⌘K
t
| Date | 13 Sept 2022 |
| Time | 07:00:10 |
| Category | Results |
| ID | 1888Z |
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.
13 September 2022
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Unaudited Interim Results for the Six Months ended 30 June 2022
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, is pleased to announce its unaudited results for the six-month period ended 30 June 2022.
Highlights
§ Revenue of US$76.2 million (H1 2021: US$47.0 million) and Adjusted EBITDA1 of US$15.6 million (H1 2021: Adjusted EBITDA loss of US$10.8 million) supported by higher vanadium prices and the weaker ZAR:USD exchange rate's positive impact on costs.
§ Operating profit of US$6.1 million (H1 2021: loss of US$19.7 million).
§ Cash balance of US$7.0 million at 30 June 2022 (US$15.4 million as at 31 December 2021), with ongoing positive cash generation since period end.
§ Free cash flow2 of US$7.1 million (H1 2021: negative US$19.8 million).
§ Total borrowings of US$76.73 million (31 December 2021 US$ 80.9 million).
§ Financial close achieved at Vametco's mini-grid project, enabling site clearance and progress with many project activities.
1. Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation excluding the Group's share of losses from joint ventures, loss from financial instruments and remeasurement of financial liabilities.
2. Free cash flow defined as operating cash flow less sustaining capital.
3. Excludes leases.
Outlook
§ Positive Adjusted EBITDA and free cash flow expected to continue into the second half of 2022, which will be used to meet the remaining capital requirements and debt repayments.
§ Group 2022 production guidance adjusted downwards to between 3,900 mtV and 4,100 mtV.
§ Group production run rate of 5,000 - 5,400mtVp.a. still expected to be achieved by the end of 2022.
§ Construction of the Electrolyte manufacturing facility (BELCO) is now 80% complete, production expected in H1 2023.
Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:
"I am pleased to present the financial results for a busy six-month period, during which we were able to bring a key component of our growth story online, in the form of Kiln 3 at Vanchem.
Higher vanadium prices also meant we were able to report a US$26.4 million increase in Adjusted EBITDA to US$15.6 million, from a loss in the first half of last year. Significantly, we also reported free cash flow of US$7.1 million in the first six months.
Barring any unforeseen events, we expect the positive Adjusted EBITDA and cash generation to be maintained in the second half of 2022, which will be used to meet the remaining capital requirements and reduce leverage.
Bushveld had to navigate several headwinds during the period, as supply chains globally continued to remain congested, and inflation pressures returned on a global scale. We continue to target savings under our Cost Savings Programme in order to counter and contain some of these pressures.
While we had previously reported Vanchem's guidance was under review due to operational challenges during the commissioning of Kiln 3, we are now revising Vanchem's production guidance downwards for 2022 having carefully monitored its initial performance and taken the ongoing load shedding risk into account.
Pleasingly, Vametco's guidance for 2022 has been marginally increased, as a result of a strong operational performance and we still expect to reach the key total annualised run rate of 5,000-5,400 mtV for the Group by year end.
In addition, following the commissioning of Kiln 3, the Company forecasts a reduced capital expenditure rate at its operations, limited mainly to sustaining capital, which is expected to support positive cash generation."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo and Finance Director, Tanya Chikanza; will host a webcast and conference call at 12:30pm UK time (1:30pm SAST) today to discuss the update with analysts. Participants may join the call by dialling:
|
Tel: |
United Kingdom: +44 (0) 330 551 0200; South Africa: +27 11 589 8302 |
|
Pin: |
Quote Bushveld when prompted by the operator |
|
Link: |
https://stream.brrmedia.co.uk/broadcast/62fa6825b629a70556525629
|
A recording of the conference call will be available on the Company's website post the call.
Chief Executive's Report
Dear Shareholders,
The first half of the year shows an improvement in the Group's Adjusted EBITDA profitability, as we delivered positive Adjusted EBITDA of US$15.6 million (H1 2021: Adjusted EBITDA loss of US$10.8 million). The Group delivered an operating profit of US$6.1 million, an improvement of US$25.8 million from the comparative period in 2021. The improvement in EBITDA and operating profit was supported by a higher average realised price and a weaker ZAR:USD exchange rate which had a positive impact of US$3.5 million on Adjusted EBITDA of which US$2.6 million was on cost of sales (excluding depreciation), despite global inflationary pressures. The Group expects this operational profitability to continue into the second half of 2022, barring any unforeseen events.
The Group cash balance at the end of the period was US$7.0 million, relative to US$15.4 million as at 31 December 2021, with the reduction arising from, inter alia, capital for the refurbishment of Vanchem Kiln 3, construction of the BELCO electrolyte plant, our equity investment in the Vametco mini-grid and the partial repayment of the Nedbank (Revolving Credit Facility) RCF.
Total borrowings for the period stood at US$76.7 million, a decrease of US$4.2 million from December 2021 (December 2021: US$80.9 million). The reduction is primarily due to the partial repayment of the Nedbank RCF and a weaker ZAR:USD exchange rate, partially offset by the convertible loan notes issued.
Of the expected capital expenditure for 2022 of approximately US$22.1 million, US$8.5 million had been spent as at 30 June 2022, with most of the cost being Rand-denominated.
The Company forecasts a reduced capital expenditure rate from 2023 onwards, limited mainly to sustaining capital, which is expected to support positive cash conversion of EBITDA, particularly as the increased production volumes of Vanchem's Kiln 3 are realised.
Group production was 4% higher relative to H1 2021, owing to Vametco's continued stable operational performance. However, Vanchem's production during the period was lower than anticipated due to lower recoveries associated with the Kiln 1 wind-down, electricity load shedding and a slower than planned ramp-up post Kiln 3 coming online. Since August, we have seen an improvement in the performance of Kiln 3, with production of 61mtV in July, increasing to 151 mtV in August. Despite the improved operational performance, this has not been sufficient to make-up for the volumes lost in prior months, and with load shedding continuing to pose a significant risk, Vanchem's production and cash cost guidance for the full year has been revised to between 1,350 mtV and 1,450 mtV and US$34.9/kgV and US$35.5/kgV (ZAR534/kgV and ZAR542/kgV) (previously 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)).
Given its strong year to date operational performance and minimal impact of load shedding on operations, Vametco's production guidance has been marginally increased to between 2,550 mtV and 2,650 mtV and the cash cost guidance has been maintained at between US$22.7/kgV and US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV) (previously production guidance was between 2,450 mtV and 2,550 mtV).
Group guidance has therefore been revised to between 3,900 and 4,100 mtV (previously between 4,200 mtV and 4,400 mtV).
The Group remains confident in achieving its steady state production run rate of between 5,000 - 5,400 mtVp.a. by the end of 2022, supported by Kiln 3 ramping up according to plan in Q4 2022. The 5,000 - 5,400 mtVp.a. will be the Group's foreseeable production run rate, which will support cost reduction and margin increase. The Group retains the optionality to expand its production to 8,000 mtVp.a. through a phased expansion plan, subject to securing the necessary funding and meeting its short-term performance targets at 5,000 - 5,400 mtVp.a.
As noted in the 2021 Annual Report, having incubated the energy division, and created the critical mass to ensure its success, Bushveld Minerals intends to carve out Bushveld Energy as a stand-alone company focused on the Vanadium Redox Flow Batteries (VRFB) value chain. This will crystalise its value and attract the appropriate institutional investors with a greater understanding of energy and the energy transition. Bushveld plans to retain a substantial share in the carved-out entity. The proposed carve-out process is underway and is planned to be completed by year end.
Bushveld Energy has an indirect 25.25% interest in VRFB original equipment manufacturer CellCube the Austrian VRFB Original Equipment Manufacturer, which has announced multiple projects and milestones over the past year. Earlier in the year, we successfully defended the litigation initiated by Garnet Commerce Limited, our partner in CellCube, against VRFB Holdings Limited (VRFB-H) and Enerox Holdings Limited (EHL), concerning an alleged breach by VRFB-H of the joint venture agreement in relation to EHL.
Bushveld Energy has developed a commercial solar plus storage mini-grid project plan for Vametco, consisting of a 3.5 MW of solar PV and 1 MW / 4 MWh VRFB mini-grid as a funded independent power producer., The Company secured funding for the engineering, procurement, and construction (EPC) of the Vametco hybrid mini-grid. A shareholders' agreement was signed between Bushveld Energy and NESA Capital as strategic equity partners in the development and funding of the project. NESA has provided 60% of the equity, while Bushveld Energy has provided 40%. The project is expected to be completed during H1 of 2023.
Construction of the BELCO electrolyte plant is more than 80% complete and is expected to enter into operation in H1 2023 with an eventual ramp-up to 8 million litres per annum. The ramp-up period can be accelerated to meet short-term market demand. BELCO is currently undergoing a qualification process for its electrolyte with VRFB companies in preparation for electrolyte sales next year. In order to ensure closer alignment of all vanadium operating facilities, BELCO electrolyte plant will remain within Bushveld, both operationally and in ownership, post the Bushveld Energy carve out. The electrolyte plant is the largest publicly announced plant outside of China and can further be increased to 32 million litres per annum at the same location to meet medium-term market demand.
Moving on to the vanadium market, during H1 2022 the London Metal Bulletin ("LMB") Ferrovanadium price averaged US$45.0/kgV (H1 2021: US$33.4/kgV), Asian Metals prices Ferrovanadium prices averaged US$37.2/kgV (H1 2021: US$31.8/kgV) and US Ryan's Note prices averaged US$58.5/kgV (H1 2021: US$34.1/kgV). Despite the recent softening in the vanadium price, we remain confident that the medium to long-term market fundamentals continue to support vanadium prices going forward.
We expect to see an even stronger operational performance in the second half of 2022, supported by improved operational stability at Vanchem which has continued into the month of September, and as Vametco continues to demonstrate solid and consistent production levels. We are confident both plants will reach a combined annualised run rate of 5,000-5,400mtV by year end. We expect the EBITDA profitability and free cash flow to be maintained in the second half of 2022, which will be used to meet the remaining capital requirements and reduce debt through the full repayment of the Nedbank RCF.
Overview
Summarised income statement
Income statement summary as adjusted from "statutory" Primary statement presentation
|
|
6 months ended 30 June 2022 |
6 months ended 30 June 2021 |
|
Unaudited |
Unaudited |
|
|
US$ |
US$ |
|
|
Revenue |
76,204,962 |
47,022,135 |
|
Cost of sales (excl. depreciation) |
(44,695,551) |
(43,439,030) |
|
Other operating and administration costs (excl. depreciation incl. operating income) |
(15,911,261) |
(14,376,544) |
|
Adjusted EBITDA |
15,598,149 |
(10,793,439) |
|
Depreciation |
(9,479,160) |
(8,949,235) |
|
Operating profit/ (loss) |
6,118,989 |
(19,742,674) |
|
Share of loss in joint ventures |
(1,899,516) |
|
|
Net financing expense |
(5,258,771) |
(2,983,277) |
|
Loss on financial assets |
(136,027) |
|
|
Loss before tax |
(1,175,325) |
(22,725,951) |
|
Income tax (expense)/credit |
(2,037,104) |
3,729,735 |
|
Loss after tax |
(3,212,429) |
(18,996,216) |
Revenue
Group revenue for the period of US$76.2 million was 62% higher than the corresponding prior period (H1 2021: US$47.0 million), underpinned by improved average realised price of US$46.4/kgV (H1 2021: US$29.2/kgV), and marginally higher sales volumes.
Group sales were marginally higher than the first half of 2021, due to domestic and international logistical challenges during the period. Logistics delays within South Africa have now largely been resolved. International logistic channels remain susceptible to shipping availability constraints. The closing inventory level as at 30 June 2022 was 826 mtV.
|
Group |
Unit |
H1 2022 |
H1 2021 |
H1 2022 vs H1 2021 |
|
Sales |
mtV |
1,644 |
1,608 |
+2% |
|
Average realised price |
US$/kgV |
46.4 |
29.2 |
58.9% |
During the period, Bushveld benefited from the robust vanadium demand and higher prices in the United States relative to other regions, by selling a larger portion of its sales to the United States. Sales to the United States were higher than other regions due to increased demand from the North American steel and aerospace industries.
The geographic split of Group sales in H1 2022 was 45% to the United States (H1 2021: 47%), 27% to Europe (H1 2021: 29%), 10% South Africa (H1 2021: 7%), 9% to Asia (H1 2021: 6%), 9% to the rest of the world (H1 2021: 7%), no sales to China in H1 2022 (H1 2021: 4%).
Cost of sales
The cost of sales excluding depreciation for the period was US$44.7 million (H1 2021: US$43.4 million). The increase was primarily due to higher energy costs of US$8.8 million (H12021: US$7.2 million), and an increase in staff costs to US$13.0 million (H12021: US$12.0 million) mainly due to the annual wage increase and the higher labour costs associated with the commissioning of Kiln 3. The increase was partly offset by the positive effect of foreign exchange with the weaker ZAR:USD exchange rate, resulting in a positive effect of US$2.6 million. Despite inflationary pressures, raw material prices of US$14.2 million remained flat relative to the corresponding prior period (H12021: US$14.1 million).
Total cost summary table:
|
|
6 months ended 30 June 2022 US$ |
6 months ended 30 June 2021 US$ |
|
Cost of sales (direct) (excl. depreciation) |
(44,695,551) |
(43,439,030) |
|
Operating and administrative costs (excl. depreciation) |
(15,911,261) |
(14,376,544) |
|
Total income statement cost (excl. depreciation) |
(60,606,812) |
(57,815,574) |
|
Total units sold (mtV) |
1,644 |
1,608 |
|
Total income statement cost per unit sold (excl. depreciation) US$/KgV |
36.9 |
36.0 |
|
Sustaining Capital |
(1,566,985) |
(6,058,174) |
|
Total cost including sustaining capital |
(62,173,797) |
(63,873,748) |
|
Cost per unit sold (including sustaining capital) US$/kgV |
37.8 |
39.7 |
|
Average exchange rate ZAR:US$ |
15.4 |
14.5 |
|
Total Revenue |
76,204,962 |
47,022,135 |
|
Average price realised US$/kgV |
46.4 |
29.2 |
Administrative and operating costs
Administrative and operating costs of US$17.7 million (excl. other operating income) (H1 2021: US$16.3 million) comprised of administrative costs of US$8.9 million (H1 2021: US$8.8 million) and operating costs of US$8.8 million (H1 2021: US$7.5 million).
Despite the inflationary increase, administrative expenses were contained at US$8.9 million (H1 2021: US$8.8 million), supported by a weaker ZAR:USD exchange rate which had a positive impact of US$0.5 million. Administrative expenses included staff salaries of US$4.0 million (H1 2021: US$5.0 million) which are not directly attributable to the cost of production. The decrease in total staff costs is a result of the weaker ZAR:USD exchange rate. Professional fees of US$2.8 million (H1 2021: US$1.2 million) include legal and consulting fees for the period.
|
|
6 months ended 30 June 2022 |
6 months ended 30 June 2021 |
|
|
Unaudited |
Unaudited |
|
US$ |
US$ |
|
|
Administrative expenses by nature |
|
|
|
Staff costs |
4,052,670 |
5,038,053 |
|
Depreciation of property, plant & equipment |
179,851 |
153,331 |
|
Professional fees |
2,806,805 |
1,173,994 |
|
Travel and other administrative costs |
1,863,193 |
2,417,396 |
|
Total administrative expenses |
8,902,518 |
8,782,774 |
Selling and distribution costs of US$4.3 million (H1 2021: US$2.8 million) increased by US$1.4 million, in line with the increased selling prices as per the Sales and Marketing Agreement that the Company has with Wogen Resources Limited (Wogen). Sales through Wogen represent approximately 75% of total Group sales.
Other mine operating costs, which include social commitments and obligations at both Vametco and Vanchem, decreased to US$1.3 million (H1 2021: US$1.6 million). The idle plant costs of US$3.2 million (H1 2021: US$2.9 million) mainly reflects the 26-day planned maintenance shut down at Vametco in Q2 2022.
Other costs
The share of loss from investments in joint ventures is the Group's share of the loss from its investments in VFRB Holdings and the Vametco mini-grid.
Finance costs increased to US$5.4 million (H1 2021: US$3.5 million), primarily due to Orion (Production Financing Agreement) PFA interest which includes notional interest of US$1 million calculated in accordance with IFRS 9, Nedbank RCF interest of US$0.2 million and Orion convertible loan interest of US$2.3 million.
Cost-saving programme
While production volume growth is expected to contribute the most to reducing costs, the Company continues to explore further opportunities to drive costs down. These efforts are focussed on procurement, as previously announced, as well as other significant cost drivers such as maintenance spend, payroll and administration costs. The Cost-saving programme is aimed at ensuring continued competitiveness throughout the commodity cycle while enhancing our product offering to markets across the geographies and industries in which we compete. The Company performed a diagnostic analysis for an addressable baseline procurement spend of around US$55.0 million and achieved a cost savings of US$0.5 million during the period. The Group still aims to achieve annualised savings of between US$2.5 million and US$4.0 million over a 24-month, notwithstanding short-term inflationary pressures that are being experienced across several input costs and are a direct result of global rising inflationary pressures on inputs such as energy costs.
Adjusted EBITDA
|
|
6 months ended 30 June 2022 |
6 months ended 30 June 2021 |
|
Unaudited |
Unaudited |
|
|
US$ |
US$ |
|
|
Revenue |
76,204,962 |
47,022,135 |
|
Cost of sales (excluding depreciation and amortisation) |
(44,695,551) |
(43,439,030) |
|
Other operating and administration costs (excluding depreciation and amortisation) |
(15,911,261) |
(14,376,544) |
|
Share of loss in Joint ventures & financial instruments |
(2,035,543) |
|
|
EBITDA |
13,562,605 |
(10,793,439) |
|
Add: Share of Loss in Joint venture & financial Instruments |
2,035,544 |
|
|
Adjusted EBITDA |
15,598,149 |
(10,793,439) |
Balance sheet
Assets
Intangible assets of US$58.6 million (2021: US$59.3 million) and property, plant and equipment of US$ 149.2 million (2021: US$153 million) decreased from 31 December 2021, primarily due to depreciation for the period and foreign exchange movements from a weaker ZAR:USD exchange rate, partially offset by capital expenditures.
Investments in joint ventures of US$7.2 million represent the Group's equity investments in VRFB-Holdings and the Vametco mini-grid. Investments in joint ventures decreased from 31 December 2021, primarily due to the recognition of the Group's share of the losses from both VFRB-Holdings and the Vametco mini-grid of US$1.9 million, partially offset by the equity investment in the Vametco mini-grid of US$1.2 million.
Other financial assets of US$1.5 million relate to the Mustang convertible loan note which was issued to the Company in accordance with the Backstop arrangement (see RNS dated 29 March 2022). Refer to Note 9 for further details.
Trade and other receivables of US$22.3 million ( US$17.6 million as at 31 December 2021) the increase was primarily due to the increase in revenue during the first half of the year.
The decrease in Group cash and cash equivalents to US$7.0 million was primarily due to the capital refurbishment at Vanchem of US$3.6 million, the partial repayment of the Nedbank RCF (including interest) of US$2.8 million, and the acquisition of the equity investment in the Vametco mini-grid of US$1.2 million, partially offset by the cash generated from operations of US$ 8.7 million.
Equity and liabilities
Share capital and share premium increased from 31 December 2021 primarily due to the conversion of the convertible loan notes issued to Primorus Investments Plc ("Primorus") in accordance with the Backstop agreement (see RNS dated 29 March 2022). Refer to Note 9 for further details.
Borrowings reduced from US$80.9 million to US$76.7 million primarily due to the partial repayment of the Nedbank RCF, as well as a ZAR:USD exchange rate, partially offset by the convertible loan notes issued to Primorus.
Net debt
The net debt reconciliation below outlines the Group's total debt and cash position.
|
|
30 June 2022 |
31 December 2021 |
Difference |
|
Unaudited |
Audited |
|
|
|
US$ |
US$ |
US$ |
|
|
Gross Cash and Cash Equivalents |
7,007,474 |
15,432,852 |
(8 425 382) |
|
Nedbank Revolving Credit Facility |
(3,092,564) |
(5,821,082) |
2 728 518 |
|
Production Financing Agreement - Orion Mine Finance |
(34,856,941) |
(33,511,742) |
(1 345 199) |
|
Convertible Loan Notes Instrument - Orion Mine Finance |
(33 794 048) |
(37,313,976) |
3 519 928 |
|
Industrial Development Corporation |
(2,938,572) |
(3,280,947) |
342,375 |
|
Other |
(1,995,991) |
(999,950) |
(996 041) |
|
Leases |
(4,295,257) |
(4,485,312) |
190 055 |
|
Net debt |
(73,965,901) |
(69,980,155) |
(3,985,746) |
Net debt increased from 31 December 2021 primarily due to a decrease in cash and cash equivalents, partially offset by the decrease in gross debt driven by the partial repayment of the Nedbank RCF.
Cash flow statement
The table summarises the main components of cash flow during the 6 months ended 30 June 2022.
|
|
6 months ended 30 June 2022 |
6 months ended 30 June 2021 |
|
Unaudited |
Unaudited |
|
|
US$ |
US$ (Restated) |
|
|
Operating profit/(loss) |
6,118,989 |
(19,742,674) |
|
Depreciation and amortisation |
9,479,160 |
8,949,235 |
|
Income taxes paid |
(680,869) |
- |
|
Changes in working capital and provisions |
(6,240,877) |
(2,975,747) |
|
Cash inflow/(outflow) from operations |
8,676,403 |
(13,769,186) |
|
Sustaining capital expenditures |
(1,566,985) |
(6,058,174) |
|
Free cashflow |
7,109,418 |
(19,827,360) |
|
Cash used in other investing activities |
(8,229,775) |
(3,431,818) |
|
Cash used in financing activities |
(4,791,334) |
(1,160,508) |
|
Net cash outflow |
(5,911,691) |
(24,419,686) |
|
Opening cash and cash equivalents |
15,432,852 |
50,540,672 |
|
Foreign exchange movement |
(2,513,687) |
5,444,255 |
|
Closing cash and cash equivalents |
7,007,474 |
31,565,241 |
Net cash generated from operating activities of US$8.7 million (H1 2021: outflow of US$13.8 million) was an improvement from the prior year period driven primarily by improved earnings.
Sustaining capital expenditure of US$1.6 million (H1 2021: US$6 million) was mostly spent at Vametco, as growth capital expenditure was prioritised at Vanchem with the commissioning of Kiln 3.
The Group generated free cash flow of US$7.1 million, an increase of US$26.9 million, supported by improved cash generated from operations.
The increase in cash used in financing activities to US$4.8 million (H1 2021: US$1.2 million) is due to the monthly repayment of the Nedbank RCF totalling US$2.8 million and royalties paid on the Orion PFA of US$2.0 million.
Capital expenditure and investing activities for the period were US$9.8 million (H12021: US$9.5 million), an increase of approximately US$0.3 million from H1 2021, mainly due to the refurbishment of Kiln 3 at Vanchem and the construction of BELCO.
The Group ended the period with a cash and cash equivalents balance of US$7.0 million, (31 December 2021: US$15.4 million).
Group 2022 capital expenditures:
|
|
2022(US$ million) guidance |
H1 2022 (US$ million) |
|
Vametco |
5.5 |
1.8 |
|
Growth |
- |
- |
|
Environmental/ Legal Compliance |
0.6 |
0.2 |
|
Sustaining |
4.9 |
1.6 |
|
|
|
|
|
Vanchem |
8.5 |
3.6 |
|
Growth |
4.5 |
3.6 |
|
Environmental/ Legal Compliance |
2.4 |
- |
|
Sustaining |
1.6 |
0.02 |
|
|
|
|
|
Bushveld Energy |
8.1 |
3.1 |
|
Growth |
8.1 |
3.1 |
|
Total |
22.1 |
8.5 |
Of the expected capital expenditure for 2022 of approximately US$22.1 million, we have spent US$8.5 million as at 30 June 2022. We expect to cover the remaining capital requirements from internally generated free cash flow.
Adjusted EBITDA to cash reconciliation
|
|
6 months ended 30 June 2022 |
|
Unaudited |
|
|
US$ |
|
|
H1 2022 Adjusted EBITDA |
15,598,149 |
|
Opening Cash and cash equivalents |
15,432,852 |
|
Accounts payables |
1,481,123 |
|
Other movements |
(1,571,062) |
|
Loan repayments |
(3,084,440) |
|
Inventory increase |
(3,089,617) |
|
Foreign exchange translation |
(2,449,920) |
|
Income Tax paid |
(680,869) |
|
Trade & other receivables |
(4,696,151) |
|
Capital expenditures |
(8,721,660) |
|
Purchase of investment (incl. Vametco Mini grid) |
(1,210,932) |
|
Closing cash and cash equivalents |
7,007,474 |
Loan repayments comprise of US$2.0 million paid to Orion and the balance paid on the Nedbank RCF, which is to be settled in November 2022.
Work in progress inventories increased at the end of June, mainly due to the ramp-up following the maintenance shutdown at Vametco and the gradual ramp-up of Kiln 3 at Vanchem, post commissioning in June. Increased raw materials costs also contributed to the increase in the cost of inventories.
ENDS
Enquiries: [email protected]
Contact
|
Bushveld Minerals Limited |
|
+27 (0) 11 268 6555 |
|
Fortune Mojapelo, Chief Executive Officer |
|
|
|
Chika Edeh, Head of Investor Relations |
|
|
|
|
|
|
|
SP Angel Corporate Finance LLP |
Nominated Adviser & Broker |
+44 (0) 20 3470 0470 |
|
Richard Morrison / Charlie Bouverat |
|
|
|
Grant Baker / Richard Parlons |
|
|
|
|
|
|
|
RBC Capital Markets |
Joint Broker |
+44 (0) 20 7653 4000 |
|
Jonathan Hardy / Caitlin Leopold |
|
|
|
|
|
|
|
Tavistock |
Financial PR |
|
|
Gareth Tredway / Tara Vivian-Neal / Adam Baynes |
|
+44 (0) 207 920 3150 |
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
Unaudited Condensed Consolidated Interim Financial statements
for the period ended 30 June 2022
|
Consolidated Statement of Profit or Loss |
|
|||
|
|
|
6 months ended 30 June |
6 months ended 30 June |
12 months ended 31 December |
|
|
|
2022
Unaudited |
2021 Restated* Unaudited |
2021
Audited |
|
|
Notes |
US$ |
US$ |
US$ |
|
Continuing operations |
|
|
|
|
|
Revenue |
|
76,204,962 |
47,022,135 |
106,857,285 |
|
Cost of sales |
|
(54,003,132) |
(52,222,217) |
(102,782,583) |
|
Gross profit / (loss) |
|
22,201,830 |
(5,200,082) |
4,074,702 |
|
Other operating income |
|
1,638,804 |
1,670,464 |
2,618,971 |
|
Impairment losses |
|
- |
- |
(2,438,890) |
|
Selling and distribution costs |
|
(4,288,342) |
(2,851,646) |
(6,406,621) |
|
Other mine operating costs |
|
(1,315,711) |
(1,592,894) |
(3,224,407) |
|
Idle plant costs |
|
(3,215,074) |
(2,985,742) |
(3,386,899) |
|
Administrative expenses |
|
(8,902,518) |
(8,782,774) |
(20,894,292) |
|
Share-based payment |
|
- |
- |
375,008 |
|
Operating profit / (loss) |
|
6,118,989 |
(19,742,674) |
(29,282,428) |
|
Finance income |
|
135,832 |
517,057 |
935,347 |
|
Finance costs |
|
(5,394,603) |
(3,500,334) |
(12,184,059) |
|
Remeasurement of financial liabilities |
|
- |
- |
(1,902,172) |
|
Share of loss from investments in joint ventures |
|
(1,899,516) |
- |
(4,351,356) |
|
Loss from financial instruments |
|
(136,027) |
- |
- |
|
Loss before taxation |
|
(1,175,325) |
(22,725,951) |
(46,784,668) |
|
Taxation |
|
(2,037,104) |
3,729,735 |
4,671,255 |
|
Loss for the period |
|
(3,212,429) |
(18,996,216) |
(42,113,413) |
|
Loss attributable to: |
|
|
|
|
|
Owners of the parent |
|
(6,281,608) |
(17,898,241) |
(40,779,853) |
|
Non-controlling interest |
|
3,069,179 |
(1,097,975) |
(1,333,560) |
|
|
|
(3,212,429) |
(18,996,216) |
(42,113,413) |
|
Loss per ordinary share |
|
|
|
|
|
Basic loss per share (in cents) |
3 |
(0.50) |
(1.50) |
(3.39) |
|
Diluted loss per share (in cents) |
3 |
(0.50) |
(1.50) |
(3.39) |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
*The consolidated statement of profit or loss for the six months ended 30 June 2021 was restated to reflect the updated taxation in accordance with the restatement disclosed in the annual consolidated financial statements for the year ended 31 December 2021.
|
Consolidated Statement of Comprehensive Loss |
|
||
|
Note |
6 months ended 30 June 2022
Unaudited US$ |
6 months ended 30 June 2021 Restated* Unaudited US$ |
12 months ended 31 December 2021
Audited US$ |
|
Loss for the period |
(3,212,429) |
(18,996,216) |
(42,113,413) |
|
Consolidated other comprehensive loss: |
|
|
|
|
Items that will not be reclassified to profit or loss: |
|
|
|
|
(Losses)/gains on valuation of investments in equity instruments |
- |
(4,767,013) |
(3,771,367) |
|
Other fair value movements |
- |
- |
13,830 |
|
Total items that will not be reclassified to profit or loss |
- |
(4,767,013) |
(3,757,537) |
|
Items that may be reclassified to profit or loss: |
|
|
|
|
Currency translation differences |
(79,562) |
11,271,089 |
(9,712,355) |
|
Other comprehensive income / (loss) for the period net of taxation |
(79,562) |
6,504,076 |
(13,469,892) |
|
Total comprehensive loss |
(3,291,991) |
(12,492,140) |
(55,583,305) |
|
Total comprehensive loss attributable to: |
|
|
|
|
Owners of the parent |
(6,466,453) |
(12,753,998) |
(55,918,489) |
|
Non-controlling interest |
3,174,462 |
261,858 |
335,184 |
|
|
(3,291,991) |
(12,492,140) |
(55,583,305) |
All results relate to continuing activities.
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
*The consolidated statement of profit or loss for the six months ended 30 June 2021 was restated to reflect the updated taxation in accordance with the restatement disclosed in the annual consolidated financial statements for the year ended 31 December 2021.
|
Consolidated Statement of Financial Position |
|
|
|
|
|
|
30 June |
31 December |
|
|
|
2022 |
2021 |
|
|
|
Unaudited |
Audited |
|
|
Notes |
US$ |
US$ |
|
Assets |
|
|
|
|
Non-Current Assets |
|
|
|
|
Intangible assets |
4 |
58,643,419 |
59,254,372 |
|
Property, plant and equipment |
5 |
149,170,956 |
153,110,702 |
|
Investment property |
|
2,537,674 |
2,595,359 |
|
Investments in joint ventures |
|
7,166,652 |
7,855,237 |
|
Total Non-Current Assets |
|
217,518,701 |
222,815,670 |
|
Current Assets |
|
|
|
|
Inventories |
6 |
44,735,773 |
41,646,156 |
|
Trade and other receivables |
7 |
22,338,367 |
17,642,216 |
|
Restricted investment |
|
2,805,121 |
2,868,886 |
|
Current tax receivable |
|
684,052 |
275,017 |
|
Other financial assets |
|
1,531,136 |
- |
|
Cash and cash equivalents |
8 |
7,007,474 |
15,432,852 |
|
Total Current Assets |
|
79,101,923 |
77,865,127 |
|
Total Assets |
|
296,620,624 |
300,680,797 |
|
Equity and Liabilities |
|
|
|
|
Share capital |
9 |
16,871,161 |
16,797,180 |
|
Share premium |
9 |
126,218,336 |
125,550,674 |
|
Accumulated deficit |
|
(7,546,648) |
(1,265,040) |
|
Convertible loan note reserve |
|
54,814 |
54,814 |
|
Foreign currency translation reserve |
|
(21,036,032) |
(20,851,187) |
|
Fair value reserve |
|
(1,938,397) |
(1,938,397) |
|
Equity attributable to owners of the parent |
|
112,623,234 |
118,348,044 |
|
Non-controlling interest |
|
35,656,358 |
32,481,896 |
|
Total Equity |
|
148,279,592 |
150,829,940 |
|
Liabilities |
|
|
|
|
Non-Current Liabilities |
|
|
|
|
Retirement benefit obligation |
|
1,909,536 |
1,905,739 |
|
Environmental rehabilitation liability |
|
18,025,919 |
18,031,321 |
|
Deferred consideration |
|
834,377 |
1,684,021 |
|
Borrowings |
10 |
69,178,080 |
70,716,595 |
|
Lease liabilities |
|
3,744,482 |
3,920,698 |
|
Deferred tax |
|
2,967,043 |
6,014,244 |
|
Total Non-Current Liabilities |
|
96,659,437 |
102,272,618 |
|
Current Liabilities |
|
|
|
|
Trade and other payables |
11 |
36,371,338 |
33,080,670 |
|
Provisions |
|
1,912,310 |
3,721,853 |
|
Borrowings |
10 |
7,500,036 |
10,211,102 |
|
Lease liabilities |
|
550,775 |
564,614 |
|
Deferred consideration |
|
849,644 |
- |
|
Current tax payable |
|
4,497,492 |
- |
|
Total Current Liabilities |
|
51,681,595 |
47,578,239 |
|
Total Liabilities |
148,341,032 |
149,850,857 |
|
Total Equity and Liabilities |
296,620,624 |
300,680,797 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
|
|
Share capital |
Share |
Foreign |
Share-based |
Convertible |
Fair value |
Accumulated |
Total |
Non- |
Total equity |
|
|
premium |
currency |
payment |
loan note |
reserve |
deficit |
attributable to |
controlling |
|
|
|
|
|
translation |
reserve |
reserve |
|
|
equity holders |
interest |
|
|
|
|
|
reserve |
|
|
|
|
of the group / |
|
|
|
|
|
|
|
|
|
|
|
company |
|
|
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
|
Balance at 1 January 2021 |
15,858,428 |
117,065,907 |
(9,470,088) |
375,008 |
54,814 |
12,966,294 |
28,367,659 |
165,218,022 |
32,146,712 |
197,364,734 |
|
Loss for the period Other comprehensive income, net of tax: Currency translation differences |
-
- |
-
- |
-
(11,381,099) |
-
- |
-
- |
-
- |
(40,779,853)
- |
(40,779,853)
(11,381,099) |
(1,333,560)
1,668,744 |
(42,113,413)
(9,712,355) |
|
Other fair value movements |
- |
- |
- |
- |
- |
(3,757,537) |
- |
(3,757,537) |
- |
(3,757,537) |
|
Total comprehensive (loss)/profit for the period |
- |
- |
(11,381,099) |
- |
- |
(3,757,537) |
(40,779,853) |
(55,918,489) |
335,184 |
(55,583,305) |
|
Issue of shares |
938,752 |
8,484,767 |
- |
- |
- |
- |
- |
9,423,519 |
- |
9,423,519 |
|
Share-based payment |
- |
- |
- |
(375,008) |
- |
- |
- |
(375,008) |
- |
(375,008) |
|
Transfer between reserves |
- |
- |
- |
- |
- |
(11,147,154) |
11,147,154 |
- |
- |
- |
|
Audited balance at 31 December 2021 |
16,797,180 |
125,550,674 |
(20,851,187) |
- |
54,814 |
(1,938,397) |
(1,265,040) |
118,348,044 |
32,481,896 |
150,829,940 |
|
Loss for the period Other comprehensive income, net of tax: Currency translation reserve |
-
- |
-
- |
-
(184,845) |
-
- |
-
- |
-
- |
(6,281,608)
- |
(6,281,608)
(184,845) |
3,069,179
105,283 |
(3,212,429)
(79,562) |
|
Total comprehensive (loss)/profit for the period |
- |
- |
(184,845) |
- |
- |
- |
(6,281,608) |
(6,466,453) |
3,174,462 |
(3,291,991) |
|
Issue of shares |
73,981 |
667,662 |
- |
- |
- |
- |
- |
741,643 |
- |
741,643 |
|
Unaudited balance at 30 June 2022 |
16,871,161 |
126,218,336 |
(21,036,032) |
- |
54,814 |
(1,938,397) |
(7,546,648) |
112,623,234 |
35,656,358 |
148,279,592 |
|
Notes |
9 |
9 |
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
6 months |
6 months |
12 months |
|
|
|
|
ended |
ended |
ended |
|
|
|
|
30 June |
30 June |
31December |
|
|
|
|
2022 |
2021 |
2021 |
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
Notes |
|
US$ |
US$ |
US$ |
|
Cash flows generated from / (used in) operating activities |
|
|
|
|
|
|
Loss before taxation |
|
|
(1,175,325) |
(22,725,951) |
(46,784,668) |
|
Adjustments for: Depreciation property, plant and equipment and right-of-use assets |
|
5 |
9,479,160 |
8,949,235 |
19,395,496 |
|
Share of loss from investments in joint ventures |
|
|
1,899,516 |
- |
4,351,356 |
|
Loss from financial instruments |
|
|
136,027 |
- |
- |
|
Remeasurement of financial liabilities |
|
|
- |
- |
1,902,172 |
|
Finance income |
|
|
(135,832) |
(517,057) |
(935,347) |
|
Finance costs |
|
|
5,394,603 |
3,500,334 |
12,184,059 |
|
Impairment losses |
|
|
- |
- |
2,438,890 |
|
Changes in working capital |
|
|
(6,240,877) |
(2,975,747) |
(5,022,120) |
|
Income taxes (paid) / received |
|
|
(680,869) |
- |
394,069 |
|
Net cash generated from / (used in) operating activities |
|
|
8,676,403 |
(13,769,186) |
(12,076,093) |
|
Cash flows used in investing activities |
|
|
|
|
|
|
Finance income |
|
|
135,832 |
517,057 |
935,347 |
|
Purchase of property, plant and equipment |
|
5 |
(8,476,677) |
(10,625,864) |
(19,449,657) |
|
Payment of deferred consideration |
|
|
- |
(1,679,943) |
(3,874,449) |
|
Purchase of investments |
|
|
(1,210,932) |
(9,993,534) |
(9,987,735) |
|
Purchase of exploration and evaluation assets |
|
4 |
(244,983) |
(374,493) |
(928,960) |
|
Disposal of financial assets held at fair value |
|
|
- |
12,666,785 |
16,147,154 |
|
Net cash used in investing activities |
|
|
(9,796,760) |
(9,489,992) |
(17,158,300) |
|
Cash flows used in financing activities |
|
|
|
|
|
|
Proceeds from loans |
|
|
- |
- |
1,335,735 |
|
Repayment of borrowings |
|
|
(3,084,440) |
(250,000) |
(4,731,932) |
|
Lease payments |
|
|
(232,688) |
(379,905) |
(705,373) |
|
Finance costs |
|
|
(1,474,206) |
(530,603) |
(2,947,577) |
|
Net cash used in financing activities |
|
|
(4,791,334) |
(1,160,508) |
(7,049,147) |
|
Total cash and cash equivalents movement for the period |
|
|
(5,911,691) |
(24,419,686) |
(36,283,540) |
|
Cash and cash equivalents at the beginning of the period |
|
|
15,432,852 |
50,540,672 |
50,540,672 |
|
Effect of translation of foreign rate |
|
|
(2,513,687) |
5,444,255 |
1,175,720 |
|
Total cash and cash equivalents at end of the period |
|
8 |
7,007,474 |
31,565,241 |
15,432,852 |
1. Corporate information and principal activities
Bushveld Minerals Limited ("Bushveld") was incorporated and domiciled in Guernsey on 5 January 2012 and admitted to the AIM market in London on 26 March 2012.
The address of the Company's registered office is 18-20 Le Pollet, St Peter Port, Guernsey. The unaudited condensed consolidated interim financial statements ("consolidated interim financial statements") of the Company for the interim period ended 30 June 2022 comprise of the Company and its subsidiaries (the "Group") and the Group's interest in equity accounted investments.
2. Significant accounting policies
Basis of accounting
The results presented in this report are unaudited and they have been prepared in accordance with the recognition and measurement principles of UK-adopted International Accounting Standards that are expected to be applicable to the next set of financial statements and on the basis of the accounting policies to be used in those financial statements.
The consolidated interim financial statements does not include all of the information required for full annual financial statements and accordingly, whilst the consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of the UK-adopted International Accounting Standards, it cannot be construed as being in full compliance with the UK-adopted International Accounting Standards. The financial information contained in this announcement does not constitute statutory accounts as defined by the Companies (Guernsey) Law 2008.
The consolidated interim financial statements have not been audited or reviewed in accordance with International Standard on Review Engagements (UK) 2410. The consolidated financial statements for the period ended 31 December 2021 is based on the statutory accounts for the period ended 31 December 2021. The auditor reported on those accounts, their report was unqualified and did not contain statements where the auditor is required to report by exception.
Going concern
Based on the current Group finances, having considered group budgets and cash flow forecasts, possible downside scenarios around commodity pricing and exchange rate and in particular around Vanchem's Kiln production profile, the cash flow forecasts demonstrate the Group will have sufficient headroom in its liquid resource to meet its obligations in the ordinary course of business for the next 12 months. Accordingly, the Directors continue to adopt the going concern basis in preparing the consolidated interim financial statements. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
Use of estimates and judgements
In the application of the Group's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. In particular, information about significant areas of estimation uncertainty considered by management in preparing the consolidated interim financial statements is described below:
i. Impairment of exploration and evaluation assets
As disclosed in note 4, the Mokopane license held by the Group requires that mining operations commence prior to the end of January 2021. As at 30 June 2022 no mining has taken place at the site. An application for an extension to requirement to commence mining activities has been submitted to the Department of Mineral Resources and Energy ("DMRE"), however a response has not yet been received. The directors are confident that the extension will be forthcoming and the license therefore remains valid. Consequently, the directors have made a judgment that no impairment of the related intangible asset is required.
ii. Mustang Convertible Loan Note option
As at 31 December 2021 Mustang Energy plc ("Mustang") had an option to require that Bushveld issue to the Mustang Convertible Loan Note ("CLN") holders such new number of Bushveld shares as is equivalent to the par value of the noteholder's CLN, together with accrued and unpaid interest in return for Mustang transferring to Bushveld Energy Limited Mustang's shareholding in VRFB Holdings Limited. As at 31 December 2021 the Mustang CLNs had a nominal value of $8 million and a 10 per cent coupon. As at 30 June 2022 this option had not been exercised by the Mustang CLN holders except for Primorus Investments Plc (note 10). The directors determined the fair value of this right is considered immaterial for recognition as at 30 June 2022.
iii. Held for sale assessment
Judgement is required in determining whether an asset or disposal group should be classified as held for sale. An asset or disposal group should be classified as held for sale when it is available for immediate sale in its present condition and its sale is highly probable. The directors determined that the announced carve-out of Bushveld Energy assets does not meet the requirements to be classified as held for sale as at 30 June 2022.
3. Loss per share
Basic loss per share
The calculation of a basic loss per share of 0.50 cents (30 June 2021: 1.50 cents) is calculated using the total loss for the period attributable to the owners of the company of US$6,281,608 (30 June 2021: Loss of US$17,898,241) and 1,261,221,934 shares (30 June 2021: 1,164,710,352 shares) being the weighted average number of shares in issue during the period.
Diluted loss per share
Due to the Group being loss making for the period, instruments are not considered dilutive and therefore the diluted loss per share is the same as basic loss per share.
4. Intangible assets
|
|
30 June 2022 (unaudited) |
31 December 2021 (audited) |
||
|
|
Cost / Valuation |
Carrying value |
Cost / Valuation |
Carrying value |
|
US$ |
US$ |
US$ |
US$ |
|
|
Vanadium and Iron ore |
53,584,415 |
53,584,415 |
53,855,618 |
53,855,618 |
|
Coal |
5,059,004 |
5,059,004 |
5,398,754 |
5,398,754 |
|
Total |
58,643,419 |
58,643,419 |
59,254,372 |
59,254,372 |
Reconciliation of intangible assets - exploration and evaluation - 30 June 2022
|
|
Opening balance |
Additions |
Foreign exchange movements |
Impairment loss |
Total |
|
US$ |
US$ |
US$ |
US$ |
US$ |
|
|
Vanadium and Iron ore |
53,855,618 |
52,239 |
(323,442) |
- |
53,584,415 |
|
Coal |
5,398,754 |
192,744 |
(532,494) |
- |
5,059,004 |
|
|
59,254,372 |
244,983 |
(855,936) |
- |
58,643,419 |
Reconciliation of intangible assets - exploration and evaluation - 31 December 2021
|
|
Opening balance |
Additions |
Foreign exchange movements |
Impairment loss |
Total |
|
US$ |
US$ |
US$ |
US$ |
US$ |
|
|
Vanadium and Iron ore |
54,950,331 |
162,621 |
(715,974) |
(541,360) |
53,855,618 |
|
Coal |
4,053,494 |
766,339 |
578,921 |
- |
5,398,754 |
|
|
59,003,825 |
928,960 |
(137,053) |
(541,360) |
59,254,372 |
Vanadium and Iron Ore
Bushveld Resources Limited has a 64 per cent interest in Pamish Investment No 39 (Proprietary) Limited ("Pamish") which holds an interest in Prospecting right 95 ("Pamish 39").
The DMRE granted a mining right to Pamish on 28 August 2019, in respect of the five farms: Vliegekraal 783 LR, Vogelstruisfontein 765 LR, Vriesland 781 LR, Schoonoord 786 LR and Bellevue 808 LR situated in the District of Mogalakwena, Limpopo, which make up the Mokopane Project.
The Mokopane Project is a vanadium resource. On 29 January 2020, the DMRE executed a 30-year mining right in favour of the Company, over the five farms: Vogelstruisfontein 765 LR, Vriesland 781 LR, Vliegekraal 783 LR, Schoonoord 786 LR and Bellevue 808 LR. The mining right required Pamish to commence mining activities, including in-situ activities associated with the Definitive Feasibility Study ("DFS") by end of January 2021. The COVID-19 pandemic resulted in a significant delay in the commencement of the DFS and the necessary engagement with local communities required to finalise Land Use Arrangements and, consequently, this deadline was not met. Application to the DMRE for an extension of 18 months to commence mining activities has been submitted. An interim access agreement was reached for access to the project areas.
The mining right allows for the extraction of several other minerals over the entire Mokopane Project resource area, including, titanium, phosphate, platinum group metals, gold, cobalt, copper, nickel and chrome.
Brits Vanadium Project
Bushveld has been granted Section 11 of the Mineral and Petroleum Resources Development Act ("MPRDA") for acquiring control of Sable Platinum Mining (Pty) Ltd for NW 30/5/1/1/2/11124 PR, held through Great Line 1 Invest (Pty) Ltd ("Great 1 Line") and was executed in May 2021. The Company has also applied for Section 102 of the MPRDA and waiting for approval to incorporate NW 30/5/1/1/2/11069 PR into NW 30/5/1/1/2/11124 PR.
Bushveld has applied for a prospecting right which has been accepted and environmental authorisation has been granted under GP 30/5/1/1/2/10576 PR held by Gemsbok Magnetite (Pty) Ltd.
A renewal application for Prospecting Right NW 30/5/1/1/2/11124 PR was granted for Great 1 Line on Farm Uitvalgrond 431 JQ Portion 3.
Coal
Coal exploration licences have been issued to Coal Mining Madagascar SARL a 99% subsidiary of Lemur Investments Limited.
The exploration is in South West Madagascar covering 11 concession blocks in the Imaloto Coal basin known as the Imaloto Coal Project and Extension.
5. Property, plant and equipment
|
|
Buildings and |
Plant and |
Motor vehicles |
Decommissio |
Right of use |
Waste |
Assets under |
Total |
|
|
other |
machinery |
furniture and |
ning |
asset |
stripping asset |
construction |
|
|
|
improvements |
|
equipment |
assets |
|
|
|
|
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
Cost At 01 January 2021 |
7,706,034 |
171,601,529 |
905,948 |
1,935,224 |
5,504,271 |
3,764,442 |
4,943,850 |
196,361,298 |
|
Additions |
- |
5,156,605 |
24,024 |
(207,189) |
396,239 |
- |
14,079,978 |
19,449,657 |
|
Disposals |
- |
(1,916,158) |
(78,119) |
- |
- |
(3,723,494) |
- |
(5,717,771) |
|
Impairments of obsolete assets |
- |
(2,263,063) |
- |
- |
- |
- |
- |
(2,263,063) |
|
Transfers |
- |
5,373,628 |
57,148 |
- |
- |
- |
(5,430,776) |
- |
|
Foreign exchange movements |
(426,162) |
(3,323,601) |
(108,315) |
(73,658) |
(834,539) |
(40,948) |
(996,705) |
(5,803,928) |
|
At 31 December 2021 (audited) |
7,279,872 |
174,628,940 |
800,686 |
1,654,377 |
5,065,971 |
- |
12,596,347 |
202,026,193 |
|
Additions |
- |
2,979,000 |
83,919 |
- |
- |
- |
5,413,758 |
8,476,677 |
|
Foreign exchange movements |
(161,803) |
(3,164,600) |
(17,797) |
(36,770) |
(112,598) |
- |
(567,463) |
(4,061,031) |
|
At 30 June 2022 (unaudited) |
7,118,069 |
174,443,340 |
866,808 |
1,617,607 |
4,953,373 |
- |
17,442,642 |
206,441,839 |
|
Depreciation At 01 January 2021 |
(1,068,211) |
(21,143,469) |
(614,854) |
(976,469) |
(1,213,860) |
(3,764,442) |
- |
(28,781,305) |
|
Disposals |
- |
1,777,899 |
89,424 |
- |
- |
3,723,494 |
- |
5,590,817 |
|
Depreciation charge for the year |
(354,785) |
(18,087,039) |
(266,419) |
(46,321) |
(640,932) |
- |
- |
(19,395,496) |
|
Impairment of obsolete assets |
- |
365,533 |
- |
- |
- |
- |
- |
365,533 |
|
Foreign exchange movements |
79,596 |
(7,221,073) |
34,257 |
76,847 |
294,385 |
40,948 |
- |
(6,695,040) |
|
At 31 December 2021 (audited) |
(1,343,400) |
(44,308,149) |
(757,592) |
(945,943) |
(1,560,407) |
- |
- |
(48,915,491) |
|
Depreciation charge for the period |
(170,424) |
(9,010,498) |
(110,037) |
- |
(188,201) |
- |
- |
(9,479,160) |
|
Foreign exchange movements |
16,084 |
1,027,169 |
20,806 |
21,025 |
38,684 |
- |
- |
1,123,768 |
|
At 30 June 2022 (unaudited) |
(1,497,740) |
(52,291,478) |
(846,823) |
(924,918) |
(1,709,924) |
- |
- |
(57,270,883) |
|
Net Book Value |
|
|
|
|
|
|
|
|
|
At 31 December 2021 (audited) |
5,936,472 |
130,320,791 |
43,094 |
708,434 |
3,505,564 |
- |
12,596,347 |
153,110,702 |
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2022 (unaudited) |
5,620,329 |
122,151,862 |
19,985 |
692,689 |
3,243,449 |
- |
17,442,642 |
149,170,956 |
6. Inventories
|
|
30 June |
31 December |
|
|
2022 Unaudited US$ |
2021 Audited US$ |
|
Raw materials |
3,784,532 |
3,159,418 |
|
Work in progress |
10,586,566 |
9,323,360 |
|
Finished goods |
18,654,997 |
18,058,022 |
|
Consumable stores |
11,709,678 |
11,105,356 |
|
|
44,735,773 |
41,646,156 |
The amount of write-down of inventories due to net realisable value provision requirement is nil (2021: nil).
7. Trade and other receivables
|
|
30 June |
31 December |
|
|
2022 Unaudited US$ |
2021 Audited US$ |
|
Trade receivables |
14,700,074 |
6,129,311 |
|
Other receivables |
5,124,662 |
5,861,661 |
|
Loss allowance |
(65,380) |
(76,704) |
|
Non-financial instruments: VAT |
2,579,011 |
5,727,948 |
|
Total trade and other receivables |
22,338,367 |
17,642,216 |
|
Categorisation of trade and other receivables |
|
|
Trade and other receivables are categorised as follows in accordance with IFRS 9: Financial Instruments:
|
At amortised cost |
19,759,356 |
11,914,268 |
|
Non-financial instruments |
2,579,011 |
5,727,948 |
|
|
22,338,367 |
17,642,216 |
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 15-90 days and therefore are all classified as current.
Other receivables consist of prepayments and deposits, which are realised over time.
Due to the short-term nature of the current receivables, their carrying amount is considered to approximate their fair value.
8. Cash and cash equivalents
Cash and cash equivalents consist of:
|
Bank balances |
7,007,474 |
15,432,852 |
The directors consider that the carrying amount of cash and cash equivalents approximates their fair value.
9. Share capital and share premium
|
|
Shares |
Share capital |
Share premium |
Total share capital and premium |
|
Number |
US$ |
US$ |
US$ |
|
|
At 1 January 2021 |
1,190,757,892 |
15,858,428 |
117,065,907 |
132,924,335 |
|
Shares issued - PMDR |
1,473,651 |
18,910 |
203,281 |
222,191 |
|
Shares issued - PMDR |
1,335,277 |
17,134 |
184,194 |
201,328 |
|
Shares issued - Duferco |
66,892,037 |
902,708 |
8,097,292 |
9,000,000 |
|
At 31 December 2021 (audited) |
1,260,458,857 |
16,797,180 |
125,550,674 |
142,347,854 |
|
Shares issued - PMDR |
1,510,230 |
20,468 |
191,374 |
211,842 |
|
Shares issued - Primorus |
2,069,063 |
27,080 |
240,976 |
268,056 |
|
Shares issued - Primorus |
2,088,582 |
26,433 |
235,312 |
261,745 |
|
At 30 June 2022 (unaudited) |
1,266,126,732 |
16,871,161 |
126,218,336 |
143,089,497 |
The Board may, subject to Guernsey Law, issue shares or grant rights to subscribe for or convert securities into shares. It may issue different classes of shares ranking equally with existing shares. It may convert all or any classes of shares into redeemable shares. The Company may also hold treasury shares in accordance with the law. Dividends may be paid in proportion to the amount paid up on each class of shares.
As at 30 June 2022 the Company owns 670,000 (December 2021: 670,000) treasury shares with a nominal value of 1 pence.
Shares issued
Primorus Investments Plc ("Primorus")
Bushveld issued a convertible loan note ("BMN CLNs") to Primorus on 28 March 2022.
The nominal amount of the BMN CLNs is £1,208,988, being the nominal value of the Mustang CLNs issued to Primorus of US$1.5 million plus interest accrued thereon as at 28 March 2022 of US$136,849.32 (being an aggregate amount of US$1,636.849.32), converted at an exchange rate of US$1.3539/GBP.
Unless previously redeemed by the Company, and subject to a conversion notice being received by the Company at least three business days prior to the relevant conversion date, a tranche consisting of one sixth of the aggregate amount of the BMN CLNs may be converted by Primorus into Bushveld shares at any time within a conversion period (the six conversion periods being: 28 February 2022 to 14 April 2022; 15 April 2022 to 14 July 2022; 15 July 2022 to 14 October 2022; 15
October 2022 to 16 January 2023; 17 January 2023 to 14 April 2023;15 April 2023 to 14 July 2023) at a conversion price of
£0.098987, being the volume weighted average price of a share as shown on Bloomberg over the 20 trading days prior to (and excluding) 28 February 2022.
Accordingly, Primorus was issued a total of 2,069,063 and 2,088,582 new ordinary shares of 1 pence each in Bushveld.
Mustang cancelled the Mustang CLNs issued to Primorus on 26 April 2021 and issued US$1,500,000 10 per cent convertible loan notes to Bushveld. The convertible loan notes are recognised as other financial assets in the consolidated statement of financial position.
Persons Discharging Managerial Responsibilities ("PMDRs")
The Company issued 1 510 230 new ordinary shares of 1 pence each in the Company in respect of the Bonus Awards announced on 21 July 2020.
Nature and purpose of other reserves Share premium
The share premium reserve represents the amount subscribed for share capital in excess of nominal value.
Share-based payment reserve
The share-based payment reserve represents the cumulative fair value of share options granted to employees.
Convertible loan note reserve
This reserve represents the equity portion of a convertible loan.
Foreign currency translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of financial statements of foreign operations.
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of financial assets at fair value through other comprehensive income until the assets are derecognised or impaired.
Accumulated deficit reserve
The accumulated deficit reserve represents other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
|
|
30 June |
31 December |
|
2022 Unaudited US$ |
2021 Audited US$ |
|
|
10. Borrowings |
|
|
|
Production Financing Agreement - Orion Mine Finance |
34,856,941 |
33,511,742 |
|
Convertible Loan Notes Instrument - Orion Mine Finance |
33,794,048 |
37,313,976 |
|
Nedbank Revolving Credit Facility |
3,092,564 |
5,821,082 |
|
Industrial Development Corporation |
2,938,572 |
3,280,947 |
|
Development Bank of Southern Africa |
999,950 |
999,950 |
|
Convertible Loan Notes Instrument - Primorus |
996,041 |
- |
|
|
76,678,116 |
80,927,697 |
|
Split between non-current and current portions Non-current |
69,178,080 |
70,716,595 |
|
Current |
7,500,036 |
10,211,102 |
|
|
76,678,116 |
80,927,697 |
|
Development Bank of Southern Africa - Facility Agreement |
|
|
Lemur Holdings Limited entered into a US$1,000,000 facility agreement with the Development Bank of Southern Africa Limited in March 2019. The purpose of the facility is to assist with the costs associated with delivering the key milestones to the power project. The repayment is subject to the successful bankable feasibility study of the project at which point the repayment would be the facility value plus an amount equal to an IRR of 40% capped at 2.5 times which ever is lower. As at 30 June 2022, US$999,950 was drawn down (31 December 2021: US$999,950).
The Industrial Development Corporation
The loan represents The Industrial Development Corporation's ("IDC") contribution and is governed by the tripartite agreement between Bushveld Energy Company (Pty) Ltd, Bushveld Electrolyte Company (Pty) Ltd and the IDC. The loan represents the initial capitalised costs of US$260,366 plus the subscription amount of US$3,020,582 to be advanced to Bushveld Electrolyte Company (Pty) Ltd. Bushveld Electrolyte Company is a South African producer of vanadium electrolyte. The company is jointly owned by Bushveld Energy and the IDC, with shareholding of 55 per cent and 45 per cent respectively. Its first manufacturing facility is under construction and located in East London, South Africa.
The loan is interest free, unsecured, subordinated in favour of Bushveld Electrolyte Company's creditors and has no fixed term of repayment in the next 12 months.
Nedbank Revolving Credit Facility
In November 2019, Bushveld secured R125 million (approximately US$8 million) revolving credit facility through its subsidiary Bushveld Vametco Alloys Proprietary Limited ("the Borrower") with Nedbank Limited, a South African based financial institution.
Key highlights of the R125 million revolving credit facility, which was drawn in March 2020:
· Three-year term - Repayment due in November 2022;
· Interest rate calculated using the three year or six months JIBAR1 as selected by the Company plus a 3.85% margin;
· Interest payments are due semi-annually with first payment due in six months from financial close.
The security provided is customary for a secured financing of this nature, including cession of shares in the Borrower, security over the assets of the Borrower, and a parent guarantee.
Financial Covenants undertaken
The Borrower shall ensure that for so long as any amount is outstanding under a Finance Document or any Commitment is in force, in respect of each measurement period:
· the Net Interest Cover Ratio exceeds 4.0 times; and
· the Net Debt to EBITDA Ratio at a Borrower level shall not exceed 4.0 times.
Production Financing Agreement - Orion Mine Finance
In December 2020, Bushveld signed a long-term PFA of US$30 million with mining-focused investment business Orion Mine Finance ("Orion"), primarily to finance its expansion plans at Bushveld Vametco Alloys (Pty) Ltd ("Vametco") and debt repayment. Exchange control authorization from the South Africa Reserve Bank Financial Surveillance Department was granted in October 2020. A first amendment was issued to the agreement on 6 August 2021.
PFA Transaction Details
The Company will repay the principal amount and pay interest via quarterly payments determined initially as the sum of:
· a gross revenue rate (set at 1.175 per cent for 2020 and 2021 and 1.45 per cent from 2022 onwards, subject to adjustment based on applicable quarterly vanadium prices) multiplied by the gross revenue for the quarter; and
· a unit rate of US$0.443/kgV multiplied by the aggregate amount of vanadium sold for the quarter.
Once the Company reaches vanadium sales of approximately 132,020 mtV during the term of the facility, the gross revenue rate and unit rate will reduce by 75 per cent (i.e. to 25 per cent of the applicable rates).
On each of the first three loan anniversaries, the Company has the option to repay up to 50 per cent of both constituent loan parts (each may only be repaid once). If the Company utilises the loan repayment option, the gross revenue rate and/or the unit rate will reduce accordingly.
The PFA capital will provide funding to continue to grow production at Vametco to more than 4,200 mtV per annual production level and debt repayment. Part of the proceeds of the Instrument were used by the Company to prepay in full the Nedbank R250 million term loan. In addition, the following amendments were applied to the financial covenants:
· Removing the cumulative DSCR covenant;
· Increasing the default level on the group net debt to Group EBITDA ratio to 4.0 times; and
· Changing the gross interest cover ratio to net interest cover ratio.
First Amendment Agreement dated 6 August 2021
In terms of the Amended Agreement with Orion, US$17.8 million of the funds ringfenced for the Vametco Phase 3 Expansion was re-allocated to Vanchem mainly for capital expenditure on Kiln 3. Kiln 3 is expected to achieve a steady state production run rate of 2,600 mtVp.a by the end of 2022.
Impact of Amended Agreement on future cashflows of the debt instrument
The original PFA had a cap of 1,075mtV per quarter. This amounted to 4,300mtV per annum expected from 2024 onwards following the completion of the Vametco Phase 3 expansion project.
The amended agreement, with the addition of the Vanchem production volumes from 1 July 2021 will result in the initial cap of 4,300mtV being reached earlier, from 1 July 2022 instead of from 2024.
Accounting for non-substantial modifications
IFRS 9 requires the amortised cost of the liability to be recalculated by discounting the modified contractual cash flows (excluding costs and fees) using the original effective interest rate. Any change to the amortised cost of the financial liability is required to be recognised within profit or loss at the date of the modification.
The carrying amount of the liability is then further revised for any costs or fees incurred. The effective interest rate is also revised accordingly, so the costs are amortised over the remaining term of the modified liability.
As a result of the increased production volumes from Vanchem and the cap of 4,300mtV being reached earlier, this resulted in a non-substantial modification to the contractual terms. The amortised cost was recalculated and the adjustment was recognised within profit or loss for the year ended 31 December 2021.
Contractual and legal balances vs IFRS 9 accounting balances
The contractual and legal accounting differ from IFRS 9 accounting.
Below table illustrates the differences in the carrying values, interest and capital of the contractual PFA and IFRS 9 accounting.
|
|
30 June |
31 December |
|
|
2022 Unaudited US$ |
2021 Audited US$ |
|
Reconciliation of Production Finance Agreement - Orion Mine Finance |
|
|
|
|
|
|
|
Opening balance |
33,511,742 |
30,105,886 |
|
Interest accrued |
2,265,986 |
2,265,986 |
|
Contractual interest |
1,250,451 |
1,198,919 |
|
Notional Interest (IFRS 9) |
1,015,535 |
2,859,569 |
|
Repayments made |
(1,983,680) |
(2,554,804) |
|
Remeasurement (IFRS 9) |
- |
1,902,172 |
|
Closing Balance |
33,794,048 |
33,511,742 |
Convertible Loan Notes Instrument - Orion Mine Finance
Bushveld, through an affiliate of Orion Mine Finance, agreed to subscribe for US$35 million convertible loan notes instrument (the "Instrument"). The conversion price of the convertible loan notes was set at 17pence. The Instrument's proceeds will go towards the first phase of Vanchem's critical refurbishment programme and debt repayment.
Financing terms of the Instrument and convertible loan notes
· A fixed 10 per cent per annum coupon with a three year maturity date from the drawdown date.
· All interest will accrue and be capitalised on a quarterly basis in arrears but compounded annually.
· Accumulated capitalised and accrued interest is convertible into Bushveld ordinary shares. All interest and principal, to the extent not converted into ordinary shares, is due and payable at maturity date.
· Funds raised are to be used for capital investment purposes for the first phase of Vanchem's critical refurbishment programme, and the balance for debt repayment purposes.
Conversion feature
Between drawdown and the Instrument's maturity date Orion may, at their option, convert an amount of the outstanding debt, including capitalised and accrued interest, into Bushveld's ordinary shares as follows:
· First six months: Up to one third of the outstanding amount;
· Second six months: Up to two thirds of the outstanding amount (less any amount previously converted);
· From the anniversary of drawdown until the maturity date: the outstanding amount under the Instrument may be converted;
· Bushveld also has the option to convert all, but not some, of the amount outstanding under the Instrument, if its volume weighted average share price is more than 200 per cent of the conversion price over a continuous 15 trading day period, a trading day being a day on which the AIM market is open for the trading of securities.
At any time until the convertible maturity date, Orion may convert the debt as above mentioned into an amount of ordinary shares equal to the total amount available for conversion under the Instrument divided by the conversion price of 17 pence.
The Orion and Nedbank borrowings are secured against certain group companies and associated assets.
|
|
30 June |
31 December |
|
2022 Unaudited US$ |
2021 Audited US$ |
|
|
11. Trade and other payables |
|
|
|
Financial instruments: Trade payables |
30,201,544 |
28,329,519 |
|
Trade payables - related parties |
103,533 |
107,026 |
|
Other payables |
6,024,744 |
4,644,125 |
|
Non-financial instruments: VAT |
41,517 |
- |
|
|
36,371,338 |
33,080,670 |
Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for trade purchases is 30 days.
The Group has financial risk management policies in place to ensure that all payables are paid within the pre-arranged credit terms. No interest has been charged by any suppliers as a result of late payment of invoices during the year.
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
12. Events after the reporting period
Mustang Energy Plc ("Mustang") made an investment into VRFB Holdings Limited ("VRFB-H") to acquire an indirect interest of 11.05 per cent in Enerox GmbH ("Enerox"). The investment was financed through the issue of US$8,000,000 Convertible Loan Notes ("CLNs") to several investors ("Noteholders") bearing 10% interest per annum. A condition of the CLNs was that if the Mustang shares were not readmitted to the Official List (by way of a Standard Listing) and to trading on the London Stock Exchange's main market for listed securities ("Readmission"), Mustang had the right, on behalf of the Noteholders, to require Bushveld to issue new ordinary shares (at a price equal to the 20 day volume weighted average price of a new Bushveld ordinary share prior to the date of issue) as is equivalent to the principal amount of each Noteholder's CLNs together with all accrued and unpaid interest thereon. In exchange, Mustang will transfer a proportionate number of its VRFB-H shares to Bushveld Energy Limited (the "Backstop").
Mustang has notified Bushveld that one of the Noteholders of CLNs with a principal amount of US$1.25 million (and accrued and unpaid interest thereon) wishes to effect the Backstop in respect of its CLNs.