Delivering Sustainable Growth – Key Findings of Vametco and Vanchem Studies to Achieve 8,000 mtVp.a.

Bushveld Minerals Limited (AIM: BMN), the AIM quoted integrated primary vanadium producer and energy storage solutions provider, is pleased to provide a summary of the key findings of the feasibility and pre-feasibility studies (the “Studies”) by METC South Africa Pty (Ltd) and MSA Group (Pty) Ltd to assess the optimal path forward to grow production at Vametco and Vanchem to 8,000 mtVp.a.

The Studies were undertaken to determine the next phase of the Company’s growth plans beyond the sustainable production run rate of between 5,000-5,400 mtVp.a., which is expected to be achieved by the end of 2022.

Highlights of the Growth Studies

• The studies highlight a significant opportunity to increase production by c.50% to 8,000mtVp.a. through the Company’s existing operations.
• Requires growth capital expenditure of US$151 million (ZAR2.3 billion)*
• Optimal staged expansion plan (based on highest to lowest IRR and NPV):
  • Stage 1 – Vametco – Installation of a Semi-autogenous (SAG) Mill to establish a permanent and reliable supply of feedstock for both plants in advance of further capacity expansion.
    • Stage 1 establishes a sustainable and reliable supply of concentrate feedstock (up to 6,800 mtV) for both plants in advance of further capacity expansion with the balance of ore, when required, being supplied through development of Mokopane, Brits or third party ore. The SAG Mill investment at Vametco will provide concentrate to enable Vanchem growth, whilst intermediate products (AMV, MVO) can also be shared between the plants.
  • Stage 2 – Vanchem – Refurbishment of Kiln 2 to increase production at Vanchem to between 3,600 – 3,700 mtVp.a. (corresponding increase in Group production to between 6,000 – 6,500 mtVp.a.).
  • Stage 3 – Vanchem – Refurbishment of Kiln 1 to increase production to between 4,600 – 4,700 mtVp.a. (corresponding increase in Group production to between 7,000 – 7,500 mtVp.a.).
  • Stage 4 – Vametco – Increase single kiln capacity to 3,400 mtVp.a. (corresponding increase in Group production to between 7,600 – 8,000 mtVp.a.).
• The option to implement the expansion in stages substantially reduces Bushveld’s upfront capital requirements and allows incremental production to be attained from each stage in order to generate additional cash flows, which can be leveraged for the next stage.

*Based on a R15.29 USD:ZAR exchange rate.

• The product diversification and the flexibility arising from the expansion allows for maximum market penetration.
• Management intent to pursue the staged expansion plans, subject to:
  • The meeting of short-term performance targets to deliver sustainable cash generating production at the production rate of 5,000 – 5,400 mtVp.a.; and
  • In a phased manner, with sufficient funding secured, accompanied by any necessary third-party validation of associated project economics.
• As a result of higher volumes and operational efficiencies, the Company has estimated that at full operational production of 8,000 mtVp.a., C1 costs per Kg/V produced at Vametco and Vanchem would fall by at least 20% at each operation, compared to 2021.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

“Bushveld’s brownfield growth strategy was predicated on the significant barriers to entry posed by the high capital intensity for development of greenfield primary vanadium production capacity in a world with only four operational primary vanadium processing plants. In acquiring the two plants, Vametco and Vanchem, the company was mindful that significant capital expenditure would be required to unlock the full production and cost potential. The Company was also of the view that a combination of the acquisition and refurbishment costs would cost much less and transition the Company into a producer in much shorter time than it would with a greenfield operation. What’s more, the Company could leverage cashflows to fund and source additional capital to implement this strategy.

In this context, I am pleased to share the results of the feasibility studies for the growth path to 8,000 mtVp.a., which allows our assets to reach their full potential unlocking significant value for shareholders.

“Thus, whilst our commitment to growth remains, we have the liberty to pursue the new growth plans only once we have achieved our production performance targets on delivering sustainable cash generating production at the production rate of 5,000 – 5,400 mtVp.a. and improved our balance sheet capacity to invest in such when funding has been secured.

“Furthermore, the studies, puts us in a position to rapidly respond to growing vanadium demand. Growth in demand for Vanadium is supported by rising intensity of use within high-strength-low-alloy-steel, as well as the significant upside potential for vanadium redox flow batteries given the increasing requirement for energy storage applications for renewable energy sources.”

In the film below, SP Angel Analyst John Meyer highlights the investment case for Bushveld Minerals