Bushveld Minerals Limited (“Bushveld Minerals” “Bushveld” Or The “Company”) Q1 2022 Operational Update

Bushveld Minerals Limited (AIM: BMN), the AIM quoted integrated primary vanadium producer and energy storage solutions provider, is pleased to provide an operational update for the three months ending 31 March 2022.

Key Highlights

Production increase on the back of continued operational stability and enhanced safety

Q1 2022 Group production of 972 mtV, one per cent higher than Q4 2021 of 962 mtV

Q1 2022 Total Injury Frequency Rate (“TIFR”) improved by 37 per cent to 5.38 (Q1 2021: 8.54)

Vametco’s C1 cost improved on the back of higher throughput while Vanchem was impacted by lower production

Vametco’s production cash cost (C1) of US$22.1/kgV improved by 17 per cent on Q1 2021, as a result of the higher throughput.

Vanchem’s production cash cost (C1) of US$38.6/kgV increased by 26 per cent on Q1 2021, as a result of the lower Q1 2022 volumes and increase in raw materials and maintenance costs, and are expected to normalise in line with guidance, on the back of the expected higher throughput for the rest of the year with Kiln 3 coming on stream.

Managing a challenging domestic and international logistics chain.

Q1 2022 Group sales of 857 mtV1, were nine per cent higher than the previous year (Q1 2021: 788 mtV), but three per cent lower than Q4 2021 (Q4 2021: 880mtV).

The challenging logistics chain has resulted in a marginal inventory build-up of 25 mtV (Q4 2021: 278 mtV), with finished products cumulative inventory of 850 mtV (Q4 2021: 825 mtV), throughout the logistics chain (stock at site, transit to Port, sea-borne and in-country warehouses).

Post quarter end, the recent disastrous floods in Kwa-Zulu Natal, South Africa have severely affected operations at the Port of Durban with shipments being delayed by between 14 and 21 days. To mitigate this, Bushveld is in the process of diverting exports through alternative South African ports, including Cape Town. The current elevated stock levels throughout the logistics chain are cushioning the negative effects this natural disaster may have on Group sales.

Unaudited cash and cash equivalents of US$12.7 million as at 31 March 2022 (31 December 2021: US$15 million). Positive cash generation from operations impacted by, among others, capital expenditure, loan repayments and increasing working capital requirements.

On track to meet 2022 production and cash cost guidance.

The Group production guidance of between 4,200 mtV and 4,400 mtV is weighted towards the second half of the year, based on the commissioning of Kiln 3 which has commenced. Kiln 3 will more than double Vanchem’s production run rate once fully ramped up, with Bushveld targeting an annualised steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022.

Vanadium market

London Metal Bulletin (“LMB”) FeV price averaged US$46.1/kgV in Q1 2022 relative to Q1 2021 (Q1: 2021: US$30.9/kgV) with the year to date average increasing to US$47.4/kgV as at 22 April 2022.

The current LMB FeV price as at 22 April 2022 of US$49.0/kgV is above the yearly average although off its peak of US$62.0/kgV seen in mid-March 2022.

The stronger prices in 2022 have a positive impact on Bushveld’s cash flow generation.

Demand for vanadium in major markets remains buoyant. Prices across the three major markets (North America, Europe and Asia) are expected to converge around Asian benchmark prices over the remainder of Q2 2022.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

“I am pleased to report a strong start to the 2022 financial year, with another solid set of quarterly operating results. Notwithstanding the challenges at the beginning of the previous year, we have successfully produced four quarters of consistent performance, building on the operational improvements and enhanced safety initiatives, which facilitated and entrenched operational stability from Q2 2021 onwards. The stable, achievable production level provides the platform to support growth and sustainable volume increases.

“The commissioning of Kiln 3 has commenced, and we are on track to significantly increase the Group’s production run rate to between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of this year, with an annual guidance of between 4,200 mtV and 4,400 mtV. This will be a significant increase from the total production of 3,592 mtV recorded in 2021 and demonstrates the growth potential of our assets. This reinforces our confidence to pursue further growth through the exploitation of our substantial resource portfolio, which is one of the largest, high-grade primary vanadium resource bases in the world, with many decades of mining potential.

“Growth in production volumes reduces unit costs and is key to margin expansion, increased profitability and long term sustainable cash generation throughout the commodity cycle, given the historic volatility of the Vanadium price. We continue to pursue cost improvement initiatives.

“Demand for vanadium in Bushveld’s major markets remains buoyant, however challenging South African and International logistics chains and the scheduled June shut-down at Vametco, which will require careful in-country stock management, have restricted sales volumes. Sales volumes are expected to increase from Q2 2022, to reflect greater Vanchem production with stock levels reducing to steady state levels.”

Health and Safety

Q1 2022 TIFR of 5.38, an improvement of 37 per cent on Q1 2021 of 8.54, as a result of emphasis and focus on hazard identification awareness and continuous risk assessments ahead of performing tasks, planned task observations, and increased visible felt leadership.

A marked decline in COVID-19 cases at both operations, with one case per month recorded at Vametco only. Vaccination rates have increased to levels above 66 per cent in Q1 2022.

Bushveld Vanadium

Group	Unit	Q1 2022	Q1 2021	Q4 2021	Q1 2022 vs Q1 2021	Q1 2022 vs Q4 2021
Production	mtV1	972	688	962	41.3%	1.0%
Sales	mtV1	8572	788	880	8.8%	-2.6%

mtV = metric tonnes of vanadium.

The Group sales mix for Q1 2022 was as follows:

Nitrovan framed contracts and spot sales account for 61 per cent and 11 per cent of Group sales respectively. Sales of AMV to electrolyte converters account for 3 per cent. FeV and V2O5 contributed to13 and 4 per cent respectively whilst Chemicals accounted for 7 per cent.

The Bushveld Group has the ability to optimise its product sales mix at its two production facilities (both intra-plant and between the plants) between the aforementioned product types to benefit from price advantages between geographic markets and product types.

Vametco

Table 1: Operational highlights for Vametco (on a 100% basis)1

Description	Unit	Q1 2022	Q1 2021	Q4 2021	Q1 2022 vs Q1 2021	Q1 2022 vs Q4 2021
Ore mined	Tonnes	425 834	314,573	347,439	35.4%	22.6%
Total mined (ore + waste)	Tonnes	882 024	617,113	630,475	42.9%	39.9%
Ore grade (in whole rock)	% V2O5	0.80	0.62	0.87	29.0%	-8.1%
Concentrate produced	Tonnes	99 559	77,459	105,753	28.5%	-5.9%
Concentrate grade	% V	1.05	1.04	1.08	1.0%	-2.8%
Recovery from Kiln to MVO	%	71.3	74.3	72.7	-4.0%	-1.8%
Production (Nitrovan, FeV)	mtV2	749	395	700	89.6%	7.0%
Production cash cost (C1)3	ZAR/KgV	337.0	396.1	353.4	-14.9%	-4.6%
Production cash cost (C1)3	US$/KgV	22.1	26.5	22.9	-16.6%	-3.5%
Foreign exchange rate	ZAR: USD	15.2	14.9	15.4	1.9%	-1.3%

Based on provisional, unaudited figures. Bushveld’s net attributable interest of the above figures is approximately 74 per cent. Production cash cost is based on vanadium produced.

mtV = metric tonnes of vanadium.

Excludes depreciation, royalties and selling, general & administrative expenses and cost associated with COVID-19.  Production cash cost is based on vanadium produced. Production cash cost (C1) measure does not have any standardized meaning prescribed by IFRS and differs from measures determined in accordance with IFRS. This measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

Q1 2022 production of 749 mtV was 90 per cent higher than Q1 2021, which was affected by the 35 day planned maintenance shutdown (Q1 2021: 395 mtV), and 7 per cent higher than Q4 2021 (Q4 2021: 700 mtV) underpinned by continued operational stability and improved plant performance.

An 11-day unscheduled kiln refractory repair was performed in January 2022. The now reduced planned annual maintenance shutdown is scheduled for 26 days in June 2022.

Q1 2022 production cash cost (C1) of US$22.1/kgV was 17 per cent lower than Q1 2021 (Q1 2021: US$26.5/kgV), as a result of the higher production volumes.

Production guidance maintained to between 2,450 mtV and 2,550 mtV and production cash cost (C1) guidance to between US$22.7/kgV and US$23.5/kgV (ZAR346.9/kgV and ZAR358.7/kgV).

Vanchem

Table 2: Operational highlights for Vanchem1

Description	Unit	Q1 2022	Q1 2021	Q4 2021	Q1 2022 vs Q1 2021	Q1 2022 vs Q4 2021
Ore milled	Tonnes	45,771	47 305	45,297	-3.2%	1.0%
Ore Grade (in Whole Rock)	% V2O5	1.35	1.38	1.53	-2.2%	-11.8%
Milled ore to kiln	Tonnes	33,381	32,912	35,551	1.4%	-6.1%
Milled Ore Grade	% V	0.97	0.94	0.90	3.2%	7.8%
Vametco concentrate to kiln	Tonnes	5,461	5,233	2,632	4.4%	107.5%
Concentrate Grade	% V	0.95	1.06	1.06	-10.4%	-10.4%
Recovery: Kiln to Final Product	%	60.6	81.1	73.4	-25.3%	-17.4%
Chemicals	mtV2	36-	–	9	–	300.0%
Flake	mtV2	7	132	26	-94.7%	73.1%
FeV	mtV2	181	45	204	302.2%	-11.3%
Nitrovan	mtV2	–	116	23	-100.0%	-100.0%
Total production	mtV2	224	293	262	-23.5%	-14.5%
Weighted average production cash cost (C1)3	ZAR/kgV	587.7	459.1	567.3	28.0%	3.6%
Weighted average production cash cost (C1)3	US$/kgV	38.6	30.7	36.8	25.7%	4.9%
Foreign exchange rate	ZAR:USD	15.2	14.9	15.4	1.9%	-1.3%

Based on provisional, unaudited figures.

mtV = metric tonnes of vanadium.

Excludes depreciation, royalties and selling, general & administrative expenses and cost associated with Covid-19. Production cash cost is based on vanadium produced. Production cash cost (C1) measure does not have any standardized meaning prescribed by IFRS and differs from measures determined in accordance with IFRS. This measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

Q1 2022 production of 224 mtV was 24 per cent lower than Q1 2021 of 293 mtV and 15 per cent lower than Q4 2021 (Q4 2021 262 mtV), impacted by the following :

The refractory condition of Kiln 1, reducing online time, negatively affecting recoveries. A 5-day temporary refractory repair on Kiln 1 was conducted in March 2022, which will last until Kiln 3 is online. Kiln 1 was reaching the end of its useful life, and commissioning of Kiln 3 has commenced, and is expected to be online in May 2022.

The use of Upper Seam ore spilling over from Q4 2021, which negatively impacted recoveries. The issues experienced during the ramp up of the Upper Seam project were resolved in February, as detailed in the section on the Upper Seam Project below.

Load shedding negatively affecting plant stability.

Q1 2022 production cash cost (C1) of US$38.6/kgV was 26 per cent higher than Q1 2021 (Q1 2021: US$30.7/kgV), and five per cent higher than Q4 2021, impacted by the lower production volumes as stated above, increase in usage of raw materials due to the lower yield combined with an increase in the cost of raw materials and the higher maintenance cost arising from the refractory repair.

The unit costs are expected to normalise in line with guidance on the back of the higher throughput, with the increase in volume from Kiln 3 diluting the fixed costs.

Chemical products at including specialist V2O5 powder, are produced at higher unit cost than that of V2O5 flake and FeV, including higher packaging and logistics costs; and hence the production costs at Vanchem will be comparatively higher than at Vametco. These products however attract commensurate premiums to the prevailing V2O5 price.

2022 production guidance maintained to between 1,750 mtV and 1,850 mtV, and production cash cost (C1) of between US$27.7/kgV and US$28.4/kgV (ZAR422.8/kgV and ZAR433.5/kgV).

Growth Projects

Feasibility and pre-feasibility studies at Vametco and Vanchem were completed to determine the nature and scope of growth beyond the current production capacity plus the capacity of Kiln 3 of 5,000 – 5,400 mtV. The studies, currently under review, provide a well-structured long term growth path to an installed processing capacity of 8,000 mtV per annum, ensuring a permanent and reliable feedstock to both Vametco and Vanchem, and included testing the economics of the various stages and options to provide the best return on investment going forward. It must be emphasised that the new growth plans to expand beyond the capacity of 5,000 – 5,400 mtV will only be pursued when full funding has been secured. An announcement will be made in the near future, on completion of the review and approval process.

The Upper Seam Project

The Upper Seam project was developed to supply ore to Vanchem (magnetite in ore > 80 per cent, V2O5 grade in magnetite >1.65 per cent). The project consists of crushing, screening and dry magnetic separation. The plant was commissioned in Q4 2021 with the final installation of the dry magnetic separator in December 2021. During commissioning and ramp-up ore quality was at times below requirements due to heavy rain and mining constraints, which resulted in operational challenges in the Vanchem kiln, affecting recoveries. The project team has now optimised the plant performance during February 2022 to meet Vanchem ore specification requirements and the Vanchem milling plant has been reconfigured to treat Upper Seam ore efficiently.

Bushveld Vanadium production profile

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.

We continue to prioritise operational stability at Vametco to achieve a sustainable and consistent output of 2,800 mtVp.a.

Vanchem’s production run rate is expected to more than double from 1,100 mtVp.a. to a run rate of 2,600 mtVp.a. by the end of 2022, supported by the commissioning of Kiln 3 and associated downstream refurbishment. Kiln 3 commissioning has commenced and expected to be online in May 2022.

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 three per cent 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, from projects currently being implemented. Beyond that, pre-feasibility studies are in progress to determine the optimal path to increase production even further to a steady state production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in the medium-term and to a steady state production run rate of 8,400 mtVp.a in the long term.

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”).

About Vametco

Vametco is located near Brits on the Western Limb of the Bushveld Complex. The integrated operation comprises a vanadium ore mine and a processing plant that produces mostly Nitrovan, a trademark product sold in major steel markets across the world. The mine lies adjacent to the Brits Vanadium Project, which will in future serve as an alternative source of near surface run of mine (“ROM”) ore feed to the Vametco plant.

The Vametco mining operation uses open pit bench mining methods to mine a well-defined orebody. The deposit is continuous with limited faulting and dips in a northerly direction at approximately 19 degrees.

ROM ore is fed into a primary, secondary and tertiary crushing circuit, followed by milling and magnetic separation to produce magnetite concentrates. The magnetite concentrates are fed into the extraction process which includes the kiln for roasting followed by leaching and precipitation. Thereafter the precipitated vanadium as ammonium metavanadate is converted to modified vanadium oxide (“MVO”) in rotary calciners. MVO is fed into the mix plant and finally into the shaft furnaces to produce Nitrovan.

About Vanchem

Vanchem is situated at Ferrobank Industrial Park in Emalahleni Local Municipality, Mpumalanga Province in the Republic of South Africa. Vanchem is a primary vanadium producing facility with a beneficiation plant capable of producing various vanadium oxides, ferrovanadium and vanadium chemicals. Vanchem uses the salt roast beneficiation process, similar to the one used at Vametco. The plant comprises: a core salt-roast processing plant, including 3 roasting kilns, an electric smelting ferrovanadium converter, an alumino-thermic smelting facility, also located at Highveld, a vanadium chemical plant; and a rail siding linking the plant with Bushveld deposits and additional potential supply sources through the national rail network.

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