Bushveld Vanadium Q3 Operational Update
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.
9 November 2018
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Bushveld Vanadium Q3 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM listed, integrated primary vanadium producer, with ownership of high grade vanadium assets, is pleased to provide an operational update for the three months to end-September 2018 ("Q3 2018"), in respect of its Vanadium platform which consists of Bushveld Vametco Limited ("Vametco"), the Brits Vanadium Project ("Brits") and the Mokopane Project ("Mokopane").
Key Highlights
· Consolidation of Vametco ownership, following the acquisition, of Sojitz's underlying effective 16% interest in Vametco Alloys (Pty) Ltd for US$20 million in September 2018, increasing Bushveld Minerals effective interest to 75%, subsequently reduced to 74% following completion of the sale of 1% to its Black Economic Empowerment shareholders, in line with the requirements of the mining regulations of South Africa.
· Vametco's production for Q3 2018 was 537 mtV in the form of NitrovanTM from magnetite concentrate (Q3 2017: 669 mtV), a decrease of approximately 14.6% relative to Q2 2018 (Q2 2018: 629 mtV), primarily due to a 16 day unprotected industrial action during which the plant ceased operations.
· As a result of the industrial action and an unplanned seven day kiln maintenance exercise, Vametco's 2018 production guidance has been reduced downwards from 2,850 mtV to 3,000 mtV to between 2,600 mtV and 2,650 mtV.
· Ferrovanadium price averaged US$85.8/KgV in Q3 2018, an increase of 24% relative to the previous quarter. For the nine months to September 2018 the ferrovanadium price averaged US$72.3/KgV, an increase of 137% relative to the comparable period in 2017.
Ø Vametco's realised price is based on the prior month's average price.
· Ferrovanadium price has continued to strengthen with the Metal Bulletin FeV mid-price averaging US$114/KgV during the month of October 2018.
· The Company continues to progress the operational improvement initiatives to enhance Vametco's productivity and achieve maximum throughput.
· The Company has completed 13 (VM001 - VM013) exploration drillholes, as part of an initiative to increase geological confidence and grade control of the ore mined at Vametco. Assay results are expected by December 2018 with an updated Mineral Resource Estimate to be published in Q1 2019.
· The Company has received all assays results for Phase 1 of its exploration programme at the Brits Project, which has to date shown positive drilling results. Sampling results of Phase 2 drillholes are expected to be received in Q1 2019.
Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:
"The successful completion of the acquisition of Sojitz's interest in Vametco has enabled us to accomplish our objective of achieving maximum ownership of the asset. To obtain the 74% ownership, Bushveld's cash outlay totalled approximately US$48 million which, given the Vametco earnings already reported for the half year, implies a payback on investment of under 12 months.
"With the completion of most of the corporate action aimed at maximising Bushveld's ownership of Bushveld Vametco, the Company can accordingly now focus on ensuring maximised production output and efficiencies at Vametco.
"The impact of the two week unprotected industrial action, as well as a seven day kiln shutdown due to unplanned maintenance, has resulted in the downward revision of guidance. This underscores the importance of focusing on operational improvement initiatives, production expansion initiatives, and proactive stakeholder engagement with organised labour and local communities. The latter will ensure these stakeholders remain an important part of our growth journey.
"We continue to benefit from a rising vanadium price supported by China's new high-strength rebar standard which came into effect on 1 November 2018.
"While higher vanadium prices partially mitigated the impact of the production shortfall, with the Company expected to generate healthy cash flows, Bushveld intends to use this opportunity to sustainably maximise production volumes and drive operating costs down. Accordingly, we are pleased to have commenced with Phase 3 of our expansion plan, which will increase capacity at Vametco to 5,000 mtV per annum. Phase 3 will also benefit from advancement of the Brits Vanadium Project, which has yielded encouraging drilling results.
"Our primary focus is to continue expanding our footprint as we execute on our strategy. We are well placed to achieve significant benefits from our high quality assets and further strengthen our competitive position."
Bushveld Vametco Limited
Production
· NitrovanTM production of 537 mtV for Q3 2018, decreased by approximately 14.6% relative to Q2 2018 (Q2 2018: 629 mtV). The lower volumes were mostly due to production interruptions as a result of a four day protest by members of the local community in July 2018 and a 16 day unprotected industrial action in September 2018.
Ø The industrial action was resolved on 21 September 2018, when the Company and the Association of Mineworkers and Construction Union announced that a resolution was reached through the implementation of a framework for a new Employee Share Options Scheme Structure.
Ø The Company continues to execute on its operational improvement initiative, to enhance Vametco's productivity and achieve maximum throughput.
· Vametco's production cost of ZAR298/KgV for Q3 2018, increased by approximately 11.0% relative to Q2 2018, as a result of lower volumes during the quarter due to the production interruptions.
· As a result of the unprotected industrial action in September 2018 and an unplanned seven day kiln maintenance exercise Vametco's production guidance for the year has been revised downwards from 2,850 mtV to 3,000 mtV to between 2,600 and 2,650 mtV. The reduced volumes and higher inflation have therefore resulted in a unit cost guidance revision to between ZAR 250/KgV and ZAR255/KgV.
Table 1: Operational highlights for Vametco (on a 100% basis)1
|
Description |
Unit |
Q3 CY18 |
9mths CY18 |
Q3 CY18 vs Q2 CY18 |
Q3 CY18 vs Q3 CY17 |
Q3 YTD CY18 vs Q3 YTD CY17 |
|
Vanadium (Nitrovan® plus FeV) produced |
mtV3 |
537 |
1,897 |
-14.6% |
-19.7% |
-10.1% |
|
Vanadium sold |
mtV3 |
584 |
1,987 |
-18.1% |
-21.5% |
-4.7% |
|
Average MB vanadium price2 |
US$/KgV |
85.8 |
72.3 |
+24.1% |
+119.8% |
+137.3% |
|
USD/ZAR average exchange rate4 |
US$:ZAR |
14.1 |
12.9 |
+11.4% |
+7.8% |
-2.1% |
|
Production costs5 |
ZAR/KgV |
297.74 |
262.08 |
+11.0% |
+25.1% |
+22.4% |
1. Based on provisional, unaudited estimates. Bushveld's net attributable interest of the above production and financials was 59.1% as at 12 September 2018 and approximately 74% from 13 September 2018.
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 the prior month's average price.
3. mtV = metric tonnes of vanadium.
4. Source: Bloomberg. The achieved USD/ZAR average exchange rate may vary.
5. 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. As part of the operational improvement initiative, designed to enhance Vametco's productivity, the Company is reviewing the timing and required investment to expand production capacity to 5,000 mtV.
· 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.
Other projects underway
· Tailings facility expansion: to maintain deposition capacity for depositing the calcines (which need to be deposited on a H:H liner) as part of ongoing operations will now be completed by end of Q4 2018 and deposition commence during Q1 2019.
· Kiln off-gas project: has been initiated to comply with regulatory requirements and further increase kiln feed throughput. Commissioning planned for end of Q1 2019.
Exploration at Vametco Mine
· 13 drillholes have been sampled and submitted for assay. All assay results are expected to be received by December 2018, and an updated Mineral Resource Estimate and Mine Works Programme are expected once all Quality Assurance Quality Control procedures have been completed.
Brits Vanadium Project
The Company has completed the second phase of the exploration programme at Brits. The aim of the exploration programme is to delineate a maiden Mineral Resource Estimate at Brits. 26 drillholes, totalling 2,818.43 metres, have been completed over the two phases. Table 2 summarises the results for the first phase of the exploration programme, the results for the second phase will be provided in Q1 2019.
Table 2: Phase 1 - Assay results and intersections for Brits Vanadium Project Drilling
|
Drillhole |
Intersection1 |
Magnetite % |
V2O5 % (in magnetite) |
|
|
BVL0012 |
LS1 |
4.32-12.91 m |
49.11 |
2.09 |
|
BVL002 |
LS8 |
16.45 - 17.55 m |
40.69 |
1.43 |
|
LS7 |
23.00 - 24.93 m |
31.55 |
1.62 |
|
|
LS6 |
30.00 - 31.10 m |
53.88 |
1.57 |
|
|
LS5 |
32.00 - 35.32 m |
39.04 |
1.61 |
|
|
LS4 |
38.00 - 39.50 m |
40.58 |
1.40 |
|
|
LS3 |
58.35 - 59.78 m |
46.05 |
1.62 |
|
|
LS2 |
63.30 - 65.60 m |
36.04 |
1.86 |
|
|
LS1 |
66.00 - 98.68 m |
55.50 |
1.68 |
|
|
BVL003
|
LS8 |
12.60 - 14.80 m |
33.97 |
1.47 |
|
LS7 |
20.50 - 23.41 m |
26.48 |
1.48 |
|
|
LS6 |
27.00 - 29.46 m |
38.68 |
1.57 |
|
|
LS5 |
32.00 - 33.74 m |
39.77 |
1.61 |
|
|
LS4 |
36.10 - 38.00 m |
38.84 |
1.45 |
|
|
LS3 |
58.00 - 60.70 m |
35.40 |
1.50 |
|
|
LS2 |
64.00 - 66.90 m |
35.64 |
1.61 |
|
|
LS1 |
67.45 - 71.86 m |
58.73 |
1.66 |
|
|
BVL0042 |
LS1 |
13.31 - 14.70 m |
80.08 |
1.94 |
|
BVL005 |
IS2 |
19.46 - 21.70 m |
29.50 |
1.45 |
|
IS1 |
28.00 - 30.15 m |
33.99 |
1.47 |
|
|
LS8 |
39.16 - 41.18 m |
32.80 |
1.43 |
|
|
LS7 |
45.96 - 49.00 m |
27.03 |
1.44 |
|
|
LS6 |
54.00 - 55.25 m |
55.64 |
1.39 |
|
|
LS5 |
58.00 - 60.00 m |
43.11 |
1.44 |
|
|
LS4 |
63.00 - 64.40 m |
41.71 |
1.59 |
|
|
LS3 |
84.00 - 86.30 m |
42.12 |
1.55 |
|
|
LS2 |
90.00 - 92.18 m |
37.88 |
1.53 |
|
|
LS1 |
93.00 - 96.22 m |
63.43 |
1.67 |
|
|
BVL0062 |
US2 |
29.00 - 32.32 m |
34.77 |
1.75 |
|
US1 |
34.35 - 41.00 m |
38.40 |
1.63 |
|
|
IS2 |
98.00 - 100.35 m |
29.17 |
1.70 |
|
|
IS1 |
106.00 - 108.5 m |
30.02 |
1.68 |
|
|
LS8 |
117.00- 119.00 m |
36.56 |
1.64 |
|
|
LS7 |
125.60 - 127.00 m |
41.62 |
1.65 |
|
|
LS6 |
131.85 - 133.10 m |
57.62 |
1.66 |
|
|
LS5 |
135.00 - 138.00 m |
44.26 |
1.70 |
|
|
LS4 |
140.20 - 141.10 m |
53.82 |
1.66 |
|
|
LS3 |
160.00 - 161.75 m |
46.79 |
1.54 |
|
|
LS2 |
165.00 - 167.73 m |
39.65 |
1.79 |
|
|
LS1 |
168.15 - 171.36 m |
65.89 |
1.78 |
|
|
BVL007 |
US1 |
50.00 - 54.44 m |
20.03 |
1.46 |
|
IS2 |
59.00 - 61.00 m |
28.48 |
1.52 |
|
|
IS1 |
65.00 - 67.00 m |
28.60 |
1.49 |
|
|
LS8 |
71.92 - 74.60 m |
34.52 |
1.42 |
|
|
LS7 |
83.00 - 84.84 m |
42.73 |
1.39 |
|
|
LS6 |
97.00 - 98.00 m |
66.30 |
1.40 |
|
|
LS5 |
99.20 - 102.30 m |
40.48 |
1.49 |
|
|
LS4 |
105.00 - 106.35 m |
53.78 |
1.40 |
|
|
LS3 |
126.00 - 126.82 m |
73.56 |
1.34 |
|
|
LS2 |
126.82 - 127.50 m |
80.08 |
1.31 |
|
|
LS1 |
130.00 - 136.50 m |
52.26 |
1.61 |
|
|
BVL008 |
New Seam 3 |
43.00 - 75.00 m |
29.22 |
1.31 |
|
New Seam3 |
107.00 - 108.90 m |
32.88 |
1.36 |
|
|
US2 |
110.40 - 112.22 m |
55.57 |
1.41 |
|
|
US1 |
128.65 - 129.34 m |
50.59 |
1.37 |
|
|
IS2 |
131.70 - 132.20 m |
39.65 |
1.45 |
|
|
IS1 |
133.00 - 138.58 m |
41.29 |
1.38 |
|
1. Note that depths are intersected depths and do not represent true thicknesses
2. BVL001, BVL004 and BVL006 have been previously reported.
3. New Seam overlying Upper Seam (US): consistency to be verified with additional boreholes
LS = Lower Seam, IS = Intermediate Seam, US = Upper
The sample analysis results continue to reaffirm the consistent nature in grade and thickness of the Lower Seam (LS), Intermediate Seam (IS) and Upper Seam (US) Layers at the Brits Vanadium Project. Although the grade of the LS is marginally lower than that mined at Vametco, it still represents world-class vanadium grades. These assay results provide evidence of continuity of ore grades and thicknesses similar to the adjacent operating Bushveld Vametco Alloys mine and confirm the potential for an eastward extension of the current orebody being mined at Vametco.
Mokopane Vanadium Project
The Mokopane Vanadium Project is a key part of Bushveld's vanadium strategy and the intention remains to secure the mining right and develop the greenfield project into a vanadium mine and processing plant. The Company continues to explore means to supply ore from the project to plants in China and / or elsewhere in the world.
ENDS
Enquiries: info@bushveldminerals.com
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Bushveld Minerals |
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+27 (0) 11 268 6555 |
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Fortune Mojapelo, Chief Executive Officer |
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Chika Edeh, Head of Investor Relations |
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SP Angel Corporate Finance LLP |
Nominated Adviser & Broker |
+44 (0) 20 3470 0470 |
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Ewan Leggat / Richard Morrison |
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Jonathan Williams / Richard Parlons |
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Alternative Resource Capital |
Joint Broker |
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Rob Collins |
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+44 (0) 207 186 9001 |
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Alex Wood |
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+44 (0) 207 186 9004 |
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Tavistock |
Financial PR |
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Charles Vivian / Gareth Tredway |
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+44 (0) 207 920 3150 |
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Lifa Communications |
Financial PR (South Africa) |
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Gabriella von Ille |
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+27 (0) 711 121 907 |
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low cost, integrated, primary vanadium producer, with ownership of high grade vanadium assets.
The Company's flagship vanadium platform includes a 74 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.
Bushveld's vision is to become a significant, low cost, integrated primary vanadium producer through owning 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 project developer and component manufacturer. 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.
While the Company's focus is on vanadium operations and the development and promotion of VRFBs, it has additional investments in coal, power and tin.
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.
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 NitrovanTM, 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®.
Competent Person's Statement
In accordance with the "AIM Rules - Note for Mining and Oil and Gas Companies", the information contained within the announcement has been reviewed and approved by Dr Luke Longridge, consulting geologist. Dr Longridge has a PhD in Geology (2012) and over 6 years' experience working on vanadiferous magnetite deposits in the Bushveld Complex. He is a member of the Geological Society of South Africa and is a registered Professional Natural Scientist (Pr Sci.Nat.) in South Africa. Dr Longridge has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined under the JORC Code (2012). Dr Longridge consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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