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.

7 November 2019

Bushveld Minerals Limited

("Bushveld Minerals" or the "Company")

Vanchem Acquisition Completed

Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated primary vanadium producer, with ownership of high grade vanadium assets in South Africa, is pleased to announce that all outstanding conditions relating to the Vanchem Acquisition, initially announced on 1 May 2019 (https://polaris.brighterir.com/public/bushveld_minerals/news/rns/story/x2qeqlx), have been fulfilled.

Bushveld Minerals has therefore acquired, through its wholly owned South African subsidiary, Bushveld Vanchem Proprietary Limited ("BV"):

·; the Vanchem Plant from Vanchem Vanadium Products (Pty) Limited ("VVP"), a subsidiary of Duferco Vanadium Investment Holding S.A.;

·; South African Japan Vanadium Proprietary Limited ("SAJV"), a wholly owned subsidiary of VVP (together with the Vanchem Plant, the "Vanchem Business"); and

·; Through Bushveld Minerals Limited, 100 per cent of the issued shares in Ivanti Resources (Pty) Limited ("Ivanti") from Duferco Participations Holding S.A ("Duferco").

As previously notified on 23 October 2019, the total consideration for the acquisition was reduced from US$68 million to US$53.5 million, of which US$30.5 million was payable in cash (US$30 million on closing and US$0.5 million after two years) and the balance (US$23.0 million) would be satisfied through the issue of Bushveld Minerals unsecured convertible loan notes. The Company is pleased to announce that:

·; The US$30 million cash payment has been made by Bushveld Minerals and VVP has confirmed receipt thereof;

·; The US$23.0 million Bushveld Minerals unsecured convertible loan notes have been issued by the Company to Duferco, which has confirmed receipt thereof; and

·; A further cash payment of US$0.5 million, plus an amount equal to the working capital adjustment of the Vanchem Businesses, will be made after two years.

Accordingly, all conditions to closure of the transaction have been fulfilled and the Company has taken operational control of the Vanchem Business and Ivanti.

BV has taken over VVP's existing senior production team, which will provide operational stability while Vanchem is integrated into Bushveld Minerals. André Strydom has been appointed General Manager of Vanchem. André brings over 18 years of mining and beneficiation experience, most recently as the General Manager of the Sadiola and Yatela mines operated by AngloGold Ashanti, a role he held since 2012.

The Company will now refine its plans for the refurbishment programme and update the market once its detailed assessment is complete.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: 

"We are delighted to announce the successful completion of the acquisition of the Vanchem assets and Ivanti shares as this is a transformational acquisition and represents a significant step in the execution of the Company's strategic plan.

I want to take this opportunity to welcome André Strydom and the Vanchem management team to Bushveld Minerals. The Vanchem team will complement the Vametco team's skills and knowledge, which will support cross-pollination of vanadium expertise and experience, as well as unlock multiple synergies across Vametco, Vanchem and Mokopane.

The acquisition places the Company in an advantageous position to offer an attractive and diverse suite of vanadium products capable of servicing the steel and chemical sectors and the burgeoning energy storage market.

We are now able to fine tune the plan for these assets and then provide, in due course, a comprehensive strategy to our stakeholders. 

As we come towards the end of 2019, we have laid the groundwork for a strong 2020, which will see Bushveld Minerals strengthening its competitive position as the leading vertically integrated primary vanadium producer."

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.

While the Company's focus is on vanadium operations and the development and promotion of VRFBs, it has additional investments in coal, power and tin.

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 Vanchem

The Vanchem Business is a primary vanadium producing facility with a beneficiation plant capable of producing various vanadium oxides, ferrovanadium and vanadium chemicals. The Vanchem Business uses the salt roast beneficiation process, similar to the one used at Vametco. Following a refurbishment and ramp-up schedule, which is estimated to require approximately US$45 million of capital expenditure, which will be incurred over a five-year period, it is expected to reach steady state production of 4,200 mtV per annum utilising all three kilns. The plant consists of the following components:

·; Milling and concentrator (magnetic separation) facility for the treatment of magnetite;

·; A roast / leach configuration with three kilns;

·; An ammonium poly-vanadate precipitation plant;

·; A de-ammoniation / vanadium trioxide plant;

·; Vanadium pentoxide flake (V2O5) production facilities;

·; Two conversion facilities (an electric smelting facility and an aluminothermic smelting facility) for the production of ferrovanadium; and

·; A vanadium chemical plant producing various vanadium chemical products.

The Vanchem Plant is situated at Ferrobank Industrial Park in Emalahleni Local Municipality, Mpumalanga Province in the Republic of South Africa and has been operating since the late 1970s, processing a combination of ore feed from the Mapochs vanadium mine ("Mapochs") and slag from Highveld. Highveld continued to supply ore to VVP from its Mapochs mine in Limpopo until it closed in 2015. The closure of the mine meant that VVP no longer had a supply of ore and as a consequence, VVP went into Business Rescue in November 2015. The Vanchem Plant was put into care and maintenance later that year. The Vanchem Plant was partially re-started in the third quarter of 2018, after VVP was able to procure magnetite ore from third parties. 

SAJV is located at the Highveld site and is situated approximately 10 km from the Vanchem Plant. SAJV comprises of an alumino-thermic smelting facility which is adjacent to the Vanchem Plant electric smelting facility.

The Vanchem Business has secured sufficient ore supply from third parties to support current levels of production, until Mokopane's development has been completed. The Company retains the optionality to supply magnetite concentrates from Vametco to the Vanchem Plant. Following receipt of the mining right, Mokopane will be a primary source of feedstock to the Vanchem Business as a result of its large mineral reserve, therefore the Transaction facilitates the expedited development of Mokopane. The Mokopane-Vanchem model will represent a fully integrated business, in line with the Company's business model at Vametco.

VVP reported, on an unaudited basis, for the year ended 30 September 2019, profits before tax of R208,292,045 (US$14,499,219) and had gross assets of R1,405,298,470 (US$92,471,489).

SAJV reported, on an unaudited basis, for the year ended 30 September 2019, profits before tax of R8,285,704 (US$576,768) and had gross assets of R23,165,992 (US$1,524,369)

.

Ivanti reported on a company basis (which captures the performance of the Calcine benefits), on an unaudited basis for the year ended 30 September 2019, profits before tax of R32,639,760 (US$2,272,055) and had gross assets of R92,510,755 (US$6,087,395).