Lemur Q1 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.
10 April 2019
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Lemur Q1 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM listed, integrated primary vanadium producer, with ownership of high grade vanadium assets in South Africa, is pleased to provide an operational update in respect of Lemur Holdings Limited (“Lemur”), the Company’s coal and energy subsidiary that is developing an integrated thermal coal mining and independent power project (the “Imaloto Project”) in Madagascar, for the quarter ended 31 March 2019.
Key Highlights
- Lemur has signed a Project Preparation Finance (“PPF”) facility agreement with the Development Bank of Southern Africa (“DBSA”) for an amount of US$1 million.
- The facility will assist in funding the completion of the project development activities and advisory services for the Imaloto Project, thereby enabling Lemur to reach financial close1.
- Review and sign-off of the power bankable feasibility study (“BFS”) has been completed by Sinohydro.
- Review of opencast mine BFS completed. Optimisation exercise underway to consider the inclusion of underground mining within the development plan.
- Engineering, Procurement and Construction (“EPC”) contract negotiations for the power plant are progressing.
- Social and Environmental Impact Assessment (“SEIA”) fieldwork ongoing and on track to be completed in Q2 CY2019.
- Negotiations with potential lenders are progressing.
1. Financial close refers to the date on which Lemur secures funding to implement the Imaloto Project pursuant to all finance documents being entered into and all the conditions precedent being fulfilled to the satisfaction of the funders.
Prince Nyati, CEO of Lemur Holdings Limited, commented:
"We are pleased that the Imaloto Project is progressing according to plan. We are particularly delighted to receive support from the DBSA. We believe that the funding will help us finalise our objective of achieving financial close and providing reliable base load power to southern Madagascar. DBSA participation in the development of the Imaloto Project highlights the economic potential of our project as well as the developmental benefits it offers to southwestern Madagascar."
Details of DBSA Project Preparation Financing
According to the DBSA, the PPF has been created and is earmarked for projects which the DBSA's financing divisions can include in their pipeline. The funds are intended to be used for the following:
· Creating an environment for implementation of infrastructure projects in Southern Africa;
· Conducting pre-feasibility studies;
· Conducting bankable feasibility studies; and
· Assisting with costs to reach financial close.
The funds are provided with the view that projects financed through this stream will be funded through DBSA's lending divisions.
Context for Lemur Holdings:
In December 2018, the DBSA board of directors approved the funding of US$1 million in the PPF for Lemur.
The PPF is important to Lemur for the following primary reasons:
- Provides "at-risk" funding for Lemur so it can develop its Imaloto Project, complete feasibility and reach financial close
- Participating in a PPF with a lender accelerates the due-diligence and approval process for the eventual project finance.
Subsequent to the approval of the DBSA board of directors, the parties signed the facility agreement on 12 March 2019 at the DBSA offices in South Africa. The following are the key points in the US$1 million Facility Agreement:
- All amounts advanced under the facility shall be applied only to cover eligible costs as part of project preparation, such as the costs to be incurred by Lemur during the project preparation phase in relation to the project development;
- More specifically, the facility agreement specifically covers funding for the following project development activities:
§ Completion of the Social and Environmental Impact Assessment ("SEIA"), including various specialist studies;
§ Technical support and advisory services; and
§ Legal, financial / transactional and other advisory services;
· Operating costs, purchase of equipment and land are not eligible;
· A joint project steering committee between DBSA and Lemur has been appointed;
§ The project steering committee will be responsible for the review and disbursement of payments for eligible project costs. The committee will be made up of at least three representatives from DBSA and two representatives from Lemur and will meet on a regular basis.
Lemur will be able to draw down on the facility once South African Reserve Bank approval has been received.
Mohale Ragkate, Group Executive of the Project Preparation Division at DBSA, commented:
"Energy is central to any country's development, and the Imaloto Project is well positioned to play an important role in providing electricity to Madagascar. A reliable power supply would have transformational developmental benefits for the country's southwest region, which currently does not have any baseload or transmission infrastructure. We believe that the conclusion of the project preparation financing paves the way for advanced discussions between DBSA and Lemur on project finance for the construction phase of the project."
Other developments
- Sinohydro has completed the review of Lemur's power BFS and signed-off on the final report.
- Review of the opencast mine BFS has been completed. Lemur has begun to focus on optimising the mix of opencast and underground mine output and an independent consultant, Bara Consulting, has been appointed to conduct the underground mine BFS.
- Negotiations on an EPC contract have reached an advanced stage. Lemur expects a contract to be signed by the end of Q2 2019.
- Fieldwork for the SEIA is ongoing and is on track to be completed by the end of Q2 2019, despite the excessive rains encountered in March 2019. Submission to the Ministry of Energy is to follow.
- Negotiations have progressed with various lenders to secure construction funding on a project finance basis.
2019 Project Objectives
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Objective |
Current Status |
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Complete Mine BFS and optimisation |
Currently under final review |
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Conclude the SEIA Study in Q2 2019 |
Field work ongoing |
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Appoint EPC Contractor for power plant in Q2 2019 |
Legal advisors shortlisted |
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Invite contractors for transmission and operation and maintenance of |
Preparing expression of interest and request for proposal information |
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Conclude funding, credit and political risk cover |
Formal discussions ongoing |
Update on Vametco mineral reserve and resource estimate:
Further to the update announced on 27 March 2019, the Vametco Mineral reserve and resource estimate is currently undergoing final stages of review and will be published as soon as it is available, albeit this may now be after 15 April 2019.
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) 20 7186 9001 |
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Alex Wood |
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+44 (0) 20 7186 9004 |
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BMO Capital Markets Limited |
Joint Broker |
+44 (0) 20 7236 1010 |
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Jeffrey Couch / Tom Rider |
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Michael Rechsteiner / Neil Elliot |
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Tavistock |
Financial PR |
+44 (0) 20 7920 3150 |
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Charles Vivian / Gareth Tredway |
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Brunswick |
Financial PR (South Africa) |
+27 (0) 11 502 7300 |
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Miyelani Shikwambana |
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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 Ltd, the Company's energy storage solutions provider. Whilst the demand for vanadium remains largely anchored in the steel industry, Bushveld 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 Lemur Holdings
Lemur Holdings is a wholly owned subsidiary of Bushveld Minerals and is the company's coal and power platform. The Imaloto Power Project is located in the southwest of Madagascar and consists of a 136 million tonne coal resource (90 per cent of which is of JORC compliant Measured and Indicated). The Project also includes a 30-year Concession for an initial 60MW mine mouth coal power plant as well as over 250km of new transmission lines, developed in parallel as one of Madagascar's leading independent power producers. Imaloto also has a secured 30-year electricity off-take with JIRAMA, the State Utility.
The initial phase of the Imaloto Power Project will potentially increase Madagascar's baseload capacity by approximately 15 per cent and almost double the transmission lines in the country. This is particularly important as the southwest region is mostly rural and about 95 per cent of the population does not have access to electricity. In terms of the in economic impact on southwest Madagascar, the Imaloto Power Project is set to contribute close to US$200 million in foreign direct investment into Madagascar and will create over 1,000 jobs and approximately US$1 billion dollars in revenue for the government of Madagascar over its useful life.
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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