Bushveld Minerals Limited (LON: BMN), a mineral project development company with a portfolio of vanadium and coal assets in Southern Africa and an investment in tin, this morning announced 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.
