TIDMBMN
RNS Number : 1888Z
Bushveld Minerals Limited
13 September 2022
Market Abuse Regulation ("MAR") Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
13 September 2022
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Unaudited Interim Results for the Six Months ended 30 June
2022
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
announce its unaudited results for the six-month period ended 30
June 2022.
Highlights
-- Revenue of US$76.2 million (H1 2021: US$47.0 million) and
Adjusted EBITDA(1) of US$15.6 million (H1 2021: Adjusted EBITDA
loss of US$10.8 million) supported by higher vanadium prices and
the weaker ZAR:USD exchange rate's positive impact on costs.
-- Operating profit of US$6.1 million (H1 2021: loss of US$19.7
million).
-- Cash balance of US$7.0 million at 30 June 2022 (US$15.4
million as at 31 December 2021), with ongoing positive cash
generation since period end.
-- Free cash flow(2) of US$7.1 million (H1 2021: negative
US$19.8 million).
-- Total borrowings of US$76.7(3) million (31 December 2021 US$
80.9 million).
-- Financial close achieved at Vametco's mini-grid project,
enabling site clearance and progress with many project
activities.
1. Adjusted EBITDA is earnings before interest, tax,
depreciation and amortisation excluding the Group's share of losses
from joint ventures, loss from financial instruments and
remeasurement of financial liabilities.
2. Free cash flow defined as operating cash flow less sustaining capital.
3. Excludes leases.
Outlook
-- Positive Adjusted EBITDA and free cash flow expected to
continue into the second half of 2022, which will be used to meet
the remaining capital requirements and debt repayments.
-- Group 2022 production guidance adjusted downwards to between
3,900 mtV and 4,100 mtV.
-- Group production run rate of 5,000 - 5,400mtVp.a. still
expected to be achieved by the end of 2022.
-- Construction of the Electrolyte manufacturing facility
(BELCO) is now 80% complete, production expected in H1 2023.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
" I am pleased to present the financial results for a busy
six-month period, during which we were able to bring a key
component of our growth story online, in the form of Kiln 3 at
Vanchem.
Higher vanadium prices also meant we were able to report a
US$26.4 million increase in Adjusted EBITDA to US$15.6 million,
from a loss in the first half of last year. Significantly, we also
reported free cash flow of US$7.1 million in the first six
months.
Barring any unforeseen events, we expect the positive Adjusted
EBITDA and cash generation to be maintained in the second half of
2022, which will be used to meet the remaining capital requirements
and reduce leverage.
Bushveld had to navigate several headwinds during the period, as
supply chains globally continued to remain congested, and inflation
pressures returned on a global scale. We continue to target savings
under our Cost Savings Programme in order to counter and contain
some of these pressures.
While we had previously reported Vanchem's guidance was under
review due to operational challenges during the commissioning of
Kiln 3, we are now revising Vanchem's production guidance downwards
for 2022 having carefully monitored its initial performance and
taken the ongoing load shedding risk into account.
Pleasingly, Vametco's guidance for 2022 has been marginally
increased, as a result of a strong operational performance and we
still expect to reach the key total annualised run rate of
5,000-5,400 mtV for the Group by year end.
In addition, following the commissioning of Kiln 3, the Company
forecasts a reduced capital expenditure rate at its operations,
limited mainly to sustaining capital, which is expected to support
positive cash generation. "
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo and
Finance Director, Tanya Chikanza; will host a webcast and
conference call at 12:30pm UK time (1:30pm SAST) today to discuss
the update with analysts. Participants may join the call by
dialling:
Tel: United Kingdom: +44 (0) 330 551 0200; South Africa:
+27 11 589 8302
Pin: Quote Bushveld when prompted by the operator
Link: https://stream.brrmedia.co.uk/broadcast/62fa6825b629a70556525629
A recording of the conference call will be available on the
Company's website post the call.
Chief Executive's Report
Dear Shareholders,
The first half of the year shows an improvement in the Group's
Adjusted EBITDA profitability, as we delivered positive Adjusted
EBITDA of US$15.6 million (H1 2021: Adjusted EBITDA loss of US$10.8
million). The Group delivered an operating profit of US$6.1
million, an improvement of US$25.8 million from the comparative
period in 2021. The improvement in EBITDA and operating profit was
supported by a higher average realised price and a weaker ZAR:USD
exchange rate which had a positive impact of US$3.5 million on
Adjusted EBITDA of which US$2.6 million was on cost of sales
(excluding depreciation), despite global inflationary pressures.
The Group expects this operational profitability to continue into
the second half of 2022, barring any unforeseen events.
The Group cash balance at the end of the period was US$7.0
million, relative to US$15.4 million as at 31 December 2021, with
the reduction arising from, inter alia, capital for the
refurbishment of Vanchem Kiln 3, construction of the BELCO
electrolyte plant, our equity investment in the Vametco mini-grid
and the partial repayment of the Nedbank (Revolving Credit
Facility) RCF.
Total borrowings for the period stood at US$76.7 million, a
decrease of US$4.2 million from December 2021 (December 2021:
US$80.9 million). The reduction is primarily due to the partial
repayment of the Nedbank RCF and a weaker ZAR:USD exchange rate,
partially offset by the convertible loan notes issued.
Of the expected capital expenditure for 2022 of approximately
US$22.1 million, US$8.5 million had been spent as at 30 June 2022,
with most of the cost being Rand-denominated.
The Company forecasts a reduced capital expenditure rate from
2023 onwards, limited mainly to sustaining capital, which is
expected to support positive cash conversion of EBITDA,
particularly as the increased production volumes of Vanchem's Kiln
3 are realised.
Group production was 4% higher relative to H1 2021, owing to
Vametco's continued stable operational performance. However,
Vanchem's production during the period was lower than anticipated
due to lower recoveries associated with the Kiln 1 wind-down,
electricity load shedding and a slower than planned ramp-up post
Kiln 3 coming online. Since August, we have seen an improvement in
the performance of Kiln 3, with production of 61mtV in July,
increasing to 151 mtV in August. Despite the improved operational
performance, this has not been sufficient to make-up for the
volumes lost in prior months, and with load shedding continuing to
pose a significant risk, Vanchem's production and cash cost
guidance for the full year has been revised to between 1,350 mtV
and 1,450 mtV and US$34.9/kgV and US$35.5/kgV (ZAR534/kgV and
ZAR542/kgV) (previously between 1,750 mtV and 1,850 mtV, and
production cash cost guidance of between US$27.7/kgV and
US$28.4/kgV (ZAR422.8/kgV and ZAR433.5/kgV)).
Given its strong year to date operational performance and
minimal impact of load shedding on operations, Vametco's production
guidance has been marginally increased to between 2,550 mtV and
2,650 mtV and the cash cost guidance has been maintained at between
US$22.7/kgV and US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV)
(previously production guidance was between 2,450 mtV and 2,550
mtV).
Group guidance has therefore been revised to between 3,900 and
4,100 mtV (previously between 4,200 mtV and 4,400 mtV).
The Group remains confident in achieving its steady state
production run rate of between 5,000 - 5,400 mtVp.a. by the end of
2022, supported by Kiln 3 ramping up according to plan in Q4 2022.
The 5,000 - 5,400 mtVp.a. will be the Group's foreseeable
production run rate, which will support cost reduction and margin
increase. The Group retains the optionality to expand its
production to 8,000 mtVp.a. through a phased expansion plan,
subject to securing the necessary funding and meeting its
short-term performance targets at 5,000 - 5,400 mtVp.a.
As noted in the 2021 Annual Report, having incubated the energy
division, and created the critical mass to ensure its success,
Bushveld Minerals intends to carve out Bushveld Energy as a
stand-alone company focused on the Vanadium Redox Flow Batteries
(VRFB) value chain. This will crystalise its value and attract the
appropriate institutional investors with a greater understanding of
energy and the energy transition. Bushveld plans to retain a
substantial share in the carved-out entity. The proposed carve-out
process is underway and is planned to be completed by year end.
Bushveld Energy has an indirect 25.25% interest in VRFB original
equipment manufacturer CellCube the Austrian VRFB Original
Equipment Manufacturer, which has announced multiple projects and
milestones over the past year. Earlier in the year , we
successfully defended the litigation initiated by Garnet Commerce
Limited, our partner in CellCube, against VRFB Holdings Limited
(VRFB-H) and Enerox Holdings Limited (EHL), concerning an alleged
breach by VRFB-H of the joint venture agreement in relation to
EHL.
Bushveld Energy has developed a commercial solar plus storage
mini-grid project plan for Vametco, consisting of a 3.5 MW of solar
PV and 1 MW / 4 MWh VRFB mini-grid as a funded independent power
producer., The Company secured funding for the engineering,
procurement, and construction (EPC) of the Vametco hybrid
mini-grid. A shareholders' agreement was signed between Bushveld
Energy and NESA Capital as strategic equity partners in the
development and funding of the project. NESA has provided 60% of
the equity, while Bushveld Energy has provided 40%. The project is
expected to be completed during H1 of 2023 .
Construction of the BELCO electrolyte plant is more than 80%
complete and is expected to enter into operation in H1 2023 with an
eventual ramp-up to 8 million litres per annum. The ramp-up period
can be accelerated to meet short-term market demand. BELCO is
currently undergoing a qualification process for its electrolyte
with VRFB companies in preparation for electrolyte sales next year.
In order to ensure closer alignment of all vanadium operating
facilities, BELCO electrolyte plant will remain within Bushveld,
both operationally and in ownership, post the Bushveld Energy carve
out. The electrolyte plant is the largest publicly announced plant
outside of China and can further be increased to 32 million litres
per annum at the same location to meet medium-term market demand
.
Moving on to the vanadium market, during H1 2022 the London
Metal Bulletin ("LMB") Ferrovanadium price averaged US$45.0/kgV (H1
2021: US$33.4/kgV), Asian Metals prices Ferrovanadium prices
averaged US$37.2/kgV (H1 2021: US$31.8/kgV) and US Ryan's Note
prices averaged US$58.5/kgV (H1 2021: US$34.1/kgV). Despite the
recent softening in the vanadium price, we remain confident that
the medium to long-term market fundamentals continue to support
vanadium prices going forward.
We expect to see an even stronger operational performance in the
second half of 2022, supported by improved operational stability at
Vanchem which has continued into the month of September, and as
Vametco continues to demonstrate solid and consistent production
levels. We are confident both plants will reach a combined
annualised run rate of 5,000-5,400mtV by year end. We expect the
EBITDA profitability and free cash flow to be maintained in the
second half of 2022, which will be used to meet the remaining
capital requirements and reduce debt through the full repayment of
the Nedbank RCF.
Overview
Summarised income statement
Income statement summary as adjusted from "statutory" Primary
statement presentation
6 months ended 6 months ended
30 June 2022 30 June 2021
===================================
Unaudited Unaudited
===================================
US$ US$
=================================== ============== ==============
Revenue 76,204,962 47,022,135
Cost of sales (excl. depreciation) (44,695,551) (43,439,030)
Other operating and administration
costs (excl. depreciation incl.
operating income) (15,911,261) (14,376,544)
=================================== ============== ==============
Adjusted EBITDA 15,598,149 (10,793,439)
Depreciation (9,479,160) (8,949,235)
=================================== ============== ==============
Operating profit/ (loss) 6,118,989 (19,742,674)
Share of loss in joint ventures (1,899,516)
Net financing expense (5,258,771) (2,983,277)
Loss on financial assets (136,027)
Loss before tax (1,175,325) (22,725,951)
Income tax (expense)/credit (2,037,104) 3,729,735
=================================== ============== ==============
Loss after tax (3,212,429) (18,996,216)
=================================== ============== ==============
Revenue
Group revenue for the period of US$76.2 million was 62% higher
than the corresponding prior period (H1 2021: US$47.0 million),
underpinned by improved average realised price of US$46.4/kgV (H1
2021: US$29.2/kgV), and marginally higher sales volumes.
Group sales were marginally higher than the first half of 2021,
due to domestic and international logistical challenges during the
period. Logistics delays within South Africa have now largely been
resolved. International logistic channels remain susceptible to
shipping availability constraints. The closing inventory level as
at 30 June 2022 was 826 mtV.
H1 2022
H1 vs
Group Unit H1 2022 2021 H1 2021
Sales mtV 1,644 1,608 +2%
------------------------ --------- -------- --------------- ---------
Average realised price US$/kgV 46.4 29.2 58.9%
------------------------ --------- -------- --------------- ---------
During the period, Bushveld benefited from the robust vanadium
demand and higher prices in the United States relative to other
regions, by selling a larger portion of its sales to the United
States. Sales to the United States were higher than other regions
due to increased demand from the North American steel and aerospace
industries.
The geographic split of Group sales in H1 2022 was 45% to the
United States (H1 2021: 47%), 27% to Europe (H1 2021: 29%), 10%
South Africa (H1 2021: 7%), 9% to Asia (H1 2021: 6%), 9% to the
rest of the world (H1 2021: 7%), no sales to China in H1 2022 (H1
2021: 4%).
Cost of sales
The cost of sales excluding depreciation for the period was
US$44.7 million (H1 2021: US$43.4 million). The increase was
primarily due to higher energy costs of US$8.8 million (H12021:
US$7.2 million), and an increase in staff costs to US$13.0 million
(H12021: US$12.0 million) mainly due to the annual wage increase
and the higher labour costs associated with the commissioning of
Kiln 3. The increase was partly offset by the positive effect of
foreign exchange with the weaker ZAR:USD exchange rate, resulting
in a positive effect of US$2.6 million. Despite inflationary
pressures, raw material prices of US$14.2 million remained flat
relative to the corresponding prior period (H12021: US$14.1
million).
Total cost summary table:
6 months ended 6 months ended
30 June 2022 30 June 2021
US$ US$
================================================= ============== ==============
Cost of sales (direct) (excl. depreciation) (44,695,551) (43,439,030)
Operating and administrative costs (excl.
depreciation) (15,911,261) (14,376,544)
Total income statement cost (excl. depreciation) (60,606,812) (57,815,574)
Total units sold (mtV) 1,644 1,608
Total income statement cost per unit
sold (excl. depreciation) US$/KgV 36.9 36.0
Sustaining Capital (1,566,985) (6,058,174)
Total cost including sustaining capital (62,173,797) (63,873,748)
Cost per unit sold (including sustaining
capital) US$/kgV 37.8 39.7
================================================= ============== ==============
Average exchange rate ZAR:US$ 15.4 14.5
================================================= ============== ==============
Total Revenue 76,204,962 47,022,135
Average price realised US$/kgV 46.4 29.2
================================================= ============== ==============
Administrative and operating costs
Administrative and operating costs of US$17.7 million (excl.
other operating income) (H1 2021: US$16.3 million) comprised of
administrative costs of US$8.9 million (H1 2021: US$8.8 million)
and operating costs of US$8.8 million (H1 2021: US$7.5
million).
Despite the inflationary increase, administrative expenses were
contained at US$8.9 million (H1 2021: US$8.8 million), supported by
a weaker ZAR:USD exchange rate which had a positive impact of
US$0.5 million. Administrative expenses included staff salaries of
US$4.0 million (H1 2021: US$5.0 million) which are not directly
attributable to the cost of production. The decrease in total staff
costs is a result of the weaker ZAR:USD exchange rate. Professional
fees of US$2.8 million (H1 2021: US$1.2 million) include legal and
consulting fees for the period.
6 months ended 6 months ended
30 June 2022 30 June 2021
Unaudited Unaudited
============================================
US$ US$
============================================ ============== ==============
Administrative expenses by nature
Staff costs 4,052,670 5,038,053
Depreciation of property, plant & equipment 179,851 153,331
Professional fees 2,806,805 1,173,994
Travel and other administrative costs 1,863,193 2,417,396
Total administrative expenses 8,902,518 8,782,774
-------------------------------------------- -------------- --------------
Selling and distribution costs of US$4.3 million (H1 2021:
US$2.8 million) increased by US$1.4 million, in line with the
increased selling prices as per the Sales and Marketing Agreement
that the Company has with Wogen Resources Limited (Wogen). Sales
through Wogen represent approximately 75% of total Group sales.
Other mine operating costs, which include social commitments and
obligations at both Vametco and Vanchem, decreased to US$1.3
million (H1 2021: US$1.6 million). The idle plant costs of US$3.2
million (H1 2021: US$2.9 million) mainly reflects the 26-day
planned maintenance shut down at Vametco in Q2 2022.
Other costs
The share of loss from investments in joint ventures is the
Group's share of the loss from its investments in VFRB Holdings and
the Vametco mini-grid.
Finance costs increased to US$5.4 million (H1 2021: US$3.5
million), primarily due to Orion (Production Financing Agreement)
PFA interest which includes notional interest of US$1 million
calculated in accordance with IFRS 9, Nedbank RCF interest of
US$0.2 million and Orion convertible loan interest of US$2.3
million .
Cost-saving programme
While production volume growth is expected to contribute the
most to reducing costs, the Company continues to explore further
opportunities to drive costs down. These efforts are focussed on
procurement, as previously announced, as well as other significant
cost drivers such as maintenance spend, payroll and administration
costs. The Cost-saving programme is aimed at ensuring continued
competitiveness throughout the commodity cycle while enhancing our
product offering to markets across the geographies and industries
in which we compete. The Company performed a diagnostic analysis
for an addressable baseline procurement spend of around US$55.0
million and achieved a cost savings of US$0.5 million during the
period. The Group still aims to achieve annualised savings of
between US$2.5 million and US$4.0 million over a 24-month,
notwithstanding short-term inflationary pressures that are being
experienced across several input costs and are a direct result of
global rising inflationary pressures on inputs such as energy
costs.
Adjusted EBITDA
6 months ended 6 months ended
30 June 2022 30 June 2021
======================================
Unaudited Unaudited
======================================
US$ US$
====================================== ============== ==============
Revenue 76,204,962 47,022,135
Cost of sales (excluding depreciation
and amortisation) (44,695,551) (43,439,030)
Other operating and administration
costs (excluding depreciation and
amortisation) (15,911,261) (14,376,544)
Share of loss in Joint ventures &
financial instruments (2,035,543)
-------------------------------------- -------------- --------------
EBITDA 13,562,605 (10,793,439)
-------------------------------------- -------------- --------------
Add: Share of Loss in Joint venture
& financial Instruments 2,035,544
-------------------------------------- -------------- --------------
Adjusted EBITDA 15,598,149 (10,793,439)
-------------------------------------- -------------- --------------
Balance sheet
Assets
Intangible assets of US$58.6 million (2021: US$59.3 million) and
property, plant and equipment of US$ 149.2 million (2021: US$153
million) decreased from 31 December 2021, primarily due to
depreciation for the period and foreign exchange movements from a
weaker ZAR:USD exchange rate, partially offset by capital
expenditures.
Investments in joint ventures of US$7.2 million represent the
Group's equity investments in VRFB-Holdings and the Vametco
mini-grid. Investments in joint ventures decreased from 31 December
2021, primarily due to the recognition of the Group's share of the
losses from both VFRB-Holdings and the Vametco mini-grid of US$1.9
million, partially offset by the equity investment in the Vametco
mini-grid of US$1.2 million.
Other financial assets of US$1.5 million relate to the Mustang
convertible loan note which was issued to the Company in accordance
with the Backstop arrangement (see RNS dated 29 March 2022). Refer
to Note 9 for further details.
Trade and other receivables of US$22.3 million ( US$17.6 million
as at 31 December 2021) the increase was primarily due to the
increase in revenue during the first half of the year.
The decrease in Group cash and cash equivalents to US$7.0
million was primarily due to the capital refurbishment at Vanchem
of US$3.6 million, the partial repayment of the Nedbank RCF
(including interest) of US$2.8 million, and the acquisition of the
equity investment in the Vametco mini-grid of US$1.2 million,
partially offset by the cash generated from operations of US$ 8.7
million.
Equity and liabilities
Share capital and share premium increased from 31 December 2021
primarily due to the conversion of the convertible loan notes
issued to Primorus Investments Plc ("Primorus") in accordance with
the Backstop agreement (see RNS dated 29 March 2022). Refer to Note
9 for further details.
Borrowings reduced from US$80.9 million to US$76.7 million
primarily due to the partial repayment of the Nedbank RCF, as well
as a ZAR:USD exchange rate, partially offset by the convertible
loan notes issued to Primorus.
Net debt
The net debt reconciliation below outlines the Group's total
debt and cash position.
30 June 2022 31 December 2021 Difference
========================================
Unaudited Audited
========================================
US$ US$ US$
======================================== ============== ================ ===========
Gross Cash and Cash Equivalents 7,007,474 15,432,852 (8 425 382)
Nedbank Revolving Credit
Facility (3,092,564) (5,821,082) 2 728 518
Production Financing Agreement
* Orion Mine Finance (34,856,941) (33,511,742) (1 345 199)
Convertible Loan Notes Instrument
* Orion Mine Finance (33 794 048) (37,313,976) 3 519 928
Industrial Development Corporation (2,938,572) (3,280,947) 342,375
Other (1,995,991) (999,950) (996 041)
Leases (4,295,257) (4,485,312) 190 055
======================================== ============== ================ ===========
Net debt (73,965,901) (69,980,155) (3,985,746)
======================================== ============== ================ ===========
Net debt increased from 31 December 2021 primarily due to a
decrease in cash and cash equivalents, partially offset by the
decrease in gross debt driven by the partial repayment of the
Nedbank RCF.
Cash flow statement
The table summarises the main components of cash flow during the
6 months ended 30 June 2022.
6 months ended 6 months ended
30 June 2022 30 June 2021
==========================================
Unaudited Unaudited
==========================================
US$ US$ (Restated)
========================================== ============== ==============
Operating profit/(loss) 6,118,989 (19,742,674)
Depreciation and amortisation 9,479,160 8,949,235
Income taxes paid (680,869) -
Changes in working capital and provisions (6,240,877) (2,975,747)
Cash inflow/(outflow) from operations 8,676,403 (13,769,186)
Sustaining capital expenditures (1,566,985) (6,058,174)
------------------------------------------ -------------- --------------
Free cashflow 7,109,418 (19,827,360)
Cash used in other investing activities (8,229,775) (3,431,818)
Cash used in financing activities (4,791,334) (1,160,508)
========================================== ============== ==============
Net cash outflow (5,911,691) (24,419,686)
Opening cash and cash equivalents 15,432,852 50,540,672
Foreign exchange movement (2,513,687) 5,444,255
========================================== ============== ==============
Closing cash and cash equivalents 7,007,474 31,565,241
========================================== ============== ==============
Net cash generated from operating activities of US$8.7 million
(H1 2021: outflow of US$13.8 million) was an improvement from the
prior year period driven primarily by improved earnings.
Sustaining capital expenditure of US$1.6 million (H1 2021: US$6
million) was mostly spent at Vametco, as growth capital expenditure
was prioritised at Vanchem with the commissioning of Kiln 3.
The Group generated free cash flow of US$7.1 million, an
increase of US$26.9 million, supported by improved cash generated
from operations.
The increase in cash used in financing activities to US$4.8
million (H1 2021: US$1.2 million) is due to the monthly repayment
of the Nedbank RCF totalling US$2.8 million and royalties paid on
the Orion PFA of US$2.0 million.
Capital expenditure and investing activities for the period were
US$9.8 million (H12021: US$9.5 million), an increase of
approximately US$0.3 million from H1 2021, mainly due to the
refurbishment of Kiln 3 at Vanchem and the construction of
BELCO.
The Group ended the period with a cash and cash equivalents
balance of US$7.0 million, (31 December 2021: US$15.4 million).
Group 2022 capital expenditures:
2022(US$ H1 2022
million)
guidance
(US$ million)
Vametco 5.5 1.8
---------- ---------------
Growth - -
---------- ---------------
Environmental/
Legal Compliance 0.6 0.2
---------- ---------------
Sustaining 4.9 1.6
---------- ---------------
Vanchem 8.5 3.6
---------- ---------------
Growth 4.5 3.6
---------- ---------------
Environmental/ 2.4
Legal Compliance -
---------- ---------------
Sustaining 1.6 0.02
---------- ---------------
Bushveld Energy 8.1 3.1
---------------
Growth 8.1 3.1
---------- ---------------
Total 22.1 8.5
===================== ========== ===============
Of the expected capital expenditure for 2022 of approximately
US$22.1 million, we have spent US$8.5 million as at 30 June 2022.
We expect to cover the remaining capital requirements from
internally generated free cash flow.
Adjusted EBITDA to cash reconciliation
6 months ended
30 June 2022
======================================
Unaudited
======================================
US$
====================================== ==============
H1 2022 Adjusted EBITDA 15,598,149
Opening Cash and cash equivalents 15,432,852
Accounts payables 1,481,123
Other movements (1,571,062)
Loan repayments (3,084,440)
Inventory increase (3,089,617)
Foreign exchange translation (2,449,920)
Income Tax paid (680,869)
Trade & other receivables (4,696,151)
Capital expenditures (8,721,660)
Purchase of investment (incl. Vametco
Mini grid) (1,210,932)
Closing cash and cash equivalents 7,007,474
====================================== ==============
Loan repayments comprise of US$2.0 million paid to Orion and the
balance paid on the Nedbank RCF, which is to be settled in November
2022.
Work in progress inventories increased at the end of June,
mainly due to the ramp-up following the maintenance shutdown at
Vametco and the gradual ramp-up of Kiln 3 at Vanchem, post
commissioning in June. Increased raw materials costs also
contributed to the increase in the cost of inventories.
S
Enquiries: info@bushveldminerals.com
Contact
+27 (0) 11 268
Bushveld Minerals Limited 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
Richard Morrison / Charlie
Bouverat
Grant Baker / Richard Parlons
+44 (0) 20 7653
RBC Capital Markets Joint Broker 4000
Jonathan Hardy / Caitlin Leopold
Tavistock Financial PR
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/ Adam Baynes 3150
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, vertically integrated primary
vanadium producer. It is one of only three operating primary
vanadium producers, owning 2 of the world's 4 operating primary
vanadium processing facilities. In 2021, the Company produced 3,592
mtV, representing approximately 3% of the global vanadium market.
With a diversified vanadium product portfolio serving the needs of
the steel, energy and chemical sectors, the Company participates in
the entire vanadium value chain through its two main pillars:
Bushveld Vanadium, which mines and processes vanadium ore; and
Bushveld Energy, an energy storage solutions provider. Bushveld
Vanadium is targeting to materially grow its vanadium production
and achieve an annualised steady state production run rate of
between 5,000 mtVp.a. and 5,400 mtVp.a by the end of 2022. Growth
plans to expand to 8,000 mtVp.a. will be pursued, subject to
funding and market conditions.
Bushveld Energy is focused on developing and promoting the role
of vanadium in the growing global energy storage market through the
advancement of vanadium-based energy storage systems, specifically
Vanadium Redox Flow Batteries ("VRFBs")
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com
Unaudited Condensed Consolidated Interim Financial
statements
for the period ended 30 June 2022
Consolidated Statement of Profit or
Loss
---------------------------------------- -------------------------------------------------------------------------
6 months 6 months 12 months
ended 30 ended 30 ended
June June 31 December
2022 2021 2021
Restated*
Unaudited Unaudited Audited
Notes US$ US$ US$
---------------------------------------- ------- -------------------- ------------------ ----------------------
Continuing operations
Revenue 76,204,962 47,022,135 106,857,285
Cost of sales (54,003,132) (52,222,217) (102,782,583)
-------------------- ------------------ ----------------------
Gross profit / (loss) 22,201,830 (5,200,082) 4,074,702
Other operating income 1,638,804 1,670,464 2,618,971
Impairment losses - - (2,438,890)
Selling and distribution costs (4,288,342) (2,851,646) (6,406,621)
Other mine operating costs (1,315,711) (1,592,894) (3,224,407)
Idle plant costs (3,215,074) (2,985,742) (3,386,899)
Administrative expenses (8,902,518) (8,782,774) (20,894,292)
Share-based payment - - 375,008
-------------------- ------------------ ----------------------
Operating profit / (loss) 6,118,989 (19,742,674) (29,282,428)
Finance income 135,832 517,057 935,347
Finance costs (5,394,603) (3,500,334) (12,184,059)
Remeasurement of financial liabilities - - (1,902,172)
Share of loss from investments in joint
ventures (1,899,516) - (4,351,356)
Loss from financial instruments (136,027) - -
-------------------- ------------------ ----------------------
Loss before taxation (1,175,325) (22,725,951) (46,784,668)
Taxation (2,037,104) 3,729,735 4,671,255
-------------------- ------------------ ----------------------
Loss for the period (3,212,429) (18,996,216) (42,113,413)
-------------------- ------------------ ----------------------
Loss attributable to:
Owners of the parent (6,281,608) (17,898,241) (40,779,853)
Non-controlling interest 3,069,179 (1,097,975) (1,333,560)
-------------------- ------------------ ----------------------
(3,212,429) (18,996,216) (42,113,413)
-------------------- ------------------ ----------------------
Loss per ordinary share
Basic loss per share (in cents) 3 (0.50) (1.50) (3.39)
Diluted loss per share (in cents) 3 (0.50) (1.50) (3.39)
-------------------- ------------------ ----------------------
The accompanying notes are an integral part of these unaudited
condensed consolidated interim financial statements.
*The consolidated statement of profit or loss for the six months
ended 30 June 2021 was restated to reflect the updated taxation in
accordance with the restatement disclosed in the annual
consolidated financial statements for the year ended 31 December
2021.
Consolidated Statement of Comprehensive
Loss
------------------------------------------ --------------------------------------------------------------------------
6 months 6 months 12 months
ended 30 ended 30 ended
June June 31 December
2022 2021 2021
Restated*
Note Unaudited Unaudited Audited
US$ US$ US$
------------------------------------------ ------------------------- ----------------------- ----------------------
Loss for the period (3,212,429) (18,996,216) (42,113,413)
Consolidated other comprehensive loss:
Items that will not be reclassified to
profit
or loss:
(Losses)/gains on valuation of investments
in equity instruments - (4,767,013) (3,771,367)
Other fair value movements - - 13,830
------------------------- ----------------------- ----------------------
Total items that will not be reclassified
to profit or loss - (4,767,013) (3,757,537)
------------------------- ----------------------- ----------------------
Items that may be reclassified to profit
or
loss:
Currency translation differences (79,562) 11,271,089 (9,712,355)
------------------------- ----------------------- ----------------------
Other comprehensive income / (loss) for
the
period net of taxation (79,562) 6,504,076 (13,469,892)
------------------------- ----------------------- ----------------------
Total comprehensive loss (3,291,991) (12,492,140) (55,583,305)
------------------------- ----------------------- ----------------------
Total comprehensive loss attributable to:
Owners of the parent (6,466,453) (12,753,998) (55,918,489)
Non-controlling interest 3,174,462 261,858 335,184
------------------------- ----------------------- ----------------------
(3,291,991) (12,492,140) (55,583,305)
------------------------- ----------------------- ----------------------
All results relate to continuing activities.
The accompanying notes are an integral part of these unaudited
condensed consolidated interim financial statements.
*The consolidated statement of profit or loss for the six months
ended 30 June 2021 was restated to reflect the updated taxation in
accordance with the restatement disclosed in the annual
consolidated financial statements for the year ended 31 December
2021.
Consolidated Statement of Financial Position
--------------------------------------------- ----- --------------- ------------
30 June 31 December
2022 2021
Unaudited Audited
Notes US$ US$
--------------------------------------------- ----- --------------- ------------
Assets
Non-Current Assets
Intangible assets 4 58,643,419 59,254,372
Property, plant and equipment 5 149,170,956 153,110,702
Investment property 2,537,674 2,595,359
Investments in joint ventures 7,166,652 7,855,237
--------------- ------------
Total Non-Current Assets 217,518,701 222,815,670
--------------- ------------
Current Assets
Inventories 6 44,735,773 41,646,156
Trade and other receivables 7 22,338,367 17,642,216
Restricted investment 2,805,121 2,868,886
Current tax receivable 684,052 275,017
Other financial assets 1,531,136 -
Cash and cash equivalents 8 7,007,474 15,432,852
--------------- ------------
Total Current Assets 79,101,923 77,865,127
--------------- ------------
Total Assets 296,620,624 300,680,797
--------------- ------------
Equity and Liabilities
Share capital 9 16,871,161 16,797,180
Share premium 9 126,218,336 125,550,674
Accumulated deficit (7,546,648) (1,265,040)
Convertible loan note reserve 54,814 54,814
Foreign currency translation reserve (21,036,032) (20,851,187)
Fair value reserve (1,938,397) (1,938,397)
--------------- ------------
Equity attributable to owners of the parent 112,623,234 118,348,044
Non-controlling interest 35,656,358 32,481,896
--------------- ------------
Total Equity 148,279,592 150,829,940
--------------- ------------
Liabilities
Non-Current Liabilities
Retirement benefit obligation 1,909,536 1,905,739
Environmental rehabilitation liability 18,025,919 18,031,321
Deferred consideration 834,377 1,684,021
Borrowings 10 69,178,080 70,716,595
Lease liabilities 3,744,482 3,920,698
Deferred tax 2,967,043 6,014,244
--------------- ------------
Total Non-Current Liabilities 96,659,437 102,272,618
--------------- ------------
Current Liabilities
Trade and other payables 11 36,371,338 33,080,670
Provisions 1,912,310 3,721,853
Borrowings 10 7,500,036 10,211,102
Lease liabilities 550,775 564,614
Deferred consideration 849,644 -
Current tax payable 4,497,492 -
--------------- ------------
Total Current Liabilities 51,681,595 47,578,239
--------------- ------------
Total Liabilities 148,341,032 149,850,857
------------- -------------
Total Equity and Liabilities 296,620,624 300,680,797
------------- -------------
The accompanying notes are an integral part of these unaudited
condensed consolidated interim financial statements.
Consolidated Statement of Changes in Equity
Share capital Share Foreign Share-based Convertible Fair value Accumulated Total Non- Total
equity
--------------
premium currency payment loan note reserve deficit attributable controlling
to
--------------
translation reserve reserve equity holders interest
reserve of the group
/
company
US$ US$ US$ US$ US$ US$ US$ US$ US$ US$
--------------
Balance at 1
January
2021 15,858,428 117,065,907 (9,470,088) 375,008 54,814 12,966,294 28,367,659 165,218,022 32,146,712 197,364,734
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Loss for the
period
Other
comprehensive
income, net
of tax: - - - - - - (40,779,853) (40,779,853) (1,333,560) (42,113,413)
Currency
translation
differences - - (11,381,099) - - - - (11,381,099) 1,668,744 (9,712,355)
Other fair
value
movements - - - - - (3,757,537) - (3,757,537) - (3,757,537)
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Total
comprehensive
(loss)/profit
for
the period - - (11,381,099) - - (3,757,537) (40,779,853) (55,918,489) 335,184 (55,583,305)
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Issue of
shares 938,752 8,484,767 - - - - - 9,423,519 - 9,423,519
Share-based
payment - - - (375,008) - - - (375,008) - (375,008)
Transfer
between
reserves - - - - - (11,147,154) 11,147,154 - - -
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Audited
balance
at 31
December 2021 16,797,180 125,550,674 (20,851,187) - 54,814 (1,938,397) (1,265,040) 118,348,044 32,481,896 150,829,940
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Loss for the
period
Other
comprehensive
income, net
of tax: - - - - - - (6,281,608) (6,281,608) 3,069,179 (3,212,429)
Currency
translation
reserve - - (184,845) - - - - (184,845) 105,283 (79,562)
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Total
comprehensive
(loss)/profit
for
the period - - (184,845) - - - (6,281,608) (6,466,453) 3,174,462 (3,291,991)
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Issue of
shares 73,981 667,662 - - - - - 741,643 - 741,643
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Unaudited
balance
at 30 June
2022 16,871,161 126,218,336 (21,036,032) - 54,814 (1,938,397) (7,546,648) 112,623,234 35,656,358 148,279,592
------------------- ------------------ -------------- ------------------ ----------------- ----------------- -------------- ---------------- -------------- ---------------
Notes 9 9
Consolidated Statement of Cash Flows
-------------------------------------------- ---------- --- ----------------- ---------------- ----------------
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
Notes
US$ US$ US$
-------------------------------------------- ---------- --- ----------------- ---------------- ----------------
Cash flows generated from / (used in)
operating activities
Loss before taxation (1,175,325) (22,725,951) (46,784,668)
Adjustments for:
Depreciation property, plant and equipment
and right-of-use assets 5 9,479,160 8,949,235 19,395,496
Share of loss from investments in joint
ventures 1,899,516 - 4,351,356
Loss from financial instruments 136,027 - -
Remeasurement of financial liabilities - - 1,902,172
Finance income (135,832) (517,057) (935,347)
Finance costs 5,394,603 3,500,334 12,184,059
Impairment losses - - 2,438,890
Changes in working capital (6,240,877) (2,975,747) (5,022,120)
Income taxes (paid) / received (680,869) - 394,069
----------------- ---------------- ----------------
Net cash generated from / (used in)
operating activities 8,676,403 (13,769,186) (12,076,093)
----------------- ---------------- ----------------
Cash flows used in investing activities
Finance income 135,832 517,057 935,347
Purchase of property, plant and equipment 5 (8,476,677) (10,625,864) (19,449,657)
Payment of deferred consideration - (1,679,943) (3,874,449)
Purchase of investments (1,210,932) (9,993,534) (9,987,735)
Purchase of exploration and evaluation
assets 4 (244,983) (374,493) (928,960)
Disposal of financial assets held at
fair value - 12,666,785 16,147,154
----------------- ---------------- ----------------
Net cash used in investing activities (9,796,760) (9,489,992) (17,158,300)
----------------- ---------------- ----------------
Cash flows used in financing activities
Proceeds from loans - - 1,335,735
Repayment of borrowings (3,084,440) (250,000) (4,731,932)
Lease payments (232,688) (379,905) (705,373)
Finance costs (1,474,206) (530,603) (2,947,577)
----------------- ---------------- ----------------
Net cash used in financing activities (4,791,334) (1,160,508) (7,049,147)
----------------- ---------------- ----------------
Total cash and cash equivalents movement
for the period (5,911,691) (24,419,686) (36,283,540)
Cash and cash equivalents at the beginning
of the period 15,432,852 50,540,672 50,540,672
Effect of translation of foreign rate (2,513,687) 5,444,255 1,175,720
----------------- ---------------- ----------------
Total cash and cash equivalents at end
of the period 8 7,007,474 31,565,241 15,432,852
----------------- ---------------- ----------------
Notes to the Condensed Consolidated Interim Financial
Statements
1. Corporate information and principal activities
Bushveld Minerals Limited ("Bushveld") was incorporated and
domiciled in Guernsey on 5 January 2012 and admitted to the AIM
market in London on 26 March 2012.
The address of the Company's registered office is 18-20 Le
Pollet, St Peter Port, Guernsey. The unaudited condensed
consolidated interim financial statements ("consolidated interim
financial statements") of the Company for the interim period ended
30 June 2022 comprise of the Company and its subsidiaries (the
"Group") and the Group's interest in equity accounted
investments.
2. Significant accounting policies
Basis of accounting
The results presented in this report are unaudited and they have
been prepared in accordance with the recognition and measurement
principles of UK-adopted International Accounting Standards that
are expected to be applicable to the next set of financial
statements and on the basis of the accounting policies to be used
in those financial statements.
The consolidated interim financial statements does not include
all of the information required for full annual financial
statements and accordingly, whilst the consolidated interim
financial statements have been prepared in accordance with the
recognition and measurement principles of the UK-adopted
International Accounting Standards, it cannot be construed as being
in full compliance with the UK-adopted International Accounting
Standards. The financial information contained in this announcement
does not constitute statutory accounts as defined by the Companies
(Guernsey) Law 2008.
The consolidated interim financial statements have not been
audited or reviewed in accordance with International Standard on
Review Engagements (UK) 2410. The consolidated financial statements
for the period ended 31 December 2021 is based on the statutory
accounts for the period ended 31 December 2021. The auditor
reported on those accounts, their report was unqualified and did
not contain statements where the auditor is required to report by
exception.
Going concern
Based on the current Group finances, having considered group
budgets and cash flow forecasts, possible downside scenarios around
commodity pricing and exchange rate and in particular around
Vanchem's Kiln production profile, the cash flow forecasts
demonstrate the Group will have sufficient headroom in its liquid
resource to meet its obligations in the ordinary course of business
for the next 12 months. Accordingly, the Directors continue to
adopt the going concern basis in preparing the consolidated interim
financial statements. This basis presumes that funds will be
available to finance future operations and that the realisation of
assets and settlement of liabilities, contingent obligations and
commitments will occur in the ordinary course of business.
Use of estimates and judgements
In the application of the Group's accounting policies, the
directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates. In particular, information about
significant areas of estimation uncertainty considered by
management in preparing the consolidated interim financial
statements is described below:
i. Impairment of exploration and evaluation assets
As disclosed in note 4, the Mokopane license held by the Group
requires that mining operations commence prior to the end of
January 2021. As at 30 June 2022 no mining has taken place at the
site. An application for an extension to requirement to commence
mining activities has been submitted to the Department of Mineral
Resources and Energy ("DMRE"), however a response has not yet been
received. The directors are confident that the extension will be
forthcoming and the license therefore remains valid. Consequently,
the directors have made a judgment that no impairment of the
related intangible asset is required.
ii. Mustang Convertible Loan Note option
As at 31 December 2021 Mustang Energy plc ("Mustang") had an
option to require that Bushveld issue to the Mustang Convertible
Loan Note ("CLN") holders such new number of Bushveld shares as is
equivalent to the par value of the noteholder's CLN, together with
accrued and unpaid interest in return for Mustang transferring to
Bushveld Energy Limited Mustang's shareholding in VRFB Holdings
Limited. As at 31 December 2021 the Mustang CLNs had a nominal
value of $8 million and a 10 per cent coupon. As at 30 June 2022
this option had not been exercised by the Mustang CLN holders
except for Primorus Investments Plc (note 10). The directors
determined the fair value of this right is considered immaterial
for recognition as at 30 June 2022.
iii. Held for sale assessment
Judgement is required in determining whether an asset or
disposal group should be classified as held for sale. An asset or
disposal group should be classified as held for sale when it is
available for immediate sale in its present condition and its sale
is highly probable. The directors determined that the announced
carve-out of Bushveld Energy assets does not meet the requirements
to be classified as held for sale as at 30 June 2022.
3. Loss per share
Basic loss per share
The calculation of a basic loss per share of 0.50 cents (30 June
2021: 1.50 cents) is calculated using the total loss for the period
attributable to the owners of the company of US$6,281,608 (30 June
2021: Loss of US$17,898,241) and 1,261,221,934 shares (30 June
2021: 1,164,710,352 shares) being the weighted average number of
shares in issue during the period.
Diluted loss per share
Due to the Group being loss making for the period, instruments
are not considered dilutive and therefore the diluted loss per
share is the same as basic loss per share.
4. Intangible assets
30 June 2022 31 December 2021
(unaudited) (audited)
Cost / Valuation Carrying Cost / Carrying
value Valuation value
US$ US$ US$ US$
--------------------------- ---------- ------------------- ----------
Vanadium and Iron ore 53,584,415 53,584,415 53,855,618 53,855,618
Coal 5,059,004 5,059,004 5,398,754 5,398,754
--------------------------- ---------- ------------------- ----------
Total 58,643,419 58,643,419 59,254,372 59,254,372
--------------------------- ---------- ------------------- ----------
Reconciliation of intangible assets - exploration and evaluation
- 30 June 2022
Opening Additions Foreign Impairment Total
balance exchange loss
movements
US$ US$ US$ US$ US$
------------------ --------- ---------------- ---------- -------------
Vanadium and Iron ore 53,855,618 52,239 (323,442) - 53,584,415
Coal 5,398,754 192,744 (532,494) - 5,059,004
------------------ --------- ---------------- ---------- -------------
59,254,372 244,983 (855,936) - 58,643,419
------------------ --------- ---------------- ---------- -------------
Reconciliation of intangible assets - exploration and evaluation
- 31 December 2021
Opening Additions Foreign Impairment Total
balance exchange loss
movements
US$ US$ US$ US$ US$
------------------ --------- ---------------- ---------- -------------
Vanadium and Iron ore 54,950,331 162,621 (715,974) (541,360) 53,855,618
Coal 4,053,494 766,339 578,921 - 5,398,754
------------------ --------- ---------------- ---------- -------------
59,003,825 928,960 (137,053) (541,360) 59,254,372
------------------ --------- ---------------- ---------- -------------
Vanadium and Iron Ore
Bushveld Resources Limited has a 64 per cent interest in Pamish
Investment No 39 (Proprietary) Limited ("Pamish") which holds an
interest in Prospecting right 95 ("Pamish 39").
The DMRE granted a mining right to Pamish on 28 August 2019, in
respect of the five farms: Vliegekraal 783 LR, Vogelstruisfontein
765 LR, Vriesland 781 LR, Schoonoord 786 LR and Bellevue 808 LR
situated in the District of Mogalakwena, Limpopo, which make up the
Mokopane Project.
The Mokopane Project is a vanadium resource. On 29 January 2020,
the DMRE executed a 30-year mining right in favour of the Company,
over the five farms: Vogelstruisfontein 765 LR, Vriesland 781 LR,
Vliegekraal 783 LR, Schoonoord 786 LR and Bellevue 808 LR. The
mining right required Pamish to commence mining activities,
including in-situ activities associated with the Definitive
Feasibility Study ("DFS") by end of January 2021. The COVID-19
pandemic resulted in a significant delay in the commencement of the
DFS and the necessary engagement with local communities required to
finalise Land Use Arrangements and, consequently, this deadline was
not met. Application to the DMRE for an extension of 18 months to
commence mining activities has been submitted. An interim access
agreement was reached for access to the project areas.
The mining right allows for the extraction of several other
minerals over the entire Mokopane Project resource area, including,
titanium, phosphate, platinum group metals, gold, cobalt, copper,
nickel and chrome.
Brits Vanadium Project
Bushveld has been granted Section 11 of the Mineral and
Petroleum Resources Development Act ("MPRDA") for acquiring control
of Sable Platinum Mining (Pty) Ltd for NW 30/5/1/1/2/11124 PR, held
through Great Line 1 Invest (Pty) Ltd ("Great 1 Line") and was
executed in May 2021. The Company has also applied for Section 102
of the MPRDA and waiting for approval to incorporate NW
30/5/1/1/2/11069 PR into NW 30/5/1/1/2/11124 PR.
Bushveld has applied for a prospecting right which has been
accepted and environmental authorisation has been granted under GP
30/5/1/1/2/10576 PR held by Gemsbok Magnetite (Pty) Ltd.
A renewal application for Prospecting Right NW 30/5/1/1/2/11124
PR was granted for Great 1 Line on Farm Uitvalgrond 431 JQ Portion
3.
Coal
Coal exploration licences have been issued to Coal Mining
Madagascar SARL a 99% subsidiary of Lemur Investments Limited.
The exploration is in South West Madagascar covering 11
concession blocks in the Imaloto Coal basin known as the Imaloto
Coal Project and Extension.
5. Property, plant and equipment
Buildings Plant and Motor vehicles Decommissio Right Waste Assets Total
and of use under
other machinery furniture ning asset stripping construction
and asset
improvements equipment assets
US$ US$ US$ US$ US$ US$ US$ US$
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
Cost
At 01
January
2021 7,706,034 171,601,529 905,948 1,935,224 5,504,271 3,764,442 4,943,850 196,361,298
Additions - 5,156,605 24,024 (207,189) 396,239 - 14,079,978 19,449,657
Disposals - (1,916,158) (78,119) - - (3,723,494) - (5,717,771)
Impairments
of obsolete
assets - (2,263,063) - - - - - (2,263,063)
Transfers - 5,373,628 57,148 - - - (5,430,776) -
Foreign
exchange
movements (426,162) (3,323,601) (108,315) (73,658) (834,539) (40,948) (996,705) (5,803,928)
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
At 31
December
2021
(audited) 7,279,872 174,628,940 800,686 1,654,377 5,065,971 - 12,596,347 202,026,193
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
Additions - 2,979,000 83,919 - - - 5,413,758 8,476,677
Foreign
exchange
movements (161,803) (3,164,600) (17,797) (36,770) (112,598) - (567,463) (4,061,031)
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
At 30 June
2022
(unaudited) 7,118,069 174,443,340 866,808 1,617,607 4,953,373 - 17,442,642 206,441,839
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
Depreciation
At 01
January 2021 (1,068,211) (21,143,469) (614,854) (976,469) (1,213,860) (3,764,442) - (28,781,305)
Disposals - 1,777,899 89,424 - - 3,723,494 - 5,590,817
Depreciation
charge for
the year (354,785) (18,087,039) (266,419) (46,321) (640,932) - - (19,395,496)
Impairment of
obsolete
assets - 365,533 - - - - - 365,533
Foreign
exchange
movements 79,596 (7,221,073) 34,257 76,847 294,385 40,948 - (6,695,040)
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
At 31
December
2021
(audited) (1,343,400) (44,308,149) (757,592) (945,943) (1,560,407) - - (48,915,491)
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
Depreciation
charge for
the period (170,424) (9,010,498) (110,037) - (188,201) - - (9,479,160)
Foreign
exchange
movements 16,084 1,027,169 20,806 21,025 38,684 - - 1,123,768
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
At 30 June
2022
(unaudited) (1,497,740) (52,291,478) (846,823) (924,918) (1,709,924) - - (57,270,883)
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
Net Book
Value
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
At 31
December
2021
(audited) 5,936,472 130,320,791 43,094 708,434 3,505,564 - 12,596,347 153,110,702
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
At 30 June
2022
(unaudited) 5,620,329 122,151,862 19,985 692,689 3,243,449 - 17,442,642 149,170,956
------------- ------------- ---------------- --------------- ----------- -------------- ---------------- ------------ ----------------
6. Inventories
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
---------- -----------
Raw materials 3,784,532 3,159,418
Work in progress 10,586,566 9,323,360
Finished goods 18,654,997 18,058,022
Consumable stores 11,709,678 11,105,356
---------- -----------
44,735,773 41,646,156
---------- -----------
The amount of write-down of inventories due to net realisable
value provision requirement is nil (2021: nil).
7. Trade and other receivables
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
-----------------
Trade receivables 14,700,074 6,129,311
Other receivables 5,124,662 5,861,661
Loss allowance (65,380) (76,704)
Non-financial instruments:
VAT 2,579,011 5,727,948
----------------- -----------
Total trade and other receivables 22,338,367 17,642,216
----------------- -----------
Categorisation of trade and other receivables
Trade and other receivables are categorised as follows in
accordance with IFRS 9: Financial Instruments:
At amortised cost 19,759,356 11,914,268
Non-financial instruments 2,579,011 5,727,948
---------- ----------
22,338,367 17,642,216
---------- ----------
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. They are
generally due for settlement within 15-90 days and therefore are
all classified as current.
Other receivables consist of prepayments and deposits, which are
realised over time.
Due to the short-term nature of the current receivables, their
carrying amount is considered to approximate their fair value.
8. Cash and cash equivalents
Cash and cash equivalents consist of:
Bank balances 7,007,474 15,432,852
-------------------------- ---------------------------
The directors consider that the carrying amount of cash and cash
equivalents approximates their fair value.
9. Share capital and share premium
Total
Shares Share capital Share premium share capital
and
premium
Number US$ US$ US$
------------- --------------- ------------------------- ----------------
At 1 January 2021 1,190,757,892 15,858,428 117,065,907 132,924,335
Shares issued - PMDR 1,473,651 18,910 203,281 222,191
Shares issued - PMDR 1,335,277 17,134 184,194 201,328
Shares issued - Duferco 66,892,037 902,708 8,097,292 9,000,000
------------- --------------- ------------------------- ----------------
At 31 December 2021 (audited) 1,260,458,857 16,797,180 125,550,674 142,347,854
Shares issued - PMDR 1,510,230 20,468 191,374 211,842
Shares issued - Primorus 2,069,063 27,080 240,976 268,056
Shares issued - Primorus 2,088,582 26,433 235,312 261,745
------------- --------------- ------------------------- ----------------
At 30 June 2022 (unaudited) 1,266,126,732 16,871,161 126,218,336 143,089,497
------------- --------------- ------------------------- ----------------
The Board may, subject to Guernsey Law, issue shares or grant
rights to subscribe for or convert securities into shares. It may
issue different classes of shares ranking equally with existing
shares. It may convert all or any classes of shares into redeemable
shares. The Company may also hold treasury shares in accordance
with the law. Dividends may be paid in proportion to the amount
paid up on each class of shares.
As at 30 June 2022 the Company owns 670,000 (December 2021:
670,000) treasury shares with a nominal value of 1 pence.
Shares issued
Primorus Investments Plc ("Primorus")
Bushveld issued a convertible loan note ("BMN CLNs") to Primorus
on 28 March 2022.
The nominal amount of the BMN CLNs is GBP1,208,988, being the
nominal value of the Mustang CLNs issued to Primorus of US$1.5
million plus interest accrued thereon as at 28 March 2022 of
US$136,849.32 (being an aggregate amount of US$1,636.849.32),
converted at an exchange rate of US$1.3539/GBP.
Unless previously redeemed by the Company, and subject to a
conversion notice being received by the Company at least three
business days prior to the relevant conversion date, a tranche
consisting of one sixth of the aggregate amount of the BMN CLNs may
be converted by Primorus into Bushveld shares at any time within a
conversion period (the six conversion periods being: 28 February
2022 to 14 April 2022; 15 April 2022 to 14 July 2022; 15 July 2022
to 14 October 2022; 15
October 2022 to 16 January 2023; 17 January 2023 to 14 April
2023;15 April 2023 to 14 July 2023) at a conversion price of
GBP0.098987, being the volume weighted average price of a share
as shown on Bloomberg over the 20 trading days prior to (and
excluding) 28 February 2022.
Accordingly, Primorus was issued a total of 2,069,063 and
2,088,582 new ordinary shares of 1 pence each in Bushveld.
Mustang cancelled the Mustang CLNs issued to Primorus on 26
April 2021 and issued US$1,500,000 10 per cent convertible loan
notes to Bushveld. The convertible loan notes are recognised as
other financial assets in the consolidated statement of financial
position.
Persons Discharging Managerial Responsibilities ("PMDRs")
The Company issued 1 510 230 new ordinary shares of 1 pence each
in the Company in respect of the Bonus Awards announced on 21 July
2020.
Nature and purpose of other reserves Share premium
The share premium reserve represents the amount subscribed for
share capital in excess of nominal value.
Share-based payment reserve
The share-based payment reserve represents the cumulative fair
value of share options granted to employees.
Convertible loan note reserve
This reserve represents the equity portion of a convertible
loan.
Foreign currency translation reserve
The translation reserve comprises all foreign currency
differences arising from the translation of financial statements of
foreign operations.
Fair value reserve
The fair value reserve comprises the cumulative net change in
the fair value of financial assets at fair value through other
comprehensive income until the assets are derecognised or
impaired.
Accumulated deficit reserve
The accumulated deficit reserve represents other net gains and
losses and transactions with owners (e.g. dividends) not recognised
elsewhere.
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
---------------- ---------------
10. Borrowings
Production Financing Agreement - Orion Mine Finance 34,856,941 33,511,742
Convertible Loan Notes Instrument - Orion Mine Finance 33,794,048 37,313,976
Nedbank Revolving Credit Facility 3,092,564 5,821,082
Industrial Development Corporation 2,938,572 3,280,947
Development Bank of Southern Africa 999,950 999,950
Convertible Loan Notes Instrument - Primorus 996,041 -
---------------- ---------------
76,678,116 80,927,697
---------------- ---------------
Split between non-current and current portions
Non-current 69,178,080 70,716,595
Current 7,500,036 10,211,102
---------------- ---------------
76,678,116 80,927,697
---------------- ---------------
Development Bank of Southern Africa - Facility Agreement
Lemur Holdings Limited entered into a US$1,000,000 facility
agreement with the Development Bank of Southern Africa Limited in
March 2019. The purpose of the facility is to assist with the costs
associated with delivering the key milestones to the power project.
The repayment is subject to the successful bankable feasibility
study of the project at which point the repayment would be the
facility value plus an amount equal to an IRR of 40% capped at 2.5
times which ever is lower. As at 30 June 2022, US$999,950 was drawn
down (31 December 2021: US$999,950).
The Industrial Development Corporation
The loan represents The Industrial Development Corporation's
("IDC") contribution and is governed by the tripartite agreement
between Bushveld Energy Company (Pty) Ltd, Bushveld Electrolyte
Company (Pty) Ltd and the IDC. The loan represents the initial
capitalised costs of US$260,366 plus the subscription amount of
US$3,020,582 to be advanced to Bushveld Electrolyte Company (Pty)
Ltd. Bushveld Electrolyte Company is a South African producer of
vanadium electrolyte. The company is jointly owned by Bushveld
Energy and the IDC, with shareholding of 55 per cent and 45 per
cent respectively. Its first manufacturing facility is under
construction and located in East London, South Africa.
The loan is interest free, unsecured, subordinated in favour of
Bushveld Electrolyte Company's creditors and has no fixed term of
repayment in the next 12 months.
Nedbank Revolving Credit Facility
In November 2019, Bushveld secured R125 million (approximately
US$8 million) revolving credit facility through its subsidiary
Bushveld Vametco Alloys Proprietary Limited ("the Borrower") with
Nedbank Limited, a South African based financial institution.
Key highlights of the R125 million revolving credit facility,
which was drawn in March 2020:
-- Three-year term - Repayment due in November 2022;
-- Interest rate calculated using the three year or six months
JIBAR1 as selected by the Company plus a 3.85% margin;
-- Interest payments are due semi-annually with first payment
due in six months from financial close.
The security provided is customary for a secured financing of
this nature, including cession of shares in the Borrower, security
over the assets of the Borrower, and a parent guarantee.
Financial Covenants undertaken
The Borrower shall ensure that for so long as any amount is
outstanding under a Finance Document or any Commitment is in force,
in respect of each measurement period:
-- the Net Interest Cover Ratio exceeds 4.0 times; and
-- the Net Debt to EBITDA Ratio at a Borrower level shall not exceed 4.0 times.
Production Financing Agreement - Orion Mine Finance
In December 2020, Bushveld signed a long-term PFA of US$30
million with mining-focused investment business Orion Mine Finance
("Orion"), primarily to finance its expansion plans at Bushveld
Vametco Alloys (Pty) Ltd ("Vametco") and debt repayment. Exchange
control authorization from the South Africa Reserve Bank Financial
Surveillance Department was granted in October 2020. A first
amendment was issued to the agreement on 6 August 2021.
PFA Transaction Details
The Company will repay the principal amount and pay interest via
quarterly payments determined initially as the sum of:
-- a gross revenue rate (set at 1.175 per cent for 2020 and 2021
and 1.45 per cent from 2022 onwards, subject to adjustment based on
applicable quarterly vanadium prices) multiplied by the gross
revenue for the quarter; and
-- a unit rate of US$0.443/kgV multiplied by the aggregate
amount of vanadium sold for the quarter.
Once the Company reaches vanadium sales of approximately 132,020
mtV during the term of the facility, the gross revenue rate and
unit rate will reduce by 75 per cent (i.e. to 25 per cent of the
applicable rates).
On each of the first three loan anniversaries, the Company has
the option to repay up to 50 per cent of both constituent loan
parts (each may only be repaid once). If the Company utilises the
loan repayment option, the gross revenue rate and/or the unit rate
will reduce accordingly.
The PFA capital will provide funding to continue to grow
production at Vametco to more than 4,200 mtV per annual production
level and debt repayment. Part of the proceeds of the Instrument
were used by the Company to prepay in full the Nedbank R250 million
term loan. In addition, the following amendments were applied to
the financial covenants:
-- Removing the cumulative DSCR covenant;
-- Increasing the default level on the group net debt to Group EBITDA ratio to 4.0 times; and
-- Changing the gross interest cover ratio to net interest cover ratio.
First Amendment Agreement dated 6 August 2021
In terms of the Amended Agreement with Orion, US$17.8 million of
the funds ringfenced for the Vametco Phase 3 Expansion was
re-allocated to Vanchem mainly for capital expenditure on Kiln 3.
Kiln 3 is expected to achieve a steady state production run rate of
2,600 mtVp.a by the end of 2022.
Impact of Amended Agreement on future cashflows of the debt
instrument
The original PFA had a cap of 1,075mtV per quarter. This
amounted to 4,300mtV per annum expected from 2024 onwards following
the completion of the Vametco Phase 3 expansion project.
The amended agreement, with the addition of the Vanchem
production volumes from 1 July 2021 will result in the initial cap
of 4,300mtV being reached earlier, from 1 July 2022 instead of from
2024.
Accounting for non-substantial modifications
IFRS 9 requires the amortised cost of the liability to be
recalculated by discounting the modified contractual cash flows
(excluding costs and fees) using the original effective interest
rate. Any change to the amortised cost of the financial liability
is required to be recognised within profit or loss at the date of
the modification.
The carrying amount of the liability is then further revised for
any costs or fees incurred. The effective interest rate is also
revised accordingly, so the costs are amortised over the remaining
term of the modified liability.
As a result of the increased production volumes from Vanchem and
the cap of 4,300mtV being reached earlier, this resulted in a
non-substantial modification to the contractual terms. The
amortised cost was recalculated and the adjustment was recognised
within profit or loss for the year ended 31 December 2021.
Contractual and legal balances vs IFRS 9 accounting balances
The contractual and legal accounting differ from IFRS 9
accounting.
Below table illustrates the differences in the carrying values,
interest and capital of the contractual PFA and IFRS 9
accounting.
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
------------------------- -------------------------
Reconciliation of Production Finance Agreement -
Orion Mine Finance
Opening balance 33,511,742 30,105,886
Interest accrued 2,265,986 2,265,986
Contractual interest 1,250,451 1,198,919
Notional Interest (IFRS 9) 1,015,535 2,859,569
Repayments made (1,983,680) (2,554,804)
Remeasurement (IFRS 9) - 1,902,172
------------------------- -------------------------
Closing Balance 33,794,048 33,511,742
------------------------- -------------------------
Convertible Loan Notes Instrument - Orion Mine Finance
Bushveld, through an affiliate of Orion Mine Finance, agreed to
subscribe for US$35 million convertible loan notes instrument (the
"Instrument"). The conversion price of the convertible loan notes
was set at 17pence. The Instrument's proceeds will go towards the
first phase of Vanchem's critical refurbishment programme and debt
repayment.
Financing terms of the Instrument and convertible loan notes
-- A fixed 10 per cent per annum coupon with a three year
maturity date from the drawdown date.
-- All interest will accrue and be capitalised on a quarterly
basis in arrears but compounded annually.
-- Accumulated capitalised and accrued interest is convertible
into Bushveld ordinary shares. All interest and principal, to the
extent not converted into ordinary shares, is due and payable at
maturity date.
-- Funds raised are to be used for capital investment purposes
for the first phase of Vanchem's critical refurbishment programme,
and the balance for debt repayment purposes.
Conversion feature
Between drawdown and the Instrument's maturity date Orion may,
at their option, convert an amount of the outstanding debt,
including capitalised and accrued interest, into Bushveld's
ordinary shares as follows:
-- First six months: Up to one third of the outstanding amount;
-- Second six months: Up to two thirds of the outstanding amount
(less any amount previously converted);
-- From the anniversary of drawdown until the maturity date: the
outstanding amount under the Instrument may be converted;
-- Bushveld also has the option to convert all, but not some, of
the amount outstanding under the Instrument, if its volume weighted
average share price is more than 200 per cent of the conversion
price over a continuous 15 trading day period, a trading day being
a day on which the AIM market is open for the trading of
securities.
At any time until the convertible maturity date, Orion may
convert the debt as above mentioned into an amount of ordinary
shares equal to the total amount available for conversion under the
Instrument divided by the conversion price of 17 pence.
The Orion and Nedbank borrowings are secured against certain
group companies and associated assets.
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
------------ ---------------
11. Trade and other payables
Financial instruments:
Trade payables 30,201,544 28,329,519
Trade payables - related parties 103,533 107,026
Other payables 6,024,744 4,644,125
Non-financial instruments:
VAT 41,517 -
------------ ---------------
36,371,338 33,080,670
------------ ---------------
Trade and other payables principally comprise amounts
outstanding for trade purchases and on-going costs. The average
credit period taken for trade purchases is 30 days.
The Group has financial risk management policies in place to
ensure that all payables are paid within the pre-arranged credit
terms. No interest has been charged by any suppliers as a result of
late payment of invoices during the year.
The directors consider that the carrying amount of trade and
other payables approximates to their fair value.
12. Events after the reporting period
Mustang Energy Plc ("Mustang") made an investment into VRFB
Holdings Limited ("VRFB-H") to acquire an indirect interest of
11.05 per cent in Enerox GmbH ("Enerox"). The investment was
financed through the issue of US$8,000,000 Convertible Loan Notes
("CLNs") to several investors ("Noteholders") bearing 10% interest
per annum. A condition of the CLNs was that if the Mustang shares
were not readmitted to the Official List (by way of a Standard
Listing) and to trading on the London Stock Exchange's main market
for listed securities ("Readmission"), Mustang had the right, on
behalf of the Noteholders, to require Bushveld to issue new
ordinary shares (at a price equal to the 20 day volume weighted
average price of a new Bushveld ordinary share prior to the date of
issue) as is equivalent to the principal amount of each
Noteholder's CLNs together with all accrued and unpaid interest
thereon. In exchange, Mustang will transfer a proportionate number
of its VRFB-H shares to Bushveld Energy Limited (the
"Backstop").
Mustang has notified Bushveld that one of the Noteholders of
CLNs with a principal amount of US$1.25 million (and accrued and
unpaid interest thereon) wishes to effect the Backstop in respect
of its CLNs.
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END
IR EAANAFFKAEAA
(END) Dow Jones Newswires
September 13, 2022 02:01 ET (06:01 GMT)
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