Bushveld Minerals Regulatory News (BMN)

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.

29 November 2017

Bushveld Minerals Limited

("Bushveld" or the "Company")

Unaudited interim results performance report for the period ended 31 August 2017

Bushveld Minerals Limited (AIM: BMN), a mineral project development company with a portfolio of vanadium and coal assets in Southern Africa and an investment in tin, is pleased to announce its results, including an operational update for the six months ended 31 August 2017.

Commenting on the results, CEO Fortune Mojapelo said:

"I am pleased to present the interim financials for the half year ended 31 August 2017. The period under review saw Bushveld Minerals continue its steady progress into a significant low cost, integrated vanadium producer, anchored in the completion of the acquisition of Strategic Minerals Corporation, in partnership with Yellow Dragon Holdings. The timing of the completion could not have been better, occurring during a time of significant increases in the vanadium price contributing to a marked improvement in Vametco's profitability and cash generation.

Our positive outlook on the vanadium market has been vindicated with sustained price growth during the period under review. This market outlook provides a sound backdrop for the Company's push to grow the vanadium platform through expansion initiatives at Vametco as well as targeted brownfield opportunities close in proximity to the Company's deposits. We are mindful of the need to grow our human capital base and have started a process to add to the leadership team. In this regard, I am pleased to welcome Prince Nyati as CEO of Lemur Holdings and Chika Edeh as the new Head of Investor Relations. The Company looks forward to further strengthening our team in the coming months.

I am encouraged by the significant progress at Bushveld Energy, which recently announced the first deployment of a vanadium redox flow battery ("VRFB") to be installed at the testing centre of the South African utility, Eskom. We believe this is an important step towards unlocking the large scale energy storage opportunities in South Africa, in preparation for which the company is steadily progressing its studies for the local manufacturing of vanadium electrolyte as well as the assembly of VRFBs in South Africa.

Furthermore, the signing of the Power Purchase Agreement between Lemur Holdings, through its Madagascan subsidiary Imaloto Power Project SARL, and JIRAMA is a critical milestone in the development of Lemur's integrated coal-to-power project. This achievement, coupled with the on-going progress on the project's bankable feasibility study adds significant value to the project and brings it even closer to implementation. Finally, with the successful listing of AfriTin Mining Limited on the AIM market, we have taken a major step in establishing a significant and independent African tin platform.

This has been an incredibly busy period for the Company, and one that has seen us take some very significant steps in delivering our strategy. We look forward to providing further updates as we continue developing each of our platforms as independent entities with dedicated resources."

Highlights:

Bushveld is making significant progress to becoming the world's largest, low cost, integrated primary vanadium producer that benefits from a high grade resource base under its ownership.

Bushveld Resources Limited 

Strategic Minerals Corporation Acquisition

§ On 6 April 2017, Bushveld Vametco Limited, in partnership with Yellow Dragon Holdings Limited, completed the acquisition of a 78.8% shareholding in Strategic Minerals Corporation (the ultimate holding company of Vametco Alloys Proprietary Limited).

Agreement with Wogen Resources Limited

§ On 20 March 2017, Bushveld announced that on 17 March 2017 it had signed a definitive Sales and Marketing Agreement with Wogen Resources Limited ("Wogen").

§ On 22 August 2017, Bushveld announced that it had agreed with Wogen to retire in full the US$3 million prepayment facility and to simultaneously increase the Vametco working capital facility by same amount from US$6 million to US$9 million.

§ On 24 August 2017, Bushveld announced that Vametco had agreed to increase the working capital facility governed by the definitive Sales and Marketing Agreement with Wogen from US$9 million to US$11 million with immediate effect.

Agreement with Barak Fund SPC Limited

§ On 30 March 2017, Bushveld announced that it had completed and signed the financing agreement for the Vametco acquisition with Barak Fund SPC Limited ("Barak Fund").

§ On 8 June 2017, Bushveld advised that it had repaid the remaining US$1.0 million principal of the US$11.0 million bridge loan facility (entered into between Bushveld and Barak Fund). 

§ On 15 June 2017, Bushveld announced that it had paid the outstanding US$ 961,010 in fees and interest to Barak Fund, completing the payment of all outstanding obligations to Barak Fund.

Vametco Operational Review 6 months ended 30 June 2017

§ The half-year to 30 June 2017 saw production levels similar to 2016 with 1,441 metric tonnes vanadium ("mtV") produced. Under the oversight of Bushveld and Yellow Dragon, Vametco commenced a multi-phased expansion project to increase annual production to more than 5,000 mtV over the next three years.

§ Reported revenue in the period improved markedly from 2015 and 2016, largely due to increased vanadium prices. During the first half of 2017, EBITDA increased to ZAR85.5 million (US$6.5 million).

Bushveld-Supported Acquisition of BEE Shareholding in Evraz Vametco

§ On 5 June 2017 Bushveld confirmed that its Black Economic Empowerment ("BEE") partner of choice, Jaxson 640, had completed its acquisition of a 21.2% stake in the Vametco vanadium mine.

Bushveld Energy Limited 

Completion of studies carried out in conjunction with the Industrial Development Corporation ("IDC")

§ Market studies for African VRFB demand and global electrolyte demand have been completed and indicate:

· Favourable demand for VRFBs, especially in the utility and off-grid, mini-grid use cases, peaking in 2025-2030;

· Global electrolyte demand likely to peak in the same time frame at 1200-1800 megawatt hours ("MWh") or 40-60 megalitres ("ML") per annum;

· Potential for Bushveld to conservatively supply an initial 5-10ML of this demand, supporting supply of an initial 200MWh in energy storage per annum;

· At present, the electrolyte market is dominated by China, with ~90% of global production capacity, with smaller facilities in Europe and batch production in other regions.

§ Bushveld Energy and the IDC are also progressing the techno-economic study on a vanadium electrolyte production plant to be located in South Africa. The study results highlighted that:

· Bushveld can manufacture electrolyte on a cost-competitive basis, thereby allowing it to compete both regionally and globally;

· A scalable plant can be configured with an initial annual production capacity of 200-400MWh;

· The estimated initial capital expenditure for the plant of ZAR130 million (US$9.7 million), of which more than 75% comprises balance of plant;

· There is scope to reduce the capital expenditure further through co-locating the electrolyte plant with Vametco Alloys (Proprietary) Limited, the primary vanadium producing mine and plant in Brits, Northwest Province, South Africa;

· The most significant driver of costs (upwards of 70%) is the vanadium feedstock, making locally available, low-cost supply a critical success factor and natural competitive advantage for South Africa.

Increased participation by Bushveld Energy in global energy storage industry platforms, such as the Energy Storage Committee ("ESC") of Vanitec, will continue to support the emerging leadership role of Bushveld Energy in the energy storage market.

Lemur Holdings  

§ On 5 April 2017, Bushveld announced the signing of a Memorandum of Understanding ("MoU") between its wholly-owned subsidiary, Lemur Holdings, and Sinohydro Corporation Limited, a subsidiary of Power China Limited. The MoU gave both companies exclusive rights to work with each other on the development of an initial 60 megawatts ("MW") independent power producer coal power plant and associated 200 kilometre transmission line in southern Madagascar.

Greenhills Resources Limited

§ On 15 June 2017, Greenhills completed the acquisition of a 49.5% interest in the Uis Tin Project from a consortium of Namibian shareholders.

Organisational update

Continuing significant developments across the Company's three platforms requires Bushveld to review its human capital to ensure it has sufficient capacity to execute on its strategy going forward. As such the Company made the following appointments:

§ Prince Nyati has been appointed CEO of Lemur Holdings and takes over from Anthony Viljoen who has taken up the role of CEO of AfriTin Mining Limited ("AfriTin"). Prince has over 15 years' experience in Energy and Mining, with a particular focus on Project Development and Mergers & Acquisitions. He has worked in several countries including Zambia, South Africa, India, Singapore and the USA with Shell Oil, Total Petrochemicals, Eskom, Tata Power and Oreport. As Group Head of Tata Power, Prince evaluated over 100 coal assets and over 50 power opportunities in 30 countries. He also served on the Board of Directors at Cennergi and the Tsitsikamma and Amakhala Wind Projects. He has led the development of numerous infrastructure projects in sub-Saharan Africa and facilitated transactions worth approximately US$1.5 billion in Zambia and South Africa.

§ Ms Chika Edeh has been appointed as Head of Investor Relations. Prior to joining Bushveld Minerals, Chika spent six years at BHP Billiton in London and Melbourne, working in Corporate Finance, Tax and Investor Relations. Prior to BHP Billiton, Chika worked for Barclays within the Private Banking division. Chika holds a Master's in Finance and Investments from Cass Business School, a Master's in Chemical Process Engineering and a Bachelor's in Chemistry from University College London.

Events Post 31 August 2017

Corporate

§ On 25 September 2017, Bushveld announced that it had raised £8.0 million of unsecured convertible bonds from UK-based funds, Atlas Capital Market and Atlas Special Opportunities. The first tranche of £4.5 million was issued on 22 September 2017.

Bushveld Resources Limited 

§ On 20 November 2017, Bushveld released an operational update on Bushveld Vametco Alloys performance in the September 2017 quarter. Vametco had a solid quarter producing 669 mtV. In addition, during the period, revenue increased by 29% and EBITDA by 69%, compared to the June 2017 quarter, supported by a rising vanadium price. The first phase of the Vametco multi-phased expansion project was achieved in the quarter, during which Vametco reached an annual production run rate of 3,035 mtV. The following two phases of expansion will increase capacity to 3,750 mtV per annum by June 2018 and to over 5,000 mtV per annum by the end of 2019.

§ On 21 November 2017, Bushveld announced that its 84%-owned subsidiary, Bushveld Energy, had confirmed its first VRFB deployment in South Africa. The system will be deployed with Eskom. This follows Eskom's identification of the need for potentially up to 2,000MW of additional, daily balanced energy storage within the existing grid. The project is co-developed by Bushveld Energy and the IDC and will allow Eskom to test the VRFB. The VRFB commissioning is expected in the first half of 2018.

Lemur Holdings 

§ On 17 November 2017, Lemur Holdings, announced that it had concluded an open market Request for Proposal process in October 2017 for all studies and services required to complete the Bankable Feasibility Study for the Imaloto Power Project in Madagascar.

§ On 23 November 2017, Lemur Holdings through its Madagascan subsidiary Imaloto Power Project SARL, executed a binding Power Purchase Agreement with Madagascar state-owned utility, Jiro sy Rano Malagasy as part of the Imaloto Power Project in Madagascar. The power plant will be located at the mine-mouth of Lemur Holdings' coal deposit, which has approximately 136 million tonnes of coal. The addition of a power component will unlock the value of the coal asset, while at the same time securing reliable electricity off-take backed by a government entity.

Greenhills Resources Limited

§ On 2 October 2017, Bushveld announced plans to de-merge its tin platform, Greenhills Resources Limited, and list it separately on the AIM market of the London Stock Exchange - renaming the company AfriTin. Shareholders approved the de-merger on 20 October 2017. The results of de-merged operations have been presented separately in the income statement.

§ AfriTin was admitted to the AIM market of the London Stock Exchange on 9 November 2017 and raised £3.5 million through an equity placing with a further £1.0 million raised from the AfriTin Notes, bringing the total raised to £4.5 million. To demonstrate Bushveld's continuing support in the now independent tin platform, the Company has retained a 17.48% shareholding in AfriTin. A further 24.39% of the issued share capital of AfriTin Mining was distributed to Bushveld shareholders on the register as at the close of business on 8 November 2017.

As the fair value of the AfriTin assets, estimated based on the market capitalisation of AfriTin on admission to the AIM market of the London Stock Exchange, was less than the book value of the tin assets at 31 August 2017, the Company recognised an impairment of £7,658,273 for its tin assets. Management would like to note that the recognition of the impairment is purely from an accounting perspective. The Company is confident that AfriTin will become a leading African tin platform. 

Outlook

We are on track and delivering on our long-standing strategy of developing each of the Company's platforms, with a view to building each on a path to independent existence with dedicated resources, with vanadium as the flagship platform of the Company. In addition, the development of our projects is based on four key pillars: (a) choosing commodities with a positive market outlook; (b) developing assets with a low cost curve positioning; (c) executing a clear realisable path to production and, thus, cash flows and (d) ensuring scalability.

Enquiries: info@bushveldminerals.com

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is an AIM listed mineral project development company with a portfolio of vanadium and coal assets in Southern Africa and an investment in tin.

The Company's flagship vanadium platform includes the Mokopane Vanadium Project, the Brits Vanadium Project, and an interest in Bushveld Vametco Alloys (Pty) Ltd primary vanadium mining and processing company. 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 one of the largest, low cost, integrated primary vanadium producers 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

Unaudited Consolidated Income Statement

For the six months ended 31 August 2017

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 31 August 2017

unaudited Consolidated Statement of Financial Position

As at 31 August 2017

unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 August 2017

unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 August 2017

unaudited Consolidated Statement of Cash Flows

For the six months ended 31 August 2017

unaudited NOTES

For the six months ended 31 August 2017

1. Corporate information

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.

These financial statements are presented in Pound Sterling (£) because that is the currency the Group has raised funding on the AIM market in the United Kingdom.

2. Basis of preparation

The results presented in this report are unaudited and they have been prepared in accordance with the recognition and measurement principles of International financial Reporting Standards ('IFRS") as adopted by the EU that are expected to be applicable to the next set of financial statements and on the basis of the accounting policies to be used in those financial statements.

The interim financial information does not include all of the information required for full annual financial statements and accordingly, whilst the interim financial information has been prepared in accordance with the recognition and measurement principles of IFRS, it cannot be construed as being in full compliance with IFRS. The financial information contained in this announcement does not constitute statutory accounts as defined by the Companies (Guernsey) Law 2008.

The audited financial information for the year ended 28 February 2017 is based on the statutory accounts for the financial year ended 28 February 2017. The auditors reported on those accounts: their report was (i) unqualified, (ii) included an emphasis of matter relating to the uncertainties in respect to the Group's ability to continue as a going concern and (iii) did not contain statements where the auditor is required to report by exception.

3. Use of estimates and judgements

In the application of the Group's accounting policies the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of revision and in future periods if the revision affects both current and future periods.

Management's critical estimates and judgements in determining the value of assets, liabilities and equity within the financial statements relate to the carrying value of intangible exploration assets of £42.2 million and the going concern assumptions.

The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future iron ore and tin prices, future capital expenditures and environmental and regulatory restrictions.

Following the listing of the AfriTin assets on the AIM the directors consider it appropriate to impair the assets by £7,658,273 which equates those assets to the market value of the company at listing.

Going concern

In preparing the interim financial statements, the directors have considered the current financial position of the Group and the likely future cash flows for the forthcoming 12 months from the date of this report. As with all exploration groups at this stage of the resource development cycle and with no cash-flow from production, funding is derived mainly through equity financing. Since posting of the 2017 Annual Financial Statements on 30 August 2017 the Company has raised funding through the following means in order to support its going concern status.

The Company has entered into an agreement with an Investor to raise funding of up to £8,000,000 through the creation and issuance of convertible bonds as more fully described in Note 11.

Thus the directors continue to adopt the going concern basis in preparing the group's financial statements.

unaudited NOTES

For the six months ended 31 August 2017

4. Associates

Associates are all entities over which the group has significant influence but not control or joint control. This is generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost.

Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit or loss and the group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent of the group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the group.

The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in the 2017 financial statements.

5. Loss per share

From operations

The basic loss per share is calculated using the total loss for the period attributable to the owners of the Company and the weighted average number of shares in issue during the period. There are no potentially dilutive shares in issue.

unaudited NOTES

For the six months ended 31 August 2017

6. Intangible assets

unaudited NOTES

For the six months ended 31 August 2017

7. Property, plant and equipment

unaudited NOTES

For the six months ended 31 August 2017

8. Trade and other receivables

9. Trade and other payables and borrowing

unaudited NOTES

For the six months ended 31 August 2017

10. Share capital and share premium

unaudited NOTES

For the six months ended 31 August 2017

11. Warrants

The warrants issued during the period are as follows:

The warrants outstanding at 31 August 2017 have an exercise price of £0.03, with a weighted average remaining contractual life of 2 years.

The group has recognised and incurred charge of £426,180 during the year 28 February 2017 which has been deducted from share premium as the warrants were issued as consideration for professional fees in relation to the issue of shares. No charge has been recognised for the period to 31 August 2017 as the warrants reserve is considered to be adequate in relation to the unredeemed warrants.

Events after the reporting date

Convertible Bond

A total fundraising of up to £8.0 million through the creation and issuance of convertible bonds, with denomination of £25,000 each, which bear a coupon of 7.5 per cent per annum and have a maturity date of two years from the date of issuance (the "Maturity Date") (the "Convertible Bonds"). The Convertible Bonds are issued at 98 per cent of face value.

The Convertible Bonds will be issued in two tranches, the first tranche of £4,500,000 ("First Tranche") was issued on 22 September 2017, upon receipt of funds by the Company. The second tranche of £3,500,000 ("Second Tranche") is to be issued at the Company's discretion forty working days (which can be shortened by mutual agreement) after the date of issuance of the First Tranche, conditional upon receipt of funds by the Company and satisfaction of certain conditions precedent. It is the Company's current intention that it will issue the Second Tranche and a further announcement will be made at that time.

The convertible Bonds are convertible into BMN ordinary shares at a price equal to the average of five days volume weighted average price (as published by Bloomberg) determined over the ten trading days immediately prior to receipt of a conversion notice by the Company from the Investor.

The Investor has agreed not to convert more than 25 per cent of the Convertible \bonds outstanding during every period of three calendar months (i) from 1 October to 31 December; (ii) from 1 January to 31 March; (iii) from 1 April to 30 June; and (iv) from 1 July to 30 September, subject to certain exception, and agrees not to short sell and/or borrow BMN ordinary shares at any point during the twenty-four month period from the date of issuance of the First Tranche.

A total of 6,250,000 warrants over BMN ordinary shares will be issued as part of the First Tranche and should the Company elect to issue the Second Tranche, a further 4,861,111 warrants will be issued. The warrants have a three year term, a strike price of 14.4p and are exercisable at any time.

unaudited NOTES

For the six months ended 31 August 2017

Events after the reporting date

Convertible Bond

The net proceeds receivable from the issue of the First Tranche will be applied to further developing the Company's vanadium and tin platforms, as well as providing general working capital. The net proceeds from the Second Tranche, assuming it is issued, will be applied in the same way.

The company has the option to redeem the Convertible Bonds prior to the Maturity Date at 105 per cent of the face value of the outstanding Convertible Bonds to be redeemed. If a material change of ownership (being the acquisition of ownership of, or voting control or direction over, more than 50% of the issued and outstanding shares of the Company) occurs, or certain events of default occur, the Investor has the right to request redemption of all or part of the outstanding amount at 105 per cent of the face value of the outstanding Convertible Bonds to be redeemed.

On the Maturity Date, any unconverted Convertible Bonds will be converted into BMN ordinary shares, with such number of ordinary shares determined by dividing the principal amount of the unconverted Convertible Bonds by the average of the lowest three days volume weighted average price (as published by Bloomberg) during the period of fifteen consecutive trading days prior to the Maturity Date.

De-merger of Tin assets

On 2 October 2017 the Board announced the intention to effect a demerger of its wholly owned subsidiary, Greenhills Resources, and its subsidiaries. The demerger was approved by way of a general shareholders meeting on 20 October 2017 to form the new company to be listed on London Stock Exchange's AIM under the name AfriTin Mining Limited (AIM;ATM) ("AfriTin"). On admission, a placing and subscription for existing and new institutional and sophisticated private investors raised gross proceeds of £3.5 million with a further £1m raised from convertible loan notes that convert on admission, bringing the total amount raised to £4.5 million. The newly formed AfriTin company which is acquiring the tin assets of Bushveld Minerals in Namibia and South Africa has 297,464,888 shares of nil par value in issue.

AfriTin was formed in 2017, to acquire Greenhills Resources Limited, a wholly owned subsidiary of Bushveld, and AIM quoted diversified mineral development company. On completion, AfriTin's key assets included an 85% interest in the Uis Tin Project in Namibia ("Uis"), a brownfield near term production opportunity, which was once the largest open cast tin mine of its kind in the world. AfriTin also holds a portfolio of tin assets in South Africa which include the Mokopane tin project and the Zaaiplaats Tin Tailings project.

As the fair value of AfriTin assets following admission to AIM were £11,601,130, an impairment of £7,658,273 has been recognised in the interim financial statements.