Q2 2021 and H1 2021 Operational Update

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 provide an operational update for the three months and six months ending 30 June 2021 (“Q2 2021 and H1 2021”).

Key Highlights

Bushveld Vanadium

• Group production in Q2 2021 of 886 mtV (Q1 2021: 688 mtV), underpinned by improved operational stability at Vametco in the period.
  • Vametco produced 278 mtV and 261 mtV for the months of May and June respectively, as a result of improved operational stability and performance following the 35-day maintenance shutdown in Q1 2021.
  • Vametco’s monthly production run-rate forecast for the rest of the year maintained at approximately 240 mtV as a result of planned maintenance strategy to enable operational stability.
  • Vanchem produced 293 mtV in Q2 2021 in line with Q1 2021 (Q1 2021: 293 mtV).
  • Vanchem is expected to maintain its current monthly production levels of approximately between 90 mtV to 100 mtV, through the support of feedstock from the upper seam at Vametco.
• Group sales in Q2 2021 of 820 mtV* (Q1 2021: 788 mtV), supported by higher production volumes at Vametco.
• On track to meet 2021 Group production guidance of between 3,400 mtV and 3,600 mtV.
• Recent unrest in South Africa, during July 2021, has not impacted production, but the Group has experienced logistics delays in getting final product to the port.
• Logistics delays have now been resolved although general international seaborne logistics pressures due to the COVID-19 pandemic remain. We continue to monitor the international logistics situation closely. The Group expects to maintain export volumes during Q3 2021.
• Q2 2021 Total Injury Frequency Rate (“TIFR”) of 1.74, an improvement of 95 per cent relative to Q2 2020 (Q2 2020: 36.34), as a result of improved risk assessment and mitigation measures.

*Reported as final sales to customers.

Vanadium market

• Q2 2021 London Metal Bulletin (“LMB”) Ferrovanadium price averaged US$36.0/kgV, 17 per cent and 44 per cent higher than Q1 2021 (US$30.9/kgV) and Q2 2020 (US$25.0/kgV) respectively. The LMB Ferrovanadium price was US$40.13/kgV as at 16 July 2021.
• The vanadium market is expected to strengthen for the remainder of the year, according to Roskill, driven by higher demand as well as tighter supply, as Chinese steel slag producers are operating at close to capacity. Prices are expected to remain strong in 2021 and gain further momentum in 2022 and 2023, given the predicted market tightness. The Company expects the market fundamentals to continue to support prices going forward.
• Iron ore prices rose to their highest levels in the last five years, exceeding the US$200/t level in May 2021, implying continuing disincentive for vanadium co-producers to blend local vanadium bearing magnetite feedstock with seaborne hematite ores. Prices are anticipated to decline as the Chinese government actively tries to control raw material prices.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

“We are pleased to report a significant increase in quarterly production in Q2 2021, albeit from a low production base in Q1 2021. More than the production volume improvements, it is positive to see improved operational stability at Vametco, as a result of not only the extended 35-day maintenance shutdown, but also of several operational improvements, which include a greater discipline in our proactive maintenance practices, process control from the technical team and people development strategy. While Vametco’s improvements are welcome, we are retaining our monthly production target of 240 mtV, allowing for any planned maintenance to be executed as part of the production stability plan. We remain on track to meet the annual Group production guidance of between 3,400 mtV and 3,600 mtV.

“In addition, we intend to complete the now expanded prefeasibility studies (“PFS”) at Vametco together with the technical studies currently under way at Vanchem in Q4 2021. These studies will determine the optimal path to increase production from Vametco and Vanchem in the most capital efficient manner.

“We are pleased to see strong demand sustained by the increase in Chinese steel production, while momentum continues to build in the application of Vanadium Redox Flow Batteries in the growing energy storage sector. Consequently, we expect the market fundamentals to continue to support the vanadium price going forward.

“In spite of our rigorous COVID-19 mitigation measures, the third wave of the pandemic in South Africa has seen a significant increase in infection rates among our employees with 54 active cases currently. This has not had a material impact on our operations, and we hope each employee achieves a speedy recovery. Moreover, we are pleased to have commenced the vaccination programme for both the Vametco and Vanchem employees, including Impala Platinum kindly agreeing to collaborate on the use of their vaccination centre for our employees at Vametco.

The recent unrest in South Africa has not impacted production. The Group has experienced logistics delays in getting the final product to the port, these delays have now been resolved. We are monitoring the international logistics situation closely, given the pre-existing COVID-19 related delays but expect the Group to maintain export volumes during Q3 2021.”