2,290,117) (36,292) 1,375,147
Other 140,424 221,983 (92,680) (3,437) 266,290
---------------------- ----------------
3,432,619 2,329,368 (2,382,797) (82,296) 3,296,894
---------------------- ----------------
Reconciliation
of provisions
- 2019
Opening Additions Utilised Foreign Total
balance during exchange
the
US$ US$ year US$ US$ US$
Leave pay 836,455 387,945 - (30,770) 1,193,630
Performance
bonus 809,085 2,640,764 (1,327,699) (23,585) 2,098,565
Surface lease 622,616 (622,616) - - -
Other 2,052,809 147,869 (2,057,581) (2,673) 140,424
---------------------- ----------------
4,320,965 2,553,962 (3,385,280) (57,028) 3,432,619
---------------------- ----------------
Leave pay and
bonus
Leave pay represents employee leave days due multiplied by their
cost to the company employment package. The bonus represents the
estimated amount due to employees based on their approved bonus
scheme.
Performance bonus
The performance bonus represents an incentive bonus due to
senior employees, calculated in terms of an approved scheme based
on the company's operating results.
Other
The other provisions represents estimates for Group tax, legal
and consulting fees to be charged.
2020 2019
US$ US$
32. Financial instruments
The Group is exposed to the risks that arise from its use of
financial instruments. This note describes the objectives, policies
and processes of the Group for managing those risks and the methods
used to measure them. Further quantitative information in respect
of these risks is presented throughout these financial
statements.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
returns to shareholders. In order to maintain or adjust the capital
structure, the Group may issue new shares or arrange debt
financing. At the reporting date, the Group had borrowings of
US$84,246,776 (2019: US$41,756,152).
The capital structure of the Group consists of cash and cash
equivalents, equity and borrowings. Equity comprises of issued
capital and retained profits.
The Group is not subject to any externally imposed capital
requirements.
Significant accounting policies
Details of the significant accounting policies and methods
adopted including the criteria for recognition, the basis of
measurement and the bases for recognition of income and expenses
for each class of financial asset, financial liability and equity
instrument are disclosed in note 3.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
- Trade and other receivables
- Cash at bank
- Trade and other payables
- Borrowings
- Investments
2020 2019
US$ US$
Categories of financial instruments
The group holds the following financial assets:
Financial assets at amortised cost
Trade and other receivables 10,451,736 4,427,793
Restricted investment 3,111,465 6,605,465
Cash and cash equivalents 50,540,672 34,011,557
Financial assets - Investment 2,785,507 4,420,891
Total financial assets at amortised cost 66,889,380 49,465,706
Financial assets at fair value 20,439,565 1,952,227
Total financial assets 87,328,945 51,417,933
2020 2019
US$ US$
32. Financial instruments (continued)
The group holds the following financial liabilities:
Financial liabilities at amortised cost
Trade and other payables 23,853,676 15,721,502
Lease liabilities 5,002,144 5,464,909
Deferred Consideration 5,416,466 7,108,819
Loans 1,597,972 -
Borrowings 84,246,776 41,756,152
Total financial liabilities 120,117,034 70,051,382
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies. The Board
receives reports through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives
and policies it sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
Price risk
The Group's exposure to commodity price risk is dependent on the
fluctuating price of the various commodities that it mines,
processes and sells.
The average market price of each of the following
commodities was:
2020 2019
Vametco US$/kgV US$/kgV
NV 23.56 48.87
MVO 17.18 -
AMV 17.53 19.09
FEV 22.33 -
2020 2019
Vanchem US$/kgV US$/kgV
Vanadium Pentoxide Flake (FVP) 19.86 76.10
Vanadium Pentoxide Chemical (VCM) 22.79 38.47
Sodium Ammonium Vanadate (SAV) 32.97 -
Ammonium Metavanadate (AMV) 26.79 -
Ferro Vanadium (FEV) 22.56 -
Vanadyl Oxalate Solution (VOX) - 14.17
If the average price of each of these commodities
increased/decreased by 10% the total sales related to each of these
commodities would have increased/decreased as follows:
Effect
Effect on 2020 on 2020
Vametco revenue net income
US$ US$
NV 7,733,450 5,568,084
MVO 25,272 18,196
AMV 14,352 10,334
FEV 32,194 23,180
7,805,268 5,619,794
2020 2019
US$ US$
-----------------
32. Financial instruments (continued)
Efect on
Effect on 2019 net
2019 revenue income
Vametco US$ US$
NV 11,692,487 8,418,591
FEV - -
MVO - -
AMV 14,391 10,361
11,706,878 8,428,952
Effect
Effect on on 2020
net
2020 revenue income
Vanchem US$ US$
Vanadium Pentoxide Flake (FVP) 831,607 598,757
Vanadium Pentoxide Chemical (VCM) 114,420 82,382
Sodium Ammonium Vanadate (SAV) 5,246 3,777
Ammonium Metavanadate (AMV) 12,704 9,147
Ferro Vanadium (FEV) 994,299 715,896
1,958,276 1,409,959
Credit risk
Credit risk is the risk that the counterparty fails to repay its
obligation to the Group in respect of the amounts owed.
Credit risk arises from cash and cash equivalents, contractual
cash flows of debt investments carried at amortised cost, at fair
value through other comprehensive income (FVOCI) and at fair value
through profit or loss (FVPL), as well as credit exposures to
customers, including outstanding receivables.
Risk management
Credit risk is managed on a Group basis. For banks and financial
institutions, only independently rated parties with a minimum
rating of 'A' are accepted.
If customers are independently rated, these ratings are used.
Otherwise, if there is no independent rating, risk control assesses
the credit quality of the customer, taking into account its
financial position, past experience and other factors. Individual
risk limits are set based on internal or external ratings in
accordance with limits set by the board. The compliance with credit
limits by customers is regularly monitored by line management.
The Group's investments in debt instruments are considered to be
low risk investments. The credit ratings of the investments are
monitored for credit deterioration.
Security
At 31 December 2020, the company held no collateral as security
against any financial asset. The carrying amount of financial
assets recorded in the financial statements, net of any allowances
for losses, represents the company's maximum exposure to credit
risk without taking account of the value of any collateral
obtained. At 31 December 2020, no financial assets were past their
due date. As a result, there has been no impairment of financial
assets during the year. An allowance for impairment is made where
there is an identified loss event which, based on previous
experience, is evidence of a reduction in the recoverability of the
cash flows. Management considers the above measures to be
sufficient to control the credit risk exposure.
Impairment of financial assets
The Group's only financial assets that are subject to the
expected credit loss model are third party trade receivables.
Trade receivables
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristics and the
days past due.
2020 2019
US$ US$
32. Financial instruments (continued)
The expected loss rates are based on the payment profiles of
sales over a period of 36 month before 31 December 2020 and the
corresponding historical credit losses experienced within this
period. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting
the ability of the customers to settle the receivables. The Group
has identified the GDP and the unemployment rate of the countries
in which it sells its goods and services to be the most relevant
factors, and accordingly adjusts the historical loss rates based on
expected changes in these factors.
On that basis, the loss allowance as at 31 December 2020 was
determined as follows for trade receivables:
Gross
Expected carrying Loss
Subsidiary credit amount allowance
loss US$ US$
rate
Bushveld Vametco Alloys
(Pty) Ltd 0.95 % 312,230 2,966
Bushveld Vanchem (Pty)
Ltd 1.94 % 38,169 740
Bushveld Minerals SA
(Pty) Ltd 1.94 % 69,189 1,342
Bushveld Energy Company
(Pty) Ltd 1.94 % 72,651 1,409
Bushveld Vametco Limited 0.93 % 2,835,340 26,369
------------------------
32,826
Trade receivables are written off when there is no reasonable
expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a
debtor to engage in a repayment plan with the Group, and a failure
to make contractual payments for a period of greater than 120 days
past due.
Impairment losses on trade receivables are presented as net
impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line
item. There were no impairment losses on trade receivables for the
2020 financial year.
It is the Group's policy that all suppliers who wish to trade on
credit terms are subject to credit verification procedures. Credit
risk arises from credit exposure to customers, including
outstanding receivables and committed transactions.
Trade account receivables comprise a limited customer base.
Ongoing credit evaluation of the financial position of customers is
performed and granting of credit is approved by directors.
The Group's credit risk is considered by counterparty, geography
and by currency. The Group has a significant concentration of cash
held on deposit with large banks in South Africa, Mauritius and the
United Kingdom and America with A ratings and above (Standard and
Poors).
The concentration of credit risk by currency was as
follows:
Currency
Sterling 663,914 169,071
South African Rand 34,165,671 17,469,394
United States Dollar 15,711,087 16,373,092
---------- ----------
50,540,672 34,011,557
---------- ----------
At 31 December 2020, the Group held no collateral as security
against any financial asset. The carrying amount of financial
assets recorded in the financial statements, net of any allowances
for losses, represents the Group's maximum exposure to credit risk
without taking account of the value of any collateral obtained. At
31 December 2020, no financial assets were past their due date. As
a result, there has been no impairment of financial assets during
the year. An allowance for impairment is made where there is an
identified loss event which, based on previous experience, is
evidence of a reduction in the recoverability of the cash flows.
Management considers the above measures to be sufficient to control
the credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due.
Ultimate responsibility for liquidity risk management rests with
the Board of directors. The Board manages liquidity risk by
regularly reviewing the Group's gearing levels, cash-flow
projections and associated headroom and ensuring that excess
banking facilities are available for future use.
2020 2019
US$ US$
32. Financial instruments (continued)
The Group maintains good relationships with its banks, which
have high credit ratings and its cash requirements are anticipated
via the budgetary process. At 31 December 2020, the Group had
US$50,540,672 (2019: US$34,011,557) of cash reserves and borrowings
of US$84,246,776 (2019: US$41,756,152). The Group will maintain its
ability to service its borrowings over the next 12 months.
Market risk
The Group's activities expose it primarily to the financial risk
of changes in foreign currency exchange rates and interest
rates.
Interest rate risk
The Group has interest bearing assets and liabilities, the
Group's income and operating cash flows are dependent of changes in
market interest rates.
As part of the process of managing the Group's interest rate
risk, interest rate characteristics of new borrowings and the
refinancing of existing borrowings are positioned according to
expected movements in interest rates.
2020 Interest
Interest bearing instruments Value of change by Effect
loan 100 basis
point
Borrowings (84,246,776) 1 % (842,468)
Cash and cash equivalents 40,260,188 1 % 402,602
--------------
(439,866)
--------------
2019 Interest
Interest bearing instruments change by
Value of 100 basis Effect
loan points
Borrowings (41,756,172) 1 % (417,562)
Cash and cash equivalents 25,462,528 1 % 254,625
--------------
(162,937)
--------------
Foreign exchange risk
As highlighted earlier in these financial statements, the
functional currency of the Group is US Dollars. The Group also has
foreign currency denominated assets and liabilities. Exposure to
exchange rate fluctuations therefore arise. The carrying amount of
the Group's foreign currency denominated monetary assets and
liabilities, all in US Dollars, are shown below:
2020 2019
US$ US$
Cash and cash equivalents 34,829,585 17,638,465
Other receivables 4,818,931 2,170,847
Trade and other payables (17,715,850) (11,563,170)
21,932,666 8,246,142
The group has transactional foreign exchange exposures, which
arise from sales or purchases by an operating unit in currencies
other than the unit's functional currency. The Vanadium market is
predominately priced in US dollars which exposes the group to the
risk of fluctuations in the SA rand/US dollar. The Group monitors
and manages risk via the newly established internal audit
function.
The Group does not enter into any derivative financial
instruments to manage its exposure to foreign currency risk.
Fair value
The directors are of the opinion that the book value of
financial instruments approximates fair value. The carrying value
less impairment provision of trade receivables and payables are
assumed to approximate their fair values.
2020 2019
US$ US$
32. Financial instruments (continued)
The Group used the following hierarchy for determining and
disclosing the fair value of financial instruments which are
measured at fair value by valuation technique:
Level 1: Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: Techniques which use inputs that have a significant
effect on the recorded fair value that are not based on observable
market data.
Of the Group's financial assets at fair value as described in
note 21, US$20,148,778 is measured using level 1 techniques and
US$2,304,099 is measured using level 3 valuation techniques.
Carrying
2020 2019
Carrying
Financial liabilities
amount Fair value
amount Fair value
Trade and other payables 23,853,676 23,853,676 15,721,500 15,721,500
Borrowings 84,246,776 84,246,776 41,756,153 41,753,153
Deferred consideration 5,416,466 5,416,466 7,108,819 7,108,819
Loans 1,597,972 1,597,972 - -
*Management assessed that the fair values of cash and cash
equivalents, restricted investment, trade and other receivables and
trade and other payables, approximate their carrying amounts
largely due to the short-term maturities of these instruments.
Carrying
2020 2019
Carrying
Financial assets
Trade and other receivables 6,692,165 6,692,165 4,427,793 4,427,793
Restricted investments 3,111,465 3,111,465 6,605,465 6,605,465
Financial assets - investments 2,785,507 2,785,507 4,420,891 4,420,891
Financial assets at fair value 20,439,565 20,439,565 1,952,227 1,952,227
Cash and cash equivalents 50,540,672 50,542,672 34,011,557 34,011,557
amount Fair value
amount Fair value
33. Contingent liabilities Bank guarantee
As required by the Minerals and Petroleum Resources Act (South
Africa), a guarantee amounting to US$6,204,018 (2019: US$6,461,513)
before tax and US$4,446,893 (2019: US$4,652,290) after tax was
issued in favour of the Department of Mineral Resources for the
unscheduled closure of the Bushveld Vametco Alloys mine. This
guarantee was issued on condition that a portion be deposited in
cash with Guard Risk Insurance Company Ltd with restricted use by
the Group, as per the below.
Restricted cash
As required by the Minerals and Petroleum Resources Act, a
guarantee amounting to US$ 6,204,018 before tax and US$4, 466,893
after tax was issued in favour of the Department of Mineral
Resources for the unscheduled closure of the mine. This guarantee
was issued on condition that a portion be deposited in cash with
Centriq Insurance Company Ltd with restricted use by the Group as
per the below:
The restricted cash disclosed as a current asset consist of
US$3,111,465 (2019: US$ Nil) paid to Centriq Insurance Company
Limited; US$ Nil (2019: US$3,051,487).
For commercial reasons, the Company decided to consolidate its
rehabilitation obligations into one insurance product. Guarantees
previously held with Guardrisk Insurance Company Ltd (2019:
US$3,553,978) and the Environmental Rehabilitation Trust (2019:
US$3,051,487) where therefore consolidated into one guarantee from
Centriq Insurance Company Ltd.
The guarantee is valid for three years, commencing on 1 June
2020 and the funds are only available if the agreement is
terminated with a six months' notice period.
Suretyship
On 22 May 2019, the Company announced that it had agreed to
provide a short-term standby working capital support facility to
AfriTin for the amount of ZAR 30,000,000 (approximately US$2.1
million on 22 May 2019). AfriTin has subsequently secured a working
capital facility for the amount of NAD 35,000,000 from Nedbank
Namibia (the "Nedbank Facility"), with the support of Bushveld
Minerals providing to stand surety for the Nedbank Facility to the
value of NAD 30,000,000 (approximately US$2.0 million).
In the unlikely event of default, Nedbank will first call on the
suretyship of the parent company of the AfriTin Group (i.e. AfriTin
Mining Limited). In the event that AfriTin Mining Limited cannot
meets its obligations under the facility, Nedbank will call upon
the Bushveld Minerals suretyship.
The above is less onerous on Bushveld Minerals as it is not a
cash collateralised guarantee. In addition, the terms agreed for
the Working Capital Facility announced on the 22 May 2019 remain
unchanged with respect to Bushveld Minerals. The Company is
comfortable with the progress that AfriTin has made towards
production at its Namibian flagship project and with the security
it retains from AfriTin for the suretyship in the form of a
notarial bond over the AfriTin processing plant.
34. Capital commitments
---------------------------------
2020 2019
US$ US$
Authorised and contracted for - 2,449,568
Authorised but not contracted for - 608,778
- 3,058,346
35. Related parties
`
Relationships
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
VM Investments Limited is a related party due to two of the
Executive Directors (Fortune Mojapelo and Anthony Viljoen) of
Bushveld Minerals Limited being majority shareholders of VM
Investments. VM Investments owns the offices rented by Bushveld
Minerals Limited. The rent paid in 2020 financial period is
US$159,651 (2019: US$176,474).
Services rendered by Ondra LLP for the amount of US$566,056
(2019: US$376,800) is classified as a related party transaction due
to a non executive director (Michael Kirkwood) being a senior
advisor at the firm.
The remuneration of key management personnel, being the
directors and other executive committee members, is set out below.
Further information about the remuneration of individual directors
is provided in the Directors' remuneration report.
2020 2019
US$ US$
Salaries and fees 2,181,022 1,772,702
Short-term incentives 144,055 881,934
Long-term incentives 564,420 346,157
2,889,497 3,000,793
36. Events after the reporting period
The unprecedented impact of the COVID-19 pandemic, as well as
the depressed governing sales price has had a negative impact on
the Group's operational and financial position during the 2020
financial year. As such the Group has proactively engaged with
Nedbank and have agreed to a covenant waiver for the testing
periods 30 June 2021.
Bushveld Minerals Limited's strong balance sheet, including
significant cash holdings, coupled with the actions it has taken to
date demonstrates the Groups capacity to navigate through the
uncertainties caused by the impacts of the COVID-19 pandemic. The
subsequent price recovery has also improved the overall financial
position of the business as its ability to operate as a going
concern for the foreseeable future.
Enerox GmbH Investment
On 31 March 2021 Bushveld Energy invested US$5.0 million into
VRFB-H and has invested approximately another US$2.7 million to
retain its 50.5 percentage holding of VRFB-H. In turn, VRFB-H
invested US$15 million into EHL to fund its part of the US$30
million investment into Enerox. The investment of VRFB-H into
Enerox is in line with Bushveld Minerals' strategy to mobilise
capital to scale up growth and capacity of VRFB manufacturers,
either through self-funding mechanisms or through funding sharing
arrangements. This strategy has been recently and successfully
illustrated by Bushveld Minerals' investment and subsequent
realisation of an interest in AIM-quoted Invinity Energy
Systems.
Annual Report
The Annual Report for the year ended 31 December 2020 will be
available on the Company's website today at the following link:
http://www.bushveldminerals.com/financial-reports/ . Physical
copies of the Annual Report will be posted to shareholders who have
elected to receive them in the week commencing 12 July 2021.
A further announcement will be made by the Company once hard
copies Annual Reports have been despatched to shareholders.
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END
FR EAKKEDDEFEEA
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June 30, 2021 02:38 ET (06:38 GMT)
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