REG - Bushveld Minerals Ld - Interim Results for Six Months ended 30 June 2023
26/09/2023 07:00
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RNS Number : 5992N Bushveld Minerals Limited 26 September 2023
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No
596/2014 until the release of this announcement
26 September 2023
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Unaudited Interim results for the six-months ended 30 June 2023
Bushveld Minerals Limited (AIM:BMN), the integrated primary vanadium
producer and energy storage solutions provider, is pleased to announce its
interim results for the six months ended 30 June 2023.
H1 2023 Financial Highlights
· Revenue of US$78.4 million (H1 2022: US$76.2 million)
· Sales of 2,096 mtV (H1 2022: 1,644 mtV), supported by higher
production of 1,784mtV (H1 2022: 1,641 mtV)
· Average realised price of US$37.4/kgV (H1 2022: US$46.4/kgV)
· Cost per unit sold including sustaining capital of US$33.4/kgV (H1
2022: US$37.8/kgV)
· Adjusted EBITDA(1) profit of US$10.3 million (H1 2022: US$15.6
million)
· Operating profit of US$2.1 million (H1 2022: US$6.1 million)
· Net loss of US$12.5 million (H1 2022: net loss US$0.3 million)
· Free cash outflow(2) of US$2.7 million (H1 2022: inflow of US$7.1
million)
· Cash and cash equivalents of US$3.7 million (2022: US$10.9 million)
· Net debt(3) of US$90.7 million (2022: US$79.5 million) including
Production Financing Agreement of US$35.1 million
1. Adjusted EBITDA is EBITDA, excluding the Group's share of losses
from joint ventures, fair value gain on derivative liability and other losses.
2. Free cash flow defined as operating cash flow less sustaining
capital.
3. Net debt is total debt plus lease liabilities less cash and cash
equivalents.
Group Priorities and FY2023 operational highlights
· On 11 September 2023, the Company announced a Binding Term Sheet with
Southern Point Resources ("SPR") for a cumulative proposed investment of
between US$69.5-US$77.5 million.
· Bushveld has since received the ZAR150 million (~US$8.1 million)
interim working capital funds as part of the transaction. The Company
continues to make progress on the overall transaction.
· Management is confident the restructuring of the Orion Mine Finance
("Orion") convertible loan of ~US$45 million (capital plus interest) will be
completed before the end of December 2023.
· Bushveld remains on track to meet the revised 2023 production
guidance of between 3,700 mtV and 3,900 mtV, and weighted average production
cash cost ("C1") guidance of between US$26.6/kgV and US$26.9/kgV (ZAR481/kgV
and ZAR487/kgV).
§ Vanchem produced 160mtV in July and 175mtV in August, 63% higher than the
average monthly production of 103mtV achieved in H1 2023.
§ Vametco produced 132mtV in July and 215mtV in August.
Analyst conference call and presentation
Bushveld Minerals' Chief Executive Officer, Craig Coltman, and Finance
Director, Tanya Chikanza, will host a conference call and presentation today
at 12:00 pm BST (13:00 SAST), to discuss the 2023 interim results with
analysts. Participants may join the call by dialling:
Tel: United Kingdom: +44 (0) 33 0551 0200; South Africa: +27 800 980 512;
USA Local: +1 786 697 3501
Password: Quote Bushveld Minerals Interim Results when prompted by
the operator
Alternatively, the presentation can be accessed as a webcast here:
https://stream.brrmedia.co.uk/broadcast/64f5fe47c6e9d7476c27f389
(https://stream.brrmedia.co.uk/broadcast/64f5fe47c6e9d7476c27f389)
Investor Meet Company
Bushveld Minerals Chief Executive Officer, Craig Coltman, will host an
investor session on 29 September 2023 at 9:00am BST (10:00am SAST) via the
Investor Meet Company platform to discuss the operational update. The session
is open to all existing and potential shareholders. Investors can submit
questions via Investor Meet Company dashboard up until 9:00am the day before
the meeting. Investors can sign up to Investor Meet Company for free and
register for the event via:
https://www.investormeetcompany.com/bushveld-minerals-limited/register-investor
(https://www.investormeetcompany.com/bushveld-minerals-limited/register-investor)
Investors who already follow Bushveld Minerals on the Investor Meet Company
platform will automatically be invited.
Craig Coltman, CEO of Bushveld Minerals commented: "In recent weeks we have
announced decisions addressing several of the challenges that were experienced
in the first six months of the year and reflected in these financial results.
The improved production at Vanchem, thanks to measures described in the Q2
operational update, tells us that we have a plant that is capable of reaching
its full potential. We must now consolidate the improved efficiencies and
achieve sustained target growth of 180mtV per month for Vanchem by the end of
2023. With incremental month-to-month improvements, we should be in a position
of attaining this by the end of 2023.
We continue to make progress in respect of the refinancing of the Orion
convertible loan note and we are confident that this will be completed before
the December 2023 due date. In addition, the proposed SPR transaction will
solve many of the balance sheet pressures that have arisen, and on this point,
we have now received the US$8.1 million working capital funds that form part
of the overall proposed transaction."
ENDS
Enquiries: info@bushveldminerals.com
Bushveld Minerals Limited +27 (0) 11 268 6555
Craig Coltman, Chief Executive Officer
Chika Edeh, Head of Investor Relations
SP Angel Corporate Finance LLP Nominated Adviser & Broker +44 (0) 20 3470 0470
Richard Morrison / Charlie Bouverat
Grant Baker / Richard Parlons
RBC Capital Markets Joint Broker +44 (0) 20 7653 4000
Jamil Miah / Sahil Suleman
Tavistock Financial PR
Gareth Tredway / Tara Vivian-Neal/ Adam Baynes +44 (0) 207 920 3150
Chief Executive Officer's Review
Dear stakeholders,
The first half of the year reflects the challenges that the Company has been
facing operationally at both Vametco and Vanchem for some time. Despite the
operational challenges, the Company was able to increase production and sales
during the period. However, lower vanadium prices meant that the Group
generated only slightly higher revenue of US$78.4 million, a lower adjusted
EBITDA profit of US$10.3 million and a net loss after tax of US$12.5 million.
As a result of the increased sales volumes and a weaker Rand, the Group cost
per unit sold for the half year (including sustaining capital expenditure)
improved by 12% to US$33.4/kgV.
During the period the Company halved its capital expenditure to US$4.3
million, however, this still resulted in a negative free cash flow of US$2.7
million, and the cash and cash equivalent balance reducing to US$3.7 million.
Total debt increased during the period to US94.4 million (including leases)
mostly due to capitalisation of interest and proceeds received from additional
funding.
To this end, I have been focusing on addressing the issues that the Company
has been facing, by motivating our own people to solve the problems that have
negatively impacted production at our operations. We are already seeing some
results stemming from the improvements in production at Vanchem in the past
couple of months.
The improvement in performance at both Vametco and Vanchem shows that we have
plants that are capable of reaching their full potential if we can solve
factors that are within our control. Given the ongoing operational
improvements, the revised 2023 Group production guidance of between 3,700 mtV
and 3,900 mtV, and the Group weighted average production cash cost guidance of
between US$26.6/kgV and US$26.9/kgV, has been maintained.
Post-period end, we agreed a binding term sheet with SPR regarding a series of
transactions totalling between US$69.5 and US$77.5 million. When concluded,
the proposed package of inter-conditional transactions will provide: (i)
interim working capital (which has now been received), (ii) the opportunity to
retire (either entirely or partially) certain existing financing instruments,
(iii) an equity investment from SPR into Bushveld Minerals, (iv) a marketing
and working capital solution to replace the Group's existing arrangements as
and when they expire over the coming 5-17 months, and (vi) the opportunity to
evaluate the business case to recommission Vanchem's Kiln-1, as part of the
Group's capital prioritisation initiative. We will update the market as and
when the various transaction milestones are reached.
OPERATIONAL OVERVIEW
During the first half of the year, the Company produced 1,784 mtV (H1 2022:
1,641 mtV). The higher production was underpinned by increased production
volumes at Vanchem, which produced 617 mtV (H1 2022: 415 mtV). Despite the
higher production volume having been supported by the use of Kiln-3, Vanchem's
production for the first six months was materially lower than what the Company
had anticipated for the period, due to plant breakdowns and unscheduled power
disruptions owing to the lack of reliability of the municipality's
infrastructure.
Furthermore, there were delays in the use of the better quality third party
ore. For these reasons, guidance at Vanchem was revised to between 1,400 mtV
and 1,500 mtV (previously between 1,500 mtV - 1,800 mtV). In July, the Company
implemented a number of initiatives aimed at Vanchem achieving stable
production levels of approximately 180 mtV per month by the end of 2023. These
initiatives included:
§ Changing the reagent mix from 100% Sodium Sulphate to a mix of Sodium
Carbonate and Sodium Sulphate, which has reduced the silica build up at the
kiln and increased the kiln availability.
§ Deploying a team from Vametco to Vanchem to improve knowledge sharing.
§ 24/7 supervisory shift managers to ensure immediate decision-making.
Since the implementation of these initiatives, Vanchem's performance has
improved, producing 160 mtV in July and 175mtV in August 2023. The average for
July and August's production represents a 63% improvement over the monthly
average for the first six months of the year. August is also the highest
production month since Bushveld Minerals took over the asset in 2019. The
Company is pleased to report that this was done safely without any injuries.
We shut down the Kiln for 8 days during September to attend to much needed
maintenance and we anticipate production of circa 130 mtV for the month of
September.
Unfortunately, during the first half of the year, Vametco's production was
affected by unplanned stoppages, including unexpected high rainfall levels
which necessitated a plant stoppage due to constraints at the barren dam and
the Sulphate Recovery Plant ("SRP").These events contributed to Vametco
producing 1,167 mtV (H1 2022: 1,226 mtV) during the period. July production
remained low at 132 mtV, and full-year guidance was revised to between 2,300
mtV and 2,400 mtV (previously circa 2,700 mtV). Since then, production has
been improving, and during the month of August, Vametco produced 215 mtV.
Whilst progress has been made on the SRP performance and barren dam levels,
Vametco has experienced reliability challenges at the leach plant. Progress
has been made to resolve the issue, however, due to this event, Vametco is
expected to produce 180 mtV in September. From October, production is expected
to return to the 200 mtV monthly production run rate.
In its efforts to reduce costs and simplify our business, the Company has
reassessed the merits of pursuing the mining right application associated with
the Brits Project and concluded that it should be discontinued. With Vametco's
life of mine conservatively estimated to be in excess of 30 years, the Company
wants to focus its efforts on its already secured asset and not be obligated
to fulfil the costly commitments associated with a second mining right that is
not required. Moreover, a withdrawal of the application would allow the
community to apply for the mining right in their own capacity and the Company
believes that this would strengthen community relations.
During the first half of 2023, the construction and initial testing of the
BELCO electrolyte manufacturing plant was completed. In the same period, the
hot commissioning phase commenced. This phase has now been completed and an
initial batch of electrolyte has been sent to a few international customers in
an effort to qualify BELCO as an approved supplier of electrolyte.
The Vametco hybrid mini-grid project is progressing. The 1 MW/4MWh VRFB system
supplied by CellCube was filled with electrolyte and energised for the first
time during the third quarter of 2023 and is currently undergoing Site
Acceptance Testing under different operating profiles. The construction of the
3.5 MW solar PV plant is nearing completion with 95% of the solar panels
already installed. The entire project is expected to become fully operational
by the end of the year. Upon completion, the plant will generate approximately
10% of Vametco's electricity requirements.
The Company previously announced its intention to carve out Bushveld Energy by
consolidating its assets into Mustang Energy Plc ("Mustang"). The Company
announced on 9 August 2023 that Mustang was informed by each of the
convertible loan notes ("CLN") holders that they had elected to redeem their
CLNs in accordance with the backstop arrangement previously agreed between
Bushveld and Mustang. In accordance with the backstop agreement a total of
270,393,578 new ordinary shares were issued to the CLN holders.
As a result of Mustang not being readmitted to trading by 31 July 2023,
shareholder Garnet exercised its option to increase its shareholding in
CellCube to 60% and committed to invest a further US$3.25 million to support
the company in the short term. As a result of these events, alternative
options are being considered for Bushveld Energy.
Health and Safety
There were 2 lost time injuries ("LTI") and 3 medical treatment cases ("MTC")
recorded in the first half of the year. This is an improvement in safety
performance compared to first half of 2022 which recorded 4 LTIs and 6 MTCs.
Bushveld continues to implement the action plans from the safety diagnostic
audit which commenced at the beginning of 2023. The Company's focus remains to
closely monitor the leading indicators, namely, visible felt leadership,
planned task observations, inspections and closing all gaps from regulatory
inspections. These leading indicators are monitored and reported on a weekly
basis. Although the Company has seen an improvement in its safety records, it
continues to focus on maturing its safety environment.
2023 priorities and outlook
My focus for the rest of 2023 is to ensure that both Vametco and Vanchem
achieve the operational targets that we have set for this year, and keep
improving on their respective operational performances. From a financing
perspective, we are confident that we will complete the Orion convertible loan
note restructuring before the 21(st) December 2023 due date. The proposed
transaction with SPR will put us in a much stronger financial position and we
will keep progressing the various work-streams in order to complete the
transaction. I am pleased to report we have received the ZAR150 million
(~US$8.1 million) in working capital funds which forms part of that
transaction. In order to improve the Group's profitability, I will be focusing
on various cost containment measures in parallel to these other initiatives.
FINANCIAL OVERVIEW
Unit H1 2023 H1 2022
Revenue US$'000 78 428 76 205
Cost of sales excluding depreciation US$'000 (50 902) (44 696)
Other operating costs and income US$'000 (9 203) (7 009)
Administration costs excluding depreciation US$'000 (8 013) (8 903)
Adjusted EBITDA US$'000 10 310 15 598
Average foreign exchange rate US$/ZAR 18.21 15.4
Group production mtV 1 784 1 641
Group sales mtV 2 096 1 644
All-in sustaining costs ("AISC") US$/kgV 33.4 37.8
Average realised price US$/kgV 37.4 46.4
The financial results for the first six months reflect a challenging start to
the year for the Company. The Company recorded an adjusted EBITDA profit of
US$10.3 million and an operating profit of US$2.1 million. Both adjusted
EBITDA and operating profit were lower than the prior year due to lower
realised prices and higher overall costs, offset to some extent by higher
sales volumes.
Income statement
The income statement summary below is adjusted from the primary statement
presentation.
H1 23 H1 22
US$'000 US$'000
Revenue 78 428 76 205
Cost of sales excluding depreciation (50 902) (44 696)
Other operating costs and income (9 203) (7 009)
Administration costs excluding depreciation (8 013) (8 903)
Adjusted EBITDA 10 310 15 598
Depreciation (8 251) (9 479)
Operating profit 2 059 6 119
Other losses (3 375) (136)
Share of loss from joint ventures (1 504) (1 900)
Fair value gain on derivative liability - 2 934
Net financing expenses (7 081) (5 259)
Loss before tax (9 901) 1 758
Income tax (2 592) (2 037)
Net loss for the period (12 493) (297)
Revenue
H1 2023 H1 2022
Group sales (mtV) 2 096 1 644
Average realised price (US$/kgV) 37.4 46.4
Revenue (US$'000) 78 428 76 205
Revenue of US$78.4 million for the Group, underpinned by higher sales volumes
partly offset by a lower average realised price of US$37.4/kgV compared to
US$46.4/kgV in the prior year.
The geographic split of Group sales during the first half of 2023 was 49% to
the USA (H1 2022: 45%), 29% to Europe (H1 2022: 27%), 6% to Asia (H1 2022:
9%), 6% to South Africa (H1 2022: 10%), and 10% to the rest of the world (H1
2022: 9%).
During the period, Bushveld continued to prioritise nitro vanadium sales into
North America given the higher vanadium prices in the region. Sales into the
aerospace and specialty chemical products sectors were also a focus given the
price premiums these sectors attract.
Cost analysis
H1 23 H1 22
US$'000 US$'000
Cost of sales excluding depreciation (50 902) (44 696)
Other operating costs and income (9 203) (7 009)
Administration costs excluding depreciation (8 013) (8 903)
Total income statement cost excluding depreciation (68 118) (60 607)
Total units sold (mtV) 2 096 1 644
Cost per income statement per unit sold (excluding depreciation) (US$/KgV) 32.5 36,9
Sustaining capital (1 793) (1 567)
Total cost including sustaining capital (69 911) (62 174)
Cost per unit sold including sustaining capital (US$/KgV) 33.4 37.8
Cost per unit sold
The Group cost per unit sold for the half year (including sustaining capital
expenditure) was US$33.4/kgV. This represents a 12% decrease relative to the
prior year primarily as a result of higher sales volumes and a weaker ZAR:US$
exchange rate, partially offset by the cost factors noted below.
Cost of sales
The cost of sales, excluding depreciation, for the first half of 2023 was
US$50.9 million, which was US$6.2 million higher than the prior period due to
higher costs at both Vametco and Vanchem, primarily due to increased units
sold. The cost increases included:
· Increases in use in raw materials and prices from suppliers;
· Higher maintenance costs, at both Vametco and Vanchem, due to
unexpected plant breakdowns during the period; and
· Higher energy costs due to the increase in oil and diesel prices, as
well as an increase in diesel usage due to unscheduled power disruptions at
Vanchem.
Other operating costs and income
Other operating costs and income of US$9.2 million increased by US$2.2 million
due to:
· A US$0.6 million increase in selling and distribution costs to US$4.9
million, primarily driven by the higher commissions paid which are a
consequence of the increased revenue as well as increased shipping and
warehouse costs;
· A US$0.6 million increase in idle plant costs to US$3.8 million,
primarily due to:
§ Downtime at Vametco due to unplanned maintenance of the SRP, unplanned
maintenance of the dust collectors at the refinery and power instabilities as
a result of a transformer failure at the local municipality at the end of June
2023.
· A US$1.4 million increase in other mine operating costs to US$2.7
million, primarily due to a write-down of work-in-progress inventory at
Vanchem of US$1.2 million;
· A US$0.7 million increase in other operating income to US$2.3
million, primarily as a result of foreign exchange gains due to the
devaluation of the Rand compared to the US$.
Administration costs
Administration costs, excluding depreciation charges for the half year, was
US$8.0 million. Below is a breakdown of the key items included in
administration costs:
H1 23 H1 22
US$'000 US$'000
Staff costs 4 227 4 052
Professional fees 1 968 2 807
Other (incl. IT and security expenses) 1 818 2 044
8 013 8 903
Adjusted EBITDA
Adjusted EBITDA is a factor of volumes, prices and cost of production. This is
a measure of the underlying profitability of the Group, which is widely used
in the mining sector.
H1 23 H1 22
US$'000 US$'000
Revenue 78 428 76 205
Cost of sales (58 945) (54 003)
Other operating costs and income (9 203) (7 180)
Administration costs (8 221) (8 903)
Add: Depreciation and amortisation 8 251 9 479
Adjusted EBITDA 10 310 15 598
US$'000
H1 2022 Adjusted EBITDA 15 598
Revenue increase due to volumes 20 952
Revenue decrease due to price (18 792)
Cost of sales change (6 206)
Operating costs and income change (2 194)
Administration cost change 890
H1 2023 Adjusted EBITDA 10 310
The Group delivered an adjusted EBITDA of US$10.3 million, a decrease of
US$5.2 million compared to the previous year, primarily driven by lower
realised sales prices and the higher costs associated with increased sales
volumes.
Other losses
Other losses of US$3.4 million primarily reflects the fair value loss
recognised on the Mustang convertible loan notes and additional funding
provided to CellCube.
Net financing expenses
Net financing expenses were US$7.1 million, US$1.8 million higher than in the
prior year. The increase was mainly attributable to interest on the Orion
Production Financing Agreement ("PFA") and Orion convertible loan note. Below
is a breakdown of net financing expenses:
H1 23 H1 22
US$'000 US$'000
Finance income (235) (136)
Interest on borrowings 6 050 4 746
Unwinding of discount 914 417
Interest on lease liabilities 325 232
Other finance costs 28 1
Net finance expenses 7 081 5 259
Interest on borrowings primarily reflected the interest on the Orion
convertible loan note of US$3.7 million (H1 2022: US$2.3 million), interest on
the Orion production financing arrangement of US$2.2 million (H1 2022: US$2.3
million).
Balance sheet
Assets
Property, plant and equipment decreased by US$15.5 million compared to the
previous year primarily due to depreciation of US$8.2 million, exchange rate
differences arising from a weaker ZAR:US$ exchange rate of US$11.8 million,
partially offset by capital expenditures of US$4.6 million.
Inventories of US$47.0 million decreased by US$8.0 million compared to the
prior year, primarily due to a reduction in finished goods and the write-down
of work in progress at Vanchem of US$1.2 million. Trade and other receivables
increased by US$1.6 million due to additional sales during the period to third
parties.
The decrease in cash and cash equivalents to US$3.7 million was primarily due
to capital expenditures incurred of US$4.3 million, the payment of finance
costs on the Orion PFA of US$2.3 million and the cash used by operations of
US$0.9 million, partially offset by proceeds received from borrowings of
US$1.3 million.
Liabilities
Total borrowings (excluding lease liabilities) of US$87.9 million increased by
US$4.8 million compared to the previous year, primarily due to the
capitalisation of interest of US$6.3 million, proceeds received on additional
funding from Nesa Investment Holdings ("Nesa") and the Industrial Development
Corporation ("IDC") of US$1.3 million, partially offset by the repayment of
the finance cost on the Orion PFA of US$2.2 million.
The net debt reconciliation below outlines the Group's total debt and cash
position:
H1 2023 31 Dec 2022 Change
US$'000 US$'000 US$'000
Orion PFA (35 112) (35 146) 34
Orion Convertible Loan Note (43 460) (39 742) (3 718)
Industrial Development Corporation Loans (6 000) (5 480) (520)
Other (3 330) (2 762) (568)
Lease liabilities (6 514) (7 282) 768
Total debt (94 416) (90 412) (4 004)
Cash and cash equivalents 3 742 10 874 (7 132)
Net debt (90 674) (79 538) (11 136)
Net debt increased by US$11.1 million compared to the prior year primarily due
to capitalised interest of US$6.3 million and the decrease in the cash and
cash equivalents balance to US$3.7 million.
Cash flow statement
The table below summarises the main components of cash flow during the year:
H1 23 H1 22
US$'000 US$'000
Operating profit 2 059 6 119
Depreciation and amortisation 8 251 9 479
Other non-cash items (5 439) -
Changes in working capital and provisions (3 889) (6 241)
Taxes paid (1 902) (681)
Cash inflow / (outflow) from operations (920) 8 676
Sustaining capital expenditures (1 793) (1 567)
Free cash flow (2 713) 7 109
Cash used in other investing activities (2 521) (8 230)
Cash used in financing activities (1 313) (4 791)
Cash outflow (6 547) (5 912)
Opening cash and cash equivalents 10 874 15 433
Foreign exchange movement (585) (2 514)
Closing cash and cash equivalents 3 742 7 007
Operating activities
Cash used in operating activities was US$0.9 million, a decrease of US$9.6
million from the previous year, primarily driven by the lower Operating profit
and higher income taxes paid.
Investing activities
Cash used in investing activities, including sustaining capital expenditure,
of US$4.3 million was primarily driven by capital expenditure on property,
plant and equipment.
Capital Expenditure
Capital expenditure decreased by US$4.3 million compared to the prior year as
2022 marked the end of a substantive capital investment phase, during which
the Company undertook extensive refurbishment and optimisation of Vametco and
Vanchem and constructed the BELCO electrolyte plant.
Capital Expenditure (US$' million)
H1 23 H1 22
US$' million US$' million
Vametco
- Growth - -
- Sustaining 1.5 1.8
Vanchem
- Growth - 3.6
- Sustaining 0.3 0.02
Bushveld Energy
- Growth 2.5 3.1
- Sustaining - -
Total 4.3 8.5
Financing activities
Cash used in financing activities of US$1.3 million comprised the repayment of
finance cost on the Orion PFA of US$2.3 million and the repayment of lease
liabilities of US$0.3 million, partially offset by the proceeds received from
borrowings of US$1.3 million from Nesa to fund CellCube and the IDC to fund
the construction of the BELCO electrolyte plant.
Going concern and outlook
The Company closely monitors and manages liquidity risk by ensuring that the
Group has sufficient funds for all ongoing operations. As part of the annual
budgeting and long-term planning process, the Directors reviewed the approved
Group budget and cashflow forecast through to 31 December 2024. The current
cashflow forecast has been amended in line with any material changes
identified during the year. Equally, where funding requirements are identified
from the cashflow forecast, appropriate measures are taken to ensure these
requirements can be satisfied.
Bushveld entered into a non-binding term sheet with Orion on 5 May 2023 to
refinance the convertible loan notes. The Orion convertible loan notes are due
to mature at the end of December 2023 and given that the current share price
is lower than the conversion price, the convertible loan notes will require
repayment or refinancing. The closing of the transaction is still subject to
certain conditions, including South Africa Reserve Bank approval,
shareholders' approval at a still to be convened general meeting, which the
Directors urge shareholders to support and the finalisation of definitive
binding documentation. The Company is confident the transaction will be
completed before the December 2023 due date, as this would be in the best
interest of both parties.
We have performed an assessment of whether the Group would be able to continue
as a going concern for at least twelve months from the date of the interim
consolidated financial statement. The assessment took into account the
financial position, expected future performance of the operations, the debt
facilities and debt service requirements, including those of the proposed
refinancing of the Orion convertible loan notes, the working capital and
capital expenditure commitments and forecasts.
The current cashflow forecast indicates that the Group requires additional
liquidity to fund its obligations and activities during the next twelve
months. The Company has identified and is proactively exercising levers within
our control which will improve the Group's liquidity. Importantly, Bushveld
has been actively pursuing various financing alternatives and recently
announced the transactions with SPR which will result in a significant
injection of cash into the Group.
Key terms of the proposed transactions
1) Interim working capital facility of ZAR150 million (~
US$8.1 million), which has now been received.
o The interim working capital facility is scheduled to mature on
implementation of the other transactions referred to in paragraphs 2, 3 and 4
below, or the first anniversary of financial close.
o On maturity, the facility will be offset against the amounts payable by
SPR in respect of the transactions referred to in paragraphs 2, 3 and 4 below.
2) Sale of 50% of Bushveld's stake in Vanchem and sale of
Bushveld's 64% stake in Mokopane to SPR for total of US$25 million, payable as
follows:
o US$12.5 million on closing of the 50% Vanchem sale.
o US$10 million on maturity of the ZAR150 million (~US$8.1 million) interim
working capital facility.
o US$2.5 million on a contingent basis if the Mokopane sale closes within
one year of the conditions precedent to completion having been met.
o The proceeds from the sale of Vanchem and Mokopane will be utilised to
reduce existing debt and strengthen the Company's balance sheet.
3) New equity investment by SPR in Bushveld Minerals Limited
for an amount up to US$12.5 million:
o The subscription price per share agreed with Orion in relation to its
conversion of the restructured convertible loan note (as announced by Bushveld
on 5 May 2023), or if lower, the price per share agreed with Orion after the
date of this term sheet in relation to its future conversion of the
restructured convertible loan note.
o The number of shares to be subscribed for shall not be more than 29.9% of
Bushveld ordinary shares of 1 pence each in issue.
o SPR will be entitled to nominate one non-executive director to the
Bushveld board.
4) Three-year Marketing and sales appointment of SPR
(extendable by a further three years at SPR's discretion) with provisional
working capital facility of US$25-30 million, to replace existing marketing
and sales arrangements as and when they expire over the coming 5-17 months.
5) Potential future investment into Vanchem by SPR of US$7-10
million in the form of equity, debt or a quasi-debt instrument. This offers
the opportunity to evaluate the business case to recommission Vanchem's Kiln-1
and increase output, subject to feasibility studies.
The Group's ability to continue as a going concern is dependent on its ability
to complete the refinance of the Orion convertible loan notes and completion
of the remaining transactions with SPR. These transactions until completed,
indicate the existence of material uncertainties that may cast significant
doubt on the Group's ability to continue as a going concern.
The interim consolidated financial statements for the six months ended 30 June
2023 have been prepared on a going concern basis as, in the opinion of the
Directors, the Group will be in a position to continue to meet its operating
and capital costs requirements and pay its debts as and when they fall due for
at least twelve months from the date of this report. The going concern note
included in the accounting policies provides further information.
Bushveld Minerals Limited
Interim Financial Statements for the period ended 30 June 2023
Consolidated Statement of Profit or Loss
6 months 6 months 12 months
ended 30 June ended 30 June ended 31 December
2023 2022 2022
Unaudited US$ '000 Restated* Unaudited US$ '000 Audited US$ '000
Notes
Revenue 78,428 76,205 148,448
Cost of sales (58,945) (54,003) (108,304)
Gross profit 19,483 22,202 40,144
Other operating income 2,258 1,639 2,733
Impairment losses - - (23,965)
Selling and distribution costs (4,892) (4,288) (9,270)
Other mine operating costs (2,737) (1,316) (2,723)
Idle plant costs (3,832) (3,215) (6,725)
Administrative expenses (8,221) (8,903) (20,328)
Operating profit / (loss) 2,059 6,119 (20,134)
Finance income 235 136 494
Finance costs* (7,316) (5,395) (14,148)
Other losses (3,375) (136) (818)
Fair value gain on derivative liability* - 2,934 2,934
Share of loss from investments in joint ventures (1,504) (1,900) (5,112)
Profit / (Loss) before taxation (9,901) 1,758 (36,784)
Taxation (2,592) (2,037) 1,345
Loss for the period (12,493) (279) (35,439)
Loss attributable to:
Owners of the parent (14,093) (3,348) (38,968)
Non-controlling interest 1,600 3,069 3,529
(12,493) (279) (35,439)
Loss per ordinary share
Basic loss per share (cents) 3 (1.09) (0.27) (3.07)
Diluted loss per share (cents) 3 (1.09) (0.27) (3.07)
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
2022 was restated to reflect the updated finance costs and fair value gain on
derivative liability in accordance with the restatement disclosed in the
annual consolidated financial statements for the year ended 31 December 2022.
Consolidated Statement of Comprehensive Loss
6 months 6 months 12 months
ended 30 June ended 30 June ended 31 December
2023 2022 2022
Unaudited US$ '000 Restated* Unaudited US$ '000 Audited US$ '000
Notes
Loss for the period (12,493) (279) (35,439)
Other comprehensive income / (loss):
Items that will not be reclassified to profit or loss:
Other fair value movements - - 140
Items that may be reclassified to profit or loss:
Currency translation differences (15,097) (80) (15,712)
Total comprehensive loss (27,590) (359) (51,011)
Total comprehensive loss attributable to:
Owners of the parent (24,716) (3,533) (53,323)
Non-controlling interest (2,874) 3,174 2,312
(27,590) (359) (51,011)
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
2022 was restated to reflect the updated finance costs and fair value gain on
derivative liability with the restatement disclosed in the annual consolidated
financial statements for the year ended 31 December 2022.
Consolidated Statement of Financial Position 30 June 31 December
2023 2022
Unaudited Audited
Notes US$ '000 US$ '000
Assets
Non-Current Assets
Intangible assets 4 52,952 53,469
Property, plant and equipment 5 111,944 127,409
Investment property 2,165 2,412
Investments in joint ventures 2,077 3,151
Restricted investment 2,432 2,710
Total Non-Current Assets 171,570 189,151
Current Assets
Inventories 6 46,963 54,990
Trade and other receivables 7 11,069 9,498
Financial assets 1,063 3,075
Cash and cash equivalents 8 3,742 10,874
Total Current Assets 62,837 78,437
Total Assets 234,407 267,588
Equity and Liabilities
Share capital 9 17,122 17,122
Share premium 9 127,702 127,702
Accumulated loss 9 (53,240) (39,147)
Share-based payment reserve 515 515
Foreign currency translation reserve (45,969) (35,346)
Fair value reserve (1,798) (1,798)
44,332 69,048
Equity attributable to owners of the parent
Non-controlling interest 33,709 36,583
Total Equity 78,041 105,631
Liabilities
Non-Current Liabilities
Post retirement medical liability 1,497 1,675
Environmental rehabilitation liabilities 15,787 16,610
Deferred consideration 1,527 1,527
Borrowings 10 37,890 35,272
Lease liabilities 6,033 6,721
Deferred tax liabilities 1,061 1,191
Total Non-Current Liabilities 63,795 62,996
Current Liabilities
Trade and other payables 11 36,889 45,896
Provisions 1,581 1,714
Borrowings 10 50,012 47,858
Lease liabilities 481 561
Deferred consideration 973 901
Current tax payable 2,635 2,031
Total Current Liabilities 92,571 98,961
Total Liabilities 156,366 161,957
Total Equity & Liabilities 234,407 267,588
Consolidated Statement of Changes in Equity
Share capital Share premium Foreign currency translation reserve Share-based payment reserve Fair value reserve Accumulated loss Total attributable to equity holders of the group Non- controlling interest Total equity
US$'000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at 1 January 2022 16,797 125,551 (20,851) - (1,938) (179) 119,380 32,482 151,862
Loss for the period - - - - - (38,968) (38,968) 3,529 (35,439)
Other comprehensive loss, net of tax: Currency translation differences - - (14,495) - - - (14,495) (1,217) (15,712)
Other fair value movements - - - - 140 - 140 - 140
Total comprehensive loss for the period - - (14,495) - 140 (38,968) (53,323) 2,312 (51,011)
Transaction with owners: Issue of shares
325 2,151 - - - - 2,476 - 2,476
Share-based payment - - - 515 - - 515 - 515
Contribution from non-controlling interest - - - - - - - 1,789 1,789
Audited balance at 31 December 2022 17,122 127,702 (35,346) 515 (1,798) (39,147) 69,048 36,583 105,631
Loss for the period - - - - - (14,093) (14,093) 1,600 (12,493)
Other comprehensive income, net of tax: Currency translation reserve - - (10,623) - - - (10,623) (4,474) (15,097)
Total comprehensive loss for the period - - (10,623) - - (14,093) (24,716) (2,874) (27,590)
Unaudited balance at 30 June 2023 17,122 127,702 (45,969) 515 (1,798) (53,240) 44,332 33,709 78,041
Notes 9 9
Consolidated Statement of Cash Flows
6 Months ended 30 June 6 Months ended 30 June 6 Months ended 30 June
2023 2022 2022
Note Unaudited US$ '000 Restated* Unaudited US$ '000 Audited US$ '000
Cash flows from operating activities
Profit / (loss) before taxation (9,901) 1,758 (36,784)
Adjustments for:
Depreciation property, plant and equipment and right-of-use assets 5 8,251 9,479 18,475
Share of loss from investments in joint ventures 1,504 1,900 5,112
Fair value gain on derivative liability - (2,934) (2,934)
Loss on financial instruments 2,125 136 -
Finance income (235) (136) (494)
Finance costs 7,316 5,395 14,148
Impairment losses - - 23,965
Other non-cash movements 1,173 - 1,138
Foreign exchange differences (5,362) - (6,949)
Changes in working capital (3,889) (6,241) 6,154
Income taxes paid (1,902) (681) (648)
Net cash generated from / (used in) operating activities (920) 8,676 21,183
Cash flows from investing activities
Finance income 97 136 336
Purchase of property, plant and equipment (4,340) (8,477) (18,197)
Purchase of investments - (1,211) (1,211)
Purchase of exploration and evaluation assets 4 (71) (245) (517)
Net cash used in investing activities (4,314) (9,797) (19,589)
Cash flows from financing activities
Proceeds from borrowings 10 1,294 - 4,222
Repayment of borrowings 10 - (3,084) (5,623)
Lease payments (349) (233) (728)
Finance costs 10 (2,258) (1,474) (3,217)
Net cash used in financing activities (1,313) (4,791) (5,346)
Total cash and cash equivalents movement for the period (6,547) (5,912) (3,752)
Cash and cash equivalents at the beginning of the period 10,874 15,433 15,433
Effect of translation of foreign exchange rates (585) (2,514) (807)
Total cash and cash equivalents at end of the period 8 3,742 7,007 10,874
Notes to the Condensed Consolidated Interim Financial Statements
1. Corporate information and principal activities
Bushveld Minerals Limited ("Bushveld" or the "Company") and its subsidiaries
and interest in equity accounted investments (together the "Group") are an
integrated primary vanadium producer and energy storage solution provider. The
company 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 2023 comprise of the Company and its
subsidiaries and 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
2022 is based on the statutory accounts for the period ended 31 December 2022.
The auditor reported on those accounts which were not qualified but included a
material uncertainty related to going concern.
The consolidated interim financial statements have been prepared on the basis
of accounting policies applicable to a going concern. 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.
Going concern
The interim consolidated financial statements have been prepared on the going
concern basis, which contemplates continuity of normal business activities and
the realisation of assets and discharge of liabilities in the normal course of
business.
The Group recorded a net loss after tax of US$12.49 million for the six months
ended 30 June 2023 (31 December 2022: US$35.44 million) and as at 30 June 2023
had cash and cash equivalents of US$3.74 million (31 December 2022: US$10.87
million) as well as total borrowings of US$87.90 million (31 December 2022:
total borrowing of US$83.13 million).
The Orion convertible loan notes are due to mature in December 2023 and given
that the current share price is lower than the conversion price, the
convertible loan notes will likely require repayment or refinancing. The
Company entered into a non- binding term sheet with Orion on 5 May 2023 to
refinance the convertible loan notes. The closing of the transaction is still
subject to certain conditions, including South Africa Reserve Bank approval,
shareholders' approval at a still to be convened general meeting which the
Directors urge shareholders to support and the finalisation of definitive
binding documentation. The Directors are confident that the restructuring will
be completed before the December 2023 due date.
The Directors closely monitor and manage the liquidity risk of the Group by
ensuring that the Group has sufficient funds for all ongoing operations. As
part of the annual budgeting and long-term planning process, the Directors
reviewed the approved Group budget and cashflow forecast through to 31
December 2024. The current cashflow forecast has been amended in line with any
material changes identified during the year. Equally, where funding
requirements are identified from the cashflow forecast, appropriate measures
are taken to ensure these requirements can be satisfied. The Directors have
performed an assessment of whether the Group would be able to continue as a
going concern for at least twelve months from the date of this report. In
their assessment, the Group has taken into account its financial position,
expected future performance of its operations, its debt facilities and debt
service requirements, including those of the proposed refinancing of the Orion
convertible loan notes, its working capital and capital expenditure
commitments and forecasts. Current cashflow forecast indicates that the Group
requires additional liquidity to fund its obligations and activities during
the next twelve months.
The Group is actively pursuing various financing alternatives to increase its
liquidity and capital resources and entered into a binding term sheet with
Southern Point Resources ("SPR") on 11 September 2023 for a cumulative
proposed investment of between US$69.5 million and US$77.5 million (refer to
note 12). The closing of the transactions are subject to certain conditions.
The Group has received the ZAR150 million (approximately US$8.1 million)
interim working capital funds as part of the transaction.
The Group's ability to continue as a going concern is dependent on its ability
to complete the refinance of the Orion convertible loan note and the
completion of the remaining transactions with SPR. Although the Group has been
successful in the past in obtaining additional liquidity, there is no
assurance that it will be able to do so in the future or that such
arrangements will be on terms advantageous to the Group.
These conditions indicate the existence of material uncertainties that may
cast significant doubt on the Group's ability to continue as a going concern.
The interim consolidated financial statements for the six months ended 30 June
2023 have been prepared on a going concern basis as, in the opinion of the
Directors, the Group will be in a position to continue to meet its operating
and capital costs requirements and pay its debts as and when they fall due for
at least twelve months from the date of this report. Accordingly, these
interim consolidated financial statements do not include adjustments to the
recoverability and classification of recorded assets and liabilities and
related expenses that might be necessary should the Group be unable to
continue as a going concern.
Use of estimates and judgements
The preparation of consolidated interim financial statements requires
management to make judgments, estimates and assumptions that affect the
reported amounts of assets, liabilities and contingent liabilities as at the
date of the consolidated interim financial statements and reported amounts of
revenues and expenses during the period ended 30 June 2023. Estimates and
assumptions are continuously evaluated and are based on management's
experience and other factors, including expectations of future events which
are believed to be reasonable under the circumstances. Actual results may
differ from these estimates.
3. Loss per share
Basic loss per share
Basic loss per share is calculated by dividing the net loss attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the period excluding ordinary shares purchased by the
Company and held as treasury shares.
6 months 6 months 12 months
ended 30 June ended 30 June ended 31 December
2023 2022 2022
Unaudited US$ '000 Unaudited US$ '000 Audited US$ '000
Numerator
Net loss attributable to equity holders (14,093) (3,348) (38,968)
Denominator (in thousands)
Weighted average number of common shares 1,287,148 1,261,222 1,270,637
Basic loss per share attributable to equity holders (cents) (1.09) (0.27) (3.07)
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 for all periods.
4. Intangible assets
Vanadium and Iron Ore Coal Total
US$ '000 US$ '000 US$ '000
Balance, 1 January 2022 53,856 5,398 59,254
Capitalised expenditures 174 343 517
Impairment loss - (5,137) (5,137)
Exchange differences (561) (604) (1,165)
Balance, 31 December 2022 53,469 - 53,469
Capitalised expenditures 71 - 71
Exchange differences (588) - (588)
Balance, 30 June 2023 52,952 - 52,952
Mokopane Vanadium and Iron Ore Project
The Group has a 64 per cent interest in Pamish Investment No 39 Proprietary
Limited ("Pamish") which holds an interest in Prospecting right 95.
The Department of Mineral Resources and Energy ("DMRE") executed a 30-year
mining right on 29 January 2020 in favour of Pamish, over five farms:
Vogelstruisfontein 765 LR; Vriesland 781 LR; Vliegekraal 783 LR; Schoonoord
786 LR; and Bellevue 808 LR (the "Mining Right") situated in the District of
Mogalakwena, Limpopo, which make up the Mokopane Project. 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.
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 to commence
mining activities has been submitted and Pamish is waiting on a response.
Engagement has begun with communities to reach agreement for access to the
project areas and secure a land use arrangement.
Subsequent to the period end, the Group entered into a binding term sheet with
Southern Point Resources to purchase the Group's 64% interest in Pamish (refer
to note 12).
Brits Vanadium Project
The Group 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 and
was executed in May 2021. The Group 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.
The Group 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.
The Group re-evaluated the Brits Vanadium Project and after careful
consideration it was concluded that the project should be discontinued.
Coal
Coal Exploration licences have been issued to Coal Mining Madagascar SARL a 99
per cent 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. The Imaloto Coal Project was
impaired during the 2022 year as no further expenditures were planned.
5. Property, plant and equipment
Buildings and Plant and machinery* Motor vehicles, Right-of-use Waste stripping Assets under construction Total
other improvements furniture and equipment assets asset
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Cost
At 1 January 2022 6,957 169,484 1,374 5,066 - 19,147 202,028
Additions - 691 138 2,989 1,850 15,988 21,656
Changes in environmental rehabilitation liabilities - (1,705) - - - - (1,705)
Transfers within PPE 63 19,376 34 - - (19,473) -
Exchange differences (445) (9,298) (92) (435) (68) (1,098) (11,436)
At 31 December 2022 (audited) 6,575 178,548 1,454 7,620 1,782 14,564 210,543
Additions - - 24 - 624 3,918 4,566
Exchange differences (660) (14,384) (142) (781) (206) (1,639) (17,812)
At 30 June 2023 (unaudited) 5,915 164,164 1,336 6,839 2,200 16,843 197,297
Accumulated depreciation
At 1 January 2022 (1,280) (45,318) (759) (1,560) - - (48,917)
Depreciation charge for the year (330) (17,233) (219) (297) (396) - (18,475)
Impairment (898) (17,920) (10) - - - (18,828)
Exchange differences 122 2,776 56 117 15 - 3,086
At 31 December 2022 (audited) (2,386) (77,695) (932) (1,740) (381) - (83,134)
Depreciation charge for the period (147) (7,160) (91) (147) (706) - (8,251)
Exchange differences 236 5,460 91 179 66 - 6,032
At 30 June 2023 (unaudited) (2,297) (79,395) (932) (1,708) (1,021) - (85,353)
Net Book Value
At 31 December 2022 (audited) 4,189 100,853 522 5,880 1,401 14,564 127,409
At 30 June 2023 (unaudited) 3,618 84,769 404 5,131 1,179 16,843 111,944
*Include decommissioning
asset.
Subsequent to the period end, the Group entered into a binding term sheet with
Southern Point Resources to purchase a 50% interest in the Group's subsidiary
that owns its Vanchem Vanadium plant (refer to note 12).
6. Inventories
6 months ended 30 June Year ended 31 December
2023 2022
US$ '000 US$ '000
Raw materials 3,731 4,435
Work in progress 14,962 14,740
Finished goods 16,948 23,511
Consumable Stores 11,322 12,304
46,963 54,900
The cost of inventories recognised as an expense during the period was
US$50.02 million (31 December 2022: US$88.60 million).
The Group recognised a net realisable value write down of finished goods
amounting to US$0.30 million (31 December 2022: US$0.33 million) and work in
progress amounting to US$1.20 million (31 December 2022: US$0.19 million).
7. Trade and other receivables
6 months ended 30 Year ended 31 December
June 2023 2022
Financial instruments: US$ '000 US$'000
Trade receivables 4,290 3,134
Other receivables 4,828 2,856
Expected credit (45) (78)
losses
Non-financial instruments:
Value-added 1,759 3,163
taxes
Deposits 17 19
Prepaid expenses 220 404
Total trade and other receivables 11,069 9,498
Categorisation of trade and other receivables
Trade and other receivables are categorised as follows in accordance with IFRS
9: Financial Instruments:
At amortised cost 9,073 5,912
Non-financial instruments 1,996 3,586
11,069 9,498
Trade receivables are amounts due from customers for goods sold or services
performed in the ordinary course of business. They are generally due for
settlement within 15-90 days and therefore are all classified as current.
The fair value of trade and other receivables approximate the carrying value
due to the short maturity.
8. Cash and cash equivalents
6 months ended 30 June Year ended 31 December
2022
2023
US$ '000 US$ '000
Cash and cash equivalents consist of:
Cash at bank and in hand 1,871 8,347
Short-term deposits 1,871 2,527
3,742 10,874
The fair value of the cash and cash equivalents approximates the carrying
value due to the short maturity.
9. Share capital and share premium
Total share capital and
Number of Share capital Share premium premium
shares US$ '000 US$ '000 US$ '000
At 1 January 2022 1,260,458,857 16,797 125,551 142,348
Shares issued - Directors and staff 2,324,842 29 494 523
Shares issued - Primorus convertible loan note 4,157,645 54 476 530
Shares issued - Lind 20,876,937 242 1,181 1,423
At 31 December 2022 (audited) 1,287,818,281 17,122 127,702 144,824
At 30 June 2023 (unaudited) 1,287,818,281 17,122 127,702 144,824
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 2023 the Company owns 670,000 (31 December 2022: 670,000)
treasury shares with a nominal value of 1 pence.
Shares issued Directors and staff
The Company issued 2,324,842 new ordinary shares of 1 pence each in the
Company in respect of the short-term incentive plans during 2022.
Primorus Investments Plc ("Primorus")
The Company issued a convertible loan note to Primorus. The Company issued a
total of 4,157,645 new ordinary shares of 1 pence each in accordance with the
conversion provisions during 2022.
Lind Global Macro Fund, LP ("Lind")
The Company issued 20,876,937 new ordinary shares of 1 pence each to Lind in
accordance with the Investment Agreement between the Company and Mustang
Energy Plc.
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.
Foreign exchange 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 loss reserve
The accumulated loss reserve represents other net gains and losses and
transactions with owners (e.g. dividends) not recognised elsewhere.
10. Borrowings
30 June 31 December
2023 2022
Unaudited US$ '000 Audited US$ '000
Production financing agreement 35,112 35,146
Orion convertible loan notes 43,460 39,742
Industrial Development Corporation shareholder loan 2,650 1,999
Industrial Development Corporation property, plant and equipment loan 3,350 3,481
Development Bank of South Africa 1,000 1,000
Other 2,330 1,762
87,902 83,130
Split between non-current and current portions
Non-current 37,890 35,272
Current 50,012 47,858
87,902 83,130
Production financing agreement Orion convertible loan notes Nedbank revolving credit facility Industrial Development Corporation loans
Other Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance, 1 January 2022 33,512 36,282 5,821 3,282 1,000 79,897
Cash changes:
Proceeds from borrowings - - - 3,416 806 4,222
Repayments of principle and interest -2,906 - -5,885 - -49 -8,840
Non-cash changes:
Convertible loan note in exchange for financial assets - - - - 1,636 1,636
Conversion of convertible loan notes - - - - -530 -530
Finance costs(1) 4,420 6,394 232 470 143 11,659
Fair value gain on derivative liability - -2,934 - - - -2,934
Adjustment to reflect market value of loan - - - -1,789 - -1,789
Exchange differences 120 - -168 101 -244 -191
Balance, 31 December 2022 35,146 39,742 - 5,480 2,762 83,130
Cash changes:
Proceeds from borrowings - - - 745 549 1,294
Repayments of interest -2,211 - - - -47 -2,258
Non-cash changes:
Finance costs(2) 2,192 3,750 - 226 108 6,276
Fair value gain on derivative liability - -32 - - - -32
Exchange differences -15 - - -451 -42 -508
Balance, 30 June 2023 35,112 43,460 - 6,000 3,330 87,902
(1)Finance costs include capitalised finance costs of US$0.47 million to
property, plant and equipment.
(2)Finance costs include capitalised finance costs of US$0.23 million to
property, plant and equipment.
Orion Mine Finance Production Financing Agreement
The Group signed a long-term production financing agreement ("PFA") of US$30
million with Orion Mine Finance ("Orion) in December 2020, primarily to
finance its expansion plans at Bushveld Vametco Alloys Proprietary Limited and
debt repayment. Exchange control authorization from the South Africa Reserve
Bank Financial Surveillance Department was granted in October 2020.
PFA Details
The Group 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 Group 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 Group has the option to
repay up to 50 per cent of both constituent loan parts (each may only be
repaid once). If the Group 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 were used by the Group to prepay in full the Nedbank ZAR250
million term loan.
First Amendment
The Group entered into a first amendment to the agreement on 6 August 2021. In
terms of the amendment, US$17.8 million of the funds ringfenced for the
Vametco Phase 3 Expansion was reallocated to Vanchem mainly for capital
expenditure on Kiln-3.
The original PFA had a cap of 1,075 mtV per quarter. This amounted to 4,300
mtV 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 resulted in the initial cap of
4,300 mtV being brought forward, from 1 July 2022 instead of from 2024.
Orion Mine Finance Convertible Loan Notes Instrument
The Company subscribed to a US$35 million convertible loan notes instrument in
December 2020 (the "Instrument") with Orion Mine Finance ("Orion"). The
Instrument's proceeds were used towards the first phase of Vanchem's critical
refurbishment programme and debt repayment.
The terms of the Instrument are:
· A fixed 10 per cent per annum coupon with a three year maturity
date from the drawdown date.
· All interest will accrue and be capitalised on a quarterly basis
in arrears but compounded annually.
· Accumulated capitalised and accrued interest is convertible into
Bushveld ordinary shares. All interest and principal, to the extent not
converted into ordinary shares, is due and payable at maturity date.
· Conversion price set at 17 pence.
The conversion features are:
Between drawdown and the Instrument's maturity date Orion may, at their
option, convert an amount of the outstanding debt, including capitalised and
accrued interest, into Bushveld's ordinary shares as follows:
· First six months: Up to one third of the outstanding amount;
· Second six months: Up to two thirds of the outstanding amount
(less any amount previously converted);
· From the anniversary of drawdown until the maturity date: the
outstanding amount under the Instrument may be converted;
· The Company also has the option to convert all, but not some, of
the amount outstanding under the Instrument, if its volume weighted average
share price is more than 200 per cent of the conversion price over a
continuous 15 trading day period, a trading day being a day on which the AIM
market is open for the trading of securities.
At any time until the convertible maturity date, Orion may convert the debt as
above mentioned into an amount of ordinary shares equal to the total amount
available for conversion under the Instrument divided by the conversion price
of 17 pence.
Derivative liability
Loan Total
US$ '000 US$ '000 US$ '000
Balance, 1 January 2022 33,316 2,966 36,282
Finance costs and fair value gain 6,394 (2,934) 3,460
Balance, 31 December 2022 39,710 32 39,742
Finance costs and fair value gain 3,750 (32) 3,718
Balance, 30 June 2023 43,460 - 43,460
The Orion and Nedbank borrowings are secured against certain group companies
and associated assets.
Nedbank Term Loan and Revolving Credit Facility
The Group secured R375 million (approximately US$25 million) in debt
facilities through its subsidiary Bushveld Vametco Alloys Proprietary Limited
(the "Borrower") in November 2019 with Nedbank Limited in the form of a R250
million term loan and a R125 million revolving credit facility.
The Nedbank term loan was repaid in December 2020.
The Group had drawn the R125 million revolving credit facility in March 2020
which has the following key terms:
· Three-year term - Repayment due in November 2022;
· Interest rate calculated using the three year or six months JIBAR
as selected by the Company plus a 3.85 percent margin;
· Interest payments are due semi-annually.
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.
The following financial covenants are in place for the Borrower for so long as
any amount is outstanding, in respect of each reporting period:
· the Net Interest Cover Ratio; and
· the Net Debt to EBITDA Ratio at a Borrower level shall not exceed
4.0 times.
The Nedbank revolving credit facility was repaid in November 2022, except for
R1.
Industrial Development Corporation Shareholder Loan
Bushveld Electrolyte Company ("BELCO") is 55 percent owned by Bushveld Energy
Company ("BEC") and 45 percent by the Industrial Development Corporation
("IDC"). The loan represents the IDC's contribution to BELCO and consists of
the initial capitalized cost of R4.38 million (US$0.23 million; 31 December
2021: R4.38 million (US$0.26 million)) and the subsequent subscription amount
of R58.88 million (US$3.64 million; 31 December 2021: R55.31 million (US$3.82
million)).
The loan is interest free, unsecured, subordinated in favour of BELCO's
creditors and has no fixed term of repayment and shall only be repaid from
free cash flow when available. BELCO has the unconditional right to defer
settlement until it has sufficient free cash flow to settle the outstanding
amount, which is estimated at the end of 2028. The loan has been classified as
non-current.
The shareholder loan is measured at the present value of the future cash
payments discounted using an interest rate of 8.5 percent, which is the
estimated prevailing market rate. The difference between the fair value and
the nominal amount of US$1.79 million was recognised as non-controlling
interest.
A general notarial bond for a minimum amount of R140 million plus an
additional sum of 30 percent for ancillary costs and expenses was registered
over all the movable assets owned by BELCO.
Industrial Development Corporation Property, Plant and Equipment Loan
The IDC provided a property, plant and equipment loan to BELCO as part of the
funding for the construction of the electrolyte plant. The loan bears interest
at the South African prime rate plus 2.5 percent margin and is repayable in 84
equal monthly instalments starting in August 2023.
Development Bank of Southern Africa - Facility Agreement
Lemur Holdings Limited entered into a US$1.0 million 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 percent capped at
2.5 times, whichever is lower. As at 30 June 2023, US$1.0 million (31 December
2022: US$1.0 million) was drawn down.
Primorus
The Company issued a convertible loan note to Primorus for the nominal amount
of £1.20 million bearing interest at 10 percent per annum. The convertible
loan note may be converted into Bushveld ordinary shares at any time within
the 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
£0.098987. Primorus converted £0.41 million of the principal amount and was
issued a total of 4,157,645 Bushveld ordinary shares.
The Company and Primorus agreed on 14 July 2023 to amend the terms of
repayment whereby the Company will make the following payments:
· An initial payment of US$150,000, followed by bi-weekly payments
of US$125,000 with the final payment to be made prior to the 30 November 2023.
Nesa Investment Holdings ("Nesa")
The Group entered into a loan agreement with Nesa to fund US$0.81 million
(R12.08 million) bearing interest at South African prime rate plus 3.5 percent
margin and is repayable on 30 October 2023.
The Group entered into a second loan agreement with Nesa to fund US$0.55
million (R10.0 million) bearing interest at South African prime rate plus 4
percent margin and is repayable after 6 months from drawn down date.
11. Trade and other payables
30 June 31 December
2023 2022
Unaudited US$ '000 Audited US$ '000
Financial instruments:
Trade payables 31,745 40,573
Trade payables - related parties 60 61
Accruals and other payables 5,030 5,257
Non-financial instruments:
VAT 54 5
36,889 45,896
Financial instrument and non-financial instrument components of trade and
other payables
30 June 31 December
2023 2022
Unaudited Audited
US$ '000 US$ '000
At amortised cost 36,835 45,891
Non-financial instruments 54 5
36,889 45,896
Trade and other payables principally comprise amounts outstanding for trade
purchases and on-going costs. The average credit period taken for trade
purchases is 90 days.
The Group has financial risk management policies in place to ensure that all
payables are paid within the pre-arranged credit terms.
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
12. Events after the reporting period
Issue of shares
The Company announced on 9 August 2023 that Mustang Energy plc ("Mustang") was
informed by each of the convertible loan notes ("CLN") holders that they have
elected to redeem their CLNs in accordance with the backstop agreement
previously agreed between the Company and Mustang.
In accordance with the backstop agreement each CLN holder was issued such
number of new ordinary shares in the Company at a price equal to the 20-day
volume weighted average price of a new ordinary share of 1 pence each prior to
the date of issue as is equivalent to the principal amount together with all
accrued and unpaid interest.
A total of 270,393,578 new ordinary shares of 1 pence each of the Company was
issued to the CLN holders on 15 August 2023. Mustang transferred its 22.1%
interest in VRFB Holdings Limited and novated its rights under the US$2.0
million loan made to Enerox GmbH to the Company.
Investment by Southern Point Resources ("SPR")
The Company announced on 11 September 2023 a binding term sheet with Southern
Point Resources for a cumulative proposed investment of between US$69.5
million and US$77.5 million.
The key terms of the cumulative proposed investment are as follows:
· An interim working capital facility secured against production at
the Vanchem plant designed to provide the Group with additional working
capital to fund the ongoing expansion of production at Vanchem whilst the
transactions contemplated below are underway, totalling ZAR150 million
(approximately US$8.1 million).
· The proposed purchase by SPR of 50% of the shares in the Group's
subsidiary that owns its Vanchem vanadium plant, and its 64% equity interest
in its subsidiary that owns its Mokopane project, for a total of approximately
US$25 million.
· An equity investment by Southern Point Resources of approximately
US$12.5 million into the Company, at the same equity price as Orion Mine
Finance ("Orion").
· A new marketing and sales arrangement under which SPR will be
appointed to carry out all marketing and sales of product for the Group. In
line with this arrangement, SPR will provide a medium-term trade finance
working capital facility to the Company, totalling approximately US$25-30
million.
· A potential future commitment by SPR of an investment of US$7-10
million in Vanchem for the recommissioning of Kiln-1.
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