Bushveld Minerals Regulatory News (BMN)

Market Abuse Regulation ("MAR") Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. 

2 August 2023

Bushveld Minerals Limited

("Bushveld Minerals", "Bushveld" or the "Company")

Q2 and H1 2023 Operational Update

Bushveld Minerals Limited (AIM: BMN), the integrated primary vanadium producer and energy storage solutions provider, is pleased to announce its operational update for the three months and six months ending 30 June 2023.

Group Highlights

§ Craig Coltman appointed Chief Executive Officer and board member, effective July 1, 2023.

§ H1 2023 Total Recordable Injury Frequency Rate ("TRIFR") of 3.39 (H1 2022: 8.06).

§ Q2 2023 production of 840 mtV (Q2 2022: 668 mtV).

§ H1 2023 production of 1,784 mtV (H1 2022: 1,641 mtV).

§ Improvement measures implemented at Vanchem.

§ Q2 2023 weighted average production cash cost1 (C1) of US$27.4/kgV (Q2 2022: US$31.2/kgV).

§ H1 2023 weighted average production cash cost1 (C1) of US$26.6/kgV (H1 2022: US$28.3/kgV).

§ Q2 2023 sales of 1,068 mtV (Q2 2022: 787 mtV), H1 2023 of 2,096 mtV (H1 2022: 1,644 mtV)

- Supported by reductions in finished product stocks.

1. Weighted average production cash cost (C1): is the blended weighted average production cash cost (C1) of Vametco and Vanchem, divided by group production.

2023 Group Guidance

§ Group production guidance for 2023 revised to between 3,700 mtV and 3,900 mtV (previously between 4,200 mtV and 4,500 mtV).

§ Group weighted average production cash cost (C1) guidance revised to between US$26.6/kgV and US$26.9/kgV, (ZAR481/kgV and 487/kgV). (Previously between US$26.1/kgV and US$27.0/kgV, (ZAR447/kgV and 438/kgV)).

Update on the Orion convertible loan note

§ As announced in the Final Results for the Year Ended 31 December 2022, the closing of the refinancing of the Orion transaction is conditional on certain conditions, including South African Reserve Bank approval, the finalisation of definitive binding documentation and shareholders' approval. As previously notified, the Company has made significant progress with Orion on the restructuring. Completion of the debt restructuring remains a key priority for Bushveld and details of a general meeting for shareholders to approve the Orion transaction will be sent to shareholders following the completion of the legal documentation and once approval from the South African Reserve Bank has been received.

Craig Coltman, CEO of Bushveld Minerals Limited, commented: 

"I spent my first week as the CEO on site at the Vametco and Vanchem plants as these are the centre of Bushveld's operations. I have had the opportunity to meet many of our employees and I am heartened by the warmth with which they have received me as well as the passion and commitment they have for Bushveld Minerals.

In my short time at the Company, I have seen that, while there are challenges, there are also many positive signs and opportunities to get the most out of Bushveld's most important asset, its people, and achieve the full potential within the Company's operations. Getting maximum value out of Vametco and Vanchem is my number one priority.

As part of this effort, I will review the Group's capital allocation strategy and prioritise projects that provide higher financial benefits with manageable risk.

With regards to guidance and after careful review, we have come to the conclusion that, largely due to challenges at Vametco associated with the levels of the barren dam and the Sulphate Recovery Plant, as well as Vanchem's weak first half performance and delays in the use of the better quality ore, the 2023 production outlook needs to be revised.

That said, a number of initiatives have already been implemented to address production issues to ensure we get the maximum performance from our assets. I look forward to leading the team that achieves this for all our stakeholders."

Conference call

Bushveld Minerals Chief Executive Officer, Craig Coltman and Finance Director, Tanya Chikanza, will host a conference call at 2:30 pm UK time (3:30 pm SAST) today to discuss the quarterly update with analysts and investors. Participants may join the call by dialling:

Tel: United Kingdom: +44 (0) 330 551 0200; South Africa: Toll Free: 0 800 980 512, USA Local: +1 786 697 3501

Password: Quote Bushveld Minerals when prompted by the operator.

A replay of the conference call will be available on the Company's website post the call.

Investor session  

Bushveld Minerals Chief Executive Officer, Craig Coltman and Finance Director, Tanya Chikanza, will host an investor session on 4 August 2023 at 9:00am BST (10:00am SAST) via the Investor Meet Company platform to discuss the operational update.

The session is open to all existing and potential shareholders. Investors can submit questions via Investor Meet Company dashboard up until 9:00am the day before the meeting.

Investors can sign up to Investor Meet Company for free and register for the event via:

https://www.investormeetcompany.com/bushveld-minerals-limited/register-investor

Investors who already follow Bushveld Minerals on the Investor Meet Company platform will automatically be invited.

BUSHVELD VANADIUM

1. Based on provisional, unaudited figures.

2. mtV = metric tonnes of vanadium.

3. Reported as final sales to customers.

VAMETCO

Operational highlights for Vametco (on a 100% basis)1

1. Based on provisional, unaudited figures. Bushveld's net attributable interest of the above figures is approximately 74%. Production cash cost is based on vanadium produced.

2. mtV = metric tonnes of vanadium.

3. Excludes depreciation, royalties and selling, general & administrative expenses. Production cash cost is based on vanadium produced. Production cash cost (C1) measure does not have any standardized meaning prescribed by IFRS and differs from measures determined in accordance with IFRS. This measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS. 

Production

§ Q2 2023 production of 485 mtV (Q2 2022: 477 mtV), impacted by circa 200 mtV loss due to:

- A 5-day unplanned maintenance of the Sulphate Recovery Plant ("SRP") and unexpected high rainfall levels during the period. As the SRP and the barren dam are interdependent, this necessitated a plant stoppage due to barren dam level constraints.

- We are exploring both short-term and long-term capacity storage plans to mitigate the barren dam challenges.

- Unplanned 7-day maintenance of the dust collectors at the refinery, and power instabilities as a result of a transformer failure at the local municipality during the end of June 2023. The issues experienced have been resolved.

§ H1 2023 production of 1,167 mtV (H1 2022: 1,226 mtV), due to lower production volumes in Q1 2023.

Costs

§ Q2 2023 production cash cost (C1) of US$27.5/kgV (Q2 2022: US$24.4/kgV) (Q1 2023: US$22.8/kgV), mainly due to higher raw materials costs and maintenance costs.

§ H1 2023 production cash cost (C1) of US$24.7/kgV (H1 2022: US$23.5/kgV).

Guidance

§ Due to ongoing challenges associated with the levels of the barren dam and the SRP, production guidance has been revised to between 2,300 mtV and 2,400 mtV (previously circa 2,700 mtV).

- 132 mtV produced in July 2023 due mainly to challenges with the barren dam levels and the SRP. Production is anticipated to ramp up to around 200mtV per month for the remainder of the year.

§ Annual 10-days (previously 30-days) planned maintenance shutdown to be conducted in Q3 2023.

§ Production cash cost (C1) guidance has been revised to between US$25.6/kgV and US$25.9/kgV (ZAR463/kgV and ZAR469/kgV) in line with the expected lower production volumes.

VANCHEM

Operational highlights for Vanchem1

1. Based on provisional, unaudited figures.

2. mtV = metric tonnes of vanadium

3. Excludes depreciation, royalties and selling, general & administrative expenses. Production cash cost is based on vanadium produced. Production cash cost (C1) measure does not have any standardized meaning prescribed by IFRS and differs from measures determined in accordance with IFRS. This measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

Production

§ Q2 2023 production of 355 mtV (Q2 2022: 191 mtV). Production increase supported by the use of Kiln-3, partly offset by unplanned stoppages.

§ H1 2023 production of 617 mtV (H1 2022: 415 mtV), underpinned by higher production volumes in Q2 2023.

Costs

§ Q2 2023 production cash cost (C1) of US$27.2/kgV (Q2 2022: US$48.5/kgV) supported by higher production volumes and a weaker ZAR:USD exchange rate.

§ H1 2023 production cash cost (C1) of US$30.1/kgV (H1 2022: US$43.2/kgV).

Guidance

§ Notwithstanding the higher production during H1 2023, Vanchem's production was materially lower than what the Company had anticipated for the period due to unplanned plant breakdowns and unscheduled power disruptions, in turn due to lack of reliability of the municipality's infrastructure. Furthermore, there were delays in the use of the third-party, better quality ore, which the Company expected to begin utilising in April 2023, with processing of this ore only commencing in July 2023. For these reasons guidance has been revised to between 1,400 mtV and 1,500 mtV (previously expected to be approximately between 1,500 mtV and 1,800 mtV).

- 158 mtV produced in July 2023, supported by the better quality ore contributing to improved production and less downtime at Vanchem.

§ Annual 25-day maintenance to be conducted in Q4 2023 (previously Q3 2023).

§ Production cash cost (C1) guidance has been revised to between US$28.1/kgV and US$28.5/kgV (ZAR509/kgV and ZAR516kgV) in line with the expected lower production volumes.

Vanchem improvement initiatives

§ A number of initiatives have been implemented during the month of July 2023 with the aim of getting Vanchem into a sustainable positive cashflow position in the short-term, and a achieve stable production levels of approximately 180 mtV per month within the next 6 months. These initiatives include:

- Changing the reagent mix from 100% Sodium Sulphate to a mix of Sodium Carbonate and Sodium Sulphate, which will reduce the silica build up at the kiln and hence increase the kiln availability.

- Deploy a team from Vametco to Vanchem to improve knowledge sharing.

- 24/7 shift managers for supervision to ensure immediate decision-making.

BELCO

§ During H1 2023, the construction and initial testing of the BELCO electrolyte manufacturing plant were completed. In the same period, the hot commissioning phase commenced. The plant will continue the hot commissioning process during H2 2023, production will commence once suitable off-takers for the product are secured.

VAMETCO HYBRID MINI-GRID

§ The Bushveld Vametco Hybrid mini-grid project is making progress. The 1 MW/ 4 MWh VRFB system supplied by CellCube has been filled with electrolyte and energised for the first time, marking a successful milestone. Currently, the construction of the 3.5 MW solar PV plant is in progress, and the entire project is expected to become fully operational in Q4 2023. Upon completion, the plant will generate nearly 10% of Vametco's electricity requirements.

Health and safety

§ Q2 2023 TRIFR of 7.58 (Q2 2022: 8.40).

§ H1 2023 TRIFR of 3.39 (H1 2022: 8.06) a significant improvement of 58% attributed to ongoing monitoring of leading indicators and a decrease in the number of incidents.

Vanadium price and outlook

§ Q2 2023 Ferrovanadium prices across all markets averaged: CRU Ryan's notes at US$40.2/kgV (Q2 2022: US$67.3kgV). London Metal Bulletin and Asian Metals averaged US$33.5/kgV and US$29.3/kgV respectively (Q2 2022: US$43.8/kgV; US$36.5/kgV).

§ Sales into the higher value markets (aerospace application, speciality alloy and chemicals) and higher price markets (Nitro Vanadium in North America) continue to be prioritised.

§ Demand for our entire range of products remains strong and we expect sales to be in line with production volumes during H2 2023.

§ The previous logistical challenges experienced have abated. Transit times to USA and European warehouses have been extended on occasion, this is closely monitored, and the required actions are taken to ensure seamless supply to customers.

ENDS

Enquiries: info@bushveldminerals.com

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 2022, the Company produced more than 3,800 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 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

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 mostly Nitro Vanadium. 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 concentrate is fed into the extraction process which consists of a rotary kiln for roasting followed by leaching and precipitation. Thereafter the precipitated vanadium as ammonium metavanadate is converted to modified vanadium oxide ("MVO") in a rotary calciner. MVO is fed into the mix plant and finally into the shaft furnaces to produce Nitro Vanadium.

About Vanchem

Vanchem is situated at Ferrobank Industrial Park in Emalahleni Local Municipality, Mpumalanga Province in the Republic of South Africa. Vanchem is a primary vanadium producing facility with a beneficiation plant capable of producing various vanadium oxides, ferrovanadium and vanadium chemicals. Vanchem uses the salt roast beneficiation process, similar to the one used at Vametco. The plant comprises: a core salt-roast processing plant, including 3 roasting kilns, an electric smelting ferrovanadium converter, an alumino-thermic smelting facility, also located at Highveld, a vanadium chemical plant; and a rail siding linking the plant with Bushveld deposits and additional potential supply sources through the national rail network.