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.

11 November 2020

Bushveld Minerals Limited

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

Vametco Mini-Grid 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 provide an update on the hybrid mini-grid project being developed at the Vametco vanadium mine comprising of 3.5 megawatts ("MW") of solar photovoltaic ("PV") generation and 4 megawatt hours ("4MWh") of vanadium redox flow battery ("VRFB") energy storage.

This project is part of Bushveld's strategy to demonstrate both the superior technical merits of long duration VRFB systems when paired with renewable energy, while providing a commercial return to the Company's shareholders. It will also use locally mined and beneficiated vanadium, showing how VRFB energy solutions can create more local value to South Africa than any other storage technology.

The hybrid mini-grid project will supply just under 10 per cent of Vametco's electrical energy consumption at any one time and will demonstrate the technical and commercial capability of hybrid mini-grids using solar PV and VRFB technology. Technically, the system will be able to operate independently or jointly, either as standalone systems or as a fully functional mini-grid installation.

In addition, the hybrid mini-grid project, will contribute towards reducing the carbon footprint of Bushveld's mining and processing operations as it will reduce CO2 emissions by more than 5,700 metric tonnes of CO2 emissions per year (and nearly 114,000 tonnes of CO2 over the 20 year-life of the project). This will be a positive contribution towards South Africa's low emission strategy.

Recent project achievements, include:

§ Receipt of environmental authorisation, following the submission of the Environmental Basic Assessment ("BA"), from the Department of Mineral Resources and Energy ("DMRE") of South Africa, for the construction of the project.

§ Appointment of Abengoa, a technology solutions provider, to manage the Engineering, Procurement and Construction ("EPC") of the project, including the integration of the solar and energy storage systems. This will be Abengoa's fourth project in South Africa using solar plus storage, having previously commissioned 250MW with storage.

§ Selection of Enerox to supply the 1MW / 4MWh VRFB for the project. The Austria-based company has installed more than 136 VRFBs and 23MWh of energy storage capacity, bringing over a decade of VRFB operational experience to the project.

§ A memorandum of understanding has been signed with Thebe Investment Corporation ("Thebe"), a South African investment management company, as a strategic equity partner in the development and funding of the hybrid mini-grid project. Thebe will be active in the development of the project going forward including assisting the Company in finalising the terms of the external debt funding.

§ In addition to the above, Bushveld had previously announced other key milestones in the project, including signing of a power purchase agreement ("PPA") with Vametco and obtaining a term-sheet for long-term debt funding of the hybrid mini-grid project.

In terms of the supply chain, Vametco, the Company's mining and processing operation will supply approximately 25 tons of vanadium in the form of oxide for the VRFB. Enerox GmbH, the VRFB developer and manufacturer owned by an investment consortium which includes Bushveld, will supply the VRFB and ensure the conversion of the oxide into electrolyte, and Abengoa will supply the solar PV unit, install and integrate the system at the Vametco mine and processing plant. Abengoa will also provide maintenance for the facility post-commissioning.

Commercially, the project is structured as a separately funded independent power producer that will sell the electrical energy to the mine, reducing Vametco's reliance on Eskom. As a result, the Vametco hybrid mini-grid project installation will be one of the first solar generation project with long-duration storage to be financed, off-balance sheet in Africa.

Securing the environmental approval, PPA and the EPC are crucial project development steps leading into an application for a generation license. Recent regulatory changes in South Africa have permitted the National Energy Regulator of South Africa to issue such generation licenses without ministerial dispensation. Financial close of both debt and equity to fully fund the project is the other key outstanding step, which will occur after receipt of the license. Construction of the hybrid mini-grid project will begin after financial close. The Company is confident in completing these last two milestones and thus has moved forward with the procurements of the VRFB.

Fortune Mojapelo, CEO of Bushveld Minerals, commented:

"I am delighted with the progress of the Vametco mini-grid project. The project demonstrates the commercial viability of solar plus VRFB storage solutions for commercial and industrial scale applications. This is occurring at a time when stationary storage deployments are gathering momentum and when in South Africa the government is making concerted efforts to lower regulatory hurdles for self-generation for commercial and industrial applications. In showcasing the business case for solar plus long duration VRFB solutions, this project will open up significant opportunities for further VRFB deployments.

In addition, there are several unique facets to this project that prove the commercial viability of VRFBs for a number of South African, but also international, industrial applications. Most importantly, we are building a large-scale solar project with a vanadium-based battery, to store the generated electricity. The vanadium comes from our mine and the battery, comes from Enerox, one of our VRFB manufacturing investments. The project has already attracted both debt and equity funding interest from reputable funding institutions which demonstrates the economics of such solar and VRFB mini-grids, even when compared to grid tariffs. Furthermore, with quality partners like Thebe and Abengoa I am confident that this project presents a great blueprint for further similar developments."

Pedro Almagro Gavilán, CEO of Abengoa Energía, commented:

"The project is a strategic and important milestone for Abengoa, which has installed the world´s largest fleet of long duration storage via thermal energy storage, and now is installing the world´s largest hybrid solar plant incorporating vanadium. With such a flagship reference, Abengoa consolidates its global reputation as a one-stop-shop storage provider, with lithium, vanadium and molten salt storage, for short, medium- and long-term dispatch capability."

Sunil Ramkillawan, CEO of Thebe Energy and Resources, commented:

"Thebe's involvement in the hybrid mini-grid project alongside Bushveld Energy confirms our strategy to partner with strong local and international partners with best in class technology and/or assets. This further demonstrates the importance of storage solutions that will complement our growing portfolio of renewable energy projects. The project also aims to deliver on our mandate of "building communities", through the support of this high local content project."

 Alexander Schönfeldt, MD of Enerox, commented:

"We are pleased that we can show our field experience of operating more than 100 vanadium redox flow systems worldwide now in this first megawatt-sized project in South Africa. The relationship with Bushveld Energy has resulted in many opportunities to collaborate in new projects and supporting them on qualifying their vanadium oxide feedstock to be operated in our systems. We expect this hybrid installation to become a blueprint of many more to come."

ENDS

Enquiries: info@bushveldminerals.com

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a low-cost, integrated, primary vanadium producer, with ownership of high-grade vanadium assets. 

The Company's flagship vanadium platform includes a 74 per cent controlling interest in Bushveld Vametco Alloys (Pty) Ltd, a primary vanadium mining and processing company; 100 per cent of Bushveld Vanchem, a primary vanadium processing facility with a beneficiation plant; the Mokopane Vanadium Project and the Brits Vanadium Project.

Bushveld's vision is to become a significant, low-cost, integrated primary vanadium producer through owning high grade assets. 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. Bushveld Energy, the Company's energy storage solutions provider, plays a leading role in the development and promotion of the role of vanadium in this market.

The Company's approach to project development recognises that, whilst attractive project economics are imperative, they may be 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 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.

About Bushveld Energy Limited

Bushveld Energy is a leading energy storage solutions provider, focusing on the African market. Bushveld Energy recognises that electricity in Africa intersects paramount potential for social transformation with an immense commercial opportunity.

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, meeting the demand for utility scale energy storage in Africa by leveraging South Africa-mined and beneficiated vanadium.

www.bushveldenergy.com 

About Abengoa

Abengoa is an international company that applies innovative technology solutions for sustainability in the infrastructure, energy and water sectors. It has has over 75 years of experience in engineering and construction, being specialists in the execution of complex "turnkey" projects or engineering, supply and construction projects (Engineering, Procurement and Construction) for third parties in four fundamental areas: energy, water, services and transmission and infrastructure

Abengoa is an expert in the hybridization of power plants to provide dispatchable, clean energy solutions, and its capabilities to supply affordable and reliable decarbonization solutions for mines, industrial facilities and isolated grids are globally recognized, with more than 12 GW of power plants - both renewable and conventional - successfully installed. Abengoa´s energy storage division has installed the world´s largest fleet of thermal energy storage and has experience across a range of storage technologies. Abengoa entered South Africa in 2010 and has successfully commissioned 250MW of solar plants with energy storage systems in South Africa, making the company one of the most referenced EPC contractors for complex power plants in the local market.

www.abengoa.com

About Thebe Investment Corporation

Thebe Investment Corporation ("Thebe") was founded in 1992 as a pioneering black-owned company by the Batho Trust, a community based trust which included Nelson Mandela (Chairman), Walter Sisulu, Dr Enos Mabuza and Reverend Beyers Naude as original Trustees. Since then it has invested in over 65 businesses over a period of 28 years. Through Thebe Energy & Resources, it takes advantage of the fact that significant resource and energy infrastructure development has to still take place within South Africa and Africa. Thebe's investments in the energy sector include investments in c.a. 1GW or renewable energy projects, its partnership in Shell Downstream South Africa and Seriti Coal.

www.thebe.co.za