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.

28 July 2022

Bushveld Minerals Limited

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

Q2 2022 and H1 2022 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 ("Bushveld"), today provides an operational update for the three months and six months ending 30 June 2022.

Highlights

·      Group production for H1 2022 of 1,641 mtV, was 4% higher than H1 2021 (H1 2021: 1,574 mtV).

-     Vametco showing continued operational performance and stability.

-     Vanchem production adversely impacted by lower recoveries associated with end-of-life Kiln 1, electricity load shedding, and a slower than planned ramp-up post commissioning of Kiln 3.  

·      Group production for Q2 2022 was 668 mtV, 25% lower than Q2 2021 (Q2 2021: 886 mtV)

-     Vametco completed a 26-day planned maintenance shutdown during the quarter, following which production volumes are back to Q1 2022 levels.

-     Vanchem's production impacted by the reasons mentioned above.

·      Group H1 2022  weighted average production cash cost (C1)  of US$28.32/kgV, was 6% higher  than H1 2021 of US$26.71/kgV.

·      Group Q2 2022  weighted average production cash cost (C1)  of US$ 31.23/kgV, was 19% higher  than Q2 2021 of US$26.33/kgV.

·      Group H1 2022 sales of 1,644 mtV, in line with H1 2021 Group sales (H1 2021: 1,608 mtV).

2022 Guidance

·      Group production guidance maintained, expected towards the lower end of between 4,200 mtV and 4,400 mtV.

-     Vametco is on track to meet the upper end of guidance.

-     Vanchem's guidance is under review on account of the slower-than-anticipated production ramp-up in June and July following the commissioning of Kiln 3 and the impact of  unprecedented electricity load shedding.

o  An update will be provided as part of the H1 2022 interims announcement.

-     Vanchem remains on track to achieve its steady state production run rate of 2,600 mtVp.a. by the end of the year.

·      Group is on target to meet the annualised steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

"The focus on operational stability at Vametco is pleasingly bearing fruit in the form of reliable production levels supportive of Vametco meeting the upper end of production guidance for the year.

"At Vanchem, the combination of low recoveries associated with Kiln 1 coming to the end of its life, a slower than expected ramp up of the refurbished Kiln 3 and extensive load shedding has had an unfavourable impact. This has resulted in lost production and necessitated placing Vanchem's guidance under review.

"Whilst both Vametco and Vanchem are adversely impacted by load shedding, for Vametco this means curtailment of power usage, however, this does not affect Vametco's production, while for Vanchem, which is on the municipal power grid this means a complete loss of power and reliance on standby diesel generators.

"Although it was encouraging to see the South African government send a strong message on how it plans to overcome the country's energy crisis, it is unfortunate that in the short term, Vanchem's ability to operate smoothly is being affected by the ongoing electricity load shedding, like many other industrial plants in the country. We are hopeful that with increased maintenance efforts at the country's power stations and the end of the winter season, we will see reduced incidences of load shedding.

"Notwithstanding these challenges, the ramp up of Kiln 3 is making steady progress and Vanchem is still expected to meet the anticipated 2,600 mtVp.a production run rate by the end of the year.

"As a Group, we remain confident in our ability to achieve a production run rate of 5,000 - 5,400 mtVp.a. by the end of this financial year."

Conference call

Bushveld Minerals Chief Executive Officer, Fortune Mojapelo will host a conference call at 12:30 pm UK time (1:30 pm SAST) today to discuss the quarterly update with analysts and investors. Participants may join the call by dialling:

Tel: United Kingdom: +44 (0) 330 551 0200, Toll Free: 0808 109 0700; South Africa: +27 11 589 8302, Toll Free: 0 800 980 512

Password: Quote "Bushveld" when prompted by the operator.

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

BUSHVELD VANADIUM

1.     Based on provisional, unaudited figures.

2.     mtV = metric tonnes of vanadium.

3.     Reported as final sales to customers.

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%. Production cash cost is based on vanadium produced.

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. 

Production

·      H1 2022 production of 1,226 mtV, was 24% higher than H1 2021 (H1 2021: 988 mtV), as a result of continued operational performance and stability.

·      Q2 2022 production of 477 mtV was 20% lower than Q2 2021 (Q2 2021: 593 mtV), due to the 26-day planned maintenance shutdown during the quarter.

-     Production volumes back to Q1 2022 levels of circa 750 mtV.

-     In 2021, the planned maintenance shutdown was carried out during Q1 2021.

Costs

·      H1 2022 production cash cost (C1) of US$23.5/kgV, was 9% lower relative to H1 2021 (H1 2021: US$25.9/kgV), as a result of increased production volumes and weaker Rand/Dollar exchange rate.

·      Q2 2022 production cash cost (C1) of US$24.4 /kgV, was 5% lower than Q2 2021 (Q2 2021: US$25.8/kgV), as a result of the weaker Rand/Dollar exchange rate. 

2022 Guidance

·      Expected to meet the upper end of production guidance of between 2,450 mtV and 2,550 mtV.

·      On track to meet 2022 production cash cost (C1) guidance of between US$22.7/kgV and US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV).

·      On target to meet steady state production run rate of 2,800 mtVp.a by the end of the year.

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.

Production

·      H1 2022 production of 415 mtV, 29% lower than H1 2021 (H1 2021: 586 mtV) due to:

-     Lower production volumes in Q1 2022 impacted by lower recoveries as a result of Kiln 1's refractory reaching the end of useful life; and

-     Q2 2022 production of 191 mtV, 35% lower than Q2 2021 (Q2 2021: 293 mtV), as production was impacted by electricity loadshedding, a slower than planned commissioning of Kiln 3 and a slower than anticipated ramp up post commissioning.

Costs

·      H1 2022 production cash cost (C1) of US$43.2/kgV, 46% higher relative to H1 2021 (H1 2021: US$29.5/kgV).

·      Q2 2022 production cash cost (C1) of US$ 48.5/kgV, 73% higher than Q2 2021 (Q2 2021: US$28.1/kgV), due to lower production volumes and higher costs related to the commissioning of Kiln 3.

·      Costs are expected to normalise during H2 2022, supported by higher production volumes.

2022 Guidance

·      Due to lower production volumes in Q1 2022 impacted by lower recoveries as a result of Kiln 1's refractory reaching the end of useful life, a slower-than expected production ramp-up post the commissioning of Kiln 3 and expected increased electricity load shedding in the short-term, production guidance of between 1,750 mtV and 1,850 mtV, and production cash cost guidance of between US$27.7/kgV and US$28.4/kgV (ZAR422.8/kgV and ZAR433.5/kgV) is under review.

-     The Group will update the market on guidance in the H1 2022 interims announcement.

·      Despite the slower than expected ramp-up of Kiln 3, Vanchem remains on track to achieve its steady state production run rate of 2,600 mtVp.a. by the end of the year.

-     This assumes forecast production volumes at Vanchem of 222 mtV by December 2022.

HEALTH AND SAFETY

·      Safety record during Q2 2022 receiving attention following an increase in the  number of medical treatment cases and lost time injuries. Total Injury Frequency Rate ("TIFR") was 9.52 compared  to 1.74 in Q2 2021.

·      Consequently, the H1 2022 TIFR,  at 9.09, was higher than H1 2021's TIFR of 5.17.

ESKOM ELECTRICITY LOAD SHEDDING  

Eskom, South Africa's national utility, implemented several load shedding measures during H1 2022. During this period, Vametco did not experience any periods of total power loss but implemented load curtailment, as it is directly linked to Eskom's grid. Vametco's operational performance was not affected by these periods of load curtailment and there is no impact on the plant's production performance. 

Vanchem's operational performance was impacted by the load shedding as it is not directly linked to the grid and instead it receives its electricity supply from the Emalahleni municipality, hence in the event of load shedding the plant does not have power. Generators are in place to power the Kiln, however, as the generators use diesel fuel there is a cost implication.

VANADIUM MARKET

·      Q2 2022 Ferrovanadium prices across all markets averaged; London Metal Bulletin ("LMB") US$43.8/kgV, 22% higher than Q2 2021 (Q2 2021: US$36.0/kgV). CRU Ryan's notes and Asian Metals averaged US$67.5/kgV and US$33.7/kgV (Q2 2021: US$36.0kgV; US$31.2/kgV) respectively.

·      Year to date average LMB price of US$44.3/kgV, CRU Ryan's Note of US$58.3/kgV and Asian Metals of US$42.1/kgV as at 22 July 2022. 

·      The current market price as at 22 July 2022 for LMB ferrovanadium is approximately US$35.3/kgV, US$54.0/kgV for CRU Ryan's notes and US$34.5/kgV for Asian Metals.

·      Logistics delays within South Africa have now largely been resolved. International logistic channels remain susceptible to shipping availability constraints and Bushveld continues to monitor the situation closely.

ENDS

Enquiries: [email protected]

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 2021, the Company produced 3,592 mtV, representing approximately 3% 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. Growth plans to expand to 8,000 mtVp.a. will be pursued, subject to funding and market conditions.

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 Nitro Vanadium. 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 concentrate is fed into the extraction process which consists of a rotary kiln for roasting followed by leaching and precipitation. Thereafter the precipitated vanadium as ammonium metavanadate is converted to modified vanadium oxide ("MVO") in a rotary calciner. MVO is fed into the mix plant and finally into the shaft furnaces to produce Nitro Vanadium.

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.