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Bushveld Minerals

Bushveld Minerals Limited Vametco 3rd Quarter Operating Results

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, has today provided an operational update with respect to Bushveld Vametco Alloys (Proprietary) Limited (“Vametco”), the South African vanadium mining operation jointly acquired by the Company and Yellow Dragon Holdings Limited (“Yellow Dragon”) from Evraz Group S.A. in April 2017. Bushveld Vametco Limited (“Bushveld Vametco”) has a 78.8% shareholding in Strategic Minerals Corporation (“SMC”), which is the ultimate holding company of Vametco. Bushveld Vametco is 45% owned by the Company and 55% by Yellow Dragon.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: “Vametco had a solid performance in the September 2017 quarter, supported by a rising vanadium price, which traded at an average of US$39.4/KgV1. This enabled revenue to increase by 29%, and EBITDA by 69%, compared to the June 2017 quarter. 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 completion of the expansion project will enhance Vametco’s existing competitive position in a structurally deficit market.”

Operational and financial highlights for Vametco (on a 100% basis)2:

Description

Unit

Q3 CY17

YTD CY17

Q3 CY17 vs Q2 CY17

Q3 CY17 vs Q3 CY16

YTD CY17 vs YTD CY16

Vanadium produced

(MTV)3

669

2,110

– 15.8%

– 14.1%

+ 1.1%

Vanadium sold

(MTV)3

744

2,085

+ 6.7%

+ 11.4%

+ 3.0%

Vanadium price1

US$/KgV

39.4

30.6

+ 46.1%

+ 59.4%

+ 54.9%

USD/ZAR exchange rate

US$:ZAR

13.1

13.2

– 1.2%

– 7.3%

– 12.0%

Revenue

ZAR’m

305.1

744.3

+ 29.0%

+ 60.7%

+ 36.5%

EBITDA

ZAR’m

90.8

189.5

+ 69.3%

+ 392.8%

+ 778.4%

Production costs4

ZAR/kg V

237.2

213.8

+ 16.8%

+ 23.0%

+ 15.8%

1. The vanadium price is based on the FeV mid average price for the period, published by Metal bulletin.

2. Bushveld’s net attributable interest of the above production and financials is approximately 26%, and will be accounted for using the equity method.

3. MTV = metric tonnes of vanadium.

4. Excludes depreciation and royalties.

Vametco produced 669 MTV in the form of Nitrovan® from own magnetite concentrate during the September 2017 quarter. Vanadium production decreased by approximately 16% relative to the June 2017 quarter mostly due to an unplanned refractory repair to the kiln (treatment plant) in September. Vanadium production decreased by 14% relative to the September 2016 quarter due to no availability of vanadium-containing slag in 2017 while the ore beneficiation upgrade was still in construction. A two week planned maintenance period is scheduled for the December 2017 quarter.

Vametco has a current annual plant capacity of approximately 3,035 MTV producing Nitrovan® and modified vanadium oxide (“MVO” or “V2O3”).

Projects

Vametco multi-phased expansion project

Under the oversight of Bushveld and Yellow Dragon, Vametco has commenced a multi-phased expansion project to increase annual production to more than 5,000 MTV over the next three years. The first phase of the expansion was achieved in the September 2017 quarter, during which Vametco reached an annual production run rate of 3,035 MTV. The following two phases of expansion will increase production to 3,750 MTV per annum by June 2018 and to over 5,000 MTV per annum by the end of 2019. The presence of an integrated platform will allow the development of downstream operations as well as to achieve product diversification.

Description of Vametco operations:

Vametco is located near Brits on the Eastern Limb of the Bushveld Complex. The integrated operation comprises a vanadium ore mine and a processing plant that produces 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 kiln (treatment plant) followed by leaching, milling and precipitation processes and finally into the Nitrovan® plant to produce vanadium products.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.