Bushveld Vanadium Q1 Operational Update

RNS Number : 3542M

Bushveld Minerals Limited

27 April 2018

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

27 April 2018

Bushveld Minerals Limited

("Bushveld" or the "Company")

Bushveld Vanadium Q1 Operational Update

Bushveld Minerals, the AIM listed integrated vanadium producer with additional investments in coal, power and tin, is pleased to provide an operational update in respect of its Vanadium platform, which consists of Bushveld Vametco ("Vametco"), Mokopane and Brits.

In line with standard market practice, the Company will only present operational information during quarterly updates, with financial information reported in the interim and full year results. 

Key Highlights

·      Vametco produced 731 mtV in the form of Nitrovan^®, an increase of 35.5% relative to Q4 2017 and 12.9% relative to Q1 2017, supported by the completion of Phase one of the expansion project;

·      The Metal Bulletin vanadium price based on the FeV mid average price for the quarter was US$61.8/KgV, an increase of 58.1% relative to Q4 2017;  

·      Phase two of the expansion project is progressing to increase production capacity to 3,750 mtV;

·      Vametco achieved an all-time record magnetite kiln feed during Q1 2018, supported by the completion of Phase one of the expansion project;

·      The Company has commenced an exploration programme at the Brits Project, which has shown positive drilling results;

·      Post the completion of the Vametco acquisition the Company is working on integrating its system and reporting standards across the group.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

"We are pleased with the strong performance at Vametco over this period, which was underpinned by the completion of the first phase of the expansion project. Phase two of the expansion plan is well underway and on track, which, once complete, will enable Vametco to achieve a production capacity of 3,750 mtV and further lower production costs. Plans for commencing Phase three are progressing to schedule. The results of the Vametco expansion project to position us to achieve a production capacity of 5,000 mtV by 2019 are coming through positively, and our previously stated 2018 guidance remains unchanged.  

"We remain focussed on delivering on this important aspect of our strategy, which will allow us to take advantage of current higher prices, along with supporting our electrolyte and FeV production aspirations. The plans being implemented will undoubtedly further enhance our competitive position in this structurally challenged market whilst our integrated platform will allow us to develop downstream operations and product diversification."

 

Bushveld Vametco

Production:

·      Vametco produced 731 mtV in the form of Nitrovan^® from magnetite concentrate during the first quarter of 2018. Vanadium production for the March 2018 quarter increased by approximately 35.5% relative to the December 2017 quarter.  This was primarily due to the kiln maintenance undertaken at the end of 2017 to allow the increased kiln feed rate as part of the second phase of the expansion project.

·      Vanadium production increased by 12.9% relative to the March 2017 quarter underpinned by increased magnetite processing rates, as a result of the completion of the first phase of the expansion project. The capacity enhancement resulted in an all-time record magnetite kiln feed being achieved during the quarter. The average kiln feed magnetite prior to the commissioning of the first phase was 36,539t pm and the average kiln feed magnetite post the implementation of the first phase was 39,161t pm, a 7.2% monthly increase on kiln feed.

·      Vanadium production guidance for the 2018 calendar year remains unchanged at approximately 3,680 mtV.  Following the completion of Phase two of the expansion project by the end of June 2018, Vametco's production capacity will ramp up from the current 3,035 mtV to 3,750 mtV per annum. The capital expenditure programme is being funded from operational cashflow, as previously notified.

Operational and financial highlights for Vametco (on a 100% basis)¹:  

Description	Unit	Q1 CY18	Q1 CY18 vs Q4 CY17	Q1 CY18 vs Q1 CY17
Vanadium (Nitrovan® plus FeV) produced	mtV3	731	+35.5%	+12.9%
Vanadium sold	mtV3	690	+8.6%	+7.2%
Average MB vanadium price2	US$/KgV	61.8	+58.1%	+144.2%
USD/ZAR exchange rate	US$:ZAR	12.0	-12.4%	-9.6%
Production costs4	ZAR/kgV	226.7	-8.0%	+11.7%

1.     Based on provisional, unaudited estimates. Bushveld's net attributable interest of the above production and financials is approximately 59.1% and will be consolidated on a 100% basis in the financial accounts.

2.     The vanadium price is based on the FeV mid average price for the period, published by Metal Bulletin. Vametco realised price is based on an average one month prior to sale. 

3.     mtV = metric tonnes of vanadium.

4.     Excludes depreciation, royalties, selling, general, & administrative expenses.

Multi-phased expansion project

·      In 2017, Vametco commenced a three-phased expansion project with the aim of increasing annualised production capacity to more than 5,000 mtV by 2019.

·      Phase one of the expansion plan was successfully completed on time and on budget in the September 2017 quarter, during which Vametco reached an annualised production capacity of 3,035 mtV.

·      Phase two of expansion plan to target annualised production capacity of 3,750 mtV continues on schedule. Commissioning of the new milling circuit is expected during June 2018 with improved concentrate volumes planned from the end of the first half of 2018.

·      Phase three of the expansion plan is planned to increase Vametco's annualised production run rate to over 5,000 mtV by 2019.

·      Completion of the expansion project will enhance Vametco's existing competitive position in a structurally challenged market. In addition, the presence of an integrated platform will allow the development of downstream operations whilst achieving product diversification.

Project	Investment1	Scope	Progress
Multiphase expansion project - Phase 1	US$0.5m	Increase Vametco annual production run rate to 3,035 mtV.	100% completed in September 2017.
Multiphase expansion project - Phase 2	~US$2.5m	Increase Vametco annual production run rate to 3,750 mtV by June 2018.	On target for completion by June 2018.
Multiphase expansion project - Phase 3	N/A	Increase Vametco annual production run rate to over 5,000 mtV by 2019.	Planning Stages.

1.     Shown on a 100% basis, Bushveld Minerals net interest is 59.1%.

Other projects underway

·      Tailings facility expansion: to provide capacity to continue depositing the calcines (which needs to be deposited on a H:H liner) as part of ongoing operations.

·      Kiln off-gas project: to comply with regulatory requirements and further increase kiln feed throughput.

·      Both projects are expected to be commissioned by the end of 2018.

Mokopane Project

The Mokopane Vanadium Project is a key part of Bushveld's vanadium strategy. The project comprises one of the world's largest primary vanadium resources as well as high in-situ grades of 1.4% V₂0₅ and in-concentrate 1.60-1.75% V₂O₅ grades for the MML orebody. An application for a New Order Mining Right was lodged in March 2015 and is being processed by South Africa's Department of Minerals Resources. The Company is in ongoing discussions with the Department of Mineral Resources with a view to being granted a New Order Mining Right. Simultaneously, the Company has been progressing ongoing consultations with the local community and continues to evaluate ways to bring the asset into production in the most cost-efficient manner possible. The intention remains to develop this project alongside the Company's broader vanadium portfolio.

Brits Project

The Company has begun an exploration programme at the Brits Project, comprising prospecting rights on several farms adjacent to Vametco, with the aim of establishing a maiden Mineral Resource Estimate. In February and March 2018, a soil geochemical sampling programme and ground magnetic survey were carried out over the Brits Project area, and interpretation of the results of this work has led to several drilling targets being delineated.

Drilling on these targets commenced in March 2018, and thus far eight diamond drill holes have been completed, totalling 833.08 metres. The Lower Seam (the primary orebody mined at the adjacent Vametco Mine) has been intersected in several drill holes, and the Intermediate Seam and Upper Seam have also been intersected in some drill holes. 

Drill hole	Total Depth	Targets Intersected
BVL001	70.76 m	Lower Seam
BVL002	79.35 m	Lower Seam
BVL003	77.32 m	Lower Seam
BVL004	40.35 m	Lower Seam
BVL005	99.36 m	Lower Seam, Intermediate Seam
BVL006	173.10 m	Lower Seam, Intermediate Seam
BVL007	141.44 m	Lower Seam, Intermediate Seam
BVL008	151.40 m	Upper Seam
Total	833.08 m

Drill cores are currently being logged and assayed. Assays will be carried out at the Vametco mine laboratory and confirmed by an independent external laboratory, with results published as they are received. The Company will commence infill drilling at the Brits Project and will begin estimation of the Mineral Resource once logging, sampling and assaying of all drill holes has been completed.

 

Enquiries: [e-mail]

Bushveld Minerals		[phone]
Fortune Mojapelo, Chief Executive Officer
Chika Edeh, Head of Investor Relations
SP Angel Corporate Finance LLP	Nominated Adviser & Broker	[phone]
Ewan Leggat
Richard Morrison
Alternative Resource Capital	Joint Broker
Rob Collins		[phone]
Alex Wood		[phone]
Blytheweigh	Financial PR
Tim Blythe / Nick Elwes		[phone]
Gabriella von Ille		[phone]

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is an AIM listed integrated vanadium producer with additional investments in coal, power and tin. 

The Company's flagship vanadium platform includes a 59.1 per cent controlling interest in Bushveld Vametco Alloys (Pty) Ltd a primary vanadium mining and processing company; the Mokopane Vanadium Project and the Brits Vanadium Project. The coal platform comprises the wholly-owned Imaloto Coal Project, which is being developed as one of Madagascar's leading independent power producers. The Company's tin interests are held through its shareholding in AIM listed AfriTin Mining Limited.

Bushveld's vision is to become a significant, low cost, integrated primary vanadium producer through owned high grade assets. This incorporates development and promotion of the role of vanadium in the growing global energy storage market through Bushveld Energy, the Company's energy storage solutions provider. Whilst the demand for vanadium remains largely anchored in the steel industry, Bushveld Minerals believes there is strong potential for an imminent and significant global vanadium demand surge from the fast-growing energy storage market, particularly through the use and adoption of Vanadium Redox Flow Batteries.

The Company's approach to project development recognises that, whilst attractive project economics are imperative, they are insufficient to secure capital to bring them to account. A clear path to production within a visible timeframe, low capital expenditure requirements and scalability are important factors in ensuring a positive return on investment. This philosophy is core to the Company's strategy in developing projects.

Detailed information on the Company and progress to date can be accessed on the website: www.bushveldminerals.com.

About 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 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 extraction process which includes the kiln for roasting followed by leaching and precipitation. Thereafter the precipitated vanadium as ammonium metavanadate is converted to modified vanadium oxide (MVO) in rotary calciners. MVO is fed into the mixplant and finally into the shaft furnaces to produce Nitrovan^TM.

 

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