REG - Ironveld PLC - Operations Update

IronveldAnnouncement

18/09/2023 07:00

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RNS Number : 6718M  Ironveld PLC  18 September 2023

Ironveld Plc

("Ironveld" or the "Company")

Operations Update

Ironveld plc ("Ironveld" or the "Company"), the AIM quoted mining development
company, is pleased to provide an update on recent activities.

Operational and Financial Update Highlights

 

·    Newly installed power generation at Rustenburg smelter now supplying
two furnaces as planned;

·    Ironveld secured a cash generative short term contract from a third
party to undertake metals processing;

·    Third furnace refurbishment now due to commence in October;

·    Directors have provided working capital support for the Company with
a facility of up to £500,000 to maintain flexibility of funding;

·    Encouraging market conditions for near-term High Purity Iron and
future iron powders products; and

·    Burnstar Technologies Pty Ltd. ("Burnstar") Liquified Natural Gas
("LNG") to hydrogen project on track.

 

Ironveld Smelting Operations

During July and August, activities at Ironveld Smelting's Rustenburg
facilities focused on ensuring that the two refurbished furnaces as well as
the Argon Oxygen Decarburization ("AOD") Convertor and the Granulator could
operate successfully. Although the refurbished plant operated as planned
without any material issues, it became clear that further electrical power
supply would be required to run all equipment simultaneously to optimum
levels. To resolve this problem, additional generators were ordered and then
fully installed earlier this month. Whilst this resulted in a short delay in
the anticipated level of activity from the first two furnaces, the additional
power is now capable of operating all equipment as planned on a full-time
basis, which is expected to continue going forward. Final works and
commissioning of the third planned furnace at the smelter had been placed on
hold pending the arrival of the additional generators and this is now expected
to start in October.

Environmentally Friendly and Economical Energy Solution

The use of generators at the site has always formed part of Ironveld's
short-term solution to remain off-grid, allowing it to avoid the daily 'load
shedding' imposed by the state electricity provider, ESKOM.  As previously
announced, Ironveld has contracted for installation of a full solar-LNG hybrid
system at its Rustenburg site to provide all power requirements on a
materially cheaper basis than both diesel generators and grid power which is
expected to be installed during Q1 2024.

In addition, all works are proceeding as planned with respect to the BurnStar
LNG to hydrogen project which is presently on track for commissioning around
the end of 2023, followed by commencement of supply during Q1 2024. This may
enable Ironveld to use hydrogen as a reductant in the smelting process,
thereby further enhancing the Company's 'green metals' credentials.

Third-party Smelting Contract Demonstrates Capabilities of On-site Team and
Equipment

In August, whilst waiting for the installation of the additional generators
and seeking to utilise the power available at the time, the smelter was able
to successfully process a test quantity of third-party metal product to
generate revenue. This is expected to lead to an additional cash generative
fixed term and quantity contract in the short term whilst the customer
conducts maintenance on its own facilities. The outcome has been to
demonstrate not only the flexibility of the production team at the smelter,
but also the Company's ability to generate value from its on-site equipment.
In due course, the fourth furnace at the smelter is also expected to be
brought into production and may become available for third party contracts.

The refurbished Granulator at the smelter performed significantly above
expectations during this recent processing. The plant was able to consistently
generate a minus two-millimetre final product, which based on current
feedback, should lead to an increased number of customers for the Company's
High Purity Iron product.

Ironveld Mining's IPace DMS Magnetite Joint Venture Progressing

As announced on 1 September 2023, an amendment to the structure of the IPace
DMS Magnetite Joint Venture ("JV") has been signed with Sable Exploration and
Mining ("SEAM"), bringing in SEAM as funding partner. SEAM has already
advanced funding as envisaged by the agreements. At the mine site, ground
works and civil works for the DMS Magnetite JV are progressing well and all
processing equipment is expected to be installed in approximately four weeks,
with first product sales around two to four weeks after that.

General mining activities to provide the smelter with necessary ore have
enabled stockpiles to be created at both sites.

High Purity Iron Powders Opportunity

Ironveld's Board has been very encouraged by recent conversations with
potential customers for its planned iron powders products. At present there is
no production of water atomised iron powders in the southern hemisphere and,
once production of these powders commences, Ironveld will enable local
customers to avoid importing these critical materials. The Company has a fully
costed capital investment programme of approximately ZAR 80 million
(approximately £3.4 million) to upgrade the Rustenburg production facilities
and is considering a number of ways to best finance this expansion without
further recourse to shareholders.

Additive Manufacturing Research reported earlier this week that metal 3D
printing markets had grown 16 per cent year-on-year and Ironveld's planned
iron powders will feed into this growing market.  For example, the aerospace
industry, including Airbus and Boeing, is increasingly using metal 3D printing
for parts, and last month Apple announced that it would be using 3D printers
to make the chassis for some of the upcoming Apple Watch Series 9 models. The
new manufacturing process that Apple is testing will use less material than
the large slabs of metal that are needed for traditional computer numerical
control manufacturing, as well as cutting down on the time that it takes to
make new devices.

Direct Funding Discussions

As announced on 30 March 2023, the Company reported that it was aware that
Grosvenor Resources (Pty) Limited ("Grosvenor") was in talks with potential
funders to facilitate its investment transactions.  An institution introduced
by Grosvenor is now in direct funding discussions with the Company and the
Company will provide a further update when appropriate.

Working Capital Loan Facility

As a result of the short delay in reaching full production capacity at the
Rustenburg smelter complex and the additional diesel generator costs as
explained above, the Company's operating expenditure has been higher than
anticipated at the time of the February 2023 placing. In order to ensure that
the Company has a sufficient working capital buffer until the expected receipt
of increased product sales from the recently installed additional on-site
power, Ironveld has entered into working capital loan facility agreements (the
"Facility") with certain Directors, being Peter Cox, Giles Clarke and Nick
Harrison, together with Tracarta Limited (in which John Wardle has a
beneficial interest). The Facility consists of a maximum of £500,000 in order
to provide the Company with flexibility in meeting ongoing operating costs
over the coming months.

The key terms or the agreements are as follows:

·    Interest on funds drawn at 11% per annum;

·    Arrangement fee of 2.5% of the Facility value;

·    Term of six months;

·    Repayment of any funds drawn down plus interest immediately upon
receipt of funds drawn down from any replacement institutional debt facility
or conversion at the issue price in the event of any future equity placing
during the loan term; and

·    There are no warrants immediately awarded in connection with the
Facility however, conditional upon a replacement institutional debt facility
being drawn down during the loan term, 62,500,000 warrants (in total) will be
issued to the lenders exercisable at 0.80p per share. The exercise price
represents a 162.3% premium to the closing mid price per Ironveld share of
0.305p on 15 September 2023.

 

Martin Eales, Chief Executive Officer, commented:

"We are extremely pleased to have the processing plant up and running
effectively and efficiently again. It was not without great deliberation that
we decided to pause certain activities but, ultimately, the decision to do
this and install additional generators, until such time as the solar hybrid
facility is commissioned, was the correct one.

"Positive discussions with potential iron powder customers are progressing
well. In addition, the Company in engaged in preliminary discussions with
direct funders, introduced by Grosvenor, which could see the Company further
accelerate its activities.

"Ironveld is edging closer to a fully operational smelting plant, with the
planned three furnaces nearing full operational status before the end of the
year. The sheer size of the mine site, and the vast amounts high grade ore
there, together with our ability to process and sell the product, means the
upside potential is enormous.

"Notwithstanding the terms of the Facility being provided by the Directors and
Tracarta, at present the Company has no intention of seeking new equity
capital, and it will give us an important financial buffer as we continue the
commissioning and production process.

"We look forward to sharing further positive updates during the remainder of
the year."

Change of Name of Nominated Adviser

The Company also announces that its Nominated Adviser and Joint Broker has
changed its name to Cavendish Capital Markets Limited ("Cavendish") following
completion of its own corporate merger.

Related Party Transaction

The Facility participation by Giles Clarke, Nick Harrison, Peter Cox and John
Wardle, all Directors of the Company, constitutes a related party transaction
pursuant to Rule 13 of the AIM Rules for Companies. The Company's independent
Directors (being Martin Eales and Malebo Ratlhagane) consider, having
consulted with the Company's nominated adviser, Cavendish, that the terms of
the Facility are fair and reasonable insofar as the Company's shareholders are
concerned.

 

For further information, please contact:

 Ironveld plc                                                c/o BlytheRay

 Martin Eales, Chief Executive Officer                       +44 20 7138 3204

                                                             +44 20 7220 0500

 Cavendish (Nomad and Broker)

 Christopher Raggett / Charlie Beeson / George Dollemore

 Turner Pope (Joint Broker)                                  +44 20 3657 0050

 Andrew Thacker / James Pope

 BlytheRay                                                   +44 20 7138 3204

 Tim Blythe / Megan Ray

 

 

 

NOTES TO EDITORS

 

Ironveld (IRON.LN) is the owner of Mining Rights over approximately 28
kilometres of outcropping Bushveld magnetite with a SAMREC compliant ore
resource of some 56 million tons of ore grading 1.12% V2O5, 68.6% Fe2O3 and
14.7% TiO2.

In 2022 Ironveld agreed to acquire and refurbish a smelter facility in
Rustenburg, South Africa, in which it can process its magnetite ore into the
marketable products of high purity iron, titanium slag and vanadium slag. This
transaction became unconditional in March 2023.

Ironveld is an AIM traded company. For further information on Ironveld please
refer to www.ironveld.com (http://www.ironveld.com/) .

 

 

 

 

 

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