TIDMBMN
RNS Number : 8853G
Bushveld Minerals Limited
09 November 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.
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
Nitrovan(TM) 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
-- Nitrovan(TM) 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 Q3 CY18 Q3 CY18 Q3 YTD
CY18 vs vs CY18
Q2 CY18 Q3 CY17 vs
Q3 YTD
CY17
Vanadium (Nitrovan(R)
plus FeV) produced mtV(3) 537 1,897 -14.6% -19.7% -10.1%
Vanadium sold mtV(3) 584 1,987 -18.1% -21.5% -4.7%
--------- --------- ------- --------- --------- --------
Average MB vanadium
price(2) US$/KgV 85.8 72.3 +24.1% +119.8% +137.3%
--------- --------- ------- --------- --------- --------
USD/ZAR average
exchange rate(4) US$:ZAR 14.1 12.9 +11.4% +7.8% -2.1%
--------- --------- ------- --------- --------- --------
Production costs(5) 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 Intersection(1) Magnetite V(2) O(5) %
% (in magnetite)
4.32-12.91
BVL001(2) LS1 m 49.11 2.09
--------------- ------------------- ---------- ----------------
16.45 - 17.55
BVL002 LS8 m 40.69 1.43
--------------- ------------------- ---------- ----------------
23.00 - 24.93
LS7 m 31.55 1.62
--------------- ------------------------------- ---------- ----------------
30.00 - 31.10
LS6 m 53.88 1.57
--------------- ------------------------------- ---------- ----------------
32.00 - 35.32
LS5 m 39.04 1.61
--------------- ------------------------------- ---------- ----------------
38.00 - 39.50
LS4 m 40.58 1.40
--------------- ------------------------------- ---------- ----------------
58.35 - 59.78
LS3 m 46.05 1.62
--------------- ------------------------------- ---------- ----------------
63.30 - 65.60
LS2 m 36.04 1.86
--------------- ------------------------------- ---------- ----------------
66.00 - 98.68
LS1 m 55.50 1.68
--------------- ------------------------------- ---------- ----------------
12.60 - 14.80
BVL003 LS8 m 33.97 1.47
--------------- ------------------- ---------- ----------------
20.50 - 23.41
LS7 m 26.48 1.48
--------------- ------------------------------- ---------- ----------------
27.00 - 29.46
LS6 m 38.68 1.57
--------------- ------------------------------- ---------- ----------------
32.00 - 33.74
LS5 m 39.77 1.61
--------------- ------------------------------- ---------- ----------------
36.10 - 38.00
LS4 m 38.84 1.45
--------------- ------------------------------- ---------- ----------------
58.00 - 60.70
LS3 m 35.40 1.50
--------------- ------------------------------- ---------- ----------------
64.00 - 66.90
LS2 m 35.64 1.61
--------------- ------------------------------- ---------- ----------------
67.45 - 71.86
LS1 m 58.73 1.66
--------------- ------------------------------- ---------- ----------------
13.31 - 14.70
BVL004(2) LS1 m 80.08 1.94
--------------- ------------------- ---------- ----------------
19.46 - 21.70
BVL005 IS2 m 29.50 1.45
--------------- ------------------- ---------- ----------------
28.00 - 30.15
IS1 m 33.99 1.47
--------------- ------------------------------- ---------- ----------------
39.16 - 41.18
LS8 m 32.80 1.43
--------------- ------------------------------- ---------- ----------------
45.96 - 49.00
LS7 m 27.03 1.44
--------------- ------------------------------- ---------- ----------------
54.00 - 55.25
LS6 m 55.64 1.39
--------------- ------------------------------- ---------- ----------------
58.00 - 60.00
LS5 m 43.11 1.44
--------------- ------------------------------- ---------- ----------------
63.00 - 64.40
LS4 m 41.71 1.59
--------------- ------------------------------- ---------- ----------------
84.00 - 86.30
LS3 m 42.12 1.55
--------------- ------------------------------- ---------- ----------------
90.00 - 92.18
LS2 m 37.88 1.53
--------------- ------------------------------- ---------- ----------------
93.00 - 96.22
LS1 m 63.43 1.67
--------------- ------------------------------- ---------- ----------------
29.00 - 32.32
BVL006(2) US2 m 34.77 1.75
--------------- ------------------- ---------- ----------------
34.35 - 41.00
US1 m 38.40 1.63
--------------- ------------------------------- ---------- ----------------
98.00 - 100.35
IS2 m 29.17 1.70
--------------- ------------------------------- ---------- ----------------
106.00 - 108.5
IS1 m 30.02 1.68
--------------- ------------------------------- ---------- ----------------
117.00- 119.00
LS8 m 36.56 1.64
--------------- ------------------------------- ---------- ----------------
125.60 - 127.00
LS7 m 41.62 1.65
--------------- ------------------------------- ---------- ----------------
131.85 - 133.10
LS6 m 57.62 1.66
--------------- ------------------------------- ---------- ----------------
135.00 - 138.00
LS5 m 44.26 1.70
--------------- ------------------------------- ---------- ----------------
140.20 - 141.10
LS4 m 53.82 1.66
--------------- ------------------------------- ---------- ----------------
160.00 - 161.75
LS3 m 46.79 1.54
--------------- ------------------------------- ---------- ----------------
165.00 - 167.73
LS2 m 39.65 1.79
--------------- ------------------------------- ---------- ----------------
168.15 - 171.36
LS1 m 65.89 1.78
--------------- ------------------------------- ---------- ----------------
50.00 - 54.44
BVL007 US1 m 20.03 1.46
--------------- ------------------- ---------- ----------------
59.00 - 61.00
IS2 m 28.48 1.52
--------------- ------------------------------- ---------- ----------------
65.00 - 67.00
IS1 m 28.60 1.49
--------------- ------------------------------- ---------- ----------------
71.92 - 74.60
LS8 m 34.52 1.42
--------------- ------------------------------- ---------- ----------------
83.00 - 84.84
LS7 m 42.73 1.39
--------------- ------------------------------- ---------- ----------------
97.00 - 98.00
LS6 m 66.30 1.40
--------------- ------------------------------- ---------- ----------------
99.20 - 102.30
LS5 m 40.48 1.49
--------------- ------------------------------- ---------- ----------------
105.00 - 106.35
LS4 m 53.78 1.40
--------------- ------------------------------- ---------- ----------------
126.00 - 126.82
LS3 m 73.56 1.34
--------------- ------------------------------- ---------- ----------------
126.82 - 127.50
LS2 m 80.08 1.31
--------------- ------------------------------- ---------- ----------------
130.00 - 136.50
LS1 m 52.26 1.61
--------------- ------------------------------- ---------- ----------------
New Seam 43.00 - 75.00
BVL008 (3) m 29.22 1.31
--------------- ------------------- ---------- ----------------
107.00 - 108.90
New Seam(3) m 32.88 1.36
--------------- ------------------------------- ---------- ----------------
110.40 - 112.22
US2 m 55.57 1.41
--------------- ------------------------------- ---------- ----------------
128.65 - 129.34
US1 m 50.59 1.37
--------------- ------------------------------- ---------- ----------------
131.70 - 132.20
IS2 m 39.65 1.45
--------------- ------------------------------- ---------- ----------------
133.00 - 138.58
IS1 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
+27 (0) 11 268
Bushveld Minerals 6555
Fortune Mojapelo, Chief Executive
Officer
Chika Edeh, Head of Investor
Relations
SP Angel Corporate Finance Nominated Adviser +44 (0) 20 3470
LLP & Broker 0470
Ewan Leggat / Richard Morrison
Jonathan Williams / Richard
Parlons
Alternative Resource Capital Joint Broker
+44 (0) 207 186
Rob Collins 9001
+44 (0) 207 186
Alex Wood 9004
Tavistock Financial PR
+44 (0) 207 920
Charles Vivian / Gareth Tredway 3150
Lifa Communications Financial PR (South
Africa)
+27 (0) 711 121
Gabriella von Ille 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 Nitrovan(TM) , 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(R) .
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
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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