2015-10-15 Bushveld Minerals Media Briefing 15h33€¦ · Shaft Sinkers Fortune Mojapelo Chief...

MEDIA BRIEFING

Fortune MojapeloChief Executive Officer

15 October 2015

Disclaimer

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15 October 2015Media briefing 2

• Junior exploration and development company‒ vanadium‒ tin‒ coal

• AIM-listed• South Africa-focused asset base• Empowered

About us


Share information

Ticker BMN

Number of ordinary shares in issue 486,337,438

Share price* 3.85 p

Number of options in issue Nil

Market capitalisation* £18.8M

Warrants* (exercise prices = 5p, 3.4p, 4.75p, 12p) 30 473 089

Top shareholders Shares held %

Acacia Resources Limited 99,340,000 20.4

Halifax Share Dealing 43,284,974 8.9

Mr Nicholas John Mallett 37,750,000 7.8

Hargreaves Lansdown Asset Management 36,777,121 7.6

Barclays Wealth Management (UK) 25,929,068 5.3

RiverRidge Ltd 25,000,000 5.1

Directors/Management 13,616,667 2.8

Total 281,697,830 57.9

Share price performance: three months

Emerging structure


Developing a world-class

vanadium platform, one of the largest outside China

Mokopane Vanadium Project

Brits Vanadium Project

Developing a significant stand-alone pan-African

portfolio of mineable tin assets

Mokopane Tin Project

Marble Hall Tin Project

Developing an integrated thermal

coal mining and IPP asset in Madagascar

Imaloto Coal Project

VANAD IUM

Strategic shift to vanadium: Bushveld Vanadium Resources (BVR)

*

GREENHILLSRESOURCES LTD

Our people


Ian WatsonNon-executive Chairman

Mining engineer; 45 years’ experience; Goldfields South Africa, Northam, Platmin, International Ferro Metals, Shaft Sinkers

Fortune MojapeloChief Executive Officer

B.Sc (Actuarial Science), UCT; mining entrepreneur; strong track record in resource exploration, development in Africa; co-founder, director, VM Investment Company (Pty) Ltd

Geoff SprouleFinance Director

Chartered accountant; 40 years’ experience; former partner, Deloitte and Touche South Africa

Anthony ViljoenNon-executive Director

Bachelor of Business and Agricultural Economics, University of Natal; post-graduate diploma in finance banking, investment management; mining entrepreneur, founding shareholder, director, VM Investment Company (Pty) Ltd

Jeremy FriedlanderNon-executive Director

BA LLB, UCT; former Old Mutual legal advisor; founder of premier property group McCreedy Friedlander; business development experience in uranium, coal, gold, industrial minerals, gas

BVR: project locations


KeyVanadium-bearingtitaniferous magnetite


Witbank

Middelburg

EASTERN LIMB

Burgersfort

Lydenburg

Thabazimbi

WESTERN LIMB

Pilanesburg

RustenburgPretoria

Johannesburg

NORTHERN LIMB


Makes for compelling proposition to major

mining houses

Provides a multiplier for enhanced exit value

A function of capex and project complexity

Protects against prevalent market aversion to pure development plays

Reduces dependence on asset sale for value realisation

Sound market fundamentals, supporting stable commodity price outlook

Supply/demand balance, in favour of growth

BVR: four strategic principles


VThe right

commodityLow cost curve position

Scalability

First of second quartile preferred

Protects against price downswings

Healthy margin potential

Pragmatic executable

path to production

The right commodity

Low-cost curve position

ScaleabilityPragmatic executable

path to production

The right commodity – vanadium

• Positive market outlook for vanadium

• Concentrated and limited supply growth profile provides support for price

‒ 67% of supply linked to co-product steel producers with strained economics

• low margins, low iron ore price present significant threat to vanadium co-production

‒ high-grade primary vanadium concentrated in South Africa

• Demand anchored in steel industry with robust growth outlook, on account of:

‒ on-going urbanisation in emerging markets

‒ infrastructure build programmes in developed markets

‒ regulation-driven increasing intensity of use of vanadium in steel production

• Potential demand step-change from energy storage applications


The right commodity – vanadium Cont.

Demand anchored in steel sector where consumption outlook remains positive

• Around 0.2% vanadium content increases steel strength up to 100% and reduces weight up to 30%.


91

4 3 2

Global vanadium consumption%, 2014

Steel alloys Other alloys

Chemicals Other*

Source: CRU, Terry Perles/Atlantic Ltd.; www.vanadiumcorp.com/tech/price;

SAMI, 2009; South Africa Mining Industry Business Opportunities Handbook, 2013; USGS, 2014


Demand anchored in steel sector where consumption outlook remains positive

• Chinese and emerging markets vanadium intensity of use in steel lags

• Regulation driven shift to higher strength rebar driving up vanadium intensity of use in China


0.090.08

0.070.06

0.05 0.050.04

0.03

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.10

North America Europe Japan CIS World Average Other China India

Implies ~30,000 tons additional demand

1

2

Source: CRU, Terry Perles/Atlantic Ltd.; www.vanadiumcorp.com/tech/price;

SAMI, 2009; South Africa Mining Industry Business Opportunities Handbook, 2013; USGS, 2014

kgV

/ton

stee

l

• ~600 million people living without electricity in Southern Africa and grids are too weak to support major industry

• 7,000MW: new energy generation capacity required each year in Africa to sustain growth– only 1,000 MW is created

• Eskom (SA) operating with just a 2,000 MW spinning reserve rather than 15% (6,000 MW) reserve margin

• In spite of these issues, demand for electricity in Africa will grow at 4.5% pa for the next 25 years

• Growth of renewable power contribution creates grid instability due to intermittency

Source: EIA, iHS, Lux Research, 2013,SA IRP 2010(revised 2013)

Significant demand upside from energy storage

Energy storage will be a key component in resolving this crisis through:

• peak shaving (and lower generation capex)

• storing electricity from solar PV for use at night

• lowering system costs for micro grids and island

• regulating load frequency

• balancing PV and wind intermittency

• reducing capex for and losses in transmission and distribution

Significant power issues in Africa… … pose a substantial opportunity for utility scale energy storage


1115 October 2015Media briefing

Source: EIA, iHS, Lux Research, 2013,SA IRP 2010(revised 2013)

Significant demand upside from energy storage


a) Lifespan cycles - able to charge and discharge repeatedly (>35,000 times) giving it a long (>20 years) lifespan

b) Capacity for 100% discharge without performance degradation is unique

c) Capacity to store large quantities of energy and scalable up into the MW-range

d) Very fast response time (<70ms)

e) Only one battery element - therefore no cross-contamination – unique among flow batteries

f) 100% of vanadium is reusable upon decommissioning of the system

• VRFB employs vanadium ions in the different oxidation states to store and release chemical potential energy

Vanadium redox flow batteries have several features that make them ideal for utility scale, stationary energy storage applications:

1215 October 2015Media briefing


• Co-product slag accounts as source of most vanadium feedstock• But the future lies with primary vanadium ore feedstock

‒ primary vanadium production economics are not influenced by steel mill profitability (unlike co-product slag)‒ primary vanadium producers, moreover, have lower capex requirements

• South Africa has >50% contribution to primary vanadium production, a result of South African’s large share of high vanadium-in-magnetite grade deposits


67%

21%

12%

Vanadium supply by raw material (2012)

Co-product steel slag

Primary vanadium ore

Secondary

16.2%

57.9%

9.2%

7.8%5.2%

3.7%South AfricaChinaRussiaEuropeNorth AmericaOther

Global vanadium production, %, 2014 (100%=86,000MT)

Source: Roskill, 2013; TTP Squared Inc, 2012

Supply is concentrated, with no significant increase in sight


• 300 Mt JORC resource

‒ outcropping

‒ defined on three adjacent and parallel layers (MML; MML Hanging Wall)

• 5.5 km strike

• High V2O5 grades‒ in-situ: 1.48% V2O5

‒ concentrate: ~2.0% V2O5

• Low-cost, established Salt Roast processing flowsheet with at least three existing operations using it

• US$10.7/kgV/ US$5.99/kg V2O5 operating cost in first quartile (Based on Mokopane Vanadium Project Scoping Study 2014)


MML Hanging Wall

MML AB Zone


Scaleability

• Bushveld Complex well known for consistency, extent of mineralisation

• Scoping study, pre-feasibility study (PFS) based on only 10% of current resource

• Resource open-ended at depth and along strike

• Project designed to accommodate scale-up option

• Potential upside from monetising of 56% Fe calcine dump


Pragmatic executable path to production

• Proven Salt Roast process with several precedents existing in South Africa

• Well-developed mining region with sound mining supportive infrastructure

• Modest capex requirements

• Deep local talent pools for envisaged processing route

• Robust economics*: pre-tax

‒ NPV10% = US$562m

‒ pre-tax IRR = 35.6%

• Existing brownfields processing infrastructure in close proximity to projects

* Based on 2014 Mokopane Vanadium Project Scoping Study, pre-feasibility study currently underway


Economics

• Scoping study completed 2014, PFS underway

• Study undertaken on MML only (JORC-compliant 52Mt resource)

• Base case RoM of 1Mtpa to produce10,350tpa V2O5 flakes product underscores viability of project

• Attractive operating costs: US$5.99/kg or US$2.72/lb of V2O5 produced

• Feasibility study underway

• Long-term V2O5 flakes price (US$16.53/kg or US$7.50/lb or US$) utilised in study is approximately 8% lower than 10-year historical average price (June 2004 – June 2014)


Bushveld Vanadium Project – Salt Roast 1Mtpa ROM scenario

Item Unit Value

Resource Mt 52

Life of mine Years 30

V2O5 production kt 10,350

Operating costsUS$/kg V2O5

flakes 5.99

(US$/lb V2O5flakes) (2.72)

Capital costs Initial US$m real 261.5

Sustaining US$m pa 1.90

Cash flow LOM US$m real 1,612

Pre-tax Post-tax

NPV @ 10% real US$m 561.9 263.6

IRR real % 35.57 24.10

Payback (based on DCF) from start of mining Years 4 years and 4 months

BVR, going forward

Bushveld vanadium strategy pillars


Completion of PFS and BFS

Explore options for early cash flow

Explore options for vanadium demand creation

Consolidate primary vanadium resources

2

1

3

4

Anchor project for Bushveld VanadiumPFS completion targeting H2 2015BFS completion in 2016, funded through strategic partner

Target initial concentrate product (up to 40,000 tonnes per month) targeting existing vanadium producers

Pursue brownfield processing plant opportunities

Actively participate in efforts to develop viable additional vanadium markets to support demand outlook

Identify, secure and develop high grade primary vanadium opportunities

BVR, going forward


VANAD IUM

• Develop processing capacity for vanadium flake, other further beneficiated products

• Target two centres for processing:

• greenfield plant, Mokopane

• brownfield plant, Gauteng, targeting ore from Brits Vanadium Project

• Set up manufacturing of vanadium electrolyte, other chemicals in South Africa

PROCESSING

• Actively support global adoption of vanadium-based redox flow batteries (VRFBs)

ENERGY

• Develop resource portfolio• in close proximity to existing

infrastructure• supportive to processing

plants (brownfield or greenfield)

• Target primary resource on each of Bushveld Complex northern limb, western limb, eastern limb

MINES

BVR consolidation: mines, processing

• Consolidation objective:‒ establish high-grade

vanadium deposits on all three limbs, in close proximity to logistics, processing infrastructure

• Extensive database developed ‒ all Bushveld Complex

vanadium-bearing mineralisations


Vanmag

IronveldPig Iron

Mokopane

EvrazHighveld Steelworks

Witbank

Middelburg

Mapochs

EASTERN LIMB

Burgersfort

Lydenburg

Rhovan

Thabazimbi

WESTERN LIMB

Pilanesburg

RustenburgPretoria

Johannesburg

NORTHERN LIMBBushveld Vanadium Project


KeyVanadium-bearingtitaniferous magnetite

Vametco

Brits Vanadium Project• Adjacent to Evraz Vametco’s vanadium operations & close to Glencore’s

Rhovan vanadium operations

• Identified continuation of Vametco mine’s orebody onto project area

• Historical data points to in-concentrate V2O5 grades in excess of 2% in part

• Within 150km radius of processing infrastructure & well serviced by rail

Leveraging vanadium's energy storage potential


• Long-life (>15 years), large capacity and scaleable energy storage system• Capacity for 100% discharge without performance degradation is unique• Very fast response time grid connectivity • 100% of vanadium is re-usable upon decommissioning of the system

VANADIUM REDOX FLOW BATTERY (VRFB)

• Steel sector concentration of consumption (90% poses risk)• Need to develop alternative sources of demand• Energy storage poised to create step-change in demand • Global energy storage market estimated to exceed US$300 billion by 2030• Contribution of renewable (intermittent) energy to energy mix a significant factor

RATIONALE

• Actively support global adoption of vanadium-based redox flow batteries (VRFBs)• Three points in our favour:

• Large, high-quality vanadium deposits • low-cost, first-quartile vanadium production• supportive deployment business models

ENERGY

Source: Roskill, 2013; TTP Squared Inc, 2012

1 PFS, BFS:

2Early cash flow: explore options• Pursue brownfield processing plant opportunities• Investigate opportunities for concentrate supply

3 Vanadium demand creation: explore options• participate in development of addition viable vanadium markets

4 Primary vanadium resources: consolidate• identify, secure, develop high-grade primary vanadium opportunities

2015 2016 2017 2018

Q4H1 H2 H1 H2 H1 H2

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

BVR: indicative timeline


PFS estimated completion

Bushveld Complex location -well known for its consistency and extent of mineralisation Scoping study based on only

10% of current resourceResource open-ended along

strike and depth Scaleable project design

Proven Salt Roast processwith several precedents

Well-developed infrastructureModest capex of US$262m Deep local talent pools for vanadium processing

Robust economics: Pre-tax NPV10% -US$562m, Pre-tax IRR – 35.6%Brownfields processing plant infrastructure available

Positive market outlook for vanadium

Demand anchored in steel industry with robust growth outlook for vanadium intensity of use

Potential step change from energy storage applicationConcentrated and limited supply growth profile provides support for price

Investment proposition


VThe right

commodityLow cost curve position

Scalability

Large open-cast JORC resource base of 300 Mt over a ~5.5 km strike (on three identified

mineralised horizons)

High in-situ V2O5 grade of 1.48% (concentrate grade ~2.0% V2O5)

in one horizon

Low-cost, established processing flowsheet

US$10.7/kgV / US$5.99/kg V2O5 first quartile

Pragmatic executable

path to production

The right commodity


ScaleabilityPragmatic executable

path to production

Appendices


Vanadium market outlook

• Assumes co-product slag input cost of zero for the slag, not entirely correct

• Production dependent on viability of steel operations, many of which are significantly constrained, being based on low grade ore feed

• Co-product slag threatened by alternative low-cost sea-borne hematite iron ore feed


0

5

10

15

20

25

30

US

$ / k

g V

Cumulative global tonnage of V

Vanadium industry cash cost curve (2012)

Producer cost per kg V Bushveld cost per kg V

Co-product slag (*)Primary ore

Secondary

US$10.7/kgVorUS$5.99/kg V2O5

or US$2.72/lb V2O5

*

Source: Roskill Feb 2013 Vanadium Report, CRU Feb 2013 Vanadium Report

Forecast

Vanadium Price Outlook

8.07

0

2

4

6

8

10

12

14

16

18

2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7

US

D /

LB V

2O5 FL

AK

ES

YEAR

VANADIUM FLAKE PRICE (>98% V2O5), 2005 - 2017CRU Historical / Forecast Roskill Forecast CRU / Roskill Forecast Avg. LT Avg. (Jun 2004 - Jun 2014)

Vanadium market outlook


Contacts and conclusion


South Africa GuernseyFortune Mojapelo

Chief Executive Officer

Tel +27 11 268 6555 Tel: +44 (0)1481 722 584

Fax: +27 11 268 5170 Fax: +27 11 268 5170

Email: [email protected]

Twitter @BushveldMin_Ltd

Block A,24 Fricker Road, IllovoJohannesburg, 2116South Africa

18-20 Le PolletSt Peter PortGuernseyGY1 1WH

Investor Relations ContactsRussell and Associates Tavistock Communications

Jane Kamau Appiah-Yeboah | James Duncan Jos Simson/Nualla Gallagher

Tel +27 11 880 3924 Tel +44 (0) 207 920 3150

Mobile +44 (0) 7899 870 45/+44 (0) 7715 164 296

2015-10-15 Bushveld Minerals Media Briefing 15h33€¦ · Shaft Sinkers Fortune Mojapelo Chief...

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