TIDMBMN
RNS Number : 4614C
Bushveld Minerals Limited
22 January 2018
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
22 January 2018
Bushveld Minerals Limited
("Bushveld" or the "Company")
Q4 Operational Update
Bushveld Minerals is an AIM listed integrated vanadium producer
with additional investments in coal, power and tin, is pleased to
provide an operational update in respect of Bushveld Vametco
("Vametco"), Bushveld Energy and Lemur Resources ("Lemur").
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"We are very pleased with the tremendous strides the Company has
made during the fourth quarter of 2017.
"Bushveld Vametco had a solid performance in the 2017 calendar
year, supported by a strong vanadium price environment with the
ferrovanadium price averaging US$33/KgV(1) for the 12 months. This
ensured revenue increase of 44% and EBITDA of 553%, compared to the
2016 calendar year. We have taken advantage of the materially
higher prices this year to conduct additional maintenance
activities at the plant in preparation for 2018. The first phase of
the Vametco multi-phased expansion project was successfully
completed in the September 2017 quarter, during which Vametco
reached an annual production run rate of 3,035 mtV. We have since
commenced the second phase of the expansion project which will
increase production to 3,750 mtV per annum by June 2018 and to over
5,000 mtV by 2019. As we anticipate an even stronger year ahead,
our projection for Vametco's 2018 calendar year production is 3,680
mtV.
"Bushveld Energy has also seen considerable progress having
strengthened relations with Eskom, the IDC and UniEnergy
Technologies. Global forecasts for stationary energy storage are
very bullish. As detailed in our strategy over the past two years,
this remains a strong area of our focus. We expect to be at the
forefront of development stationary energy storage throughout
Southern Africa.
"At Lemur, our decision to increase the scope of the project
from a pure coal mine to a fully integrated power project has not
only increased the size of the Imaloto project but also
significantly de-risked the project by guaranteeing offtake of the
coal produced. This gives us various options on the approach and
timing of advancing the project. Our immediate next steps on the
Imaloto project will remain focussed on delivering a bankable
project to help grow sustainable economic development in Southwest
Madagascar through supplying much-needed baseload power using
locally produced fuel.
"I look forward to providing further updates in the coming
year."
Bushveld Vametco
Production:
-- Vametco produced 2,649 mtV in the form of Nitrovan(R) from
magnetite concentrate during the 2017 calendar year. Vanadium
production decreased by 7.2% relative to the 2016 calendar year due
to increased maintenance downtime.
-- Vanadium production for the December 2017 quarter decreased
by approximately 19.4% relative to the September quarter due to the
kiln riding ring repair and kiln upgrades. The intervention on the
kiln has allowed increased kiln feed, as part of the second phase
of the expansion project.
-- Vanadium production of approximately 3,680 mtV consisting of
3,050 mtV Nitrovan(R) and 630 mtV Ferrovanadium (FeV) (converting
modified vanadium oxide (MVO) to FeV) is expected in the 2018
calendar year, supported by the ramp-up of the second phase of the
expansion project which is expected to increase Vametco's
production capacity from the current 3,035 mtV to 3,750 mtV per
annum by June 2018 for a self-funded capital expenditure of
approximately US$2.5 million.
-- Unit production cost for the 2018 calendar year is expected
to decrease from ZAR 221/KgV in 2017, by approximately 7% to ZAR
205/KgV, mainly due to economies of scale.
Operational and financial highlights for Vametco (on a 100%
basis)(2) :
Description Unit Q4 CY17 CY17 Q4 CY17 vs Q3 Q4 CY17 vs Q4 CY17 vs CY16 CY18 guidance
CY17 CY16
====================== ========= ======== ======== =============== =============== ============= ==============
Vanadium(Nitrovan(R)
plus FeV)
produced mtV(3) 539 2,649 -19.4% -29.8% -7.2% 3,680
---------------------- --------- -------- -------- --------------- --------------- ------------- --------------
Vanadium
sold mtV(3) 636 2,721 -14.5% -19.2% -3.2% -
---------------------- --------- -------- -------- --------------- --------------- ------------- --------------
Vanadium
price(1) US$/KgV 39.1 32.6 +0.2% +75.7% +76.7% -
---------------------- --------- -------- -------- --------------- --------------- ------------- --------------
USD/ZAR
exchange
rate US$:ZAR 13.6 13.3 +4.5% -2.1% - 9.7% -
---------------------- --------- -------- -------- --------------- --------------- ------------- --------------
Revenue ZAR'm 346.0 1,090.3 +13.4% +61.1.0% +43.5% -
---------------------- --------- -------- -------- --------------- --------------- ------------- --------------
EBITDA ZAR'm 126.4 315.6 +39.3% +373.2% +553.4% -
---------------------- --------- -------- -------- --------------- --------------- ------------- --------------
Production
costs(4) ZAR/kgV 246.6 220.7 +4.0% +21.1% +16.3% 205
---------------------- --------- -------- -------- --------------- --------------- ------------- --------------
1. The vanadium price is based on the FeV mid average price for
the period, published by Metal bulletin.
2. Bushveld's net attributable interest of the above production
and financials is approximately 59.1%, and will be consolidated on
a 100% basis from the December 2017 financials.
3. mtV = metric tonnes of vanadium.
4. Excludes depreciation, royalties, selling, general, & administrative expenses.
Multi-phased expansion project
-- In 2017 Vametco commenced a multi-phased expansion project
with the aim of increasing annual production to more than 5,000 mtV
over the next three years.
-- The first phase of the expansion was successfully completed
on time and on budget in the September 2017 quarter, during which
Vametco reached an annual production run rate of 3,035 mtV.
-- The next two phases of expansion will increase production to
3,750 mtV per annum by June 2018 and to over 5,000 mtV per annum by
the end of 2019.
-- The completion of the expansion project will enhance
Vametco's existing competitive position in a structurally sparse
market. In addition, the presence of an integrated platform will
allow the development of downstream operations as well as achieving
product diversification.
Project Investment(1) Scope Progress
--------------------- -------------- -------------------- ---------------
Multiphase expansion US$0.5millon Increase Vametco 100% completed
project -Stage annual production in Septmeber
1 run rate to 3,035 2017.
mtV.
--------------------- -------------- -------------------- ---------------
Multiphase expansion US$2.5million Increase Vametco Equipment
project -Stage annual production ordered
2 run rate to 3,750 and awaiting
mtV by June 2018. delivery.
--------------------- -------------- -------------------- ---------------
Multiphase expansion - Increase Vametco Planning
project -Stage annual production Stages.
3 run rate to over
5,000 mtV by 2019.
--------------------- -------------- -------------------- ---------------
1. Shown on a 100% basis, Bushveld Minerals net interest is 59.1%.
Bushveld Energy
Highlights:
First confirmed South African project
-- Signed agreement with Eskom, the South African national power
utility, for the installation of a vanadium redox flow battery
(VRFB) with peak power of 120kW and peak energy of 450kWh.
-- The project includes our two strategic partner entities, the
South African Industrial Development Corporation (IDC), as a
co-developer and USA-based UniEnergy Technologies (UET), as the
VRFB manufacturer.
-- Eskom will use the system to evaluate its performance
characteristics against a multitude of applications, including
minimum load shifting, wind smoothing, solar smoothing, improved
power quality among others.
-- Site preparation activities and procurement for long lead
time items began in fourth quarter of 2017 in order to achieve
operation in the first half of 2018.
Electrolyte production
-- Completed locational study for the vanadium electrolyte
production plant in South Africa, jointly with the IDC. A dual
locational strategy for electrolyte production is preferred to
shorten the environmental approval process, reduce upfront capital
and take advantage of local government incentives.
-- Jointly with Bushveld Vametco, produced initial, laboratory
batches of vanadium electrolyte using Vametco's intermediary
product as feedstock. In-house and international testing confirmed
the viability of using the Vametco feedstock to produce various
types of battery-grade electrolyte.
Energy storage market and project development activity focus
-- Global forecasts for stationary energy storage are very
bullish, including Bloomberg New Energy Finance that forecasts a
125GW / 300GWh market by 2030.
-- Bushveld Energy's project development focus is on the
deployment throughout the African continent of large scale energy
storage deployments which favour the technical benefits of VRFBs.
The size, technical and commercial competency of our team befits a
project pipeline of dozens of megawatt-plus-sized projects over
thousands of kilowatt-sized ones.
-- Our business model focuses on partnerships and collaborations
with national or regional utilities and independent power project
(IPP) developers. The recent Bushveld Energy - Eskom project is an
example of our utility strategy. Bushveld Energy's work with IPP
developers in Africa focuses primarily on mini-grid projects in
remote, off-grid locations and medium to large electricity users
that suffer from expensive, constrained or intermittent electrical
power supplies. With rising electricity prices in South Africa and
a rebound in the global price for oil (and thus diesel), Bushveld
Energy is seeing a rapid increase in economically viable storage
projects across the continent for the coming year.
Mikhail Nikomarov, CEO of Bushveld Energy, commented:
"The fourth quarter of 2017 was extremely productive for
Bushveld Energy. Achieved milestones included our first energy
storage project and progress towards our own electrolyte production
capabilities. We also reiterated our strategy of working through
partnerships, further reinforcing our relationship with UET and the
IDC, and formalised one with Eskom, one of the largest power
utilities in the world. The 2018 year will be an exciting growth
year for our company, building on results initiated in the December
2017 quarter."
Lemur Resources
Highlights:
-- Signed a binding 30 year power purchasing agreement (PPA)
with the Madagascar state-owned utility, Jiro sy Rano Malagasy
(JIRAMA). The PPA has enhanced the bankability of the project by
guaranteeing offtake of power. The PPA with JIRAMA is also a legal
requirement for getting a government concession for the project to
proceed.
-- Appointed Worley Parsons as Owner's Engineer and Social
Environmental Impact Assessment (SEIA) Advisor. Worley Parsons will
manage the BFS and other technical aspects of the project.
-- Completed site visit for load, demand study and transmission
routing. The intention of the study is to gain an understanding of
the load demand and to optimise the power plant design and its
phasing. This is critical to the bankability of the project.
-- Revised Mining Plan to align with the coal asset with a
minimum 30 year life of the power station and thus ensure security
of fuel supply.
-- Completed Open Tender Process and Selection of Local
Madagascar SEIA Consultants. Worley Parsons role was to ensure
local compliance with IFC standards. That said, having local
consultants conducting the SEIA is critical because they understand
the nuances of the Madagascar regulation and social system.
Focus for 2018:
-- Obtaining the concession for the Project.
-- Commencing the SEIA Study, which is a requirement before
starting the mining or construction activities on the site.
-- Upon completing the BFS, Lemur will focus on completing
funding and credit enhancement options for the project. The company
has already started early stage discussions with select parties on
funding.
-- Focus on offtakes with other power users to supplement the demand from JIRAMA.
-- Seek to conclude coal offtakes with third parties - the coal
mine is viable with only supplying coal to the power project.
Notwithstanding, supplying coal to third parties provides early
cashflows prior to commissioning of the power plant.
-- Further explore strategic partnerships for the project
(technical, commercial and financial).
-- The power project expected commissioning date is 2021.
Prince Nyati, CEO of Lemur Resources Limited, commented:
"Lemur Resources achieved significant developments in the fourth
quarter of 2017. The most significant of which was the signing of a
binding 30 year Power Purchase Agreement with JIRAMA. The PPA was
critical to meeting the statutory requirements for the government
to grant a concession for a power project. The concession is a
priority for the company going forward. We plan to start the Social
Environmental Impact Assessment study in the first quarter of 2018
and continue progressing the Bankable Feasibility Study."
Enquiries: info@bushveldminerals.com
Bushveld Minerals +27 (0) 11 268 6555
Fortune Mojapelo, Chief
Executive Officer
Bushveld Energy Limited
Mikhail Nikomarov,
Chief Executive Officer,
Bushveld Energy Limited +27 (0) 11 268 6555
Lemur Resources Limited
Prince Nyati,
Chief Executive Officer,
Lemur Resources Limited +27 (0) 11 268 6555
SP Angel Corporate Finance
LLP +44 (0) 20 3470 0470
Nominated Adviser & Broker
Ewan Leggat
Richard Morrison
Blytheweigh
Financial PR
Tim Blythe / Nick Elwes +44 (0) 207 138 3204
Gabriella von Ille +27 (0) 711 121 907
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is an AIM listed integrated vanadium producer
with additional investments in coal, power and tin.
The Company's flagship vanadium platform includes a 59.1%
controlling interest in Bushveld Vametco Alloys (Pty) Ltd a primary
vanadium mining and processing company; the Mokopane Vanadium
Project and the Brits Vanadium Project. The coal platform comprises
the wholly-owned Imaloto Coal Project, which is being developed as
one of Madagascar's leading independent power producers. The
Company's tin interests are held through its shareholding in AIM
listed AfriTin Mining Limited.
Bushveld's vision is to become a significant, low cost,
integrated primary vanadium producer through owned high grade
assets. This incorporates development and promotion of the role of
vanadium in the growing global energy storage market through
Bushveld Energy, the Company's energy storage solutions provider.
Whilst the demand for vanadium remains largely anchored in the
steel industry, Bushveld Minerals believes there is strong
potential for an imminent and significant global vanadium demand
surge from the fast-growing energy storage market, particularly
through the use and adoption of Vanadium Redox Flow Batteries.
The Company's approach to project development recognises that,
whilst attractive project economics are imperative, they are
insufficient to secure capital to bring them to account. A clear
path to production within a visible timeframe, low capital
expenditure requirements and scalability are important factors in
ensuring a positive return on investment. This philosophy is core
to the Company's strategy in developing projects.
Detailed information on the Company and progress to date can be
accessed on the website: www.bushveldminerals.com.
About Vametco
Vametco is located near Brits on the Western Limb of the
Bushveld Complex. The integrated operation comprises a vanadium ore
mine and a processing plant that produces Nitrovan(R), a trademark
product sold in major steel markets across the world. The mine lies
adjacent to the Brits Vanadium Project, which will in future serve
as an alternative source of near surface run of mine (ROM) ore feed
to the Vametco plant.
The Vametco mining operation uses open pit bench mining methods
to mine a well-defined orebody. The deposit is continuous with
limited faulting and dips in a northerly direction at approximately
19 degrees.
ROM ore is fed into a primary, secondary and tertiary crushing
circuit, followed by milling and magnetic separation to produce
magnetite concentrates. The magnetite concentrates are fed into the
extraction process which includes the kiln for roasting followed by
leaching and precipitation. Thereafter the precipitated vanadium as
ammonium metavanadate is converted to modified vanadium oxide (MVO)
in rotary calciners. MVO is fed into the mixplant and finally into
the shaft furnaces to produce Nitrovan(R).
About Bushveld Energy Limited
Bushveld Energy Limited is an energy storage solutions provider
focusing on the African market, with registered offices in
Mauritius and a wholly owned subsidiary in South Africa. Bushveld
Energy recognises that electricity in Africa intersects paramount
potential for social transformation with an immense commercial
opportunity.
Launched in 2016, Bushveld Energy is focused on developing and
promoting the role of vanadium in the growing global energy storage
market through application in vanadium redox flow batteries. Its
near term strategy is to deploy several VRFB systems as part of its
longer term vision to become a significant electricity storage
provider in Africa by 2020, meeting the demand for utility scale
energy storage in Africa by leveraging South Africa-mined and
beneficiated vanadium.
http://www.bushveldenergy.com
About Lemur Resources Limited
Lemur Resources is a wholly owned subsidiary of Bushveld
Minerals and is the company's coal and power platform. The Imaloto
project is located in the southwest of Madagascar and consists of a
136 million ton coal resource (90% of which is of JORC compliant
Measured and Indicated). The project also includes an initial 60MW
mine mouth coal power plant as well as over 200km of new
transmission lines, developed in parallel as one of Madagascar's
leading independent power producers.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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