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. 

21 October 2021

Bushveld Minerals Limited

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

Q3 and 9 months 2021 Operational Update

Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated primary vanadium producer and energy storage solutions provider with ownership of high-grade assets in South Africa, is pleased to provide an operational update for the three months and nine months ending 30 September 2021 ("Q3 2021 and 9M 2021"). 

Key Highlights

Bushveld Vanadium

· Q3 2021 Total Injury Frequency Rate ("TIFR") of 8.74, an improvement of 46 per cent on Q3 2020 (Q3 2020: 16.10).

· Group production in Q3 2021 of 1,056 mtV, an increase of 19 per cent on Q2 2021 (Q2 2021: 886 mtV), underpinned by continued operational stability at Vametco.

- Focus has been on stabilising operations to achieve a sustainable production run rate supported by the implementation of a proactive maintenance programme, other operational improvements and a new operating model at both plants.

- Vametco's production cash cost (C1) of US$22.4/kgV improved by 13 per cent on Q2 2021, as a result of the higher throughput in Q3 2021 and a weaker ZAR:USD exchange rate.

- Vanchem production cash cost (C1) of US$27.3/kgV improved by three per cent on Q2 2021, in line with the weaker ZAR:USD exchange rate.

· Group production for 9M 2021 of 2,629 mtV, was two per cent lower than 9M 2020 Group production of 2,680 mtV, as a result of lower production volumes at Vametco during the H1 2021.

· On track to meet 2021 Group production guidance of between 3,400 mtV and 3,600 mtV.

· Unit costs for this 9M 2021 have started to normalise in line with the lower unit costs in Q3 2021 on the back of the higher throughput, and we expect this trend to continue in Q4 2021. We are therefore maintaining our unit cash cost guidance for 2021 at both plants.

· Group sales in Q3 2021 of 826 mtV1 in line with Q2 2021 of 820 mtV. Despite higher production volumes, sales to final customers were impacted by challenges in international logistics channels arising from COVID-19, the unrest in South Africa in July 2021 as well as disruptions at local ports in July and August 2021. We expect sales to recover as warehouse stocks in target markets are replenished. 

1: Reported as final sales to customers.

Finance update

· Positive progress has been made in negotiations with Duferco Participations Holding S.A ("Duferco") on the remaining balance US$11.5 million of the convertible loan note, that would result in US$5 million being payable in November 2021 and the remaining US$6.5 million being converted into Bushveld shares, as announced on 27 September 2021. We will update the market in due course on the final outcome.

· Cash and cash equivalents as at 30 September 2021 of US$25 million (30 June 2021: US$31.6 million) was impacted by the lower sales and the consequential higher working capital, as well as the on-going capital expenditure during the quarter to support growth and operational stability.

Vanadium market

· After a strong start to the quarter, Ferrovanadium prices ("FeV") fell and currently trade at an average of approximately US$31/kgV across markets. At the moment, the US market is maintaining a premium to European prices with Chinese prices marginally lower.

· Demand in the US, Europe and Rest of the world remains buoyant.

· Q3 2021 London Metal Bulletin FeV price averaged US$38.2/kgV, 6 per cent higher than Q2 2021 (US$36.0/kgV) and 58 per cent higher than Q3 2020 (US$24.2/kgV).

· The 2021 year to date average FeV price is approximately US$35/kgV across all markets as at 8 October 2021.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: 

"I am pleased to report a solid quarter of production where we achieved our targets of stability and cost control at both our operations, on the back of the operational improvements we are implementing. At the same time, we were able to improve safety statistics, a very important achievement and one we will continue to focus on.

"We entered Q4 2021 on a strong footing as a result and therefore still on track to achieve our production guidance. We continue to invest in sustaining and growth capital to maintain stability and provide the platform for growth, to support the volume increase in 2022."

Conference call

Bushveld Minerals Chief Executive Officer, Fortune Mojapelo, Finance Director, Tanya Chikanza and Francois Naude, Director of Operations; will host a conference call at 11:00 am UK time (12:00 noon SAST) today to discuss the quarterly update with analysts. Participants may join the call by dialling:

Tel: United Kingdom: +44 (0) 330 336 9434; South Africa: +27 11 844 6054

Pin: 6605060

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

Safety and COVID-19

· Q3 2021 Total Injury Frequency Rate ("TIFR") of 8.74, an improvement of 46 per cent on Q3 2020 of 16.10, as a result of increased planned task observations by supervisors and proactively applying lessons learned from previous incidents.

· From 1 October 2021, South Africa's lockdown regulations were relaxed to an adjusted level 1 as the country exited the third wave of COVID-19 and to ensure economic recovery. Bushveld Minerals is encouraged with the progress of the vaccination awareness at the operations.

Bushveld Vanadium

1. mtV = metric tonnes of vanadium.

Vametco

Table 1: 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 per cent. Production cash cost is based on vanadium produced.

2. Recoveries were up by 13.6 percent in Q3 2021 relative to Q2 2021, as Q2 2021 was impacted by April slower start-up.

3. mtV = metric tonnes of vanadium.

4. Excludes depreciation, royalties and selling, general & administrative expenses and cost associated with COVID-19. 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.

· Q3 2021 production of 765 mtV was 29 per cent higher than Q2 2021 of 593 mtV, underpinned by continued operational stability and improved plant performance.

- Since the successful completion of maintenance work in H1 2021, steady performance continued in Q3 2021 resulting in July, August, and September production of 251 mtV, 260 mtV and 254 mtV respectively.

· 9M 2021 production of 1,753 mtV was 10 per cent lower than 9M 2020 of 1,951 mtV, due to plant instability, planned 35-day maintenance and unprotected industrial action in the first four months of H1 2021.

· Q3 2021 production cash cost (C1) of US$22.4/kgV was 13 per cent lower than Q2 2021 of US$25.8/kgV, as a result of higher volumes in Q3 2021. The net impact of the higher volumes and increased costs in ZAR, reduced unit cost by 10 per cent and the slightly weaker exchange rate of USD:ZAR14.62 relative to Q2 2021 of USD:ZAR14.14 reduced unit cost by a further three per cent.

· 9M 2021 production cash cost (C1) of US$24.4/kgV was 39 per cent higher relative to 9M 2020 of US$17.5/kgV, due to lower production volumes and a stronger ZAR:USD exchange rate. The net impact of the volume decrease and increase in cost of production was to increase unit costs by 22 per cent, while the stronger ZAR:USD exchange rate increased unit costs by a further 17 per cent.

· 2021 production guidance maintained to between 2,300 mtV and 2,400 mtV, and production cash cost (C1) of between US$23.70/kgV and US$24.20/kgV (ZAR339/kgV and ZAR345/kgV).

Vanchem

Table 2: 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 and cost associated with Covid-19. 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.

· Q3 2021 production of 291 mtV in line with Q2 2021 of 293 mtV and Q3 2020 of 294 mtV.

· 9M 2021 production of 876 mtV was 20 per cent higher than 9M 2020 production of 729 mtV. The lower 9M 2020 production was impacted by the shutdown of Kiln 1 for just over a month due to COVID-19 pandemic.

· Q3 2021 production cash cost (C1) of US$27.3/kgV was three per cent lower than Q2 2021 of US$28.1/kgV, as a result of the slightly weaker exchange rate of USD:ZAR14.62 relative to Q2 2021 of USD:ZAR14.14. The Q3 2021 production cash cost (C1) in local currency of ZAR398.8/kgV was in line with the Q2 2021 of ZAR397.8/kgV).

· 9M 2021 production cash cost (C1) in local currency of ZAR418.6/kgV, was 12 per cent lower than 9M 2020 of ZAR474.5/kgV due to the higher volumes produced. The strong ZAR:USD exchange rate movement then reversed this improvement, and as a result, the 9M 2021 production cash cost (C1) of US$28.7/kgV was in line with 9M 2020 of US$28.4/kgV.

· 2021 production guidance maintained to between 1,100 mtV and 1,200 mtV, and production cash cost (C1) of between US$30.3/kgV and US$31.1/kgV (ZAR434/kgV and ZAR444/kgV).

Growth Projects

Vametco Phase III Pre-feasibility studies ("PFS")

As previously announced on 30 June 2021, the scope of work of the PFS for Phase III at Vametco has been extended to include upgrading the concentrate section to a Semi-Autogenous Grinding mill and life of mine of Open Pit with higher production to supply both Vametco and Vanchem, making Vametco the single ore supply for both operations for the medium-term. Details on the ramp-up profile and capital expenditure plans will be provided once the PFS has been completed, which is still expected in Q4 2021.

Vanchem Phase II refurbishment

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. Vanchem has three roasting kilns of which Kiln 3 holds similar properties to that of Vametco's Kiln. It has a length of 90 metres and 4.0m in diameter and covers 50 per cent of Vanchem's installed kiln roasting capacity, with Kiln 2 and Kiln 1 at 25 per cent respectively.

The Upper Seam Project

The Upper Seam project continues with commissioning. All crushing units have been commissioned and are operational, with the magnetic separator to be commissioned at the end of October 2021. Vanchem has received the initial batches of ore from the Upper Seam Project.

The Upper Seam Project has a reserve of 0.9 Mt of in-situ ore and the total resource base of 16 Mt. The resource has similar mineralogy to the current ore used at Vanchem, and tests conducted have proven its suitability for processing. This will ensure that Vanchem has sufficient ore feedstock in the short to medium term, with no significant capital expenditure requirements.

Bushveld Vanadium production profile

· 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.

- We continue to prioritise operational stability at Vametco to achieve a sustainable and consistent output of 2,800 mtVp.a.

- Vanchem's production run rate is expected to more than double from 1,100 mtVp.a. to a run rate of 2,600 mtVp.a. by the end of 2022, supported by the commissioning of Kiln 3 and associated downstream expansions. Kiln-3 is expected to be commissioned in H1 2022.

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 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 

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 Nitrovan, a trademark product sold in major steel markets across the world. The mine lies adjacent to the Brits Vanadium Project, which will in future serve as an alternative source of near surface run of mine ("ROM") ore feed to the Vametco plant.

The Vametco mining operation uses open pit bench mining methods to mine a well-defined orebody. The deposit is continuous with limited faulting and dips in a northerly direction at approximately 19 degrees.

ROM ore is fed into a primary, secondary and tertiary crushing circuit, followed by milling and magnetic separation to produce magnetite concentrates. The magnetite concentrates are fed into the extraction process which includes the kiln for roasting followed by leaching and precipitation. Thereafter the precipitated vanadium as ammonium metavanadate is converted to modified vanadium oxide ("MVO") in rotary calciners. MVO is fed into the mix plant and finally into the shaft furnaces to produce Nitrovan.

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.