Full Year Results for the 12-month Period Ended 31 December 2021

Bushveld Minerals Limited (AIM: BMN), the AIM-quoted, integrated primary vanadium producer and energy storage provider, with ownership of high-grade assets in South Africa, is pleased to announce its full year results for the year ended 31 December 2021.

FY2021 Operational and Financial Highlights:

• Group Revenue of US$106.9 million, a 18.8% increase over 2020 (2020: US$90.0 million), supported by improved average realised price of vanadium.
• Group production of 3,592 mtV, at the upper end of 2021 revised guidance of between 3,400mtV and 3,600mtV.
  • H2 2021 Group production of 2,018 mtV, a 28.2% increase over H1 2021 (H1 2021: 1,574 mtV), supported by operational improvements implemented from Q2 2021.
  • Operational stability has continued into H1 2022, resulting in 12 months of stable production levels.
• Group Sales of 3,314 mtV, a 13.7% decrease over 2020 (2020: 3,842 mtV), as a result of international and domestic logistical challenges.
• Underlying Group EBITDA1 loss of US$7.5 million an improvement of US$7.4 million relative to 2020 (2020: EBITDA loss US$14.9 million).
  • H2 2021 underlying EBITDA profit of US$3.3 million, supported by strong production levels, higher realised prices and continuing to trade on an EBITDA positive basis in H1 2022.
  • The Group has been EBITDA positive for the past 12 months.
• Ended the year with cash and cash equivalents of US$15.4 million held at 31 December 2021 (2020: US$50.5 million). Gross Debt of US$82.1 million (2020: US$89.2 million).
  • Prioritised significant investments including: growth initiatives at Vanchem (US$4.2 million), construction of BELCO electrolyte plant (US$4.9 million), investment in CellCube (US$10 million) and debt repayments (US$3.9 million).
• Successfully realised its investments in AIM-listed companies AfriTin Mining Limited and Invinity Energy Systems Plc for approximately US$3.5 million and US$12.7 million respectively.
• Obtained an indirect shareholding of 25.25% into CellCube, a Vanadium Redox Flow Battery original equipment manufacturer.
• Group Total Injury Frequency Rate (“TIFR”) was recorded at 7.78 in 2021 representing a 52 per cent improvement from 2020 (2020: 16.06).

1. Adjusted EBITDA is EBITDA, excluding the Group’s share of losses from joint ventures and the remeasurement of financial liabilities. Underlying EBITDA is Adjusted EBITDA excluding impairment charges.

2. ZAR14.8:US$ 2020: ZAR16.5:US$

Post period events

• Commissioning of Kiln 3 at Vanchem was completed in June 2022 within budget with a production run rate of 2,600 mtVp.a. anticipated in Q4 2022.
• Secured the funding for the Engineering Procurement and Construction of the Vametco hybrid mini grid.
• Staged growth plans announced to increase Group production to 8,000 mtVp.a., subject to:
  • The achievement of short-term performance objectives to deliver sustainable cash generation at the production rate of 5,000 – 5,400 mtVp.a.; and
  • Sufficient funding secured
• Group unaudited cash and cash equivalents of US$12.7 million as at 31 March 2022.

Priorities and outlook

• On track to meet 2022 Group production guidance of between 4,200 mtV and 4,400 mtV, (weighted towards the second half of the year).
• Ramping up production to achieve an annualised steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022.#
  • The volume increase will support further unit cost reduction and increase the Group’s ability to generate positive margins throughout the vanadium price cycle.
• Commencing in 2022, implement the Group cost savings programme in order to achieve costs savings of approximately US$2.5 million to US$4 million, over a 12 to 24 month period.
• Intention to carve-out of Bushveld Energy as a standalone company focused on the VRFB value chain, Bushveld Minerals will maintain a strategic investment in the company. This will enable Bushveld Energy to have the Board and management team required for success, and it will be in a better position to attract the appropriate institutional investors and market valuation.
• Progress construction of the BELCO electrolyte plant, anticipated completion in H1 2023.
• Commence construction of the Vametco hybrid mini-grid, completion expected in H1 2023.

Group Capital Expenditure

Expected capital expenditure for 2022 of approximately US$22.1 million, of which we have already spent US$9.0 million as at 31 May 2022, with most of the cost being Rand-denominated. The capital expenditure includes the following:

• Vametco US$5.5 million;
• Vanchem US$8.5 million;
• Bushveld Energy (BELCO) US$8.1 million

Annual Report

The Annual Report for the year ended 31 December 2021 will be available on the Company’s website today at the following link: http://www.bushveldminerals.com/financial-reports/. Physical copies of the Annual Report will be posted to shareholders who have elected to receive them, during the week commencing the 11 July 2022. A further announcement will be made by the Company once hard copies of the Annual Reports have been dispatched to shareholders.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

“I’m pleased that we finished 2021 strongly, generating positive EBITDA in the second half of the year which has carried through into the first half of the 2022 year. This was a year of two halves, as we entered 2021 facing the ongoing challenges of the Covid-19 pandemic, which were compounded by some operational instabilities at Vametco in the first quarter. We adapted quickly to changing conditions and government mandates to instill normal and productive operating conditions and implemented several interventions which included increasing investments in maintenance and sustaining capital and implemented a rigorous and proactive maintenance programme. I am proud of Bushveld’s resilience throughout the year.

This approach has seen the Company produce solid successive quarterly performances from the second quarter, enabling the Company to meet the upper end of our revised production guidance for the Group in 2021. Production in the second half of the year of 2,018 mtV was 28.2% higher than the first half, illustrating our success in embedding improvements across all operations. I am pleased to report that this has continued into the current year and am delighted to announce the commissioning of Kiln-3 at Vanchem in June 2022, which will deliver production growth and result in lower unit costs at Vanchem.

.As we continue to pursue incremental operational improvements and further embed our values and culture at Bushveld, we expect the effects will continue to reflect in our production and profitability, helping us realise a sustainable cash generating business. We have already seen an improvement in our safety record, although this is from a very strong baseline.

The Group ended the fiscal year with revenue of US$106.9 million and an underlying EBITDA loss of US$7.5 million (adjusted for a one-off impairment loss of US$2.4 million), an improvement of US$7.4 million over the 2020 EBITDA loss of US$14.9 million. During the course of the year, the strengthening of the South African rand had a substantial effect on expenses. This resulted in a net negative exchange impact of US$11.6 million on underlying EBITDA. Excluding the negative impact of the exchange rate, we would have achieved a positive underlying EBITDA profit of US$4.1 million for the year if the exchange rate had been comparable to 2020. In the second half of the year, the Group realised an underlying EBITDA profit of US$3.3 million due to strong production performance as well as a higher realised price. We are pleased that this profitable performance has continued into the first half of 2022.

Moving on to our energy platform, after incubating Bushveld Energy and establishing the critical mass necessary for its success, we intend to carve-out Bushveld Energy as a standalone company focused on the VRFB value chain. We believe that this will help to crystallise the value of Bushveld Energy and position it in the capital markets to attract the appropriate energy-market focused institutional investors with an appetite and understanding of the energy proposition, while retaining the vertical integration proposition of Bushveld Minerals through a substantial strategic shareholding in the stand-alone energy company.

Whilst still in its early stages, Bushveld Minerals has embarked on a journey to define and implement a comprehensive sustainability strategy. At the heart of this strategy is an overarching philosophy of going “Beyond Compliance”, which requires an understanding and commitment to sustainability as core to our business and not a question of meeting regulatory requirements. The philosophy underpins our approach to environment management and engaging with social partners. Bushveld Minerals is well placed to make a meaningful contribution to global decarbonisation efforts through its alloying products that reduce the carbon footprint of steelmaking, and through our electrolyte products used in large-scale long-duration energy storage systems that will support the energy transition through, among others, supporting greater penetration of renewable energy to the global energy mix.

We have successfully transitioned from an exploration company into a sizeable, margin-positive primary vanadium producer with global distribution networks and significant growth potential, an accomplishment we are proud of, considering we began with a market capitalisation of US$20 million and we have amassed an asset base with a net asset value of US$150 million, since 2017. We accomplished this by investing more than US$185 million, which was funded with a relatively heavy reliance on debt markets and a minimal reliance on equity financing; since 2017, the Company has raised only approximately 25 percent of our capital through direct equity financing.

So, our transformation journey continues. With two of the world’s four operating primary vanadium production facilities, a diverse product profile and significant growth upside, we are well placed in a market that will increasingly look to primary producers to meet its growing vanadium demand. Our immediate short-term focus is to ensure that the production base continues to be stable and sustainable, as we ramp up production towards the run rate of 5,000 – 5,400 mtVp.a.in the fourth quarter, following the commissioning of Kiln 3 in June 2022. This positions Bushveld as one of the largest and most significant primary vanadium producers with a low cost production base and supplying approximately five per cent of the global market.

We recently announced the key findings of the feasibility and pre-feasibility studies regarding the optimal path forward to increase Vametco and Vanchem’s production to 8,000 mtVp.a. The expansion will be conducted in phases and will only be pursued once we have met our short-term performance goals of 5,000 – 5,400 mtVp.a. and secured the necessary funding.

We remain committed to achieving operational excellence at our Business and generating positive margins through our low-cost production platform.”

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