Annual Report and
Financial Results
December 2020
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Building on our solid
foundation to meet the
growing vanadium demand
This report is also available at
www.bushveldminerals.com/financial-reports
In this Annual Report, the terms ‘Bushveld Minerals Group’,
‘Bushveld’, ‘Company’, ‘Business’,‘Group’, ‘we’, ‘us’, ‘our’ and
‘ourselves’ are used to refer to Bushveld Minerals Limited. The
terms ‘Vametco Mine and Processing Plant’, ‘Vametco Vanadium
Mine’ and ‘Vametco’ are used to refer to ‘Bushveld Vametco
Alloys (Proprietary) Limited’. The terms ‘Vanchem Plant’ and
‘Vanchem’ are used to refer to ‘Bushveld Vanchem Proprietary
Limited’. The term ‘Cellcube’ refers to ‘Enerox GmbH’.
Cross-references refer to sections of the Annual
Report, unless stated otherwise.
Contents
Business Overview
02 Who We Are
03 Bushveld Minerals’ Key Achievements
04 Our Core Business
06
Investment Case
08 Chairman’s Statement
10 Chief Executive Officer’s Review
18 Business Model
22 Vanadium Market Overview
28 Energy Storage Overview
30 Bushveld Minerals’ Performance and Objectives
34 Finance Director’s report
39 Details of Operating Assets and Operational Review
47 Principal Risks
50 COVID-19 Response
52 Sustainability
59 Our People
Governance
62 Board of Directors
64 Executive Management Team
67 Technical Advisers
69 Corporate Governance Report
75 Report of the Audit Committee
77 2020 Remuneration Report
92 Directors’ Report
94 Statement of Directors’ Responsibilities
Financial Statements
Independent Auditor’s Report
95
100 Consolidated Statement of Profit or Loss and Other
Comprehensive Income
101 Consolidated Statement of Financial Position
102 Consolidated Statement of Changes in Equity
103 Consolidated Statement of Cash Flows
104 Notes to the Consolidated Financial Statements
Supplementary Information
142 Mineral Resources and Reserves
150 Acronyms
151 Glossary
153 Notice of Annual General Meeting
156 Company Information
Annual Report and Financial Results 2020 | Bushveld Minerals
01
Financial StatementsSupplementary InformationGovernanceBusiness Overview Who We Are
Bushveld Minerals is a low-
cost, vertically-integrated
primary vanadium producer
Bushveld owns two of the world’s four operating vanadium processing
facilities and is one of only three operating primary producers globally.
In 2020, the Company produced more than 3,600 mtV, representing
approximately three per cent of the global vanadium market. With a
diversified vanadium product portfolio serving the needs of the steel, energy
and chemical sectors, the Company participates in the entire vanadium
value chain through its two main pillars: Bushveld Vanadium, which mines
and processes vanadium ore; and Bushveld Energy, an energy storage
solutions provider.
Bushveld Vanadium is targeting to materially grow its vanadium production
and achieve an annualised steady state production run rate of between
5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022, from projects
currently being implemented. Beyond that, pre-feasibility studies are in
progress to determine the optimal path to increase production even further
to a steady state production run rate of between 6,400 mtVp.a. and 6,800
mtVp.a. in the medium-term and to a steady state production run rate of
8,400 mtVp.a. in the long term. Bushveld Energy is focused on developing
and promoting the role of vanadium in the growing global energy storage
market through the advancement of vanadium-based energy storage
systems, specifically Vanadium Redox Flow Batteries (“VRFBs”).
02
Bushveld Minerals | Annual Report and Financial Results 2020
Bushveld Minerals’ Key Achievements
Bushveld Minerals
Bushveld Minerals
admitted to
trading on AIM
on 26 March 2012.
Mokopane
Licence extension for
Mokopane
Prospecting
Right approved.
Bushveld Energy
Official launch of
Bushveld Energy.
Vametco
Acquired a 26.6 per cent
effective shareholding in
Vametco, a vanadium mine
and primary processing
facility.
Vametco
Increased its effective
shareholding
in Vametco to
59.1 per cent.
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
6
2
0
1
7
2
0
1
8
Bushveld Energy
Implemented its first
rental contract with
Avalon Battery
Corporation.
Mokopane
Executed a
30-year mining right.
Bushveld Energy
Received Environmental
Authorisation for a 200
MWh (~1,100 mtVp.a)
capacity vanadium
electrolyte facility.
2
0
1
9
Bushveld Energy
Vanadium rental
partnership with Invinity
and Pivot Power (part of
EDF Renewables).
2
0
2
0
Bushveld Minerals
Bushveld Vanadium Project platform
established on an initial resource of 52Mt.
Bushveld Energy
Co-cooperation Agreement signed with
Industrial Development Corporation to determine
the economic viability of VRFBs for use and
manufacture in South Africa.
Vametco
Increased its effective
shareholding in Vametco
to 74 per cent through
a series of transactions.
Bushveld Energy
Started development
of first commercial
photovoltaic and
vanadium redox flow
battery mini-grid.
Bushveld Energy
8.71 per cent investment
into AIM-listed Invinity
Energy Systems (“Invinity”).
Vanchem
Acquired 100 per
cent of Vanchem,
a primary vanadium
processing facility.
Bushveld Energy
Acquired Cellcube as
part of an investment
consortium.
Bushveld Energy
Established the
Bushveld Electrolyte
Company (“BELCO”).
Bushveld Energy
Monetised Invinity
Investment and
realised US$13 million.
2
0
2
1
Bushveld Energy
Secured indirect interest
of 25.25 per cent in
Cellcube.
Bushveld Energy
Commenced
construction of
BELCO.
Annual Report and Financial Results 2020 | Bushveld Minerals
03
Financial StatementsSupplementary InformationGovernanceBusiness Overview Our Core Business
Our Vision
Our Strategy
Become one of the world’s most significant, lowest-cost,
vertically-integrated primary vanadium platforms, with
a diversified vanadium product portfolio.
• Build a sustainable, cash-generating, low-cost
production platform, comprising:
- high-grade, opencast and low-cost primary
Our Mission
Generate value in a safe and sustainable way for all of
our stakeholders throughout the commodity cycle.
vanadium mines; and
- refurbished scalable brownfield processing
facilities.
• Use our large, low-cost production platform to build
a leading downstream vanadium-based energy
storage platform, creating value as a manufacturer of
electrolyte, investor and project developer across the
Vanadium Redox Flow Battery (”VRFB”) value chain.
04
Bushveld Minerals | Annual Report and Financial Results 2020
KEY
Main Road
Railway
KEY
KEY
Main Road
Main Road
Railway
Railway
NORTHERN
LIMB
Mokopane
4
NORTHERN
LIMB
NORTHERN
LIMB
4
Mokopane
Mokopane
4
WESTERN
LIMB
Brits
11
Brits
Rustenburg
WESTERN
LIMB
WESTERN
LIMB
2
Brits
2
Brits
EASTERN
LIMB
KEY
Main Road
Railway
2
Vanchem
3
Middelburg
Bushveld Vanadium’s core assets
EASTERN
LIMB
EASTERN
LIMB
1 Vametco – integrated mine
and processing facility
NORTHERN
LIMB
2 Brits resource
Mokopane
4
3 Vanchem – processing facility
Rustenburg
Rustenburg
Vametco
0
20
40
60
Kilometres
0
20
40
60
0
20
Kilometres
40
60
Kilometres
Brits
11
Pretoria
Brits
11
Vametco
Johannesburg
Vametco
Pretoria
Pretoria
Johannesburg
Johannesburg
3
Vanchem
Witbank
Vanchem
3
Middelburg
Middelburg
Witbank
Witbank
4 Mokopane project
WESTERN
LIMB
EASTERN
LIMB
The Company’s assets are located in South Africa, which
hosts the largest high-grade primary vanadium deposits
in the world.
Rustenburg
The Vametco mine, Brits resource and Mokopane project
comprise a total JORC-compliant resource base of at least
549 Mt (100 per cent basis), including 75 Mt (100 per cent
basis) of JORC-compliant reserves, with some of the
highest primary grades in the world.
20
0
Kilometres
40
2
Brits
Brits
Through Vametco and Vanchem, Bushveld Minerals
produces Nitrovan, ferrovanadium, vanadium oxides and
vanadium chemicals, which deliver a diversified revenue
stream from the steel, chemicals and energy storage
markets.
60
Pretoria
Vanchem
Vametco
11
3
Witbank
Middelburg
Johannesburg
Collectively, the Vametco and Vanchem plants provide
Bushveld with the potential for a flexible and scalable
low-cost production platform, which will enable it to
maintain a competitive position in the vanadium market.
E N E R G Y
Bushveld Energy, launched in 2016, is focused on
developing and promoting the role of vanadium in the
growing energy storage market through the application of
VRFBs. Bushveld Energy is building an energy storage
supply chain in South Africa by leveraging the Company’s
South African-mined and beneficiated vanadium.
Bushveld Energy’s business model embraces several
activities along the VRFB value chain, including electrolyte
production, investment in VRFB manufacturing, and
energy storage project development across Africa.
Annual Report and Financial Results 2020 | Bushveld Minerals
05
Financial StatementsSupplementary InformationGovernanceBusiness Overview Investment Case
Our Key Strengths
A green commodity for the future with attractive fundamentals
• Vanadium demand is underpinned by its use in steel, which is expected to grow at a
Compound Annual Growth Rate (“CAGR”) of 2.7 per cent through to 20301.
• Vanadium increases the efficiency of the steel supply chain while reducing greenhouse
gas emissions.
• VRFBs are expected to increase vanadium demand, from energy storage, by a CAGR of
56.7 per cent by 20301.
• Supply is concentrated, constrained and limited new supply is expected from greenfield
projects, given their higher barriers to entry.
• VRFB technology supports the global transition to clean energy and produces lower life cycle
CO2 emissions than competing storage technologies2.
• Medium- to long-term market fundamentals remain attractive.
Solid foundation
• The Company’s 549 Mt (100 per cent basis) resource is one of the largest primary vanadium
resource bases and offers significant growth potential. Bushveld Minerals’ orebodies comprise
large, long-life, opencast deposits, with grades of 1.6 – 2.0 per cent V2O5 in-magnetite, which
are among the highest in the world.
• The Group owns two of the world’s four operating primary production processing facilities,
which are low-cost and scalable operations.
• The Group has a diverse revenue stream from the steel, chemicals and energy markets.
Significant production growth
• Bushveld has the capacity to scale up production, increasing its share of the vanadium market.
• The Company aims to achieve a steady state production run rate of between 5,000 mtVp.a.
and 5,400 mtVp.a. by the end of 2022. Studies are under way to increase production to
a steady state production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in the
medium term and to a steady state production run rate 8,400 mtVp.a. in the longer term.
06
Bushveld Minerals | Annual Report and Financial Results 2020
Vertical integration
• Bushveld Minerals’ vertical integration strategy allows it to mine, process and manufacture
vanadium-based products in a single value chain and provides flexibility to maximise sales,
depending on product demand.
• The Company uses its low-cost scalable production base to build a significant downstream
vanadium-based energy storage platform, thus participating in a massive, rapidly-growing
industry.
• Vertical integration is key, both to ensure future vanadium demand from energy storage and
to unlock significant economic opportunities for the Company across its value chain.
• The growth of the VRFB industry can support vanadium demand and contribute to minimising
volatility in the vanadium price. The Group will continue to supply the steel, chemicals and
energy markets to maintain its solid position throughout the commodity cycle.
Sustainability – Value beyond compliance
• Bushveld Minerals is dedicated to maintaining sustainable mining and processing practices
across all of its operations and projects. This includes ensuring employees enjoy a healthy
and safe working environment, that it operates in an environmentally- and socially-responsible
manner, and that it adds value to all stakeholders.
• The Company actively promotes the principles of the circular economy. It is scaling up the
necessary technical and commercial parameters to ensure that vanadium in energy storage
is re-used.
• The Group is helping to reduce the environmental footprint of mining, including reducing the
carbon intensity of its own operations.
Shareholder returns
• Bushveld Minerals is committed to delivering attractive returns to its shareholders. It applies
a consistent and disciplined approach towards capital allocation to manage the Group’s
growth initiatives.
Sources:
1 Roskill, Vanadium Outlook to 2030.
2. Vanitec and Texas A&M study.
Annual Report and Financial Results 2020 | Bushveld Minerals
07
Financial StatementsSupplementary InformationGovernanceBusiness Overview Chairman’s Statement
Positioning
Bushveld Minerals
for the Future
Our objective is to grow production in an efficient, sustainable manner, while
avoiding any strain on our balance sheet. This is not a race, but a journey,
and we want to make certain that once we reach our goal, we can maintain
our production rates for decades into the future.
Dear Stakeholders,
There is no doubt that 2020 will be remembered for
decades to come as a difficult period for everyone, and
for some more than others.
It was also a year when responsibility came to the
forefront; the responsibility of governments to look
after their citizens, corporates to ensure the health and
safety of their employees, and companies like Bushveld
Minerals to ensure that the value of its tier-one assets
were retained throughout the difficult period of the
COVID-19 pandemic.
As a corporate citizen in South Africa, Bushveld Minerals’
responsibilities run deep, starting with our local
communities. The sustainability of our communities
is intrinsically linked to the success and longevity of
our operations.
I would like to applaud management for acting swiftly
to protect our employees early and throughout the
pandemic. Management halted operations, in line with
the government’s equally commendable measures, and
applied strict health and safety protocols, including social
distancing, sanitising, education and a revised shift
system, once operations were restarted.
Vanadium prices were not excluded from the pandemic’s
effect on global growth, as prices of basic materials,
including those needed for steel production, dipped
initially, due to weakness in key markets.
Again, management must be commended for finding
new sources of demand in China. The country emerged
from the pandemic with a strong appetite for metals, and
its demand was higher than in other parts of the world.
Late in 2020 and in the first half of 2021, we have seen
vanadium prices continue to rise globally as growth
returns after a year of lockdowns.
Prudently, the Board and management conducted an
internal review of capital expenditure plans, ensuring the
roll-out of these planned investments matched our ability
to finance them and that they were not slowed down by
short-term market dynamics.
We entered into a transaction with Orion Mine Finance,
under which we successfully secured US$65 million
in funding. The financing provides a structure that will
support the Group to achieve a steady state production
run rate of between 5,000 mtVp.a. and 5,400 mtVp.a.
by the end of 2022. Studies are currently being conducted
to determine the optimal way to deploy this capital for
further growth to a steady state production run rate of
between 6,400 mtVp.a. and 6,800 mtVp.a., which may
include resequencing some of our capital projects. Our
objective is to grow production in an efficient, sustainable
manner, while avoiding any strain on our balance sheet.
This is not a race, but a journey, and we want to make
certain that once we reach our goal, we can maintain our
production rates for decades into the future.
In the year under review, we controlled our newest asset,
Vanchem, for the full financial year. Vanchem diversifies
our product mix and delivers key brownfield growth that
we previously indicated was an important part of our
strategy, given our vast resource in the ground.
Despite the unforeseen challenges of the past year,
governments have recognised and embraced the
opportunity to steer the world towards the clean energy
transition faster than was previously evident. Many
governments have put renewable energy and a focus
on reduced emissions at the centre of their stimulus
programmes.
In South Africa, the government has prioritised the
need to resolve its energy supply crisis and it has taken
some bold steps since the start of 2021. Several recent
announcements are promising for the future of
renewable energy and energy storage.
08
Bushveld Minerals | Annual Report and Financial Results 2020
Although COVID-19 infections continue to rise by varying
degrees in different countries, we are seeing signs of
progress in the world’s efforts to combat the pandemic
through vaccination programmes, including South Africa.
We will continue to prioritise the safety of our employees
as we prepare the business for a global economic
recovery and an acceleration of the new energy future,
fuelled by governments’ policies to encourage the
transition.
I would like to thank Fortune and the entire Bushveld
team for their efforts during a very challenging year.
Finally, I pay tribute to Dolly Mokgatle, our former
non-Executive Director, who tragically passed away
in early 2021. Dolly, was an established and highly-
experienced business leader in South Africa, who will
be sorely missed by all.
Ian Watson
Independent Non-Executive Chairman
29 June 2021
The first key announcement was confirmation by
National Treasury that it had agreed with Eskom on an
implementation plan and timelines for the restructuring
of the utility. This will allow competition and cost
transparency in electricity generation. The second key
announcement was the increase in the threshold for
self-generation without a licence from 10 MW to 100 MW,
which will help to increase electricity supply, particularly
from renewable resources. The third was the revival of
the renewable procurement programme. This was halted
in 2015 but reprioritised under the 2019 Integrated
Resource Plan. All three are important steps to increase
competition in the power sector.
These developments support Bushveld Minerals’ plans
to develop its downstream operations beyond the
production of end-use vanadium products, to become
a key player across the renewable energy storage value
chain. As we have repeatedly stated, the energy storage
market presents a sizeable commercial opportunity for
our Company. Our integrated strategy means we will not
only benefit from the uptick in demand arising from this
opportunity, but will also be able to participate
meaningfully in the downstream sector.
As you know, we recognised this opportunity much
earlier than most others and had already established
a solid energy base. We were able to benefit from our
investment in Invinity Energy Systems (“Invinity”), the
London-listed entity that resulted from the merger
between Avalon Battery Corporation and redT energy plc,
as Invinity’s shares gained appreciably in value after its
relisting in April 2020. It has subsequently secured several
exciting sales contracts. Additionally, we invested into
Cellcube as part of an investment consortium.
We have also made significant progress in our efforts
towards self-generation at Vametco. We have developed
a strong platform for externally-funded solar generation
and Vanadium Redox Flow Battery (“VRFB”) storage that
will satisfy just under 10 per cent of Vametco’s energy
requirements and reduce its carbon footprint. This project
is part of Bushveld’s strategy to demonstrate the superior
technical and economical merits of long-duration VRFB
systems when paired with renewable energy, as the South
African government relaxes regulatory hurdles around
energy self-generation.
Another key responsibility for us is to our shareholders.
While much of the regular in-person engagement
with our investor base was impossible in 2020, our
responsibility to ensure sustainable returns for the long
term informed every decision we made. Despite a global
event that no-one had prepared for, the business was
managed appropriately through this challenging period.
To progress the Company so much under such
constraints would have been impossible without the
combined efforts of our people, who are essential to
our success.
Annual Report and Financial Results 2020 | Bushveld Minerals
Annual Report and Financial Results 2020 | Bushveld Minerals
09
Financial StatementsSupplementary InformationGovernanceBusiness Overview Chief Executive Officer’s Review
Ensuring a Solid Base to
Achieve Sustainable Growth
While COVID-19 was an unprecedented and unexpected challenge, I am
pleased to say we have emerged from 2020 in a robust position. This reflects
our pragmatic approach to the outbreak. We sought to keep our employees
and communities safe, while building resilience and agility so that the
Business could continue to operate while maintaining an appropriate growth
outlook.
2020 overview
I would like to begin by expressing my deep gratitude to
every individual within the Bushveld Group for their efforts
to ensure that the Company survived 2020 relatively
unscathed. Our comprehensive response to the
COVID-19 pandemic, ably led by the COVID-19 Task
Team we established, was only effective because our
employees respected and followed the protocols that
were prescribed.
Our response plan operated in a context of a laudable and
decisive set of risk-adjusted actions by the government of
South Africa, which included a series of lockdowns and
several other measures that have helped the country
weather the COVID storm. This enabled its people to return
to some sense of normality and ordinary operating
conditions far sooner than many other countries.
While COVID-19 was and is an unprecedented challenge,
I am pleased to say we have emerged from 2020 in a
robust position. This reflects our pragmatic approach
to the outbreak. We sought to keep our employees and
communities safe, while building resilience and agility
so that the Business could continue to operate while
maintaining an appropriate growth outlook.
• Adapting our business to align with new operational
realities, such as disrupted supply chains and logistics,
to ensure we could still service our customers.
During the initial lockdown imposed by the South African
government in late March 2020, we were able to maintain
some scaled-down operations at Vametco. Vanchem
was placed on care and maintenance. The re-start and
ramp-up to normal production levels necessitated
operational adjustments to accommodate social
distancing, COVID-19 protocols and altered shifts for
the implementation of certain projects. We continue to
use an agile remote working set-up to ensure that all
employees remain productive while we minimise any
potential outbreaks in the workplace.
At the start of 2020, execution of our previously-
announced growth strategy was well advanced.
This strategy included: the refurbishment programme
at Vanchem and the planned expansion at Vametco,
targeting an increase of production to 4,200 mtVp.a.
at both operations; construction of the electrolyte
manufacturing plant in East London; and making
investments in the Vanadium Redox Flow Battery (“VRFB”)
value chain. Due to the pandemic, we had to review
some of our targets.
This meant, in the short term, prioritising:
• The health and safety of our employees, to prevent
and minimise transmission of the virus in the
workplace and at home. We implemented safety
protocols in the workplace, including social distancing,
supplying sanitisers, education about the virus, and
restructuring the shift system. We supported our
local communities by supplying water and sanitisers
to local hospitals, police stations and care homes.
• Cash preservation, which entailed a review of all
capital expenditure and the deferment of several
growth initiatives until we had clarity on the expected
impact of the pandemic on our operations and
markets.
In the short term, our decision to defer some planned
growth capital expenditure was reinforced by a declining
vanadium price. The vanadium price fell from approximately
US$30/kgV to lows of circa US$20/kgV (London Metal
Bulletin prices) in part due to the pandemic’s disruptive
impact on global commodities markets.
However, a review of the outlook for vanadium in a
post-COVID world highlighted a stronger case for growth
in the longer term driven by economic recovery in key
global economies, several of whom embarked on fiscal
programmes targeting infrastructure development and an
accelerated energy transition investments, both of which
are favourable for vanadium demand.
10
Bushveld Minerals | Annual Report and Financial Results 2020
Our financial stress-testing indicated that the business
was in a healthy position. However, prevailing market
conditions meant we would need external funds to
support our growth plans.
Towards the end of the year, we successfully closed a
US$65 million financing arrangement with Orion Mine
Finance (“Orion“), through a Production Financing
Agreement and convertible loan note issue. The funding
placed us in a strong position to maintain our growth
strategy. Some of the funding was used to strengthen the
balance sheet by partially retiring existing debt facilities.
We ended the year with cash and cash equivalents of
US$50.5 million.
During Q4 2020, as economies reopened, there was
strong vanadium demand, not only from China, but also
from some of our more traditional markets, such as the
USA and Europe. This demand has continued into 2021.
Bushveld generated revenue of US$90 million on the
back of sales of 3,842 mtV. However, we recorded an
EBITDA loss of US$14.9 million due to a 52 per cent
decline in the realised vanadium price.
Safety
We recorded 54 COVID-19 cases among our employees
in 2020, all of whom have fully recovered. We are grateful,
not only to our colleagues working hard to ensure
compliance with our safety protocols, but also to the
employees abiding by these protocols. Post year end,
however, we were sad to record two fatalities due to
COVID, underscoring the need to remain vigilant, even as
the country’s mass vaccination programme is set to pick
up momentum in H2 2021.
Governments around the world are now well into the
next phase of recovery, reinvigorating parts of the
economy that have been severely affected, upping
infrastructure spend, and focusing on those sub-sectors
that have a prosperous future, such as the new energy
transition. We are proud that the South African
government is on the same path.
Despite the ongoing pandemic, we were pleased to
achieve a Total Injury Frequency Rate (“TIFR”) at Vametco
of 18.21, an improvement of 22 per cent from 23.49 in
2019, and a TIFR of 5.26 at Vanchem. The safety of our
workforce and all employees remains front of mind for us.
Bushveld Vanadium: operational performance
Production for the year was 24 per cent higher than in
2019, despite the challenging environment and 380 mtV
of lost production due to the COVID-19 pandemic. The
consolidation of Vanchem for a full-year period made up
a large part of the production and sales volume increase.
Sales volumes rose 61 per cent relative to 2019, owing to
the addition of sales from Vanchem, as well as increased
demand from customers during the second half of the
year. In the early part of the year, we began diverting
a larger portion of our sales to China, as the country’s
economy was one of the first to ease lockdown measures
and restart industrial production. During 2020, 23 per
cent of our sales were to China, up from nine per cent
in 2019. This is in line with the Company’s strategy of
increasing sales to higher-priced markets.
Continues >
Group production
Vametco production
Vanchem production
Unit
mtV
mtV
mtV
2020 2020 versus 2019
Lost production
due to COVID-192
3,631
2,654
990¹
24%
-6%
–
380
300
80
1. Includes 14 mtV of ammonium metavanadate that Vametco sold to Vanchem for further processing
into 12.8 mtV of ferrovanadium.
2. Lost production associated with the 21 day COVID-19 nationwide shutdown in South Africa.
United States
Europe
China
Rest of the World
34%
Group sales by region %
19%
23%
24%
Annual Report and Financial Results 2020 | Bushveld Minerals
Annual Report and Financial Results 2020 | Bushveld Minerals
11
Financial StatementsSupplementary InformationGovernanceBusiness Overview Chief Executive Officer’s Review continued
Strategic focus
Brownfield assets acquisition
We believe that vanadium market fundamentals
significantly favour primary producers. We are thus
pleased to have been able to acquire Vanchem in
November 2019, following the acquisition of Vametco
in 2017 and 2018. This puts Bushveld in a competitive
position, as it owns two of the world’s four operating
primary processing plants. The acquisitions are part of
the brownfield strategy we announced in 2016, which
has seen the Company transform from an exploration
to a Vanadium mining and processing company.
The combined acquisition cost for these two plants was
approximately US$120 million. The capital expenditure of
approximately US$30 million (including US$15 million in
Environmental compliance related capital expenditure),
will take the Group’s steady state production run rate to
between 5,000 mtVp.a. and 5,400 mtVp.a, from the
projects currently being executed, such as the Vanchem
kiln 3 refurbishment (Phase1). We achieved this growth
by leveraging cashflows generated by the operations,
debt funding and approximately US$60 million in equity
financing (through equity placing, convertible and warrant
instruments) since 2016.
Following these acquisitions, our main focus has been
to refurbish and expand production at these assets,
to integrate and operate them efficiently, and to maximise
synergies between them. Maximising efficiencies also
entails addressing the historic under-investment in
maintenance at Vanchem and Vametco, which will deliver
greater performance reliability. Where necessary, plant
reliability will be prioritised ahead of growth.
Another key focus has been aligning the operations
with the Group’s operating model, culture and standards,
as well as building the leadership team. Our operating
model is based on having strategic control of our assets
to ensure we can exercise sufficient oversight and
strategic direction. This requires building the necessary
capacity at head office, with a fit-for-purpose
organisational design, appropriate technical skills,
integrated business processes and establishing robust
shared service functions to maximise efficiencies.
This is no small task for an operation with this depth
of vertical integration in mining, crushing and milling,
concentration, pyrometallurgy and hydrometallurgy.
Meanwhile, the continuing operation and growth of
Vanchem necessitates securing its ore supply while the
Mokopane project is being developed. With the ore
stockpile acquired with the plant depleting, we anticipate
replacing this supply with ore from Vametco, which has
an abundant resource base.
Specifically, we have earmarked the Upper Seam portion
of the Vametco resource through a targeted operation
(“The Upper Seam Project”). With a reserve of 0.9 Mt of
in-situ ore, The Upper Seam Project will supply Vanchem
with 34 kt per month commencing in Q3 2021, removing
the necessity of relying exclusively on third-party sources
of ore over this period. The Upper Seam Project resource
has similar mineralogy to the current ore used at
Vanchem, and tests conducted to date have proven
its suitability for processing at Vanchem.
The cost of supply to Vanchem will be in line with or better
than third-party suppliers. This initiative will ensure that
Vanchem has sufficient competitively-priced ore feedstock
in the short to medium term, with no significant capital
expenditure requirements. Since the total Upper Seam
resource base is 16 Mt, we are investigating the potential to
extend this source of supply beyond the initial 18 months.
Further information can be found in the Details of
Operating Assets and Operational Review.
Operational stability
We are mindful that over the years Vametco’s performance
has not met expectations. In 2020, its output would have
been 2,954 mtV, if it were not for production lost through
the effects of COVID-19. The plant did not undertake the
standard annual shutdown in an effort to make up time.
This resulted in significant operational instability, which
caused several unscheduled stoppages during Q1 2021,
prior to the 35-day maintenance shutdown.
Since the successful completion of the shutdown,
operational stability and performance have improved.
Sustaining this stability, however, requires a recalibration
of Vametco’s monthly production levels and a disciplined,
proactive maintenance strategy over a period of time. As
a consequence, the management team has revised the
monthly production targets for Vametco to approximately
240 mtV per month, previously 270 mtV. This changes
Vametco’s 2021 production guidance to between 2,300
mtV and 2,400 mtV, from previous guidance of between
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Bushveld Minerals | Annual Report and Financial Results 2020
2,700 mtV and 2,850 mtV. The run rate for the
remaining months of 2021 is an annualised production of
approximatively between 2,600 mtVp.a. and 2,700 mtVp.a.
We want to ensure that Vametco achieves sustainable and
consistent output of 2,800 mtVp.a. before embarking on
aggressive production growth.
Disappointingly, the commissioning of Vanchem’s kiln 3,
which is currently under refurbishment and the
consequent production run rate increase of 2,600 mtVp.a.
is likely to be delayed to the end of Q4 2021 owing to
among other factors, delays in securing steel supplies.
This requires revising 2021 production guidance to
between 1,100 mtV and 1,200 mtV, previously between
1,400 mtV and 1,500 mtV. Overall, 2021 Group full-year
production guidance has been revised to between 3,400
mtV and 3,600 mtV, previously between 4,100 mtV and
4,350 mtV.
We are also mindful of the increases in costs at Vametco
over the past three years and have initiated a review of
those costs to see where improvements are possible.
Further detail is provided in the Finance Director’s
Statement.
We have not taken these decisions lightly. While we retain
confidence in the plant’s ability to produce above this
level, our philosophy is that growth must be built on
a foundation of robust, stable and efficient operations
and must be pursued in a capital-efficient manner.
Capital projects sequencing
Notwithstanding the production revisions, our plans to
grow output to 8,400 mtVp.a. in the long-term remain
unchanged. During the current year, the studies on the
Vametco Phase III expansion project and the Vanchem
Phase II refurbishment will determine which project will
be prioritised to achieve our production targets beyond
our first production target. The decision will be guided
by the principle of capital efficiency of ‘securing the
next-cheapest unit of vanadium’. As we are reviewing
our production profile to achieve optimal sequencing
between Vametco and Vanchem, the scope of the
pre-feasibility study (“PFS”) for Vametco has been
extended. It is now expected to be completed in Q4 2021
together with the technical studies currently under way
at Vanchem.
The stability of operations at Vanchem relative to
Vametco, and the emerging view, supported by studies,
that expanding production at Vanchem is likely to be
significantly cheaper than at Vametco, has helped shape
a growth-outlook that comprises:
• The current growth phase, which is being
implemented, will see production increase to a steady
state production run rate of between 5,000 mtVp.a.
and 5,400 mtVp.a. by the end of 2022. This reflects
Vametco and Vanchem operating at a steady-state
production run rate of 2,800 mtVp.a. and 2,600
mtVp.a., respectively. Vanchem’s production is
expected to increase from 1,100 mtV to a run rate of
2,600 mtV by the end of 2022, supported by the
commissioning of Kiln 3 and associated downstream
expansions. Further information can be found in the
Details of Operating Assets section of this report.
• A second growth phase to increase production to
a steady state production run rate of between 6,400
and 6,800 mtVp.a.
• A third growth phase to a steady state production run
rate of 8,400 mtVp.a., when the rest of the expansion
initiatives are implemented.
We will provide details on the production path and
expected capital expenditure once the studies are
completed.
Annual Report and Financial Results 2020 | Bushveld Minerals
Continues >
13
Financial StatementsSupplementary InformationGovernanceBusiness Overview Chief Executive Officer’s Review continued
Bushveld Energy
We are delighted to see the growing global momentum
behind the energy transition away from fossil fuels to clean
energy, especially renewable energy and energy storage
in particular. An increasing number of countries are
committing to reducing their carbon footprints and
increasing the share of renewable energy in the power
sector. The role of electricity continues to grow.
These developments validate our forward-thinking strategy,
set in motion in 2014, to vertically integrate downstream
into the energy storage sector, through the launch of
Bushveld Energy in 2016. They come as we make significant
progress across the three areas of focus for Bushveld
Energy: electrolyte manufacturing; sales and rentals;
deployment of VRFBs in Africa; and investments into VRFB
manufacturing.
We are fortunate to be based in a country that has made
bold decisions on this energy transition and has grown
to be the sixth-largest residential energy storage market
in the world. We expect it to grow into the global top-five
utility energy storage markets, with policies that catalyse
deployment of more stationary energy storage systems.
Moreover, growing interest in increasing the country’s
share of the value chain unlocks greater opportunities for
local suppliers.
During the year we made progress on our plans to build
an electrolyte manufacturing plant in East London, South
Africa. With an initial capacity of 200 MWh of vanadium
electrolyte and capacity to scale up to 800 MWh, the
electrolyte plant will be the largest publicly-announced
plant outside China.
Our strategy to invest in VRFB manufacturing, which is
designed to be a catalyst for mobilising financing to build
scale among VRFB Original Equipment Manufacturers, has
also been fruitful. Our investment in AIM-quoted Invinity
Our emphasis in 2021 is on achieving
consistent operational stability, enhancing
operational performance and ensuring that
both Vametco and Vanchem achieve their
near- and medium-term production and cost
targets, with optimal efficiency.”
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Bushveld Minerals | Annual Report and Financial Results 2020
Towards the end of the year, we successfully
closed a US$65 million financing arrangement
with Orion Mine Finance (“Orion“), through
a Production Financing Agreement and
convertible loan note issue. The funding placed
us in a strong position to maintain our growth
strategy. Some of the funding was used to
strengthen the balance sheet by partially retiring
existing debt facilities. We ended the year with
cash and cash equivalents of US$50.5 million.
Energy Systems Plc (“Invinity”), whose creation we facilitated
in 2020, delivered immediate benefits. Invinity has won
several important contracts and its share price rose by more
than 300 per cent in 2020. We have since crystallised our
position and realised a total of approximately US$13 million,
providing a significant return on capital of more than double
our initial investment of US$5 million, in just over a year.
With a right of first refusal for supply of vanadium and
electrolyte, we have an attractive opportunity to develop
a vanadium supply-relationship with Invinity. Through a joint
venture agreement with Invinity, we are now developing
and deploying vanadium electrolyte rentals to Invinity’s
customers.
We also played a key role in partnering with other investors
to acquire Cellcube, of which we now own 25.25 per cent
indirect interest. Cellcube, the holding company for Enerox
GmbH, an Austrian-based leading VRFB manufacturer,
has a solid track-record in manufacturing grid-scale energy
storage systems.
As with Invinity, we have a right of first refusal to supply
vanadium to Cellcube, creating more offtake potential for
our vanadium and electrolyte products and hedging against
future volatility in vanadium prices, as the VRFB market
develops.
Despite the challenges of the COVID-19 pandemic,
progress continued on our mini-grid project at Vametco,
where Cellcube has been selected to supply a 4 MWh VRFB
for the project. The solar PV and storage project will save
nearly 114,000 tonnes of CO2 over its 20 year life. The
mini-grid provides an important proof-of-concept for
self-generation solutions in a country that has made firm
commitments to establish a supportive framework for
self-generation. In the latest development, the threshold for
self-generation without a licence will be lifted from 10 MW
to 100 MW, unlocking faster growth in behind-the-meter
generation and storage.
Annual Report and Financial Results 2020 | Bushveld Minerals
Continues >
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Chief Executive Officer’s Review continued
Sustainability: Value beyond compliance
In 2020, we started a process of developing our
sustainability strategy, which will focus on Environment,
Social and Governance (“ESG”) principles. We will
integrate material ESG considerations across the
value-chain into the business decision-making process;
report on material ESG key performance indicators;
and communicate a consistent message to stakeholders
on key ESG commitments.
We also initiated the process of developing an ESG
Management System (“EMS”). The purpose of the EMS
is to provide a framework to enable Safety, Health and
Environmental (“SHE”) and social risks to be understood,
and to develop, implement and appropriately manage
mitigation measures.
Collectively, the ESG strategy and management system
will assist us to comply with relevant authorisations, legal
requirements, the International Finance Corporation
Standards and other obligations, in a systematic and
structured framework.
We are especially proud that, through vanadium, we
play an important role in global decarbonisation efforts.
In steel – the use of vanadium as an alloying element
•
will reduce the intensity of steel in construction,
resulting in a reduced carbon footprint for
steelmaking.
• Through VRFBs, vanadium plays a key role in
supporting the global energy transition to a greener
supply-mix, which is fast gaining momentum.
Through a commitment to developing renewable
energy-based energy-generation solutions we will also
ensure that our production platform has a favourable
carbon footprint.
Finally, through the innovative electrolyte rental solutions
that we are developing and implementing, not only will
we help to accelerate the adoption of VRFBs, but we will
also help advance the circular economy by ensuring
vanadium is reused through multiple life-cycles.
Johannesburg Stock Exchange listing
We continue to monitor market conditions and engage
with South African institutional investors. However, because
of the unforeseen events of 2020, we had to redirect much
of our focus towards dealing with the pandemic, prioritising
the safety of employees, and focusing on managing our
operations. This included securing US$65 million from
Orion. The Company remains interested in the potential
listing and will continue to explore the opportunity to do so
when conditions are suitable.
Appointments and integration
In 2019, we adopted our new operating model. Overall,
we remain on course to roll it out across the Group, in
spite of the setbacks of 2020. This is a key step in ensuring
that we have sufficient organisational capacity to support
our growth plans.
Our priority in 2020 was to manage the impact of
COVID-19, while keeping a firm handle on initiatives
to build critical organisational capacity. We are pleased to
report that some of the work that was already under way
to implement the operating model has contributed to
our ability to manage the COVID-19 challenges more
effectively. The model was primarily designed to help
us achieve operational excellence, by ensuring that our
business operations have sufficient support and that we
can achieve greater integration across the various parts
of the Group.
We have made significant strides in building our
organisational capacity. We will continue to do so,
focusing on human capital, financial resources, the
operating model, and business processes and systems.
As one of our initiatives to enhance our operational
performance, we announced the appointment of
Francois Naude as Director of Operations; he brings
more than 27 years of mining and processing experience
and he will oversee the Vametco, Vanchem and Bushveld
Electrolyte Company (“BELCO”) operations, with the
latter, migrating to the Bushveld Vanadium platform.
The appointment is key to our operational strategy.
The Operations Director’s mandate covers the following
key parameters: meeting the Company’s production
volume aspirations; achieving cost targets; meeting
SHE objectives; maintaining our social licence to operate;
and effectively implementing capital projects on budget
and in time.
Looking forward
Our emphasis in 2021 is on achieving consistent
operational stability, enhancing operational performance
and ensuring that both Vametco and Vanchem achieve
their near- and medium-term production and cost
targets, with optimal efficiency. Francois and his team
have already made significant headway, prioritising
operational stability and reliability, especially at Vametco.
While we are always mindful of achieving our growth
targets, we believe it is more prudent to invest efficiently.
This could necessitate resequencing our capital projects
and potentially revising development timelines.
I am confident that we now have in place a sound
technical leadership team to ensure we succeed.
Through Bushveld Energy we have championed the place
of VRFBs in the growing energy storage space. Not only
did we have the foresight to see the opportunity, we also
developed an appropriate and agile strategy for vertical
integration along the value chain that we are pleased to
see other vanadium producers adopting. Our key focus
items are construction of the 200 MWh electrolyte plant,
which commenced in June 2021, and obtaining a
generation licence. Furthermore, we intend to achieve
financial close on, and begin construction of, the
Vametco hybrid mini-grid.
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Bushveld Minerals | Annual Report and Financial Results 2020
Overall, fundamentals for the vanadium market remain
strong, characterised by a growing intensity of use of
vanadium in steel. We expect governments across the
world to adopt similar policies to those of China, by
increasing infrastructure spending to revive and support
their economies post-COVID. The energy transition will
continue, resulting in greater renewable and energy
storage deployment, in which VRFBs are expected to
capture a significant market share, increasing vanadium
demand. We retain the view that vanadium supply
remains constrained and concentrated. All these factors
benefit primary vanadium producers such as Bushveld
Minerals.
We remain fully committed to our vertically-integrated
growth strategy of achieving our long-term production
of 8,400 mtVp.a. while becoming a leader in the
downstream VRFB industry.
Once again, I would like to thank all of our employees and
investors for continuing to believe in Bushveld, despite an
uncertain and difficult year. We have begun 2021 in a solid
position, benefiting from increased vanadium demand
and higher prices, as the world economy recovers and
accelerates its adoption of new energy sources. We have
reason to look forward to the future with great optimism.
Fortune Mojapelo
Chief Executive Officer
29 June 2021
Annual Report and Financial Results 2020 | Bushveld Minerals
17
Financial StatementsSupplementary InformationGovernanceBusiness Overview Business Model
Bushveld Minerals’ Vertical
Integration Business Model
Capturing demand opportunities across the vanadium value chain.
Strategy
Bushveld Minerals’ vanadium grades, at 1.6 per cent –
2.0 per cent V2O5 in-magnetite, are among the highest
in the world. We were the first to establish a vertically-
integrated business model, which we have nurtured
from the start, as we partner in, develop and supply
this nascent but high-growth sector. We diversify our
vanadium products beyond steel and alloys to grow
demand by developing the opportunity for vanadium
in the energy storage industry.
Here the Company sees a confluence of:
• A burgeoning energy storage industry that is set to
create a steep-change in vanadium demand.
• The Company’s unique position in the industry,
enabling it to capture a significant share of the
vanadium value chain in the energy storage industry.
• A large, attractive commercial opportunity that can
create a natural hedge for the Company, as vanadium
is one of the most volatile commodities.
While vertical integration captures commercial value for
the business, it is also essential to unlock the energy
storage opportunity for vanadium. Vertical integration
addresses two significant hurdles for the global adoption
of Vanadium Redox Flow Batteries (“VRFBs”), namely:
Geology and mining
Bushveld has one of the largest, high-grade primary
vanadium resource bases in the world. The Company’s
vanadium resource base currently consists of three
mineral assets: Vametco, Brits and the Mokopane project.
Together, the three deposits constitute a 549 Mt (100 per
cent basis) JORC-compliant resource, including 75 Mt
(100 per cent basis) of JORC-compliant reserves. The
resource vanadium grades are some of the highest
primary grades in the world. These high-grade deposits
are located on the Bushveld Complex, which hosts the
world’s largest primary vanadium resources.
Bushveld Minerals seeks to establish a portfolio of
vanadium resources for future development in potential
partnerships as the supply deficit deepens and it
becomes clearer that primary production is key to
addressing this shortfall.
Processing
Bushveld’s asset strategy focuses on identifying constrained
brownfield processing infrastructure that can be made
more efficient and expanded, following refurbishment
and maintenance. The attraction of brownfield processing
facilities lies in the potential for significant reductions in
capital expenditure and lead-time to achieve production,
compared with new build options. This strategy
underpinned Bushveld’s purchase of Vametco in 2017 and
Vanchem in 2019, both of which provide the Company with
a solid platform from which to expand its production base.
These two plants give Bushveld the potential to significantly
increase its share of the vanadium market while remaining
a low-cost producer.
The Company’s vanadium product portfolio is diverse and
includes Nitrovan, ferrovanadium, vanadium oxides,
electrolyte and vanadium chemicals. These vanadium
products are marketed to steel manufacturers, chemical
producers and battery companies.
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Bushveld Minerals | Annual Report and Financial Results 2020
• Security of supply. The massive, but uncertain, growth
in the energy sector’s demand for vanadium could
create more market volatility, if not matched with
timely supply expansion. A recent World Bank Group
Minerals for Climate Action report estimated that, by
2050, vanadium demand in energy alone could be
nearly twice the current market size. However, the
uncertain timing of that demand makes industry-wide
production expansion challenging; and
• Security of cost. Vanadium’s high price volatility and
its role as the sole mineral in the VRFB makes input
costs more important than in other industries, such as
steel. While price spikes, such as the one seen in 2018,
are profitable for vanadium producers, they may
undermine the energy storage industry before it
attains maturity.
Implementation
Our vertical integration strategy has the following two
primary components:
• Establishing a low-cost primary production platform
based on our large high-grade deposits and low-cost,
scalable processing facilities; and
• Leveraging our production capabilities to build a
downstream vanadium-based energy storage platform
comprising electrolyte production, investment into
VRFB manufacturing and development of megawatt-
scale energy storage projects.
Energy storage
Bushveld Minerals identified the fast-growing energy
storage market as a key and attractive downstream
industry where vanadium-based battery systems have
the potential to take a significant market share. Through
our subsidiary Bushveld Energy, we are actively driving
the adoption of VRFBs in the global energy storage
industry. Bushveld Energy’s business model extends
across three pillars: electrolyte supply; investment into
VRFB manufacturing; and battery deployment and
project development across Africa.
According to Guidehouse Insights, previously known
as Navigant Research, global stationary energy storage
demand is forecast to grow to 100 GWh in annual
deployments by 2027. A mere 10 per cent share of this
market for VRFBs would see VRFB deployments of 10
GWh per annum by 2027. Since a 1 GWh VRFB system
requires approximately 5,500 mtV, or approximately five
per cent of 2020’s global vanadium production (circa
116,128 mtV1), this could add up to 55,000 mtV to annual
vanadium demand by 2027. Guidehouse Insights forecast
that flow batteries could account for up to 18 per cent of
the US$50 billion energy storage market by 2027,
representing nearly US$10 billion in revenue. The long-term
opportunity is even larger. The 2020 World Bank Group
report “Climate Smart Mining” noted that vanadium would
be the fifth-most impacted mineral by increased energy
storage demand. Almost twice as much vanadium would
be needed for energy storage by 2050 than was
produced globally in 2018. The 2021 International Energy
Association (“IEA”) report “The Role of Critical Minerals
in Clean Energy Transitions” found that, under certain
scenarios, between 120,000 mtV and 210,000 mtV
would be needed for energy storage alone by 2040.
Annual Report and Financial Results 2020 | Bushveld Minerals
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Business Model continued
For these reasons, Bushveld pursued a downstream
integrated business model through Bushveld Energy to:
• Exploit the rapidly growing multi-billion-dollar
commercial opportunity that the energy storage
industry presents, through the adoption of VRFBs.
• Become a key player across the VRFB supply chain
through electrolyte supply, investment in VRFB
production and original equipment manufacturers,
and deploying energy storage projects using VRFBs
in Africa.
• Strengthen and diversify vanadium demand beyond
steel and alloys to create exposure to a much higher
growth market, which the Company’s upstream assets
are well positioned to supply.
• Contribute to reducing the volatility of Bushveld’s
revenues and profitability, as energy storage exhibits
lower market volatility than commodity markets and
provides an industrial hedge to the vanadium price.
• Achieve higher valuation multiples for our business,
as energy and diversified listed companies carry higher
earnings multiples than pure miners.
Unique positioning
All these factors allow Bushveld Minerals to maximise
the Company’s share of the vanadium value chain and
underscore its unique positioning to unlock this value,
which includes:
• A large, high-grade, long-life primary resource base.
• Low-cost, scalable primary processing infrastructure
with capacity to grow production.
• A diverse vanadium product offering, including low
capital intensity of further downstream products,
such as vanadium electrolyte.
• Deep local knowledge of energy markets, enabling
it to secure large-scale energy storage mandates.
• Alignment with South Africa’s policy environment,
which supports mineral beneficiation and large-scale
deployment of stationary energy storage systems.
Sources:
1. Roskill, Vanadium Outlook to 2030.
Impact of South Africa’s policy framework on Bushveld Minerals’ business model
In a year when governments around the world had to step up to the challenge of the impact
of COVID-19 on their economies, South Africa continued to battle with securing its energy supply.
The government has acknowledged the need to
accelerate its plans to resolve South Africa’s energy crisis
as this is the catalyst for implementing the various sector
master plans that are meant to kickstart South Africa’s
post COVID-19 recovery.
To this end, the South African government has not only
reiterated its commitment to ramp up the implementation
of its energy programmes, but has also taken encouraging
steps towards supporting local beneficiation of critical
minerals such as vanadium. Such positive signals to
the mining sector and supports the case for Bushveld
Minerals’ vertical integration model and its drive to
ensure that it participates fully in the global vanadium
value chain.
In 2020, we were pleased by some of the key
developments announced by South Africa’s Department
of Minerals and Energy, such as:
1. Restructuring of Eskom: The confirmation by
National Treasury at the beginning of 2021 that it
had agreed with Eskom on an implementation plan
and timelines for the restructuring of Eskom. In this
restructuring, the transmission division will be legally
separated from the larger entity by December 2021,
and the generation and distribution divisions will be
separated by December 2022. These are important
steps to increase competition in the power sector
and improve cost transparency and accountability at
Eskom. The restructuring has not affected Eskom’s
battery procurement programme, funded by the
World Bank, under which three battery tenders were
issued for 827 MWh in April 2021.
2. Additional energy renewable generation: the South
African government restarted implementing the
renewable procurement programme that was halted
in 2015 but re-prioritised under the 2019 Integrated
Resource Plan (“IRP 2019”).
In December 2020, the government concluded the
bidding process for an additional 2,000 MW from a
mix of renewable energy sources. This was followed
by the announcement in March 2021 that the fifth bid
window for renewable energy procurement will soon
be opened, which will add another 2,600 MW to the
grid. It will also procure over 11,000 MW of power,
including at least 513 MW of energy storage, under
the IRP 2019.
In June 2021, we welcomed the government’s
announcement that the threshold for self generation
will be increased from 10 MW to 100 MW. We expect a
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Bushveld Minerals | Annual Report and Financial Results 2020
significant increase in private power generation
projects. This is great news for the Bushveld Energy
strategy, as industries seek to become less reliant on
Eskom and move towards renewable energy and
energy storage solutions.
research and development, technology and capability
applications. More encouraging for Bushveld is that
the government is specifically supporting the
development of a local battery manufacturing
industry for energy storage.
The increased pace of implementation from
government’s side is a clear sign that Bushveld’s plans to
build capacity for VRFB manufacturing in South Africa are
aligned with the needs of South Africa’s energy sector.
3. Masterplans for local beneficiation: South Africa has
some of the largest deposits of high-grade minerals
that are in demand as the world undergoes an energy
transition. The increasing demand for battery storage
and fuel cells provides an opportunity for South Africa
to leverage its comparative advantage from these
national resources to build a dynamic industrial
economy. In responding to this challenge, the South
African government has in the past year reiterated its
commitment to invest in building more local capacity
for minerals beneficiation.
This will benefit vanadium, as well as other industrial
minerals such as Platinum Group Metals. The key
outcomes of this master plan are that we will see an
increase in government’s investment in significant
Annual Report and Financial Results 2020 | Bushveld Minerals
21
Financial StatementsSupplementary InformationGovernanceBusiness Overview Vanadium Market Overview
About Vanadium
Vanadium is derived from three sources: co-production,
primary production and secondary production. In 2020,
approximately 90 per cent of global vanadium was recovered
from magnetite and titano-magnetite ores, either from
co-production or primary production.
• High seaborne iron ore prices (iron ore prices rose to
their highest levels in the last five years, at over
US$150/t3) by December 2020. This was driven by
China’s strong demand, as well as constrained global
supply. As a result, Chinese steel mills used more
domestic vanadium titaniferous magnetite ore.
• Co-production derived from iron ore processed for
steel production remains the main source of
vanadium, accounting for 72 per cent of 2020 global
supply1.
• Primary production involves salt-roasting, water
leaching, filtration, desilication and precipitation. This
accounted for 18 per cent of global supply in 2020,
and rose year-on-year in tonnage terms, even though
its market share percentage decreased relative to
20191.
• Secondary production is the recovery of vanadium
from fly ash, petroleum residues, alumina slag, and
from the recycling of spent catalysts used in crude oil
refining. It accounted for approximately 10 per cent of
global supply in 20201.
In 2020, global vanadium production increased to 116,128
mtV from 109,643 mtV in 20191. This increase was due to
higher slag production in China, driven by:
•
Increased crude steel production, supported by the
Chinese Government’s stimulus measures, primarily
driven by infrastructure spending, which translated into
record steel production of 1,065 Mt2, a seven per cent
year-on-year increase.
China is the world’s top vanadium producer, accounting
for 60 per cent of global vanadium supply in 2020. Most
of its vanadium was derived from co-production. Russia is
the second-largest producer and South Africa the
third-largest, accounting for 17 per cent and seven per
cent of 20201 supply, respectively. South Africa’s vanadium
was derived from primary production from Bushveld
Minerals and Glencore.
Vanadium market fundamentals
Supply
Most of the volume, on a unit basis, came from Chinese
slag producers, whose production of slag increased. This
resulted from higher steel output on the back of fiscal
stimulus that the government introduced in late March
2020 to fast-track an economic recovery. These
measures included increased infrastructure spending,
which translated into record steel production.
China became a net vanadium importer for five months
in 2020: June, July, August, October and November.
This absolute increase in steel production has resulted in
Chinese co-producers operating at near capacity, limiting
2020 Global Vanadium Production by Country
2020 Global Vanadium Production by Source
6% 3%
7%
7%
China
Russia
S Africa
Other
Brazil
USA
18%
10%
Co-production
Primary
Secondary
17%
60%
72%
22
Bushveld Minerals | Annual Report and Financial Results 2020
Ferrovanadium Price: May 1980 – May 2021
FeV historical average mid-price (US$/kgV)
V
g
k
/
$
S
U
–
e
c
i
r
P
V
e
F
B
M
L
140
120
100
80
60
40
20
0
7
8
y
a
M
9
8
y
a
M
1
9
y
a
M
3
9
y
a
M
5
9
y
a
M
7
9
y
a
M
9
9
y
a
M
1
0
y
a
M
3
0
y
a
M
5
0
y
a
M
7
0
y
a
M
9
0
y
a
M
1
1
y
a
M
3
1
y
a
M
5
1
y
a
M
7
1
y
a
M
9
1
y
a
M
1
2
y
a
M
Source: London Metal Bulletin, price as at 28 May 2021
the scope for further vanadium production growth from
this source.
Outside China, production increases were recorded by
primary producers in South Africa and Brazil. Stone coal
production declined slightly year-on-year, as low prices
disincentivised production. Although stone coal producers
could be re-incentivised by higher prices, environmental,
financial, and technical constraints remain.
Historically, vanadium supply and demand has relied
upon steel supply and demand, respectively. The limited
capacity of vanadium-producing steel plants has driven
vanadium’s price volatility. With growth in primary
production of vanadium, the dependency of vanadium
supply on co-production from steel is decreasing.
The same trend would be likely to follow in vanadium
demand, if new uses of vanadium continue to grow faster
than steel demand, such as from energy storage.
Despite the significant increase in vanadium slag
production, several efforts by the Chinese government to
rationalise its steel industry and cut pollution may impose
further constraints on vanadium co-production steel
plants. Stone coal production, meanwhile, will continue
to be limited by environmental restrictions. The result is a
constrained growth outlook for Chinese vanadium
production from co-producers, which are already
operating at near capacity, and stone coal vanadium
producers. The constraint is exacerbated by the ban on
vanadium slag imports into China.
Secondary production is poised to increase supply in the
medium term, as a result of the International Maritime
Organisation (“IMO”) 2020 regulations that require the use
of more refining catalyst. However, it remains a higher-
cost form of production than primary and co-production.
The new supply could either displace the projects with
weaker economics or create a larger and more durable
surplus. Secondary production is limited, not by
processing capacity, but by both the availability of the
necessary feedstock and the high costs of production.
Supply of secondary materials is derived mainly from
spent catalysts associated with the processing of crude
1 Source: Roskill Vanadium Outlook to 2030.
oils and oil sands, the manufacture of various acids, ash
and residues from the combustion of oils and coals, and
some residues from alumina production, particularly in
India.
Supply growth can be considered across three categories:
capacity expansions of current producers, re-starts of
production plants that had been mothballed, and
greenfield project development. Capacity expansions
have the highest probability of realisation, with the lowest
capital and quickest path to production. New greenfield
projects face the most significant hurdles. Most of the
recent greenfield projects announced for development
are of a co-production or multi-commodities nature,
suffer from relatively low grades and require significant
capital and a relatively stable and higher price outlook
than recent prices indicate.
Section 232 of the Trade Expansion Act of 1962,
as amended (19 U.S.C. 1862)
Section 232 of the Act provides the President of the USA
with the ability to impose restrictions on certain imports,
“based on an affirmative determination by the
Department of Commerce that the product(s) under
investigation is imported into the United States in such
quantities or under such circumstances as to threaten to
impair the national security”.
In November 2019, a petition was filed by two domestic
vanadium producers (AMG Vanadium and U.S.
Vanadium_LLC) alleging that vanadium is imported into
the USA in quantities or under circumstances that
threaten to impair national security. In May 2020, in
response to the petition, Bushveld and a clear majority of
other vanadium industry stakeholders responded in
opposition to arguments that the national security of the
USA is threatened by vanadium imports. They noted in
particular that Nitrovan has been imported into the US in
stable volumes over several decades, and in part
highlighted that even the domestic USA producers of
vanadium are non-integrated processors that actually
import a significant portion of their feedstock. Bushveld
Minerals’ sales volume to the USA accounted for 34 per
cent in 2020.
Annual Report and Financial Results 2020 | Bushveld Minerals
23
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Vanadium Market Overview continued
The US Commerce Department submitted the results of
their investigation to the President in February 2021.
Neither the headline findings nor the report itself have so
far been made public.
While vanadium demand will be underwritten by the
growing intensity of use of vanadium in the steel market,
the energy storage industry offers significant demand
upside.
By 22 June 2021, no official statement has been made by
the President of the USA about the Section 232
investigation into vanadium imports. It is now being
assumed that there will be no changes to the current
situation regarding importation of vanadium into the USA.
An example is Nusaned Investment, a Saudi Arabian-
based company that entered into a joint venture with
Germany-based technology company, Schmid Group, to
focus on manufacturing and technology development.
Demand
Total vanadium demand is dominated by the steel
industry, which accounted for 91 per cent of total
demand in 20201 and will remain the largest source of
vanadium demand in future.
Global vanadium consumption increased from 109,835
mtV in 2019 to 112,157 mtV in 20201, supported by
increased infrastructure spending in China, which resulted
in higher steel production, in turn supporting vanadium
demand.
During the period, Bushveld took advantage of the robust
vanadium demand and higher prices in China than in other
jurisdictions by diverting a larger portion of its sales to China
in H1 2020. The vanadium demand from the North
American and European steel and aerospace industries
declined during the period, due to the pandemic and
associated plant shutdowns.
The increase in consumption was primarily driven by the
Chinese Government’s stimulus for infrastructure
spending, as well as increased intensity of use of
vanadium in steel, as enforcement of rebar standards
improved during 2020. According to Roskill, vanadium
demand in the steel market will grow at a CAGR of about
2.7 per cent through to 2030, with global vanadium
demand from steel reaching approximately 136,000
tonnes by 2030.
According to Roskill, vanadium demand from VRFBs will
grow at a CAGR of approximately 56.7 per cent through
to 20301. Longer-term demand will be even greater. For
example, the World Bank Group forecasts that by 2050
vanadium demand from energy storage alone could be
twice as large as global vanadium production in 2018.
Market balance
Supply and demand dynamics point to a structural net
deficit. Supply is concentrated and constrained as:
•
In China, capacity utilisation from slag producers was
estimated at 80 to 90 per cent in 2020, with the top
five producers operating close to full capacity. Russia
was also operating close to full capacity, at
approximately 90 per cent1.
• The steel industry in China has been increasingly
relying on imported iron ore, which is non-vanadium
bearing.
• Over the longer term, Chinese vanadium production
will be constrained by the decline in domestic iron ore
supply and iron ore quality, coupled with
environmental restrictions on steelmakers, co-product
and stone coal vanadium producers, as well as the ban
on vanadium slag imports.
Growing demand is underpinned by higher intensity of
use of vanadium in steel. China will drive most of the
increase. The growth in demand for vanadium will be
impacted by demand for VRFB’s and by how quickly
non-Chinese global steel and alloy demand recovers.
Developed economies, such as Europe, Japan and North
America, have a higher vanadium intensity than
developing countries. China surpasses the world average
in its intensity of use, supported by enhanced compliance
on rebar standards.
The vanadium market moved into a short-term surplus in
2020, as ex-China steel mill shutdowns continued due to
the COVID-19 pandemic. Roskill expects the market will
move into a deficit from 2021 to 2023, followed by a
surplus from 2024. The market will revert to a deficit from
Word Crude Steel Production and Consumption of Vanadium in Steel
200,000
150,000
100,000
50,000
0
2,500
2,000
1,500
1,000
500
0
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Outlook for consumption of Vanadium in Steel (mtV) – LHS
World crude steel production (Mt) – RHS
Source: Roskill, Vanadium: Outlook 2030, World Steel Association
24
Bushveld Minerals | Annual Report and Financial Results 2020
Vanadium Intensity of Use (2018-2025)
t
/
g
y
t
i
s
n
e
t
n
m
u
d
a
n
a
V
i
i
100
80
60
40
20
0
China
Japan
India
South Korea
World Average
Rest of Asia
EU
NAFTA
2018
2019
2020f
2021f
2022f
2023f
2024f
2025f
Source: Fastmarkets 2020.
Source: Roskill, Vanadium: Outlook 2029.
2029. Roskill takes the assumption that all new projects
announced will come into production
Roskill has revised upwards its forecast for vanadium
consumption in energy storage through VRFBs upwards.
It forecasts growth in demand between 2020 and 2030
from 163 mtV to 14,585 mtV.
Vanadium price
2020 was characterised by the divergence in economic
performance and steel production between China and the
rest of the world, respectively depicting strong growth and
strong decline. This was reflected in the vanadium market,
with increased imports in China that built a Chinese price
premium.
The robust vanadium demand and rising prices seen at
the end of 2020 continued in 2021, across all key markets.
The recovery was driven by higher steel mill capacity
utilisation rates and low warehouse stocks. The vanadium
price has continued to rise, with increased demand in
Europe and the US. We expect prices to be stable for the
remainder of 2021.
Outlook
H1 2021 benefited from global demand recovery, which is
expected to gain momentum in H2 2021. This is because
Chinese economy remained robust and economic
recovery took hold in other countries around the world.
Vanadium prices have recovered and should remain firm
as long as the economic recovery persists. Governments
around the world have announced different measures to
revive their economies after the impact of COVID-19, and,
with vaccine availability and widespread distribution, the
global economy is expected to recover.
The potential headwinds are:
• Easing of stimulus in China, which may reduce
Chinese vanadium consumption.
• Setbacks in the global recovery from COVID-19, as
new variants are seen across the globe.
Demand for VRFBs is expected to increase, based on a
higher number of installations in 2020, as well as in 2021,
and announced projects for the rest of the decade. This
translates into a higher gigawatt/h (GWh) forecast and
higher vanadium demand.
China Crude Steel and Vanadium Consumption
)
t
M
(
l
e
e
t
S
1,200
1,000
800
600
400
200
0
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
)
V
t
(
i
m
u
d
a
n
a
V
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
China crude steel consumption (LHS) (Mt)
China vanadium consumption in steel (RHS) (tV)
China crude steel production (LHS) (Mt)
Source: Roskill, Vanadium: Outlook 2030
Annual Report and Financial Results 2020 | Bushveld Minerals
25
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Vanadium Market Overview continued
Vanadium Market Balance (mtV)
8,000
6,000
4,000
2,000
0
-2,000
-4,000
-6,000
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
Balance (LHS)
Supply (RHS)
Demand (RHS)
Source: Roskill Vanadium Outlook to 2030
We retain the view that supply remains concentrated and
constrained. Limited new supply is expected from
greenfield projects and co-production is still primarily
driven by steel and iron ore fundamentals.
With record steel production and iron ore prices close to
their all-time high, China’s slag producers are forecast to
have increased their output by about nine per cent in
2020. Although the high iron ore price provides an
incentive for steel mills to use more domestic vanadium
titaniferous magnetite ore, Chinese co-producers are
operating close to capacity, so their ability to produce
more vanadium is restricted.
In addition, several efforts by the Chinese government to
cut pollution may impose further constraints on
vanadium co-production steel plants. These initiatives
include the reduction of excess steelmaking capacity
targeting highly-polluting, high-cost plants, and the
conversion of blast furnace operations to electric arc
furnace technologies, which will increase the role of
scrap iron in steel making and reduce the overall demand
for iron ore.
Declining domestic iron ore supply, due to quality, along
with environmental restrictions on both steelmakers and
co-production vanadium producers, can be expected to
see a greater reliance on haematite (non-vanadium
bearing) iron ore for steel making among co-producers,
which will limit vanadium slag production growth.
A green commodity for the future
Vanadium’s benefits to a greener society include its
contributions as an alloy in high-strength, low-alloy steels,
primarily used in construction. A recent study quantified
this benefit as equivalent to the annual CO2 production of
the Philippines or annually “planting approximately 260
million trees.”4. Its use as the critical mineral in VRFBs
further positions vanadium as a green commodity for the
future.
In the aerospace sector, vanadium has long been the
material used to ensure low density, high strength, and the
ability to maintain strength at high operating temperatures
which is essential in aero-engine gas turbines and
airframes.
Development of new titanium alloys continues and
grades containing 8, 10 and 15 per cent vanadium
have even higher strengths. They have the potential to
make important contributions to weight reduction and
fuel efficiency in the aircraft of the future.
One of the key green applications of vanadium, with even
more potential future upside, given the energy transition,
is in VRFBs used for grid energy storage. VRFBs are safe
and have a long lifespans, enabling them to repeatedly
charge/discharge over 35,000 times for a lifespan of over
20 years.
Bushveld Minerals is building its own VRFB solar mini-grid
at the Vametco mine. This will decrease the Company’s
carbon footprint, as it will reduce CO2 emissions by
more than 5,700 metric tonnes per year (and nearly
114,000 tonnes of CO2 over the life of the project).
Sources:
1. Roskill, Vanadium Outlook to 2030.
2. World Steel Association
3. Bloomberg, December 2020, May 2021.
4. Texas A&M study
5. Section 232 Investigations: Overview and Issues for Congress,
Congressional Research Service,
26
Bushveld Minerals | Annual Report and Financial Results 2020
Annual Report and Financial Results 2020 | Bushveld Minerals
27
Financial StatementsSupplementary InformationGovernanceBusiness Overview Energy Storage Overview
Energy Storage
Overview
The energy sector is undergoing a fundamental transition,
both in the extent of electrification and the advent of
renewable energy. Electricity’s share of global energy
consumption has doubled from 10 per cent in 1980 to 20
per cent today. It is expected to exceed 40 per cent by
20501. At the same time, renewable energy is displacing
fossil fuels in energy generation. These two changes have
enormous implications, not only for global energy
production, but for all minerals involved in the electricity
value chain.
Electricity is much more difficult to “store” than other
sources of energy. On top of that, the variability of
renewable energy sources further exacerbates the daily
misalignment between when electricity produced and
consumed. Both trends increase the need for stationary
storage, including large batteries. Energy storage, especially
long-duration storage (four or more hours per day), is
essential to support the growth in electricity demand while
enabling the energy transition to a carbon neutral world.
According to Bloomberg New Energy Finance, global
stationary energy storage installations will grow 122-fold
from 2018 to 2040, rising from 17 GWh to 2,850 GWh by
2040. In the shorter term, according to Guidehouse
Insights, formerly Navigant Research, the market will
reach US$50 billion in annual value by 2027.
Unsurprisingly, investment into battery technologies is
also accelerating, with Mercom reporting that in 2020
corporate funding of battery storage companies reached
US$6.6 billion compared with US$2.8 billion in 2019,
almost a 250 per cent increase. The trend accelerated in
Q1 2021, with corporate funding of battery storage
companies reaching US$4.7 billion in the quarter
compared with just US$244 million in Q1 2020.
Bushveld Energy participates in the global value chain for
energy storage through the supply of vanadium mined by
the Group, electrolyte that will be produced by the Group
and investment in battery companies and manufacturing.
In addition, Bushveld has a deployment business that
focuses on the African market, which is traditionally
under-served but offers immense growth potential.
South Africa is an excellent example of that growth:
•
In 2020, South Africa was the sixth-largest market for
residential energy storage, with 185 MWh of
deployments, according to IHS Markit. It ranked
behind Italy and ahead of the United Kingdom.
• According to Bushveld’s own analysis, South Africa
may be one of the top-five utility energy storage
markets in 2022.
Over 1,440 MW of utility procurement has already been
announced, including;
• 350 MW from the first phase of the World Bank-funded
Eskom battery procurement programme (already
tendered).
• 578 MW from storage co-located with renewable
energy in seven awarded projects in H1 2021, under
South Africa’s Risk Mitigation Independent Power
Procurement (“RMIPP”) round.
• 513 MW in new tenders announced by the
Department of Mineral Resources and Energy for H2
2021 that are included in the South African
Government’s Integrated Resource Plan.
• Within the roughly 8,000 MW global forecast from
Guidehouse Insights for 2022 for utility scale storage,
South Africa is poised to account for approximately 15
per cent.
World Energy Demand by Carrier
World Electricity Generation by Power Station Type
Units: EJ/yr
500
400
300
200
100
Units: PWh/yr
60
50
40
30
20
10
0
1980
1990
2000
2010
2020
2030
2040
2050
0
2018
2022
2026
2030
2034
2038
2042
2048
2050
Coal
Oil
Natural Gas
Biomass
Direct Heat
Electricity
Solar Thermal
Coal fired
Fixed offshore wind
Onshore wind
Solar PV
Solar thermal
Oil fired
Gas fired
Nuclear
Floating offshore wind
Hydropower
Geothermal
Source: DNV GL Energy Transition Outlook 2020, IEA 2019
Source: DNV GL Energy Transition Outlook 2020, IEA 2019
28
Bushveld Minerals | Annual Report and Financial Results 2020
Annual Installed Stationary Energy Storage Capacity and
Deployment Revenue by Market Segment
Forecast 2022 Utility-Scale Installations
120,000
100,000
80,000
h
W
M
60,000
40,000
20,000
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Utility-Scale
Total Revenue
Commercial & Industrial
Residential
Source: Guidehouse Insights
60
50
40
30
20
10
0
n
o
i
l
l
i
b
S
U
9,000
8,000
7,000
6,000
5,000
W
M
4,000
3,000
2,000
1,000
0
South
Africa
USA
Global
Source: USA forecast from Wood Mackenzie P&R/ESA US energy
storage monitor 2020 year in review; Global forecast from
Guidehouse Insights; South Africa forecast based on Bushveld Energy
analysis
These solutions will accelerate VRFB adoption by
reducing the upfront capital costs, while creating new
economic opportunities for vanadium producers.
Advancement of VRFB market and outlook
In 2020, VRFBs deployments increased and the supply
chain continued to mature. Specific examples included:
• 51 MWh VRFB awarded to Sumitomo in Japan, 400
MWh VRFB project announced by Shanghai Electric
in China, and, in early 2021, a 500 MWh project
announced by VRB Energy, also in China.
• Announcement of giga factories for VRFB production
in China by Shanghai Electric and in Saudi Arabia by
Schmid and Nusaned, part of the Saudi Aramco group.
• Large, multinational power companies, such as EDF
and Enel, started deploying VRFB technology in
Europe in 2020. More recently, Siemens Gamesa
announced a joint development agreement for VRFBs
with Invinity Energy Systems in Q2 2021.
Demand from VRFBs is set to grow further as
governments focus on accelerating the energy transition
to zero-carbon resources.
Sources:
1. DNV GL Energy Transition Outlook 2020
Vanadium Redox Flow Batteries (“VRFBs”)
VRFBs are well-positioned to take a significant share of
the stationary energy storage market, owing to unique
advantages for long-duration stationary energy storage
applications.
Advantageous features of VRFBs include:
• Long lifespan cycles: the ability to repeatedly charge/
discharge more than 35,000 times for a lifespan of
over 20 years.
• 100 per cent depth of discharge without material
performance degradation is unique to VRFBs.
• Low cost per kWh when fully used at least once daily.
• Safety: no fire or smoke risk from thermal runaway.
• Sustainability: a 30 per cent lower carbon footprint
than li-ion batteries. Vanadium is re-usable on
decommissioning of a system.
• Flexibility that allows for capturing the multi-stacked
values of energy storage in grid applications.
• No cross-contamination, since there is only one
battery element, unique among flow batteries.
The lack of degradation of the electrolyte, as well as the
simple architecture of the VRFB that allows electrolyte to
be removed and re-used, creates an opportunity to devise
innovative financial solutions such as electrolyte rental.
Overview of Vanadium Redox Flow Battery Technology
Electrode
Membrane
V4/V5+
+
e
Electrolyte
Tank
V2/V3+
-
e
Pump
Power source-load
Pump
Illustration: Bushveld Energy
Annual Report and Financial Results 2020 | Bushveld Minerals
29
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Bushveld Minerals’ Performance and Objectives
Bushveld Minerals’ strategy
Health & Safety and
Stakeholder
Engagement
Build a sustainable, cash-generating,
low-cost production platform,
comprising:
• high-grade, open-cast and low-cost
•
primary vanadium mines; and
refurbished scalable brownfield
processing facilities
Financial
Operational
Use our large, low-cost production
platform to build a leading downstream
vanadium-based energy storage
platform, creating value as a
manufacturer of electrolyte, investor and
a project developer across the Vanadium
Redox Flow Battery (“VRFB”) value chain.
E N E R G Y
30
Bushveld Minerals | Annual Report and Financial Results 2020
Bushveld Minerals | Annual Report and Financial Results 2020
Performance versus 2020 objectives
2021 objectives
• Reported zero fatalities, no lost-time injuries and no
• Zero harm: the health, safety and well-being of our
new cases of occupational health diseases.
employees, as always, is a key priority.
• Maintain the necessary safety measures required in
a COVID-19 constrained environment, while ensuring
minimal disruption to the operations.
• Strengthen relations with labour and communities.
• Continue to build operational capacity, financial
resources, the operating model, and business
processes and systems.
• US$50.5 million cash and cash equivalents held at
• Strengthen the Company’s balance sheet and increase
31 December 2020 (2019: US$34.0 million).
• Revenue of US$90.0 million, a 23 per cent reduction
relative to 2019 (2019: US$116.5 million) as a result of a
52 per cent decline in the average realised price, partly
offset by an increase in sales.
•
cash flow through margin expansion and debt
reduction.
Implement the Group’s Cost Savings Programme to
cut costs by between US$2.5 million to US$4 million
starting from 2022.
• EBITDA loss of US$14.9 million, the decrease relative
to 2019 (2019: US$32.6 million) is due to a decline in
the vanadium prices.
• Completed and drew down the US$65 million
financing package with Orion Mine Finance to fund
mining projects as well as to partially retire existing
debt facilities.
• Early settlement of Duferco Participations Holding
S.A.’s convertible loan notes, with partial repayment
of US$11.5 million of the US$23 million of notes held.
• Annual production of 3,631 mtV, 24 per cent higher
•
than 2019 (2019: 2,931 mtV), primarily as a result of the
inclusion of Vanchem’s production, despite 380 mtV
of production lost due to the nationwide lockdown.
• Annual sales of 3,842 mtV, 61 per cent higher than
2019 (2019: 2,392 mtV), as a result of the contribution
of sales volumes from Vanchem as well as increased
demand from existing customers.
• Sales to China contributed 23 per cent of total
volumes sold, compared with nine per cent in 2019.
Improve operational stability in H2 2021 and continue
to implement synergies across Vametco and
Vanchem.
• Complete technical studies at Vametco and Vanchem,
in order to identify an optimal growth path.
• Optimise production flexibility between Vametco and
Vanchem.
•
Identify and implement cost reduction initiatives.
• Achieve benefits of centralised procurement activities.
• Established Bushveld Electrolyte Company as the
operating entity for the electrolyte business and
completed the engineering phase.
• Progress construction of the electrolyte plant,
with an initial 200 MWh capacity.
• Scale up the vanadium electrolyte rental product
• Signed an electrolyte rental contract between Pivot
Power, part of EDF Renewables, and Vanadium
Electrolyte Rental Limited, a joint venture established
in 2020.
• Successfully completed investments in VRFB Original
Equipment Manufacturers Invinity Energy Systems plc
and Cellcube.
with new contracts.
• Support and fund the growth of Cellcube, together
with the other shareholders.
• Attain financial close and commence construction of the
Vametco hybrid mini-grid.
• Participate in large, upcoming battery energy storage
tenders in South Africa.
• Develop self-generation options for all Bushveld’s
existing and future electricity needs.
Annual Report and Financial Results 2020 | Bushveld Minerals
31
Financial StatementsSupplementary InformationGovernanceBusiness Overview Bushveld Minerals’ Performance and Objectives continued
Group 3-year
Performance Indicators
Despite the 24 per cent increase in production and the 78 per cent increase
in sales, Group performance was impacted by the lower vanadium price.
Revenue versus average realised price
Revenue decline of 23 per cent in 2020 relative to 2019 as
a result of the 52 per cent reduction in the average
realised price, partially offset by a 24 per cent increase in
Group production.
EBITDA KPI
EBITDA loss of US$14.9 million in 2020, the decrease
relative to 2019 is primarily due to the decline in the
vanadium price.
Revenue (US$ millions)/average realised price US$/kgV
EBITDA (US$ millions)
2020
23.4
2019
48.9
90
116.5
2018
74
2020
-14.9
32.6
2019
2018
192
101
0
50
100
150
200
-20
20
40
60
80
100 120
Revenue
Average realised price
Sales
61 per cent increase in 2020 sales volume relative to 2019, as a result of sales from Vanchem, as well
as increased demand from China during H2 2020.
Sales (mtV)
Group sales by region %
2020
2019
2018
3,842
19%
United States
Europe
China
Rest of the World
34%
2,392
2,573
23%
24%
1,000
2,000
3,000
4,000
32
Bushveld Minerals | Annual Report and Financial Results 2020
KPI Group’s key performance indicators
Production KPI
24 per cent increase in 2020 Group production compared
with 2019, primarily as a result of the inclusion of
Vanchem, despite 380 mtV of production lost due to the
COVID-19 nationwide lockdown.
Total Injury Frequency rate (“TIFR“)
TIFR was 15.11. Vametco achieved a TIFR of 18.21
representing an improvement of 22 per cent relative to
2019. Vanchem’s 2020 TIFR was 5.26.
Production (mtV)
Group Total Injury Frequency Rate
2020
2019
2018
3,631
2,931
2,560
2020
2019
2018
15.11
23.49
28.85
0
1,000
2,000
3,000
4,000
5
10
15
20
25
30
Employees
Bushveld employed 712 people.
Number of employees
2020
2019
2018
712
691
503
0
100 200 300 400 500 600 700 800
KPI Group’s key performance indicators
Annual Report and Financial Results 2020 | Bushveld Minerals
Annual Report and Financial Results 2020 | Bushveld Minerals
33
Financial StatementsSupplementary InformationGovernanceBusiness Overview Finance Director’s report
Ensuring Financial Reliance
in Market Downturn
Overview
The 2020 financial year was a difficult year operationally
due to the impact of the COVID-19 pandemic, which
resulted in 380 mtV in lost production, as well as
additional costs associated with adapting our work
practices to ensure our workplaces were safe for us to
continue to operate, following the nationwide lockdown.
Group production nevertheless increased by 24 per cent
to 3,631 mtV, as Vanchem operated for a full 12 months
under the Bushveld Group umbrella, underscoring the
importance of our acquisition. Group sales increased
by 61 per cent to 3,842 mtV, despite the logistical
challenges resulting from COVID-19. This was a significant
achievement, which also reflects the inclusion of
Vanchem’s sales for the full financial year, and increased
customer demand in H2 2020.
Group
Sales
Unit
mtV
Average realised price
US$/kgV
2020
3,842
23.4
2020 vs
2019
61%
-52%
The financial benefits of this performance were
significantly diluted by market factors, as the decline in
vanadium prices experienced in the second half of 2019
persisted throughout 2020. Year-on-year, realised prices
declined by approximately 52 per cent, consequently
eroding Group profitability and cashflow.
The Group reported revenue of US$90 million (2019:
US$116.5 million), and an Earnings Before Interest, Tax,
Depreciation and Amortisation (“EBITDA”) loss of
US$14.9 million (2019: EBITDA of US$32.6 million).
The Group put in place several measures to conserve
cash and protect the balance sheet in light of the
uncertain operating environment. We scaled back
on our planned capital expenditure, optimising our
capital allocation process to preserve cash. From a cost
perspective, we continued to focus on cost containment
even as we integrated the two operations. We expect to
realise synergies in areas such as the shared procurement
platform we established, as we progress. The Group’s
focus on cost containment and the early wins achieved
are illustrated later in this report under the Cost of
sales section.
Administrative expenses were reduced by US$4.9 million
to US$19.8 million (2019: US$24.7 million) as a result of
cash-preservation measures implemented by the Group.
These costs are further analysed in the administration
cost section. Net cash from operating activities was an
outflow of US$17.1 million (2019: US$28.5 million), mainly
driven by the decline in price.
Despite uncertain market conditions, we successfully
secured US$65 million of funding from the mining-
focused investment business, Orion Mine Finance
(“Orion”). The Group ended the year with a strong cash
balance of US$50.5 million (2019: US$34.0 million).
Orion: US$65 million financing package
In November 2020, the Company announced that it had
successfully completed and drawn down on a US$65
million financing package from Orion. The funding
comprised a US$30 million Production Financing
Agreement and a US$35 million convertible loan note.
Part of the proceeds were used to retire the Nedbank
ZAR250 million term loan, repay US$5 million of the
Duferco loan notes, plus interest of US$1.28 million,
as well as to fund capital projects in Bushveld Vanadium.
Analysis of results
Income statement summary as adjusted from “statutory”
primary statement presentation.
Revenue
Cost of sales
Other operating and
administration costs
US$
2020
US$
2019
89,988,078
(73,394,608)
116,514,112
(45,819,774)
(31,534,410)
(38,061,382)
EBITDA
(14,940,940) 32,641,956
Depreciation
(17,866,153)
(10,388,145)
Operating (loss)/profit
(32,807,093)
22,253,811
Gain on bargain purchase –
Vanchem
Net financing expense
Other non-operating costs
Profit before tax
Income tax charge
–
(4,654,258)
(206,066)
60,586,633
1,923,687
(1,510,572)
(37,667,417) 83,253,558
484,654 (14,005,965)
Profit after tax
(37,182,763)
69,247,593
Revenue
Revenue for the Group was US$90.0 million (2019:
US$116.5 million). Group sales in 2020 amounted to 3,842
mtV at an average price of US$23.4/kgV and an average
exchange rate of ZAR16.46 to the US dollar (2019: 2,392
mtV, average price US$48.7/kgV, average exchange rate of
ZAR14.5 US dollar). The geographic split of Group sales in
2020 was 34 per cent to the United States, 24 per cent to
Europe, 23 per cent to China and 19 per cent to the rest
of the world. Sales to China in 2020 were significantly
higher than the nine per cent share of total sales achieved
in 2019, in line with our strategy of creating sufficient
flexibility in the business to enable the Group to increase
sales to higher-priced regions.
34
Bushveld Minerals | Annual Report and Financial Results 2020
The idle plant costs of US$4.2 million (2019:US$2.9
million) mainly reflects the 21-day shutdown,
as a result of the South African COVID-19 nationwide
lockdown during the first half of 2020.
Group administrative expenses reduced by US$4.9 million
to US$19.8 million (2019: US$24.7 million), due to our
effective cost-control measures. The overall effectiveness
of the containment can also be noted with the full year
of administrative costs associated with the Vanchem site
fully absorbed whilst still delivering a reduction in the
administrative costs when compared to 2019.
Administrative expenses included staff salaries of US$8.1
million (2019: US$9.6 million) for both the operations
and head office administration and management staff.
Since the costs are not directly attributable to the cost
of production, they are recoded under administrative
expenditure based on industry practice. The operation
salaries amounted to US$4.7 million (2019: US$5.7
million), whilst the shared service and change to head
office division (including directors fees), amounted to
US$3.5 million (2019: US$3.8 million). The reduction in
overall salary costs was as a result of one-off costs
incurred in 2019 associated with Vametco legacy staff
offset by a slight ramp up in staff costs for Vanchem and
capacity building of the Shared Service departments
professional fees of US$6 million (2019: US$7.6 million),
are mainly attributable to the costs associated with the
Orion transaction as well as other Bushveld Energy
corporate development initiative such as Invinity and
Cellcube that were implemented in the year.
Continues >
Cost of sales
The cost of sales excluding depreciation for the period
was US$73.4 million (2019: US$45.8 million). The increase
is partially attributable to the inclusion of Vanchem for the
full financial year as well as increase in areas such as
energy and maintenance costs at Vametco.
The material cost benefits of increasing production
are illustrated in the table below, which shows that our
strategy of growing production through the acquisition
of Vanchem and increasing its production has resulted
in a lower Group cost of US$29/kgV (including sustaining
capital) relative to 2019 (2019: US$37/kgV) as a result
of the dilution of fixed costs. The effects of the bargain
purchase of US$60.6 million have been excluded from
the calculation below as it is a once off in nature and
did not contribute cash to the bottom line performance
of the business in 2019. We expect to see continued
cost-reductions as the Group continues to embed
synergies across Vametco and Vanchem and grow
production organically.
Total Cost
Cost of sales (direct)
Operating costs and admin
Other non-operating costs
Total income statement
cost excl. depreciation
Total units sold
Cost income statement per
unit produced (excl.
depreciation) US$/kgV
Sustaining capital
Total cost including
sustaining capital
Cost per unit sold including
sustaining capital US$/kgV
2020
2019
(73,394,608)
(31,534,410)
(206,066)
(45,810,774)
(38,061,382)
(1,510,572)
(105,135,084)
3,842
(85,382,727)
2,392
27
(5,375,610)
36
(3,652,977)
(110,510,694)
(89,035,704)
29
37
Total revenue
Revenue
Average price realised
US$/kgV
89,988,078
116,514,112
23
49
Cost-saving initiative
To ensure that Bushveld Minerals remains competitive at
a lower vanadium price and reaps the benefits of a higher
commodity price, the Group has introduced a cost-
savings programme (“CSP”). The CSP is aimed at ensuring
continued competitiveness throughout the commodity-
cycle, while enhancing the offering to markets across all
the industries in which we compete. We are targeting
cost-saving initiatives across the Group, with procurement
as the first priority. Our objective is to cut costs by
approximately US$2.5 million to US$4 million per year,
starting from 2022.
Other operating and administration costs
Other mine operating costs included community,
social and labour plan costs at Vametco and Vanchem.
Even though the Group as a whole was not profitable,
mainly driven by the poor vanadium price, the Group
still maintain its social commitments and obligations.
Annual Report and Financial Results 2020 | Bushveld Minerals
Annual Report and Financial Results 2020 | Bushveld Minerals
35
Financial StatementsSupplementary InformationGovernanceBusiness Overview Finance Director’s Report continued
Other costs incurred related to additional overheads on
establishing the Vanchem administrative departments as
well as the general security and maintenance of the sites.
Net debt
The net debt reconciliation below outlines the Group’s
total debt and cash position.
The EBITDA reconciliation shown below illustrates the
impact of the decline in the vanadium price from the
prior year. Operating costs increased due to the Vanchem
operations running for the full year, this was offset by a
declined in the mineral royalty payable relative to sales
prices. The royalties are paid by Vametco at the Unrefined
Rate of 0.5 + { EBIT / (Gross Sales x 9) } x 100 with a seven
per cent maximum royalty percentage payable on
unrefined minerals.
2019 EBITDA
Revenue changes
Operating cost changes
Inventory movement
2020 EBITDA
US$
32,641,956
(26,526,033)
(30,029,571)
8,972,708
(14,940,940)
2020
US$
2019
US$
Gross Cash and Cash
Equivalent
50,540,672
34,011,557
Nedbank Term Loan and
Revolving Credit Facility
Convertible Loan Notes
(8,636,535)
(18,071,342)
– Duferco
(11,585,068)
(23,173,288)
Production Financing
Agreement – Orion Mine
Finance
Convertible Loan Notes
Instrument – Orion Mine
Finance
(30,105,886)
(33,706,104)
–
–
Other
Net Debt
(845,588)
(511,522)
(33,706,104)
(7,744,595)
Balance sheet
Assets
Total current assets increased during the year as a result
of the increase in value of financial assets US$22.4 million
(2019 US$1.9 million) which related to the investments
made in Invinity Energy Systems (“Invinity”) and Cellcube.
Refer to note 21 of the financial statements for further
detail. The other material increase was as a result of the
Group cash and cash equivalents of US$50.5 million
(2019: US$34.0 million) due to the Orion financing
package offset by the settlement of the Nedbank term
debts as well as other borrowing obligations.
Cash flows
Net cash outflow from operating activities for the year were
(US$17.1 million), a decrease of US$45.6 million compared
with 2019, driven by reduced profitability on the back of
sustained low vanadium prices. Capital expenditure and
investing activities for the year were US$13.3 million, a
decrease of US$36.4 million from 2019 mainly due to the
cash preservation measures implemented during the year.
Cash generation
The table below summarises the main components of
cash flow during the year.
Non-current assets related to intangibles and property,
plant and equipment remained consistent to the prior
year and changes were mainly as a result of depreciation
in the year. A deferred tax asset was raised for the
assessed loss incurred during the year, (refer to note 16
for further details).
Equity and liabilities
Total current and non-current liabilities increased by
US$48.2 million due to the Orion production financing
agreement and convertible loan notes, offset by the
repayment of the Nedbank term loan. The trade and
other payable also contributed to the increase as a result
of Vanchem coming online for the full year and the
additional trade balance required as a result.
The share capital balance also increased as a result of
the Duferco convertible loan note which was exercised
at the end of the financial year.
Operating (loss)/profit
Depreciation and
amortisation
Changes in working capital
US$
2020
US$
2019
(32,807,093)
22,253,811
17,866,153
10,388,145
and provisions
Taxes paid
1,253,029
(3,452,492)
4,586,737
(8,767,312)
Cash flow from operations
Sustaining capital
(17,140,404)
(5,375,610)
28,461,381
(3,652,977)
Free cashflow
Cash from other investing
(22,516,014) 24,808,404
activities
Financing activities
Cash (outflow)/inflow
Opening net cashflow
Foreign exchange
movement
(7,943,222)
47,433,269
(46,077,866)
13,287,374
16,974,034
34,011,557
(7,982,088)
42,019,123
(444,919)
(25,478)
Closing net cash
50,540,672
34,011,557
36
Bushveld Minerals | Annual Report and Financial Results 2020
We will continue to prioritise
financial stability through cost
containment, conserving cash
and adhering to a clear capital
allocation framework, to ensure
the Group’s resilience through
the operating cycle.
Investing activities
Investing activities were driven by capital expenditure
growth with property plant and equipment expenditure
of US$3.9 million, as well as a payment made for the
deferred consideration owed to Evraz of US$1.7 million.
Investment in Cellcube of US$1.9 million, and US$1.5
million spent on intangibles. The costs were offset by
finance income to the tune of US$1 million for the year.
Financing activities
Financing activities of US$47.4 million include the
US$65 million Orion financing package and approximately
US$8 million from the Nedbank revolving credit facility.
This was partially offset by the US$5 million repayment
of the US$23 million unsecured convertible note held
by Duferco plus interest of US$1.28 million in cash.
The balance of US$6.5 million which was also due for
repayment was settled by the issue of 37,115,210 new
Bushveld shares. The Nedbank term loan of ZAR250 million
(approximately US$17 million) was also fully retired.
Financial risk management
The main financial risks faced by the Group relate to
the availability of funds to meet business needs (liquidity
risk), the risk of default by counterparties to financial
transactions (credit risk), fluctuations in interest and
foreign exchange rates and commodity prices. These
factors are more fully outlined in the notes to the
accounts. There are important aspects to consider when
addressing the Group’s going concern status, particularly
in the context of the COVID-19 pandemic. We are
proactively managing the risks within our control. There
are, however, factors which are outside the control of
management, specifically volatility in the ZAR:USD
exchange rate as well as the vanadium price, which we
do not currently hedge and which can have a significant
impact on the Business.
Annual Report and Financial Results 2020 | Bushveld Minerals
37
Financial StatementsSupplementary InformationGovernanceBusiness Overview Although the start of the 2021 financial year has been
challenging, we are encouraged by the positive
production run rate at Vametco post-maintenance and by
the upward vanadium pricing trajectory that we have seen
to date.
Vanchem is expected to make EBITDA losses for the rest
of the year, but this situation is expected to reverse after
the growth in capital spending, as it will enable Vanchem
to ramp up production to a sustainable steady state
production run rate of approximatively 2,600 mtVp.a.
by the end of 2022. Beyond 2021, the Group is expected
to benefit from the synergies of running both operations,
as the combined production from Vametco and Vanchem
will contribute to the Group’s fixed costs.
Looking forward, we will continue to prudently manage
costs and conserve cash, as long as uncertainty lingers
over the global health and possible economic
consequences of COVID-19, even though COVID-19
vaccine programmes are being implemented globally.
The vanadium price was impacted in 2020 by lower
global demand due to the COVID-19 pandemic. Prices
have significantly improved from their lows of 2020 and
are currently trading above US$40/kgV, supported by
various fiscal stimulus measures, which are expected to
drive demand for raw materials.
We will continue to prioritise financial stability through
cost containment, conserving cash and adhering to a
clear capital allocation framework, to ensure the Group’s
resilience through the operating cycle.
Tanya Chikanza
Finance Director
29 June 2021
Finance Director’s Report continued
Going concern and outlook
We manage liquidity risk by ensuring that the Group
has sufficient funds for all ongoing operations. Our
philosophy is to maintain a low level of financial gearing,
given exposure to the vanadium price and exchange rate
fluctuations.
As part of the annual budgeting and long-term planning
process, the Group’s budget and cashflow forecasting
is reviewed and approved by the Board. The forecast is
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. In particular, a capital allocation framework is
applied which prioritises maintenance, critical and
regulatory capital funding requirements.
We also closely monitor liquidity risk. We regularly
produce cash forecasts and analyse sensitivities to
different scenarios, including, but not limited to, changes
in commodity prices and different production profiles
from the Group’s producing assets.
The Nedbank debt facility available to Vametco is subject
to financial covenants which are EBITDA-driven. After
year-end, in light of the weak vanadium price during
H2 2020 and the low production volumes now expected
for H1 2021, as a result of the 35-day maintenance
shutdown and the unprotected industrial action at
Vametco, we proactively engaged Nedbank. This enabled
us to successfully renegotiate the covenant testing terms
required under the ZAR125 million Revolving Credit Facility
(“RCF”). Nedbank has agreed to waive the covenants for
the June 2021 period and relax the December 2021 Group
net debt to EBITDA ratio from 2.50 times to 4.0 times.
A condition of the waiver is that the RCF is amortised by
ZAR5 million (approximately US$0.3 million) per month
from 6 August 2021, with a bullet payment of ZAR50
million US$3.4 million) due on the maturity date of
6 November 2022.
Since year-end, renegotiations of the Duferco convertible
balance of US$11.5 million have been positive and near
conclusion. This would result in US$5 million being
payable in November 2021 and the remaining US$6.5
million being converted into Bushveld shares.
Post year end, the investment in Invinity was realised,
resulting in capital appreciation of some 160 per cent.
The proceeds of the sale were used towards Bushveld
Energy’s 2021 projects, including its investment in
Cellcube, as explained in the CEO’s Review.
As mentioned in the CEO Review, we are evaluating the
Group’s growth-production sequencing and funding
requirements for all operations in order to determine
the ideal production sequencing to achieve our targets.
Details on the Group’s production path and funding
will be provided on completion of the technical studies
currently underway at Vametco and Vanchem.
38
Bushveld Minerals | Annual Report and Financial Results 2020
Details of Operating Assets and Operational Review
Details of Operating Assets
and Operational Review
Bushveld owns one of the largest, high-grade primary
vanadium resource bases in the world, with all of its assets
situated in South Africa. The Company’s vanadium
resource comprises three mineral assets: the Vametco
mine, Brits resource and the Mokopane project. The
Group’s principal vanadium processing facilities are the
Vametco processing plant (“Vametco”), in which the
Company first acquired an interest in April 2017, and the
Vanchem plant (“Vanchem”), a primary vanadium-
producing facility with a beneficiation plant capable of
producing various vanadium oxides, ferrovanadium and
vanadium chemicals, acquired in November 2019.
The Company plans to achieve a steady state production
run rate of between 5,000 mtVp.a. and 5,400 mtVp.a.
by the end of 2022, from the projects currently being
executed such as the Vanchem kiln 3 refurbishment
(Phase1). Futhermore, studies are under way to
determine the optimal path to increase production to
a steady state production run rate of between 6,400
mtVp.a. and 6,800 mtVp.a. in the medium-term and to
a steady state production run rate of 8,400 mtVp.a. in
the long-term.
Vametco
Vametco is an integrated mining and processing plant
located eight kilometres north-east of Brits in the North
West Province of South Africa. The operation owns the
new order mining right for vanadium and other
associated minerals over a portion of the remaining
extent of Portion 1 of the farm Uitvalgrond 431 JQ and
Portion 1 of the farm Krokodilkraal 426 JQ in Brits.
Vametco operates an open-pit mine supplying ore
to a vanadium processing plant located on the same
properties.
Mine
Vametco’s open pit mine is approximately 3.5 kilometres
long, extending in a west-east direction. The ore body
is well-defined, continuous and dips in a north-east
direction at approximately 19 to 20 degrees. The mine
is based on a JORC-compliant resource of 184.2 Mt,
including 46.4 Mt reserves, with in-magnetite vanadium
grades averaging approximately 2.0 per cent V2O5, with
a life of mine of more than 30 years.
Processing
Vametco’s processing plant receives ore from the
co-located Vametco mine. Vametco employs the
standard salt-roast and leach process to produce a
steel-alloying vanadium carbon nitride product called
Nitrovan. The process involves the following stages:
• Step 1: Crushing, milling and magnetic separation to
produce a magnetite concentrate with average grades
of approximately 2.0 per cent V2O5 in-magnetite;
• Step 2: Salt-roasting the concentrate, where the
concentrate is roasted with sodium salts in a kiln at
approximately 1,150°C to form a water-soluble sodium
vanadates material;
• Step 3: Leaching and purification, with dissolution of
roasted vanadium concentrate in water, purification,
and precipitation of vanadium through the addition
of ammonium sulphate followed by drying and then
processing in a reducing environment to produce
a Modified Vanadium Oxide (“MVO”) product; and
• Step 4: Nitrovan production: the MVO is briquetted
and fed into a shaft induction furnace in a nitrogen
atmosphere to produce Nitrovan, which is used as
a micro-alloy in steel production.
Annual Report and Financial Results 2020 | Bushveld Minerals
39
Financial StatementsSupplementary InformationGovernanceBusiness Overview Details of Operating Assets and Operational Review continued
Table 1: Operational highlights for Vametco (on a 100 per cent basis)
Description
Vanadium (Nitrovan plus FeV) produced
Production cash cost2 (C1)
Total cash cost3
Unit
mtV1
US$/kgV
US$/kgV
2020
2,654
18.33
23.31
2019
2,833
18.05
29.38
2020 vs
2019
-6.3%
1.5%
-20.7
1. mtV = metric tonnes of vanadium.
2.
Includes direct costs of production. Excludes depreciation, royalties, movements in finished goods inventories and selling, general &
administrative expenses.
Includes direct costs of production, selling, general & administrative expenses and cash outflows on sustaining capital and growth capital.
Excludes depreciation, royalties, movements in finished goods inventories and sales commissions.
3.
2020 operational performance
Vametco achieved an annual production of 2,654 mtV.
Approximately 300 mtV was lost when production
was disrupted by the South African 35-day nationwide
lockdown due to the COVID-19 pandemic. In spite of
the impact of the nationwide lockdown and resultant
changes in work arrangements, Vametco’s production
was just six per cent lower than in 2019 (2019: 2,833 mtV).
Vametco achieved a production cash cost of US$18.30/
kgV and a total cash cost of US$23.31/kgV.
Phase III of the multiphase expansion project
In 2020 the Company commenced the technical studies
associated with the Pre-Feasibility Study (“PFS”) for
the expansion of Vametco to achieve a steady-state
production run-rate of 4,200 mtVp.a. As the Group is
reviewing its production profile and associated capital
spend to achieve the most capital efficient production
sequencing between Vametco and Vanchem, the scope
of work of the PFS has been extended to include
upgrading the concentrate section to a Semi-Autogenous
Grinding mill and life of mine of Open Pit with higher
production to supply both Vametco and Vanchem
making Vametco the single ore supply for both operations
for the medium term. Details on the ramp-up profile and
capital expenditure plans will be provided once the PFS
has been completed, which is expected in Q4 2021.
2020 capital expenditure
Sustaining capital expenditure required for maintaining
and sustaining Vametco was US$1.6 million. A kiln off-gas
project was initiated in 2018 to comply with environmental
regulations relating to air emissions and to further-
increase kiln feed throughput. During 2020, Vametco
successfully completed and commissioned the kiln
off-gas. A total of US$2.3 million was invested
in the project in 2020.
2021 outlook and capital expenditure
A Group operational leadership and technical team has
been formed and has devised a programme to address
issues causing instability and variations in our process.
The team’s focus is on understanding the causes of
variation and improving people, processes and systems
to achieve sustainable steady-state production.
and the 35-day planned maintenance shutdown. There
were more unforeseen mechanical breakdowns after
start-up, followed by a six-days of unprotected industrial
action in April 2021.
The strategy for Vametco is to create an operational
environment that focuses on stability and consistency
through the implementation of various workstreams.
These include: maximising safety and housekeeping;
identifying and solving process and system constraints;
and optimising preventative maintenance programmes
to minimise unplanned breakdowns. After the successful
completion of the 35-day annual shut down, the plant
has experienced improved levels of stability and reliability,
setting the operation up for consistent performance for
the remainder of the year at monthly production levels
of approximately 240 mtV.
Due to the above, Vametco’s 2021 guidance has been revised
to between 2,300 mtV and 2,400 mtV, previously between
2,700 mtV and 2,850 mtV. The annualised production run
rate for the remaining months of 2021 is between 2,600 mtV
and 2,700 mtV. Production cash cost (C1) has been revised to
between US$23.7/kgV and US$24.20/kgV (ZAR339/kgV and
ZAR345/kgV), previously US$20.0/kgV and US$21.30/kgV
(ZAR320/kgV and ZAR340/kg).
Total capital expenditure is estimated at ZAR85.2 million
(circa US$6.0 million), with most of the cost being
ZAR-denominated. It includes:
• ZAR62 million (circa US$4.4 million) of sustaining
capital;
• ZAR19.7 million (circa US$1.4 million) of environmental
capital; and
• ZAR3.5 million (circa US$245,000) required for the
Vametco Phase III PFS.
Vanchem
Vanchem is a primary vanadium-processing facility with a
beneficiation plant. It is located at Ferrobank Industrial Park
in Emalahleni Local Municipality, Mpumalanga Province,
in South Africa. It produces vanadium pentoxide,
ferrovanadium and vanadium chemicals and is capable of
producing vanadium trioxide. Vanchem uses the salt-roast
beneficiation process, similar to that used at Vametco.
As reported in the Q1 2021 operational update,
performance was impacted by mechanical breakdowns
Vanchem continues to use vanadiferous magnetite ore
acquired together with the operation in November 2019.
40
Bushveld Minerals | Annual Report and Financial Results 2020
This ore feedstock has been supplemented with limited
quantities of magnetite concentrate from Vametco.
The Upper Seam portion of the Vametco resource
(“The Upper Seam Project”) has been earmarked as the
near-term source of feedstock for Vanchem, to replace
the ore stockpile acquired with the plant while the
Mokopane project is being developed. The source of
the ore will be the Upper Seam reserve and stockpile,
which has a V2O5 grade in magnetite of 1.76 per cent
and magnetite content of 65 per cent in ore, superior
to previous third-party suppliers. This will be upgraded
to 80-85 per cent magnetite in ore with a mass yield of
80 per cent, using the temporary ore processing unit.
With a reserve base of approximately 0.9 Mt of ore,
the Upper Seam Project, will supply Vanchem with
a significant proportion of its ore requirement for
18 months and has the ability to supply 34 kt of ore per
month commencing in Q3 2021, removing the necessity
of relying exclusively on third-party sources of ore
over this period. The Upper Seam Project resource has
similar mineralogy to the current ore used at Vanchem,
and tests conducted to date have proven its suitability for
processing at Vanchem. This will be achieved by installing
a temporary ore processing unit, which will avail additional
crushing capacity to Vametco on a demand basis and have
dry magnetic separation capabilities.
The initiative will ensure that Vanchem has sufficient
competitively-priced ore feedstock (in line with, or better
than, third-party suppliers) in the short to medium term,
with no significant capital expenditure requirements. In
addition, with an overall Upper Seam resource base of 16 Mt
the potential to extend this particular supply beyond the
initial 18 months exists and is being investigated accordingly.
Vanchem has a short to medium term strategy of sourcing
feedstock, ahead of the Mokopane mine becoming its
primary supplier, as follows:
• Source ore from the Upper Seam at Vametco; and/or
• Procuring ore from third parties when prices are more
competitive when compared to the Upper Seam costs
and have operational and/or blending advantages.
Quantities of third-party ore have been procured and
additional opportunities are being considered.
Processing:
• Step 1: Crushing, milling and magnetic separation to
produce a magnetite concentrate with average grades
of approximately 1.65 per cent V2O5 in-magnetite;
• Step 2: Salt-roasting of concentrate. The concentrate
is roasted with sodium salts in a kiln at approximately
1,150°C to form a water-soluble sodium vanadate
material;
• Step 3: Leaching and purification, involving dissolution
of roasted vanadium concentrate in water, purification
and precipitation of vanadium through the addition of
ammonium sulphate, followed by drying and then
processing in a reducing environment to produce
an ammonium metavanadate (“AMV”) product;
• Step 4: The AMV is de-ammoniated and melted to
produce vanadium pentoxide flakes – a primary
product. The AMV is also used in other processes
to produce a spectrum of vanadium chemicals; and
• Step 5: vanadium pentoxide is reduced by aluminium
in the aluminothermic process in the presence of iron
to produce ferrovanadium – a primary product.
2020 operational performance
Vanchem produced 990 mtV in the financial year. It lost
approximately 80 mtV when production was disrupted
by the South African 35-day nationwide lockdown due
to the COVID-19 pandemic. In spite of this, Vanchem met
its 2020 production guidance of between 960 mtV and
1,100 mtV. Vanchem achieved a production cash cost of
US$22.40/kgV and a total cash cost of US$29.9/kgV.
Table 2: Operational highlights for Vanchem
(100 per cent basis)1
Description
Chemicals
Flake
FeV
Total production
Unit
mtV1
mtV1
mtV1
mtV1
Weighted average production cash
cost(C1)2
US$/kgV
Weighted average total cash cost(C1)3 US$/kgV
2020
137
418
434
990
22.4
29.9
1. mtV = metric tonnes of vanadium.
2.
3.
Includes direct costs of production. Excludes depreciation,
royalties, movements in finished goods inventories and selling,
general & administrative expenses.
Includes direct costs of production, selling, general &
administrative expenses and cash outflows on sustaining capital
and growth capital. Excludes depreciation, movements in finished
goods inventories and sales commissions.
2020 capital expenditure
Sustaining and critical capital expenditure required for
maintaining and sustaining Vanchem was US$0.2 million
and US$3 million of environmental capital.
Refurbishment programme
In 2020 the Company completed a preliminary
desktop scoping study on a three-phase refurbishment
programme for the entire plant to achieve a steady-state
production run-rate of 4,200 mtVp.a., fully utilising a
three-kiln configuration. In Phase I of the refurbishment
programme, Vanchem’s production is expected to
increase from 1,100 mtV to a run rate of 2,600 mtV by the
end of 2022, supported by the commissioning of Kiln 3
and associated downstream expansions.
Vanchem has three roasting kilns of which Kiln 3’s holds
similar properties to that of Vametco Kiln. It has a length of
Annual Report and Financial Results 2020 | Bushveld Minerals
41
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Details of Operating Assets and Operational Review continued
90 metres and 4.0m in diameter. In addition, Kiln 3 covers
50 per cent of Vanchem’s installed capacity, with Kiln 2 and
Kiln 1 at 25 per cent respectively. More details of the ramp-up
profile and capital expenditure plans will be provided once
the technical studies are completed in Q4 2021.
approximately 65 kilometres west of the provincial capital,
Polokwane. The project includes one of the world’s
largest primary vanadium resources, with a weighted
average grade of 1.4 per cent V2O5 in-whole rock and
1.75 per cent V2O5 in-magnetite.
2021 outlook and capital expenditure
Due to delays in securing steel supplies for the
refurbishment of Kiln 3 feed-end building, production
has been revised to between 1,100 mtV and 1,200 mtV,
previously, between 1,400 mtV and 1,500 mtV. Production
cash cost (C1) has been revised to between US$30.3/kgV
and US$31.1/kgV (ZAR434/kgV and ZAR444/kgV)
previously, between US$26.20/kgV and US$26.70/kgV
(ZAR419/kgV and ZAR427/kg). Accordingly, due to the
delay, the capital expenditure for the year associated with
the kiln 3 refurbishment has been revised to US$11.3 million,
previously US$15.7 million with most of the cost being
ZAR-denominated.
Brits
The Brits project hosts high-grade vanadium
mineralisation in several magnetite layers. The
mineralisation, which is outcropping, is a continuation
of the Vametco strike. The project offers a potential
extension of Vametco’s life of mine and a cheap source
of near-surface ore for the Vametco plant. Drilling
has shown lower seam weighted average grades of
0.6 per cent V2O5 in-whole rock and 1.6 per cent V2O5
in-magnetite, which are among the highest in the world.
A Competent Person’s Report (“CPR”) was published in
January 2020. Brits has the potential to provide additional
feed tonnage for Vametco and, if required, concentrate
feed for the Vanchem plant.
The Company’s interest in the asset ranges between
51 per cent and 74 per cent through three different
companies, one of which is Caber Trade Mining and
Invest 1 (Pty) Ltd (“Caber Trade”), the mining right applicant,
in which the Company holds an interest of 51 per cent.
The Caber Trade mining right application was refused
by the Department of Mineral Resources and Energy
(“DMRE”) in 2020, since it did not fulfil certain conditions
set out in the 2012 letter of acceptance. Caber Trade has
subsequently lodged an appeal against the decision, on the
grounds that the process followed in the refusal decision
was administratively flawed. The appeal process is ongoing
and we await the final decision of the DMRE.
The Caber Trade properties were not included in the CPR,
therefore the refusal of the mining right therefore has no
impact on the mineral resource statement.
Mokopane
Mokopane is located on the central portion of the
northern limb of the Bushveld Complex. The project
is in the Mokopane District of Limpopo Province,
Licensing
On 29 January 2020, the DMRE executed a 30-year
mining right in favour of the Company’s subsidiary,
Pamish Investments No. 39 (Pty) Ltd (“Pamish”), over
five farms: Vogelstruisfontein 765 LR; Vriesland 781 LR;
Vliegekraal 783 LR; Schoonoord 786 LR; and Bellevue
808 LR. The Mining Right required Pamish to commence
mining activities, including in-situ activities associated
with the Definitive Feasibility Study (“DFS”) by end of
January 2021. The COVID-19 pandemic resulted in a
significant delay in the commencement of the DFS and
the necessary engagement with local communities
required to finalise Land Use arrangements and,
consequently, this deadline was not met. Application to
the DMRE for an extension of 18 months to commence
mining activities has been submitted. Engagement has
begun with communities to reach agreement for access
to the project areas and secure a Land Use Arrangement.
Ownership
While the Mokopane mining right is subject to Mining
Charter II regulations, the Company is committed to
adopting Mining Charter III regulations in respect of host
community and employee shareholding requirements. In
accordance with Mining Charter III, a free-carried interest of
five per cent of the equity in Pamish will, in due course, be
transferred by the existing shareholders (Bushveld Minerals
and Izingwe Capital (Pty) Ltd) to the Bakenberg Community
Trust, a trust established for the benefit of the local
communities. Bushveld Minerals’ interest in the Mokopane
Project will accordingly reduce from 64 per cent to 60.8 per
cent, while Izingwe’s shareholding will reduce from 36 per
cent to 34.2 per cent. Pamish has further committed to
allocate an additional five per cent to an Employee Share
Ownership Participation Scheme once the mine is
operational, which will result in Bushveld Minerals ultimately
holding 57.6 per cent and Izingwe 32.4 per cent.
Geology & resources
The Mokopane deposit is a layered orebody along a
5.5 kilometre north-south strike, dipping at between
18 and 22 degrees west. The project comprises three
adjacent and parallel magnetite layers, namely the
Main Magnetite Layer (“MML”), the MML-Hanging Wall
(“MML-HW”) layer and the AB Zone. Its 298 Mt (JORC)
resources and reserves have grades ranging from
1.6 per cent to over 2.0 per cent V2O5 as follows:
• MML: 52 Mt @ 1.48 per cent V2O5 (1.6-1.8 per cent
V2O5 in-magnetite).
• MML-HW & Parting: 233 Mt @ 0.8 per cent V2O5
(1.5-1.6 per cent V2O5 in-magnetite).
• AB Zone: 12 Mt @ 0.7 per cent V2O5 (greater than 2.0
per cent V2O5 in-magnetite).
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Bushveld Minerals | Annual Report and Financial Results 2020
Outlook and capital expenditure
Mokopane is intended to be a primary source of
feedstock for Vanchem from its large mineral resource
base in the longer term. With the success of the short-to
medium-term initiatives associated with the Upper Seam
project at Vametco, which could supply Vanchem with
ore for an extended period and in line with the Group’s
capital projects sequencing, Bushveld is reviewing the
business case at Mokopane. This review will consider
commencing mining operations at a much-reduced level
(producing a dry magnetic separation ore product for
transport to Vanchem, which has milling and wet
magnetic separation production capacity). It would allow
for scaling up as necessary, as Vanchem’s production
capacity grows and other sources are phased out. This
analysis could, of necessity, affect the scope and nature
of the DFS which has been planned at Mokopane for the
commencement of mining activities.
Activities for 2021 include a ground water survey and
aerial surveys and compiling and submitting a water use
licence application. The MML at Mokopane would remain
the targeted deposit for short- to medium-term mining
operations at Mokopane. The revised business case
will not preclude expansion of ore production, including
the development of milling and concentrate facilities or
the option of developing Mokopane into a stand-alone
integrated mine and processing plant, producing 5,300
mtVp.a. of V2O5 product, as set out in the pre-feasibility
study completed in 2016.
Flexible and integrated asset-base with a diversified portfolio of products
Bushveld Minerals’ vertical integration strategy and production flexibility allows it to mine, process and manufacture
vanadium-based products in a single value chain, providing flexibility to source feedstock and maximise sales, depending
on product demand dynamics. This will provide a solid foundation for our business throughout the commodity cycle.
Ore
sources
Brits
deposit
Vametco
mine
Vanchem
stockpiles
3rd party
ore
Mokopane
Vametco
(crushing, screening, milling
and concentration)
Vanchem
(crushing, screening, milling
and concentration)
Magnetite concentrate
Vametco
(extraction, precipitation
and refining)
Vanchem
(extraction, precipitation
and refining)
Electrolyte
Plant
e
t
a
r
t
n
e
c
n
o
c
e
t
i
t
e
n
g
a
M
Final products
Nitrovan
AMV
MVO
V2O5
FeV
Chemical
V2O3
Current
Future
Electrolyte
Annual Report and Financial Results 2020 | Bushveld Minerals
Continues >
43
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Details of Operating Assets and Operational Review continued
Bushveld Energy
In 2020, Bushveld Energy started to reap the initial results
of its activities across three strategic pillars: vanadium
electrolyte supply, investment into Vanadium Redox Flow
Batteries (“VRFBs”), and Manufacturing and Deployment
of VRFBs in Africa.
Vanadium electrolyte manufacturing and leasing
The development of a 200 MWh vanadium electrolyte
production facility of approximately 1,100 mtV or 8M litres
of electrolyte to supply VRFBs, in partnership with the
Industrial Development Corporation (“IDC”), was
completed and implementation began. During the year,
the Bushveld Electrolyte Company (“BELCO”) was
established as the operational company for the
electrolyte business, with 55 per cent ownership by
Bushveld Energy and 45 per cent by the IDC. To ensure
closer alignment of all vanadium operating facilities,
BELCO will migrate to the Bushveld Vanadium platform in
2021, both operationally and in ownership, overseen by
Francois Naude, Bushveld’s Director of Operations. Sales
and marketing of electrolyte will also be carried out by
Bushveld Minerals.
BELCO’S Engineering, Procurement and Construction
(“EPC”) process started in Q2 2020. The engineering
phase was completed in Q4 2020. Procurement
commenced in Q1 2021, construction started in Q2 2021
and plant commissioning is expected to occur during
H2 2022.
Design modifications to improve safety, operations and
maintenance were identified during the engineering
phase that increased capital expenditure for construction
to ZAR217 million (approximately US$13.6 million) from
US$10 million originally at the concept stage. Bushveld’s
capital expenditure investment commitment for plant
construction has been amended to ZAR81 million
(approximately US$5.1 million) through to 2024. The
balance of ZAR136 million (approximately US$8.5 million)
will be funded through equity and debt, under the
agreement signed between Bushveld Energy and the IDC.
Bushveld is also committing ZAR24 million (US$1.5
million) for working capital during the first three years of
plant operations to support ramp-up.
Bushveld Energy continued to innovate beyond pure
electrolyte sales, by establishing the Vanadium Electrolyte
Rental Limited (“VERL”) company with AIM-listed Invinity
Energy Systems (“Invinity“). In 2020, VERL signed a rental
contract in the United Kingdom with Pivot Power, part of
EDF Renewables. Under this contract, VERL will own the
electrolyte in Pivot Power’s 5 MWh flow battery and rent it
to Pivot Power for 10 years.
Partnering with VRFB Original Equipment
Manufacturers
During the year, Bushveld Energy’s strategy of supporting
and collaborating with global VRFB manufacturers
delivered results.
The VRFB Original Equipment Manufacturers (“OEM”)
partnership strategy is designed to play a catalytic role in
mobilising third-party capital to assist VRFB manufacturers
to scale up their sales and capacity to meet the fast-
growing demand for long-duration energy storage
solutions. The strategy embraces the rental of vanadium
feedstock, vanadium electrolyte and electrolyte; VRFB
deployment; and investment in the OEMs.
In line with this strategy, Bushveld Energy has made
strategic equity investments and entered into joint venture
agreements across the vanadium and energy storage
value chain. Two significant investments were in Invinity
and Cellcube (Enerox GmbH).
Invinity was relisted on AIM on 1 April 2020 after the
merger of Canada/US-based Avalon Battery Corporation
with AIM-listed redT energy plc (“redT”). Bushveld’s initial
interest in Invinity was 8.71 per cent. Between its listing
and the end of 2020, Invinity’s share price increased by
over 300 per cent, reflecting the build-up of its order
pipeline to 18.6 MWh. It was able to raise over GBP33
million in follow-on funding in 2020, in addition to the
initial US$5 million investment from Bushveld.
Bushveld Energy has since sold its stake in Invinity,
for which it received about US$13 million, a return
of approximately 160 per cent in just over one year.
The proceeds of the sale were used towards Bushveld
Energy’s 2021 projects, including its investment in
Cellcube. Bushveld Energy continues to support Invinity
and its management team and the two companies
collaborate on multiple areas of interest. Bushveld has
the right of first refusal to supply vanadium and vanadium
electrolyte to supply to systems sold by Invinity, up to the
second-year anniversary of the agreement.
Similarly, Bushveld Energy holds an indirect interest in
Cellcube of 25.25 per cent. In March and April 2021,
Bushveld contributed US$7.7 million of the US$30 million
of funding that Cellcube requires to scale up to 30 MW
(120 - 240 MWh) per annum of manufacturing capacity
and sales by 2022. This will enable it to capitalise on
a strong pipeline of available projects and future
manufacturing expansion.
As with Invinity, Bushveld Energy is playing a catalytic role
in supporting the growth of Cellcube, with most of the
capital coming from other investors.
44
Bushveld Minerals | Annual Report and Financial Results 2020
The timing of the investments has been opportune, given
the acceleration of the energy transition, increased need
for clean energy technologies and massive capital
migration into companies developing and deploying such
technology in 2020 and 2021.
Deployment of VRFBs
The hybrid mini-grid project at the Vametco vanadium
mine progressed in 2020, despite significant disruptions
due to the COVID-19 pandemic in South Africa. The
project was increased to 3.5 MW of solar PV generation
and 4 MWh of VRFB energy storage to incorporate new
regulatory permissions. It is part of Bushveld’s strategy to
demonstrate both the superior technical merits of
long-duration VRFB systems when paired with renewable
energy and provide a commercial return to the
Company’s shareholders. It will also use locally-mined
and beneficiated vanadium, showing how VRFB energy
solutions can create greater local value for South Africa
than any other storage technology.
The hybrid mini-grid project will supply just under 10 per
cent of Vametco’s electrical energy consumption at any
one time, and will demonstrate the technical and
commercial capability of hybrid mini-grids using solar PV
and VRFB technology. Technically, the system will be able
to operate independently or jointly, either as a standalone
system, or as a fully-functional mini-grid installation.
In addition, the hybrid mini-grid project will contribute
towards reducing the carbon footprint of Bushveld’s
mining and processing operations. It will cut CO2
emissions by more than 5,700 metric tonnes per year
(and nearly 114,000 tonnes of CO2 over the 20-year life
of the project). This will be a positive contribution towards
South Africa’s low-emission strategy and Bushveld
Minerals’ Environmental Social and Governance
objectives.
Bushveld Energy has received environmental
authorisation and awarded the EPC contract for the
construction of the mini-grid. Cellcube will supply the 1
MW/4 MWh VRFB using single-acid, sulphate-based
electrolyte for the project. An EPC will manage and
integrate the project, including 3.5 MW of solar PV.
The Company signed a memorandum of understanding
with Thebe Investment Corporation (“Thebe”), a South
African investment management company, as a strategic
equity partner in the development and funding of the
hybrid mini-grid project. Thebe will be active in the
development of the project going forward, including
assisting the Company in finalising the terms of the
external debt funding. The Vametco installation will be
one of the first solar mini-grid projects with long-duration
storage financed off-balance sheet as an independent
power producer (“IPP”) in Africa.
As previously announced, at Eskom’s mini-grid facility in
Rosherville, South Africa, Bushveld Energy and the IDC
installed the country’s first VRFB in 2018, a peak 120 kW/
peak 450 kWh system using mixed acid electrolyte. In
June 2020, UniEnergy Technology (“UET”) which was the
VRFB provider, shifted to a new VRFB product, and was
no longer able to continue monitoring, maintaining and
servicing the system. A replacement system has been
supplied but not yet commissioned, because of
COVID-19 restrictions in China and South Africa.
2021 outlook and capital expenditure
Bushveld Energy’s 2021 capital expenditure was budgeted
at ZAR152 million (circa US$9.5 million). Most of this
budget will be covered by sales of existing Bushveld
Energy assets, such as the recent sale of the Company’s
holding in Invinity. Capital will be spent on the following
projects and initiatives:
• Supporting and funding the growth of Cellcube,
together with the other shareholders of EHL, to enable
it to capitalise on the rapidly-growing global energy
storage market.
• Bushveld’s share of BELCO’s procurement and
construction costs.
• Scaling up the electrolyte rental product (including
the rental contract with Pivot Power) in the UK through
the VERL, and the rental contract for the Vametco
mini-grid.
• Developing self-generation and storage solutions
for Bushveld Minerals’ operating facilities through
Bushveld Energy’s Deployment business, including
Bushveld’s share of the equity portion of financing for
the Vametco mini-grid project, which is structured as
an Independent Power Producer (“IPP”).
• Participating in large upcoming battery energy storage
tenders in South Africa. These include the World
Bank-funded BESS programme at Eskom, which
has already issued 827 MWh in tender opportunities.
Another is the 513 MW battery procurement
programme announced by the Independent Power
Programme Procurement Office. This tender is
expected to be issued in H2 2021 by the DMRE.
Other non-core interests
Additional investments in coal, coal-to-power
and tin
Coal – Lemur Holdings
Lemur Holdings (“Lemur”), a wholly-owned subsidiary
of Bushveld Minerals, is focused on coal energy projects.
Its flagship project is the Imaloto coal-to-power project in
southwest Madagascar, which consists of four exploration
permits and one mining and exploitation permit, covering
a total area of about 81.25 square kilometres.
Annual Report and Financial Results 2020 | Bushveld Minerals
Continues >
45
Financial StatementsSupplementary InformationGovernanceBusiness Overview Details of Operating Assets and Operational Review continued
Imaloto is an integrated coal-fired power project. It
includes a 136 Mt coal mine, a 60 MW power plant and
a new transmission line stretching over 250 kilometres.
It is the only coal-to-power solution being developed in
Madagascar. The power plant is scalable from the current
planned 30 MW to 60 MW and the transmission line is
expandable up to 500 kilometres.
The project has a total of 136 Mt JORC-compliant mineral
resources, of which 92 Mt is in the measured and indicated
category. In addition to a fully-executed mining exploitation
licence, Lemur has two exploration permits covering a
combined 87.5 square kilometres in close proximity to the
Imaloto Power Project.
Imaloto is perfectly-positioned to address Madagascar’s
persistent power supply challenges, particularly in
its least-developed but mineral-rich southern region.
The southern region currently does not have a power
grid and is almost entirely powered by isolated generators.
In addition to substantially increasing the generation
capacity in Madagascar, the initial 60 MW capacity of
the Imaloto Power Project will form the basis for a power
grid for the southern region.
The Imaloto power station will be located next to the
coal mine, providing a captive market for the mine’s
production and unlocking the intrinsic value in the
underlying project.
This project is at an advanced stage. The feasibility studies
for both the power plant and the transmission line were
completed by Sinohydro, following a technical co-
operation agreement signed in 2017.
Negotiations with the contractors for the EPC of the
power station and transmission line are ongoing.
However, final sign-off of EPC agreements has been
delayed until site visits by contractors take place.
Lemur remains in discussions with potential strategic
partners and the government of Madagascar on the
implementation of the project.
The PQ Iron & Titanium and PQ Phosphate
Projects
The PQ Iron & Titanium Project is a multi-commodity
project, located 45 kilometres north-northwest of the
town of Mokopane in Limpopo Province, South Africa.
The Project has a JORC-compliant Inferred and Indicated
Mineral Resource of 955 Mt, with an average grade of
33.7 per cent Fe and significant TiO₂ (over 18 per cent
TiO₂ in-magnetite concentrates). The project boasts
some of the highest in-magnetite grades of titanium in
the world and could be developed as a titanium and pig
iron project in the future. No further work is planned on
the project at this stage.
The PQ Phosphate Project resource lies immediately
above the iron ore and titanium resource of the PQ
Project. The Company reported in June 2014 a maiden
phosphate resource statement for the PQ deposit of 442
Mt, with average phosphate grades of 3.6 per cent P₂O₅.
Although the grades are low, the PQ Phosphate deposit
is in the immediate hanging wall of the PQ Project and
would be mined concurrently with the stripping of the
latter. Of particular interest is that laboratory-scale test
work has shown that 37 per cent P₂O₅ concentrate grades
are achievable from this deposit.
The Imaloto project has a full mining right for the coal
mine as well as a 30-year Independent Power Producer
concession from the government of Madagascar. Lemur
has also concluded a 30-year Power Purchase Agreement
for an initial 25 MW from JIRAMA, the state-owned utility.
Both projects are based on the same licence area as the
Mokopane Vanadium Project, where there is a mining
right held by Pamish Investments No. 39 (Pty) Ltd
(“Pamish”). Therefore, all shareholding arrangements for
Mokopane Vanadium Project apply to the PQ Iron Ore,
Titanium & Phosphate Projects.
Lemur appointed Bara Consulting to undertake the
Definitive Feasibility Study (“DFS”) for its Imaloto coal mine
in the first quarter of 2020. The DFS is currently in final
draft form and ready for sign-off, subject to a site visit by
the Competent Person.
Most Social and Environmental Impact Assessment
(“SEIA”) studies have been completed and submission to
the Ministry of the Environment is expected to occur in
the second half of 2021.
During the fourth quarter of 2020, Lemur appointed the
Development Bank of Southern Africa as its Mandated
Lead Arranger (“MLA”) for the construction capital funding
of up to US$155 million for the Imaloto Power Project.
Progress to date has been limited to understanding
the economic parameters necessary for success and
how these projects can be configured in line with the
Company’s approach towards developing projects.
No further work is planned on these projects while the
Company advances its vanadium platform.
AfriTin Mining Limited
The Company holds a 4.76 per cent shareholding in
AIM-listed AfriTin Mining Limited, an African mining
company with a portfolio of near-production tin assets
in Namibia and South Africa. It was demerged from
Bushveld Minerals in November 2017.
46
Bushveld Minerals | Annual Report and Financial Results 2020
Principal Risks
Principal Risks
1. Global Pandemic
Nature of Risk
Mitigating Action
Risk of COVID–19 infections and
emerging variants
• Strict enforcement and monitoring of COVID-19 government
regulations by COVID-19 Task Team.
• Counter measures in place with local medical staff and clinics
for support and further testing. Quarantine facilities in place
at local establishments.
• Procurement of COVID-19 vaccinations under consideration
in conjunction with Minerals Council South Africa.
2. Meeting Production
Targets
Nature of Risk
Mitigating Action
Unplanned plant and equipment
breakdowns, causing production
delays
• Prioritised and revised plant and equipment maintenance
strategy in progress.
• Daily monitoring and proactive response to breakdowns.
• Emergency repairs and maintenance teams mobilised
and prioritised.
• Capital allocated for refurbishment and maintenance.
Unprotected strikes and community
protest action
• Pro-active stakeholder strategy in place resulting in frequent
consultations and engagement with union and communities.
• Addressing legacy and historical practices with organised labour
to avert strike action.
3. Funding of Working
Capital and Debt
Nature of Risk
Mitigating Action
Global market volatility affecting
demand and commodity prices
Volatile exchange rate
Rising costs of raw materials and
labour
Breach of debt covenants levels
• Managing our operations to the lowest cost levels possible.
• Commodity prices monitored on a regular basis.
• Global vanadium market movements monitored on a daily basis.
• Hedging considered as a mitigating strategy, should prices dip
below specific thresholds.
• Current and forecast exchange rates monitored daily.
• Hedging considered as a mitigating strategy, should exchange
rates dip below specific thresholds.
• Cost containment measures in place and prioritisation of expenditure.
• Robust procurement processes ensure price competitiveness.
• Avoidance of wasteful and unnecessary expenditure.
•
Implementation of new operating model supplemented by S189
process, to remove redundancies and duplication.
• Regular monitoring of working capital requirements and
expenditure in relation to breaching debt covenants.
• Regular communication with lenders.
• Taking proactive corrective measures ahead of potential covenant
breaches, including proactively considering alternate funding
options and/or covenant waivers.
Annual Report and Financial Results 2020 | Bushveld Minerals
47
Financial StatementsSupplementary InformationGovernanceBusiness Overview Principal Risks continued
4. Increased Safety and
Health Incidents
Nature of Risk
Mitigating Action
Compliance with safety and
health processes and protocols
• Rigorous safety and health protocols implemented and observed,
leading to zero fatalities.
• Regular health checks performed.
Insufficient plant maintenance
contributes to an unsafe workplace
and increased safety incidents.
Increased safety awareness and campaigns.
•
• Regular safety briefings held.
• Safety protocols strictly maintained and adhered to.
Row
5. Plant and Infrastructure
Nature of Risk
Mitigating Action
Plant and infrastructure
maintenance backlog
• Capital allocated for refurbishment and maintenance of plant
and equipment.
• Planned annual plant shutdown executed to conduct routine
maintenance and repairs.
Reactive asset maintenance and
scheduling
• Asset management strategy being developed.
• Asset register in place.
• Senior appointment of asset management resource concluded.
6. Licence to Operate
Nature of Risk
Mitigating Action
Compliance with Mining Charter III
transitional plan
• Stakeholder engagement strategy in place.
• Recruitment of transformational specialist under consideration.
• Transformation Committee formed (represented by Group Heads)
to monitor compliance with Mining Charter III and Black
Economic Empowerment (“BEE”) legislation.
• Regular engagement with DMRE relating to approval of Social and
Labour Plan.
Compliance with Broad-Based
Black Economic Empowerment
(“BBBEE”) Act
• Preferential procurement policy developed.
• Supplier and enterprise development and preferential procurement
initiatives prioritised.
• External supplier contracted to perform ‘fronting’ validation service.
Security of tenure as lessee affected
due to community factionalism
• Regular and continuous engagement with surrounding
communities and stakeholder groups.
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Bushveld Minerals | Annual Report and Financial Results 2020
7. Environment
Nature of Risk
Mitigating Action
Compliance with Environmental
legislation
• Comprehensive gap analysis performed by external consultants on
state of Environmental Social and Governance (“ESG”) standards,
resulting in remediation action plan, which is progressing.
• Kiln off-gas system has been installed and commissioned.
• Capital budgeted for 2021 to address dam water capacity and
mitigate risks.
• Regular monitoring and management intervention in key risk
areas.
• Rehabilitation guarantees in place to minimise and mitigate
environmental effects of mining.
Ground Water Pollution
• Ground water pollution modelling conducted at all operations and
managed accordingly.
8. Electricity Supply
Nature of Risk
Mitigating Action
Unstable electricity supply from
local Municipality, particularly at
Vanchem
• Engagement with Eskom for direct supply.
• Stand-by generators and countermeasures in place in the event of
load-shedding.
• Developing self-generation solutions for our operations.
9. Sales and Marketing
Nature of Risk
Mitigating Action
Growing trade protectionist policies
in key markets
• Developing a broad global market strategy that provides flexibility
• Close and regular monitoring of legislation.
Disrupted logistics supply chain due
to global COVID-19 restrictions.
• Operational flexibility producing a wide variety of Vanadium
products.
• Adjusting our inventory management levels at various global
warehouses.
10. Environmental, Social and Governance
Nature of Risk
Mitigating Action
Compliance with ESG
Lack of governance frameworks
and policies
• ESG gap analysis performed.
• ESG framework being developed.
• Key compliance obligations prioritised.
• Regular monitoring of compliance.
• Formalisation and implementation of Enterprise Risk
Management.
• Policies in place to combat bribery and corruption.
• Governance framework being developed.
•
Internal audit function established
Annual Report and Financial Results 2020 | Bushveld Minerals
49
Financial StatementsSupplementary InformationGovernanceBusiness Overview COVID-19 Response
Bushveld Minerals’
COVID-19 Response
In the year under review, the impact of COVID-19 on the
business required the Group to put in place effective
health and safety protocols. It had to adapt the way that
support is provided to employees and ensure business
continuity. From the start of the pandemic, the Group has
been operating in a precarious environment. The Group
continuously adapted its response to ensure that rising
issues were adequately addressed across all units of its
business. Over and above the measures outlined in this
document, management worked to ensure the recovery
and resilience of the business post the lockdown period.
In 2020, the Group did not report any COVID-19-related
deaths at its operations. However during the second
wave, which intensified in January 2021, Vametco
reported two COVID-19 related deaths, despite the strict
safety measures that were in place. During the lockdown
in 2020,the Group was able to maintain some scaled-
down operations at Vametco, while Vanchem was on
care and maintenance. While financial-stress testing
showed the need to strengthen the balance sheet, it did
not suggest the business was in distress. The Group is
making continuous efforts to adapt to an agile remote
working set-up.
In order to manage any potential outbreak in the
workplace, a COVID-19 task team was established. The
main purpose of the task team are to assist the Group to
navigate through this precarious period, ensure business
continuity and focus, and instil confidence and steadiness
across our ecosystem.
This committee addresses some of the following issues:
• Formulating and implementing health and safety
protocols; and
• Formulating and driving the implementation of
business continuity plans.
Key Interventions
Employees
The Group’s immediate focus was to ensure the safety of
employees and maintain safety in the work environment.
At the same time, it had to protect the livelihoods of
employees by considering the financial impact of the
pandemic.
The Human Resource stream focused on proactively
managing the workforce, with its first priority being the
most vulnerable staff. Measures were put in place to
protect business continuity, with protocols to enable the
organisation to adapt to the pandemic.
IT intervention
Another key intervention was to ensure that the Group’s
Information Technology (“IT”) teams assessed and
addressed systems and cyber vulnerabilities, while
enabling employees in all areas of the business to work
smoothly.
The key IT interventions were in these areas:
• Security awareness;
•
Identity and access management, allowing for unusual
and privileged access;
• Data loss prevention; and
• Remote access support.
Communication
The task of the communication stream was to pro-
actively engage the Group’s employees and stakeholders.
The team implemented an enhanced workforce
engagement plan to maintain morale while normal
contact was disrupted. The Group sought to
communicate early and often and ensure that messages
were transparent, simple and clear. Employees were
provided with credible and factual information on
COVID-19 prevention.
Externally, the Group collaborated with local government
and other companies in the host communities to reduce
the impact on society. The Vametco team continues to
offer water to communities with access points outside its
operations and has donated sanitisers to community clinics.
Suppliers
COVID-19 is prompting companies to revisit their global
supply chain strategies and accelerate the adoption of
Digital Supply Network models and capabilities. However,
immediate actions are needed to respond to the
short-term challenge.
The business has reviewed these key areas:
• Risk of supplier disruptions.
• Location of suppliers and origin of supply.
• Ensuring transporters are available and classified
as essential.
• Whether suppliers are classified as essential.
• Stock holdings and storage restrictions.
• Ranking of critical materials and putting contingency
plans in place for the most critical items.
Identifying alternative suppliers.
•
• Ongoing revision of contingency measures.
• Continuous collaboration with essential suppliers.
The team considered not only the changing nature of
how and where work gets done, but also how to maintain
optimal collaboration between physically-dispersed teams.
We continue to assess the environment as it changes
and take guidance from the industry on the identified
focus areas.
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Bushveld Minerals | Annual Report and Financial Results 2020
Financial analysis
We undertook financial modelling to estimate the
impact of the shutdown under various lockdown length
scenarios. The financial modelling also considered
emerging consensus views on key parameters, such as
exchange rates and the vanadium price. In addition, the
financial modelling considered the impact on the Group’s
compliance with its covenants under the Nedbank term
debt financing to assess the risks of breaching those
covenants. Finally, the analysis considered the impact
of COVID-19 on the Group’s capital requirements. An
assessment of the Group’s capital expenditure was done,
and recommendations made on the previously-approved
capital expenditure programme.
Looking ahead
Since the lockdown, lessons learnt have been captured,
ensuring that Bushveld emerged stronger and more
prepared for the new normal. The business will remain
focused on ensuring several key indicators, including:
• Vanadium market and production scenarios: An
understanding of the vanadium demand and supply
dynamics post the pandemic.
• Agile way of working: Revising employment
arrangements to reflect the new normal.
• Risk Management: Crisis and resilience planning
to ensure business continuity.
• Financial resilience: Maintaining robust financial
forecasts and scenario planning. Stress-testing the
corporate model and capital structure.
• Digitisation: Considering a digitally-enabled
workplace in future, including for business processes
and back-office functions.
Annual Report and Financial Results 2020 | Bushveld Minerals
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Sustainability
Sustainability – Value
Beyond Compliance
Our employees
Peers in mining &
energy industries
Investors
Financial institutions
Government
Statutory bodies
OUR
STAKEHOLDERS
Communities
Customers
Media
Suppliers
Universities & research
institutions
Labour unions
Bushveld Minerals’ strategic intent of value beyond
compliance is anchored on the principle of creating
shared, long-lasting value for all its stakeholders.
The Group began to develop a sustainability strategy in
2020. The sustainability strategy focuses on Environment,
Social and Governance (“ESG”) principles. The Group will
integrate material ESG considerations into the decision-
making process, across the value chain. It will report
on material ESG Key Performance Indicators and
communicate a consistent message to stakeholders
on key ESG commitments.
The Group also started a process of developing the ESG
management system, which is developed in line with the
International Finance Corporation (“IFC”) Performance
Standards. It also incorporates the requirements of the
ISO 14001:2015 Environmental Management Systems
and ISO 45001:2018 Occupational Health and Safety
Management Systems to facilitate future alignment with
these standards and certification at an operational level.
Collectively, the ESG strategy and management system
will assist Bushveld and its operations to comply with
relevant authorisations, legal requirements, the IFC’s
Environmental and Social Performance Standards
and other obligations in a systematic and structured
framework. The Group’s sustainability strategy and ESG
management system will be concluded in Q4 2021.
1. Health and safety
Bushveld Minerals recognises that the well-being of
employees and communities is key for its long-term
success, and we intend to build on the foundations already
in place at Vametco and Vanchem.
The approach is risk-based, starting with a Baseline Risk
Assessment, moving to an Issue-based Risk Assessment,
and then to a Continuous Risk Assessment, which
includes lagging and leading indicators.
Our guiding principle is zero tolerance for deviations from
safety regulations, whether by our own employees or
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Bushveld Minerals | Annual Report and Financial Results 2020
contractors. We have instilled a work culture based on
behavioural management that views health and safety as
of paramount importance. This was achieved through
various safety campaigns implemented in 2020.
Training is directed at making sure our employees not
only work responsibly for their own well-being, but also
look out for their colleagues’ health and safety. Our safety
drive entails visible leadership and behavioural change
coaching, inspections and training programmes that are
conducted on site by both management and employees.
We believe that measuring ourselves against industry-
leading practices and implementing good health and
safety systems and conditions will keep us in the forefront
of the industry.
Bushveld Vametco’s safety performance for 2020 was
zero fatalities and zero lost-time injuries. The Department
of Mineral Resources’ Mine Health and Safety inspectors
paid 15 visits to the mine and issued one stoppage in
terms of the Mine Health and Safety Act’s Section 54.
All findings were corrected.
2. Environmental management
Bushveld Minerals’ environmental strategy is centred on
compliance with various environmental laws and
regulations (national, provincial and local) and alignment
with international standards, including the IFC’s
environmental and social performance standards and the
ISO 14001:2015 Environmental Management system.
Annual environmental performance assessment audits
are conducted by an external environmental specialist
and by regulatory authorities. They consider the Group’s
compliance with the conditions of the Environmental
Management Plan (“EMP”) and the mine’s environmental
authorisations. Environmental legal compliance audits
were also performed by an independent specialist. No
major findings were reported from any of these audits
and no environmental penalties were imposed by the
regulatory authorities.
Vametco
Vametco is embarking on an Environmental Impact
Assessment (“EIA”) for its expansion project. The updated
EIA will enable it to develop a comprehensive EMP.
Vametco plans to start the process of developing and
implementing the ISO 14001:2015 Environmental
Management System.
Water management
Water management is integral to the Group’s licence to
operate, so compliance with all the requirements of the
Group’s Water Use Licence (“WUL”) is a priority. Vametco
is in the process of amending its Water Use Licence
to include activities under the third phase expansion.
In 2020, there were two compliance audits by the
competent authority, the Department of Water and
Sanitation. Action plans were developed and
communicated to the department to address the findings.
The outstanding issues will be addressed through the
amendment to the WUL, which is in progress.
Vametco also conducted all required internal and external
Integrated Water Use Licence (“IWUL”) audits in 2020.
Based on those audits, action plans were developed to
improve water management.
Vametco follows an ongoing surface and groundwater
monitoring programme. Sampling and analysis of
various chemical constituents and groundwater level
measurements are conducted on a monthly and quarterly
basis, as required by the IWUL and South African National
Standards drinking water quality standards, to ensure
effective management of the water resources on site and
in surrounding areas. The implementation of best practice
measures for effective clean and dirty water separation,
optimised recycling of used water and water balance.
The annual water allocation under Vametco Alloys’
WUL is 1,624,811 m3 from various sources (boreholes,
open pit seepage and third-party water supplied by the
Hartbeespoort Irrigation Water Board (Canal). In 2019,
Vametco’s water withdrawals were 77 per cent of its total
allocation (1,251,114 m3), resulting in a 23 per cent saving
(373,697 m3). In 2020, Vametco increased its water
withdrawals by 6 per cent compared with the 2019
utilisation. That brought its total extraction to 82 per cent
(1,324,302 m3) of its allocation.
Waste Management
Vametco is in the process of amending its Waste
Management Licence, which will be authorised by the
DMRE as part of the environmental authorisation for the
entire operation. With the advent of COVID-19, some
non-essential activities were halted, which affected waste
management services. Total waste removed from site
declined by 31 per cent compared with 2019. A total of
599 tons of waste was removed at Vametco in 2020,
compared with 871 tons removed in 2019. Recyclable
waste removed in 2020 (463 tons) declined by 33 per cent
(233 tons) against 2019 (696 tons). Waste disposed off-site
into landfills (136 tons) declined by 22 per cent (39 tons)
compared with 2019 (175 tons).
An independent external specialist conducted audits on
the Factor of Safety (“FoS”) of the Group’s mineral waste
disposal, particularly the tailings dam and magnetite
tailings storage facilities. The report is expected in 2021.
Air quality and environmental dust fall-out
The Bojanala District Municipality granted Vametco an
Atmospheric Emission Licence in September 2020, in line
with Minimum Emission Standards valid for 5 years. The
Group is dedicated to ensuring that there is compliance with
the conditions of the licence This includes monitoring our
stacks emissions and implementing management plans if
they exceed the designated limits. Capital projects, including
the installation of off-gas scrubber systems and bag house
systems, demonstrate our commitment to keep our
emissions within standards. The effectiveness of these
measures is evident in the results of stack emissions
monitoring conducted by independent third-party specialists.
Vametco developed and is implementing a dust
management plan to ensure that the operation remains
within its compliance limits of below 1,200 mg/m2 per
day, in line with South African National Dust Control
Regulations, 2013.
Annual Report and Financial Results 2020 | Bushveld Minerals
53
Financial StatementsSupplementary InformationGovernanceBusiness Overview Sustainability continued
Biodiversity Management
Vametco conducts annual plant assessments as part of
the biodiversity impact assessment. This includes an
Invader Species Eradication Programme, in which people
from the local community are employed. Vegetation and
grass are planted in areas meeting final rehabilitation
criteria during summer. Updated plant and animal
specialist studies were conducted as part of the EIA.
Mine rehabilitation and environmental liabilities
A closure cost review analysis for 2020 was conducted
by a third-party consulting firm. No material change was
reported compared with 2019. Concurrent rehabilitation
is practised wherever possible to minimize environmental
impacts during operation and reduce the final
environmental liability. Vametco is finalising the Financial
Rehabilitation for Closure in terms of the NEMA Financial
Provisioning Regulations of 2015.
Quality Management System (“QMS”):
ISO 9001:2015
Vametco has maintained its ISO 9001 certification. During
the annual assessment audit conducted in 2020 by the
certification body, Bureau Veritas (“BV”), the organisation
demonstrated that its quality management system fulfilled
the requirements of the standard. No major findings were
raised and all minor findings were addressed.
Vanchem
Occupational Health and Safety
One of Vanchem’s priorities is to provide a safe and
healthy workplace for all its employees, contractors,
suppliers, and visitors.
One of the first priorities following the acquisition of
Vanchem was to update the Occupational Health and
Safety Policy and Procedures. The updated policy and
procedures are meant to provide the leadership with the
resources to ensure all workers go home safe and well
every day. The procedures are also designed to ensure a
systematic approach is taken to anticipating, identifying,
evaluating, controlling, monitoring, and managing
occupational health and safety risks to make them “as low
as reasonably practicable”.
The Group is developing the system in line with the ISO
45001: 2018 Occupational Health and Safety Management
System.
Environment
Since acquiring Vanchem, independent consultants were
commissioned to conduct various EIAs to evaluate the
current status quo on the environmental impacts and risks
of our operation. For projects which need to progress to
construction and operation, the EIA forms the basis of the
site-specific environmental management system (“EMS”).
The system is developed in line with ISO 14 001: 2015
Environmental Management System.
In 2020, Vanchem started to implement the ISO 9001:
2015 Quality Management System. The first-stage audit
is expected in October 2021 and the certification audit is
expected to take place in March 2022.
Bushveld Energy
Bushveld Energy is actively driving the adoption of
Vanadium Redox Flow Batteries (“VRFBs”) in the global
energy storage industry. Bushveld Energy’s activities
stretch over three key areas: electrolyte production;
battery investment and manufacturing; and project
development.
Bushveld Energy is developing a 1 MW mini-grid at Vametco,
consisting of 3.5 MW of solar photovoltaics and 1 MW/4
MWh of VRFBs. The additional benefit of this project for
Bushveld Minerals is that it is expected to contribute towards
the reduction of the Company’s carbon gas emissions
through using renewable solar energy and storage.
Bushveld Energy, together with the Group’s Operations
team, is investigating options to further increase sourcing
of renewable energy at all of Bushveld’s facilities to further
minimise the carbon footprint.
VRFBs are designed to last for 20 years or more, so fewer
batteries need to be deployed than would be the case for
lithium batteries. The unique technical design allows full
re-usability of the chemical electrolyte in the battery,
once the electrical and mechanical components wear
out. That means that even when the battery reaches
the end of its 20-year lifespan, the electrolyte can be
redeployed into another battery. The electrolyte can
be easily reprocessed by existing vanadium processing
facilities, at minimal cost, into products such as
ferrovanadium and vanadium-pentoxide for use in
high-strength steels and specialty alloys and chemicals.
Vanadium electrolyte is primarily made of water, allowing
for easier processing than from other compound states.
Only one mineral is extracted from vanadium electrolyte,
whereas lithium, nickel, manganate, cobalt, etc. need to
be separated out in a lithium battery. These opportunities
may make vanadium the most circular economy-friendly
mineral.
3. Socio-Economic Development
In 2020, Bushveld Minerals was not immune to the global
economic challenges brought on by the impact of
COVID-19. The pandemic has not only negatively
impacted many livelihoods globally, but in the case of
South Africa, the impact of COVID-19 has worsened
socio-economic challenges that pre-dated the pandemic.
As a result, the host communities where the operations of
Bushveld Minerals are located are currently experiencing
even higher levels of unemployment, poverty and
inequality. Communities have increased expectations of
the mining sector and of other large employers in their
areas. This will undoubtedly continue to put pressure on
their relationship with the Bushveld operations at
Vametco and Vanchem.
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Bushveld Minerals | Annual Report and Financial Results 2020
6
Removal of electrolyte for
recycling after
VRFB end of life
6
5
5
Removal and
redeployment of
electrolyte into other
VRFBs
4
4
Deployment into energy
storage VRFBs (through a
rental model)
1
2
3a
Production into
vanadium electrolyte
3a
3
1
Exploration
and mining
2
Processing into value-added
vanadium products –
Oxide – Ferrovanadium
3
Production into high
strength steels, speciality
alloys and speciality
chemicals
In 2020, the implementation of Corporate Social
Investment (“CSI“) projects for Bushveld Minerals was
impacted by the COVID-19 lockdown. However, a total of
over ZAR1.5 million was spent to support various social
initiatives around our operations that benefited our host
communities. The key areas that were impacted by this
spending were:
•
Improving infrastructure, using the services of local
SMMEs;
• Creating short-term job opportunities for unemployed
community members; and
• Raising COVID-19 awareness in the community.
Socio-economic Base Study
In October 2020, Bushveld Minerals commissioned a
socio-economic baseline studies among local
communities around its Vametco Alloys and Vanchem
operations.
The results of the study will be used to identify and
develop sustainable programmes that will help to address
the socio-economic challenges within Bushveld’s host
communities. The households surveyed were located in
the identified host communities of Madibeng and
Emalahleni. The results of the study, have provided key
indicators of where efforts should be focused in future.
Bushveld aims to build sustainable relationships with its
host communities by partnering with them to implement
sustainable development programmes.
Key Indicators
The baseline study focused on key socio-economic
indicators related to population and demographics,
community well-being, employment and income,
employability, access to infrastructure and related public
services, economic development and the impact of
COVID-19.
Although there were some differences in population
and demographics within the Madibeng and Emalahleni
communities, there were also some clear similarities that
are worth highlighting.
Annual Report and Financial Results 2020 | Bushveld Minerals
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Sustainability continued
Below is a summary of key findings that were common to
both Vametco and Vanchem.
Income and employment
Key Findings
• High unemployment rate – youth
unemployment is over 30 per cent in both
communities
• Community believes that Bushveld needs to
employ more people from the local community
• Community believes Bushveld needs to
commit to train more local people to be
employable in its operations
Community Recommendations
• Focus on employability and income generation,
not only on the procurement opportunities
• Skills development to be prioritised so that
beneficiaries develop relevant and mobile skills
and are not dependent strictly on Bushveld
Community well-being
Economic development
Key Findings
• Community believes Bushveld needs to
develop and contract with more local
businesses
Community Recommendations
•
Implement a procurement policy that benefits
local businesses
• Support SMME development
Impact of COVID-19
Key Findings
• Worsening unemployment, as livelihoods
were impacted in 2020 lockdowns
• Lack of opportunities for SMMEs due to
decrease in business activity across sectors
Community Recommendations
• Continue to respond to COVID-19 needs as
they arise
Key Findings
• There is a perception that the mining
sector is not having a positive impact
on the community
• There is insufficient reporting on progress on
the commitments already made to uplifting
the community
Community Recommendations
• Building capacity for an impactful SED
Programme
• Focus on programmes that have sustainable
benefits for communities
• Contribute to improving housing challenges
• Focus on environmental issues, such as
air quality
Access to infrastructure
& related public services
Key Findings
• There is increasing pressure on infrastructure
and public services
• Local municipalities are not able to keep up
with demand
• There is an expectation from community
members that the mining companies in their
area must contribute towards improving
infrastructure
Community Recommendations
• Bushveld needs to support local social
amenities
• Bushveld needs to support projects initiated
by the municipalities
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Bushveld Minerals | Annual Report and Financial Results 2020
Socio-economic development contributions:
human resources development
Human resources development (“HRD”) is one of the
Company’s important socio-economic goals. Bushveld
Minerals invests in developing the skills of its employees
and members of the host communities. The aim is to
improve the quality of life of workers and members of the
community, while increasing their labour mobility and
prospects of employment beyond Bushveld Minerals.
The HRD programmes include learnerships, internships,
bursaries, portable skills and Adult Education and Training
(“AET”). The HRD programmes and achievements in 2020
are described below.
1. Learnerships: Learnership programmes are offered to
both employees and non-employees. In 2020, there were
47 non-employee learners and five employee learners.
Trades taught included: Fitting, Fitting and Turning,
Electrical, Instrument Mechanician, Rigging, Boiler-making
and Diesel Mechanics.
2. Internships: Four community members were part of
the one-year internship programme studying in Analytical
Chemistry. Another seven community learners were on
a two-year internship programme, with two in Finance,
one in Geology; one in Electrical Engineering; one in
Analytical Chemistry and one in Chemical Engineering.
3. Bursaries: 35 bursaries were awarded. 69 per cent of
the bursary holders were females. Qualifications pursued
included Medicine, Accounting, Engineering, Information
Technology, Geology, Law, Education and Pharmacology.
4. Portable skills: Due to COVID-19 restrictions, the
business was unable to make an impact in this area. Training
sessions will resume once health and safety protocols allow.
5. AET: This is an accredited curriculum offered to
community members and employees to promote literacy.
It focuses on upgrading English communication skills and
numeracy. The curriculum ranges from pre-AET to level 4
(NQF1). In 2020, there were 29 learners from the
community and 16 employees on this course.
Socio-economic development contributions:
Labour Profile
Bushveld Minerals’ subsidiaries pay special attention to
sourcing labour from host municipalities, and this
contributes directly towards local socio-economic
development. The graphs below show Vametco’s and
Vanchem’s Labour Profiles.
Vametco’s Labour Profile (31 December 2020)
5%
5%
2% 1%
2% 1%
17%
17%
20%
20%
78%
78%
77%
5%
17%
2% 1%
20%
Vanchem’s Labour Profile
4%
6%
78%
77%
90%
Geographical area
6%
6%
Labour from within Madibeng
Local Municipality
4%
4%
Labour from outside Bojanala
District Municipality but from
within South African borders
77%
Labour from outside Madibeng
Local Municipality but from within
Bojanala District Municipality
Labour from outside the borders
of South Africa
90%
90%
Geographical area
Labour from within Emalahleni
Local Municipality
Labour from outside Emalahleni
Local Municipality but from within
Nkangala District Municipality
Labour from outside Nkangala
District Municipality but from
within South African borders
Labour from outside the borders
of South Africa
Annual Report and Financial Results 2020 | Bushveld Minerals
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Sustainability continued
Stakeholder Engagement
Bushveld Minerals has developed a Stakeholder
Engagement Strategy which forms the blueprint for
building relationships with stakeholders, including host
communities and local landowners. The stakeholder
engagement strategy was developed to enable Bushveld
Minerals to develop a collaborative relationship with
key stakeholders in support of its strategic objective –
to become a fully integrated vanadium company.
The stakeholder engagement strategy builds on
Bushveld’s strategic intention to identify key stakeholders
and their interests and requirements, to develop
appropriate engagement models. There were meaningful,
transparent, and honest engagements with stakeholders
in 2020.
Four key stakeholder engagement outcomes were set to
support Bushveld Minerals’ strategy:
• Socio-economic development, regulatory
compliance, and creation of value beyond compliance
in communities where we operate.
• Development of a strong South African vanadium
industry, including a broad base of stakeholders.
• Development of a policy and regulatory framework for
the battery energy storage systems industry, including
VRFBs, in the South African electricity market; and
• Expansion of VRFB deployments into the African
continent and exports of vanadium, electrolyte, and
the electrolyte rental product to key global markets
(US, UK/EU and China).
The country experienced the worst pandemic in over
100 years, accompanied by government measures to
curb infections. Without doubt, the national lockdown
and new compliance and safety regulations had a
negative impact on the original 2020 stakeholder
relations plan for face-to-face engagements. Engagement
has become virtual, which brings its own challenges.
Key highlights from our stakeholder relations activities
in 2020 include:
1. The commitment by the Office of the Premier of
the Eastern Cape to provide necessary support to
Bushveld Electrolyte Company’s investment in the
Eastern Cape.
2. The commitment by the Office of the Deputy Minister
of Finance in South Africa to provide necessary
support to Bushveld Minerals in championing local
beneficiation programs in the vanadium sector.
3. Bakenberg Traditional Council, Bakenberg Mining
Forum and Pamish resolved to engage further to
finalise all outstanding matters affecting the mine, such
as surface lease agreements, community shareholding,
and implementing the social and labour plan.
4. The Investment and Infrastructure Office in the
Presidency committed to provide the necessary
support to Bushveld Energy.
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Our People
Our People
Bushveld Minerals sees all its employees as long-
term strategic partners, sharing the common
objective of building a sustainable business for the
mutual benefit of all stakeholders.
Strategic Overview
In 2019, the Group introduced an integrated Human
Capital strategy that sought to advance our strategic
intent of having skilled and engaged employees who are
able to innovate and drive operational excellence. This
was centred on two strategic pillars; shared human capital
identity and an integrated employee experience. In 2020,
there was progress in the implementation of our priorities,
with key strategic milestones detailed below.
1. Developing a shared Human Capital Identity
• The Group has made great strides towards building
an integrated group approach to employee relations.
The Association of Mineworkers and Construction
Union (AMCU) was on-boarded at Bushveld Vanchem,
and a 12-month wage agreement signed.
• The Group has implemented a strategic control
operating model. This ensures that the executive team
participates in development and the implementation
of business unit strategies to consolidate the “Bushveld
Minerals Way” of operating and to maximise synergies
across the Group. As a result of applying this model,
Vanchem and Vametco’s operating structures were
fully aligned, and the service delivery models for all
support functions were reconfigured, namely:
- Finance, Audit and Risk;
- Human Capital;
- Community and Stakeholder engagement; and
- Safety, Health and Environment.
The restructure was followed by the ongoing process
of constructing the Bushveld Minerals Way which
incorporates the alignment of ways of work, systems
and processes across the Group to drive operational
excellence.
2. Cultivating a shared employee experience
Employee well-being
• COVID-19 was the true test of our ability to cultivate a
•
shared employee experience of well-being and
resilience.
In response, Bushveld introduced the Kaelo
programme, managed by a private employee wellness
provider, to support employees and their families. The
programme was selected for the versatile interventions
that it offered our employees during these difficult
times. Employees had access to psychological and
mental health assistance, financial and legal advice,
trauma counselling and more.
• A dynamic COVID-19 policy and protocols was put in
place with a focus on ‘Safety First’ and to allow a
variety of flexible work practices for different
categories of employees.
• This led to an effective response that included
identifying and protecting vulnerable employees,
introducing and administering special COVID-19 sick
leave, and reinforcing employee wellness
programmes, with a focus on the physical and mental
wellness of our employees and their families.
• We introduced remote working, where possible, and
leveraged technology to facilitate and adapt to new
ways of working. Where remote working was not
practical, for example on mining and processing sites,
operating procedures were modified to ensure social
distancing, mask wearing, and frequent hand washing
or sanitising.
People Management Practices
In 2020, a group-wide Competency Framework was
developed. It will form the foundation for the Group
Talent Framework. The first Group Talent Forum presided
over by the Group Chief Executive was convened in
the second half of the year. This is a management
governance forum that discusses and makes
recommendations on issues such as senior leadership
development, succession, senior talent pipeline oversight
and retention across the Group.
The Group performance and reward framework was
implemented at Vanchem. It has not been implemented yet
at Vametco due to legacy issues.
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Our People continued
2020 People Profile
Bushveld Minerals employees (race profile)
12%
2%
0.4%
1%
86%
African
Coloured
Indian
NSA
White
1. Diversity and Inclusion
The primary focus remains to acquire diverse and deep
leadership skills to help move the business to the next level
of growth. The Group’s aspirations for employment equity
include achieving value beyond compliance and improving
labour and community relations, with transformation and
diversity as a value driver across the business.
The ability to attract, integrate and retain high-calibre skills
and human capabilities remains at the top of the Group’s
human capital agenda. For this reason, there has been an
investment in time and resources to achieve best-practice
talent acquisition, while building a solid remuneration
and reward framework aimed at rewarding exceptional
performance and retaining critical skills.
2. Overall Group Staff Complement
The Group employed a total of 712 people at the end of December 2020. The table below provides a breakdown by
business unit:
Employment Type
Permanent
Fixed-term Contractors
Learners/Apprentices/Interns/Graduates
Total Headcount
Bushveld Minerals
Corporate Office
(including Bushveld
Energy and Lemur)
28
6
–
34
Vametco
Vanchem
430
20
53
503
164
11
–
175
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Bushveld Minerals | Annual Report and Financial Results 2020
2020 Human Resources Priorities
Our priorities for 2020 are informed by the Group Human Resources strategy, underpinned by the Group Strategic
Priorities.
Human Resources
STRATEGIC PILLAR
Shared Human
Capital Identity
Integrated Employee
Experience
FOCUS AREA
• Leadership – Shared leadership ethos and talent management, including
succession management.
• Culture – Post-acquisition culture integration for the Group and its operations.
• Employee Wellness and Relations – Focus on building an integrated group
approach to employee relations, with fully-engaged employees who will thrive and
give their best to achieve their own and the Company’s objectives.
•
Integrated talent management practices
- Talent acquisition: enhance our ability to attract great talent across all operations.
- Performance: ensure that business leaders have the requisite set of
competencies and tools to shape and drive a performance culture.
- Talent development: investment in the improvement of both leadership and
technical competencies across the group.
- Remuneration and reward: Group-wide implementation of the remuneration
and reward philosophy and policy.
• Bushveld employer branding
- Develop an integrated internal and external Bushveld Minerals employer brand.
- Leverage the Group’s employee value proposition to strengthen its reputation
as a preferred employer, for both existing and prospective employees.
Bushveld Minerals sees all its employees as long-term strategic partners, sharing the common objective of building
a sustainable business for the mutual benefit of all stakeholders. We believe in a shared human capital identity and
integrated employee experience across our operations, underpinned by people management practices that foster
the performance, growth and prosperity of all our employees.
Skilled and engaged employees, working in a safe and productive environment, are able to innovate and drive
operational excellence, enabling us to create value for our stakeholders.
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Meet the Board
of Directors
Ian Watson (78)
Independent Non-Executive
Chairman
Fortune Mojapelo (45)
Co-founder and
Chief Executive Officer
Appointed to Board
March 2012
Appointed to Board
March 2012
Experience
A mining engineer with considerable
experience in the South African mining sector.
A professional engineer and a member of the
Engineering Council of South Africa. Previous
roles include Managing Director of Northam
Platinum. A former CEO of Platmin Limited and
International Ferro Metals (SA). Consulting
Engineer at Gold Fields of South Africa Limited.
Qualifications
National Diploma in Mining from
Witwatersrand Technical College School
of Mines.
Mine Manager’s Certificate of Competency,
Republic of South Africa.
Board Committee membership
Chairman of the Disclosure and Nomination
Committees and a member of the
Remuneration Committee.
Experience
Co-founder and Chief Executive of Bushveld
Minerals, a role he has held from the inception
of the Company. Co-founder and Director of
Bushveld Energy. A founding shareholder of
VM Investment Company, a principal
investment and advisory company focusing on
mining projects in Africa. Played a leading role
in the origination, establishment and project
development of several junior mining
companies in Africa. Began his career at
McKinsey & Company as a consultant on
corporate strategy and organisational
development in several sectors in South Africa
and Nigeria.
Qualifications
BSc (Actuarial Science) from the University of
Cape Town.
Board Committee membership
Disclosure and Nomination Committees.
Tanya Chikanza (55)
Finance Director
Appointed to Board
October 2019
Experience
Has extensive experience in managing
publicly-listed companies’ relationships with
financial markets. Has a global and market-
facing perspective, with 30 years in
international equity and debt capital markets,
strategy, corporate finance and audit.
Previously spent nine years at dual-listed
Lonmin Plc where, as Executive Vice President
of Corporate Strategy, Investor Relations and
Corporate Communication, she helped to
steer Lonmin’s return to profitability in 2018
and led the recent all-share transaction with
Sibanye-Stillwater. Executive Director at
Smith’s Corporate Advisory in London.
Vice-President Corporate Finance at JP
Morgan Cazenove.
Qualifications
Qualified Chartered Accountant.
Member of the Institute of Chartered
Accountants of Zimbabwe.
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Bushveld Minerals | Annual Report and Financial Results 2020
Anthony Viljoen (44)
Non-Executive Director
Appointed to Board
March 2012, Executive Director. Appointed
Non-Executive Director in November 2017
Experience
Founding Chief Executive Officer of AIM-listed
AfriTin Mining Limited since 2017. Executive
Director of Bushveld Minerals from March 2012
to November 2017. A mining entrepreneur and
founding shareholder and director of VM
Investment Company, a principal investment
and advisory company focusing on mining.
Involved in the establishment and project
development of a number of junior mining
companies across Africa. Previously worked at
Deutsche Bank, Barclays Capital in London and
Loita Capital Partners.
Qualifications
BSc (Business and Agricultural Economics)
from the University of KwaZulu-Natal.
Postgraduate Diploma in Finance Banking and
Investment Management from the University
of KwaZulu-Natal.
Board Committee membership
Audit Committee.
Jeremy Friedlander (66)
Independent Non-Executive
Director
Michael J. Kirkwood (74)
Senior Independent
Non-Executive Director
Appointed to Board
March 2012
Appointed to Board
April 2018
Experience
Established McCreedy Friedlander in 1993,
which became one of the premier property
agencies in South Africa and listed it in 1998 on
the JSE. A director of Onslow Resources (oil
and gas in Namibia and Yemen). Business
development director of a number of Avana
companies involved in uranium, coal, gold, oil
and gas and industrial minerals. Recently
involved in the establishment of a number of
natural resource projects, predominantly in
Africa and South America.
Qualifications
BA LLB from the University of Cape Town.
Board Committee membership
Audit, Disclosure and Remuneration
Committees.
Experience
Spent over 30 years with Citigroup, latterly as
UK Head for 10 years. Retired in 2008.
Subsequent multiple listed company
Non-Executive board roles include Kidde plc,
Circle Holdings plc (Chair), AngloGold Ashanti
Ltd and Eros International plc. NED of UK
Financial Investments Ltd (UK Government
entity) and Deputy Chair of Price Waterhouse
Coopers Advisory board. Current roles include
Chairman of Ondra LLP, NED of AngloGold
Ashanti Holdings plc and Verita Healthcare
Group. Prominent positions as President of the
Chartered Institute of Bankers, Chairman of
British-American Business and Deputy Chair of
British Bankers Association.
Qualifications
Graduate of Stanford University in Engineering,
Economics and Management, California.
Fellow of Chartered Institute of Bankers
Honorary Fellow of the Association of
Corporate Treasurers.
Board Committee membership
Chairman of the Audit and Remuneration
Committees, and a member of the
Nominations Committee.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Governance
Executive Management
Team
Fortune Mojapelo (45)
Co-founder and Chief Executive
Officer since March 2012
Tanya Chikanza (55)
Finance Director since
October 2019
Francois Naude (47)
Director of Operations
since January 2021
Experience
Co-founder and Chief Executive of Bushveld
Minerals, a role he has held from the inception
of the Company. Co-founder and Director of
Bushveld Energy. A founding shareholder of
VM Investment Company, a principal
investment and advisory company focusing on
mining projects in Africa. Played a leading role
in the origination, establishment and project
development of several junior mining
companies in Africa. Began his career at
McKinsey & Company as a consultant on
corporate strategy and organisational
development in several sectors in South Africa
and Nigeria.
Experience
Has extensive experience in managing
publicly-listed companies’ relationships with
financial markets. Has a global and market-
facing perspective, with 30 years in
international equity and debt capital markets,
strategy, corporate finance and audit.
Previously spent nine years at dual-listed
Lonmin Plc where, as Executive Vice President
of Corporate Strategy, Investor Relations and
Corporate Communication, she helped to
steer Lonmin’s return to profitability in 2018
and led the recent all-share transaction with
Sibanye-Stillwater. Executive Director at
Smith’s Corporate Advisory in London.
Experience
Has over 27 years’ experience in mining and
processing. Previously Director of Operations
at Vedanta Resources’ Konkola Copper Mines
in Zambia. A former General Manager at
AngloGold Ashanti. Founder and Director of
Southern Cross Mining Services, a Company
that was later sold to JIC Mining Services.
Qualifications
Mine Managers’ Certificate of Competency
(No.5402).
National Higher Diploma – Mining Engineer.
Qualifications
BSc (Actuarial Science) from the University of
Cape Town.
Vice-President Corporate Finance at JP
Morgan Cazenove.
Qualifications
Qualified Chartered Accountant.
Member of the Institute of Chartered
Accountants of Zimbabwe.
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Bushveld Minerals | Annual Report and Financial Results 2020
Mikhail Nikomarov (40)
Chief Executive Officer of
Bushveld Energy since April 2015
Prince Nyati (43)
Chief Executive Officer of Lemur
Holdings since November 2017
Sihle Mdluli (40)
Director: Strategy and Corporate
Services since June 2019
Experience
Over 15 years of international business
experience in energy and finance, including as
CEO and co-founder of Bushveld Energy since
2015. Seven years with McKinsey & Company
in Moscow and Johannesburg, advising
national governments, utilities and
manufacturers on growth strategy and policy
and leading operational turnarounds in the
energy sector. Three years as Portfolio
Manager at Sovereign Bank, USA (now
Santander Bank). Chairman of the Board of
South African Energy Storage Association.
Chair, Energy Storage Committee, Vanitec (the
global association of vanadium producers).
Qualifications
MBA from INSEAD.
Experience
Over 16 years’ experience developing energy
and mining projects in sub-Saharan Africa.
Started his career in oil, gas and
petrochemicals in the USA and has worked in
Zambia, South Africa, India and Singapore for
companies including Shell Oil, Total
Petrochemicals, Eskom and Tata Power. As
Africa Group Head at Tata Power, Prince
evaluated over 100 mine assets and 50 power
opportunities in 30 countries. Worked on
transactions representing over US$1 billion in
value. Other experience includes commodity
trading, specialising in domestic and seaborne
coal. Involved in the development and financial
close of a 120 MW hydro-electric project in
Zambia as well as two wind farm projects (235
MW) in South Africa. Served on the boards of
Cennergi and the Tsitsikamma and Amakhala
Wind Projects.
Diploma in Economics from London School of
Economics.
BA (History) and BA (Economics) from
University of Massachusetts.
Qualifications
MBA from the University of Houston.
BA from the University of Zambia.
Experience
Former Director and Operations
Transformation Leader at Deloitte Africa’s
Strategy and Operations practice.
Spent over nine years assisting clients in
defining and executing their strategies and
improving their cost per output unit in a
sustainable manner. Has extensive experience
in building stakeholder value in the mining and
public sectors, focusing on Strategy
Formulation and Execution, Business Model
Transformation, Recovery and Turnaround
Strategy, Capital Projects Efficiency,
Collaborative Facilitation and Stakeholder
Engagement. Prior to Deloitte, she spent over
six years at De Beers, where she acquired
experience in mining, plant operations, general
management and diamond sales.
Qualifications
Program for Management Development from
Gordon Institute of Business Science.
MBA from Wits Business School.
BSc Engineering (Metallurgy) from the
University of the Witwatersrand.
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Executive Management
Team continued
Ken Greve (60)
Director: Corporate Development
since 1 January 2019
Viki Rapelas (42)
Director: Legal, Governance and
Compliance since January 2019
Experience
Admitted Attorney of the High Court of
South Africa since 2004. Admitted Notary and
Conveyancer since 2012. Legal Advisor to the
Bushveld Minerals Group since 2007. 19 years
of transactional advisory, mergers and
acquisitions and general corporate and
commercial law experience.
Qualifications
International Law qualification from University
of Antwerp (Belgium).
BProc and LLB from Rand Afrikaans University
(now University of Johannesburg).
Experience
Mining Engineer with extensive experience in
project management, project development,
business and company valuations, mergers
and acquisitions, logistics contracts and
specialised financing, particularly in the
resources industry. Held senior corporate
finance and investment banking roles at Gold
Fields of South Africa, JP Morgan, Kumba
Resources and BHP Billiton, where he was
Vice-President of Strategy & Business
Development in South Africa. Previously held
various directorships, including at Richards Bay
Minerals, where he oversaw the Black
Empowerment transaction. Member of the
South African Institute of Mining and
Metallurgy.
Qualifications
BCom Honours (Economics) from the
University of South Africa.
Mining Engineering degree from the University
of the Witwatersrand.
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Bushveld Minerals | Annual Report and Financial Results 2020
Technical
Advisors
Professor Morris
Viljoen (80)
Technical Advisor
since March 2012
Experience
Over 30 years’ experience in the mining
industry, following a role with JCI in base
metals (including nickel, copper antimony,
gold and platinum) exploration and mining in
southern Africa and as consulting geologist for
Rustenburg Platinum Mines (part of Anglo
American Platinum).
Held the position of Professor of Mining
Geology at the University of Witwatersrand for
13 years and established the Centre for Applied
Mining and Exploration Geology, which has
identified and developed mineral projects
including the Amalia and Blaaubank lode gold
deposits, the Akanani/AfriOre Platinum Project
and the Uramin Uranium Project.
Professor Richard
Viljoen (80)
Technical Advisor
since March 2012
Experience
Over 30 years’ experience in the mining
industry, including 15 years as chief consulting
geologist for Gold Fields of South Africa.
Notable past experience includes the
development of significant mines, including
Northam Platinum and the Leeudoorn and
Tarkwa gold mines, identifying and developing
a significant platinum deposit in the Bushveld
Complex for Akanani Resources as well as
acting as consultant for exploration and mining
companies in Canada, Mexico, Venezuela,
India and China in the fields of base metals,
gold and platinum.
Has also completed numerous Competent
Person’s Reports for projects including the
Witwatersrand South Reef project, Doornkop
mine project and the Uramin uranium project.
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A great loss for
Bushveld Minerals
It is with great sadness that Bushveld Minerals learned of the untimely
passing of Ms Dolly Mokgatle in early 2021. In her relatively short time with
us, we appreciated what made her such a driving force in building the new
South Africa.
From March 2020, Ms Mokgatle served on the board of
Bushveld Minerals as an independent non-executive
director. She was also a member of our Audit Committee.
Before joining Bushveld Minerals, Ms Mokgatle had a
distinguished career as a captain of industry, a trailblazer
for black women in business and a champion for
women’s empowerment. Ms Mokgatle’s impressive
career in the private sector included being CEO of
Spoornet (now Transnet Freight Rail) and a founder of
the Peotona group of companies. In the energy sector,
she was MD of the Transmission Group at Eskom and
a deputy chair on the board of the National Energy
Regulator of South Africa. Throughout her career, she
was a staunch believer in educating and mentoring girls
and younger women, pioneering a women‘s
development programme.
During her time at Bushveld Minerals, Ms Mokgatle
readily immersed herself in the role and added immense
value with her wisdom and knowledge of the South
African energy sector. She will be sorely missed by all
those who worked with her at Bushveld Minerals.
Dolly will be greatly missed by her family, friends
and colleagues as well as the South African business
community as a whole, which has lost a great talent
and business partner.
May her soul rest in peace.
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Bushveld Minerals | Annual Report and Financial Results 2020
Governance
Corporate Governance
Report
The Board collectively recognises that implementing an
effective corporate governance structure is of paramount
importance to continue to deliver the Company’s
strategy, create long-term value and maintain our licence
to operate. In 2018, the Company elected to adopt and
comply with the Quoted Companies Alliance Corporate
Governance Code (“QCA Code”), to support a flexible and
pragmatic approach to corporate governance regulations
as being more appropriate for Bushveld.
The principles of the QCA Code are set out below,
supplemented with details of how the Company is
applying them and how the principles support the
Company’s medium- to long-term success.
Additionally, the Company’s website includes a Corporate
Governance Statement that explains the application of
the QCA Code further and can be found at http://www.
bushveldminerals.com/corporate-governance/.
Deliver Growth
Principle 1:
Establish a strategy and business model that
promotes long-term value for shareholders
Bushveld Minerals’ business strategy revolves around
unlocking the value of assets in its diversified vanadium
product portfolio and delivering returns to shareholders
through effective management and efficient operations.
The strategy is clear and supported by a compelling
investment case, both of which are fully described in
various sections within the Business Overview of this report.
The overriding objective of the Board is to direct the
business to ongoing success in delivering long-term
shareholder value. To achieve this, an operating model
has been adopted that defines how to deliver and execute
the strategy by defining the structures in which to operate
and the capabilities required.
Principle 2:
Seek to understand and meet shareholder
needs and expectations
The Board is committed to providing effective
communication with shareholders and attaches great
importance to delivering clear and transparent
information on the Company’s activities and strategy.
The Bushveld Minerals Investor Relations team is
dedicated to communicating the Bushveld Minerals value
proposition to both institutional and private investors, as
well as the broader market. This is successfully achieved
through active engagement with investors, research
analysts and journalists via a combination of investor
roadshows, proprietary webinars, attendance at
conferences focused on the mining and energy storage
sectors and engagement with selective media. These
engagements are key as they provide valuable feedback in
the Board’s decision-making process and determine how
the Company can best meet shareholder expectations.
The Board views the Annual General Meeting (“AGM”) as
the main forum for communicating directly with investors
and it is attended by the Directors, in person (where
circumstances allow) or via teleconference, who are
available to answer any questions raised by shareholders.
At the AGM, various resolutions are proposed and voted
on by the shareholders, either by attending the meeting
or appointing a proxy to vote on their behalf. The results
of the voting are released to the market as soon as
practicable after the AGM has closed.
Significant developments and regular operational updates
are disseminated through stock exchange announcements
via the Regulatory News Service (“RNS”) and can be
found on the Company’s website at http://www.
bushveldminerals.com/regulatory-news-rns/. The
website also has a wealth of information for existing and
potential shareholders, including a corporate video,
project descriptions, investor presentations, financial and
technical reports, analyst research, webcasts and certain
shareholder information.
Any shareholder enquiries can be directed to
info@bushveldminerals.com
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Corporate Governance Report continued
Virtual roadshows
Full Year 2019 Results
H1 2019 Results
Reporting
Q1 2020 Operational Update
Q2 and H1 2020 Operational Update
Final Results for the year ended 31 December 2019
Interim Results for six months to end of June 2020
Q3 and 9 months 2020 Operational Update
Q4 and FY 2020 Operational Update
Annual General Meeting
General Meeting
Conferences
In-person
Africa Mining Indaba, Cape Town
Roskill/Investec Conference – Spotlight on Africa, Cape Town
BMO Metals and Mining Conference, Florida
Virtual
7th Vanitec Energy Storage Meeting
International Flow Battery Forum
Proactive One2One Investor Forum
South African National Energy Association’s workshop on Energy Storage
World Energy Storage Day, conference and expo
Exane BNP Paribas – Energy Storage Conference
Africa Utility Week
The Junior Indaba
Solar Power Africa
Africa Utility Week
Stakeholder Consultation of the Energy Storage Partnership – World Bank
South Africa Investment Conference
Bernstein Revolution Conference
International Mining and Resources & Expo (“IMARC”)
2020
June
October
May
September
June
September
November
January 2021
July
November
February
February
February
June
June
July
September
September
October
November
November
November
November
November
November
November
November
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Principle 3:
Take into account wider stakeholder and social
responsibilities and their implications for
long-term success
Bushveld Minerals recognises that successful execution
of its business strategy requires it to build and maintain
meaningful, well-functioning relationships with its
multiple stakeholders. These include government,
regulatory authorities, funders, partners, employees,
contractors, customers and, very importantly, the
communities in which our projects and operations are
based. We see our socio-economic role going beyond
the creation of jobs and revenue for South Africa, to
acting as an agent for transforming these communities.
Consequent to the appointment of the Internal Audit
and Risk role, the development of an Enterprise Risk
Management Framework (“ERMF”), incorporating Risk
Appetite and Tolerance levels, has been expedited. The
aim is to approve and implement the ERMF during 2021:
Q2/Q3. Notwithstanding, the ongoing development of
a formal risk-management framework, the company
identifies, evaluates and manages risk throughout its
operations and has completed detailed risk assessments,
together with risk mitigation strategies. These detailed risk
assessments are consolidated and have resulted in the
identification of principal risks that could impact the
Company’s ability to deliver on its long-term strategic
objectives. The principal risks are detailed on page 47.
More information and detail on this can be found within
our Sustainability Report on page 52.
Principle 4:
Embed effective risk-management, considering
both opportunities and threats, throughout the
organisation
The Board has primary responsibility for establishing
and maintaining the Company’s governance structures,
internal controls and risk-management systems, which
are designed to meet the particular needs of the
Company and the risks to which it is exposed. The
oversight responsibility for reviewing the adequacy and
effectiveness of these governance structures, internal
controls and risk-management systems has been
delegated to the Audit Committee.
A key priority for the Audit Committee during 2019 was
to initiate the recruitment process, in conjunction with
Human Resources, and conclude the appointment
of the Group Head: Internal Audit and Risk, which
was successfully completed in 2020. Pursuant to this
appointment, and on recommendation from the Audit
Committee, the Board has also formally mandated and
given effect to the establishment of the Internal Audit &
Risk function by approving the Internal Audit Charter,
Internal Audit Manual, Internal Audit Code of Ethics and an
Internal Audit Policy. These policies are fully aligned to the
Institute of Internal Auditors, International Standards for the
Professional Practice of Internal Auditing, consequently
the main objectives of the Internal Audit and Risk function
is to support Bushveld in accomplishing its objectives
by bringing a systematic and disciplined approach to
evaluating and improving the Company’s governance,
risk management and systems of internal controls. To
maintain its independence and objectivity, this role reports
functionally to the Chairperson of the Audit Committee
and administratively to the Finance Director. While the
Board is aware that no system or any one individual can
provide absolute assurance against material misstatement
or loss, this appointment gives the Directors the required
level of assurance that the risks of the Company are being
proactively managed.
Over and above the work being performed by the Internal
Audit and Risk function, the Board considers that the
frequency of Board meetings, and the level of detail
presented to the Board for its consideration in relation to
the operations of the Company, provides an additional
process to identify, evaluate and manage significant risks
relevant to its operations. Additionally, the reports received
from the Company’s external, independent auditor, via
the Audit Committee, on the state of Bushveld’s internal
controls is of course another valuable tool.
Maintain a dynamic management framework
Principle 5:
Maintaining the Board as a well-functioning,
balanced team led by the Chair
The 2020 Board consisted of a Non-Executive Chairman
(Ian Watson), a Senior Non-Executive Director (Michael
Kirkwood), three additional Non-Executive Directors
(Jeremy Friedlander, Dolly Mokgatle and Anthony Viljoen)
and two Executive Directors (the Chief Executive Officer
and the Finance Director, Fortune Mojapelo and Tanya
Chikanza, respectively). The Board was of the view
that the Chairman and three of the four non-Executive
Directors, being Michael Kirkwood, Jeremy Friedlander
and Dolly Mokgatle, were deemed to be independent
for the purposes of Corporate Governance and are of
independent character and judgement. The Board was
satisfied that it had achieved a suitable balance between
independence, on the one hand, and knowledge of the
Company on the other, enabling it to discharge its duties
effectively. It was with great sadness that the Board learnt
of the untimely passing of Dolly Mokgatle in January 2021
and, as a result, is, through the Nomination Committee,
actively searching for a suitably qualified replacement.
The Board holds formal quarterly meetings and meets
outside those events as and when necessary. The
Executive Directors work full-time for the Company and
the expectation is that the Non-Executive Directors will
spend approximately 30 days per annum on work for the
Company.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Corporate Governance Report continued
The Board met formally four times during the year ended
31 December 2020, with an additional three meetings
held to consider matters falling outside of the quarterly
cycles. Attendance was as follows:
Ian Watson
Michael J. Kirkwood
Jeremy Friedlander
Anthony Viljoen
Dolly Mokgatle (appointed 19 March 2020)
Fortune Mojapelo
Tanya Chikanza
7
7
7
7
5
7
7
The Board is supported by Audit, Remuneration,
Nomination and Disclosure Committees which operate
within specific terms of reference and are described
further in Principle 9 below.
Principle 6:
Ensure that the Directors pool the necessary
up-to-date experience, skills, and capabilities
The Directors of Bushveld Minerals have been appointed
to the Company because of the varied skills and
experience that they offer, as well as their personal
qualities and capabilities. Full biographical details of
the Directors are included on pages 62 and 63. which
provides an indication of their breadth of skills and
experience. The Board is also able to engage
independent advisors should the need arise.
The Board is determined to ensure that it continues to
have the right balance of Directors. This is a continuous
process, with the Nomination Committee regularly
reviewing the composition of the Board to ensure that it
has the necessary breadth and depth of skills to support
the ongoing strategy of Bushveld Minerals. In addition to
this, at least one-third of directors retire by rotation and
offer themselves for re-election every year, which is voted
on by shareholders at the AGM.
As noted above, in March 2020 the Board appointed
Dolly Mokgatle, whose extensive expertise in South
Africa’s power network, coupled with her in-depth
knowledge of energy policy, was considered very valuable
for the Company’s energy strategy. In addition, with
her corporate experience on numerous company
boards over the years, the Company’s governance
was strengthened. Since Dolly’s passing, efforts are
under way to find a suitable replacement.
Principle 7:
Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
The Board recognises the importance of regularly
reviewing the effectiveness of its performance and the
ability of the members to work together to achieve the
Company’s objectives, as well as that of its committees
and the individual directors.
Responsibility for assessing and monitoring the
performance of the Executive Directors lies with the
independent Non-Executive Directors, using agreed key
performance indicators. Further detail can be found in the
Remuneration Report on page 77.
The Board as a whole evaluates its own performance
internally, and that of the committees, and uses the
process to identify opportunities for improvement.
The Nomination Committee is responsible for reviewing
the structure, size, and composition (including skills,
knowledge, experience and diversity) of the Board and
making recommendations to the Board on any changes.
Succession planning for Directors and other senior
executives is also the responsibility of the Nomination
Committee and is front of mind.
Principle 8:
Promote a corporate culture that is based on
ethical values and behaviours
Bushveld is committed to the highest standards of
transparency, accountability and conducting business
in an honest and ethical manner, in accordance with
sound governance principles. In building a strong and
sustainable governance framework, the Company’s
aspiration is to ensure that ethical values and behaviours
are fully embedded throughout the Company, supporting
the ethical culture of Bushveld. The Board and senior
management is fully committed in establishing an honest
and ethical culture and is conscious that the tone it sets
will impact all aspects of the Group and the way that
employees behave and operate.
The Company seeks to ensure that responsible business
practices are fully integrated into the management of its
operations, which is essential for operational excellence
and to deliver Bushveld’s strategy.
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Bushveld has the following policies in place:
Conflicts of Interest, Anti-Corruption and Bribery Policy
It is the Company’s policy to conduct all of its business in
an honest and ethical manner. We take a zero-tolerance
approach to bribery and corruption and are committed
to acting professionally, fairly and with integrity in all our
business dealings and relationships, wherever we operate.
The purpose of this policy is to provide clear guidelines
and acceptable practices to all employees to avoid
potential and perceived conflicts and interest. The policy
further sets out firm rules and regulations regarding the
receipt of gifts, entertainment and business courtesies.
Bribery and corruption in any form or shape is strongly
discouraged and employees found in contravention of
these polices may be subject to disciplinary proceedings.
Fraud Prevention and Fraud Investigation Policies
The purpose of these policies is to detail the Company’s
expectations with respect to managing fraud-risk, to
develop awareness of that risk in the organisation, to
provide guidance to those who find themselves having
to deal with fraud, and for establishing procedures and
assigning responsibility for the investigation of fraud and
related offences. These policies are in the process of
finalisation.
Whistle-blowing Policy
This policy will help break the cycle of silence and
inaction and assist in preventing corruption within
Bushveld and the broader public sector in which it
operates. The policy is to encourage employees and
stakeholders to feel confident in raising breaches and
concerns and to ensure that whistle-blowers will be
protected from possible reprisals or victimisation,
if disclosures are made in good faith.
Share Dealing Policy
The Company has adopted a policy for dealing in its
shares, which incorporates all obligations under both
Rule 21 of the AIM Rules for Companies and Article 19
of the Market Abuse Regulations.
The policy explains the circumstances under which
shares in the Company can be bought or sold by
Directors and relevant employees, along with the
requirements and procedures that have to be followed
when dealing in the Company’s shares. In addition to this,
the Company has a Memorandum on Inside Information
providing additional information on applicable laws and
possible sanctions, market-abuse provisions and
communication requirements.
Social Media Policy
While the Company recognises the benefits that social
media engagement can have in helping it reach out
to stakeholders, this policy is in place to facilitate the
responsible use of social media and minimise the risks
to the Company through its misuse, which can bring
a company into disrepute.
Principle 9:
Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
The Board’s role is to provide strategic leadership to the
Company within a framework of prudent and effective
controls, enabling risk to be assessed and managed.
Matters reserved for the attention of the Board include,
inter alia:
• Board membership and powers, including the
appointment and removal of Board members and
determining the terms of reference of the Board;
• Establishing the overall control framework, including
the operating model that defines how to deliver and
execute strategy by defining the structures in which
to operate;
• Key commercial matters, including the approval of the
budget and financial plans, changes to the Company’s
capital structure, the Company’s business strategy,
acquisitions and disposals of businesses and capital
expenditure;
• The approval of financial statements, dividends and
significant changes in accounting practices; and
• Stock exchange-related issues, including the approval of
the Company’s announcements and communications
with both shareholders and the stock exchange.
To that end, the Board is supported by committees that
have the necessary skills and knowledge to discharge their
duties and responsibilities effectively. These committees
are primarily made up of Non-Executive Directors.
Descriptions of the various committees are provided
below.
Audit Committee
The Audit Committee, comprising Michael Kirkwood
as chair, Jeremy Friedlander, Dolly Mokgatle (up until
9 January 2021) and Anthony Viljoen, has responsibility
for monitoring the integrity of the financial statements of
the Company, including its annual and half-yearly reports,
interim management statements, preliminary results
announcements and any other announcements relating
to financial performance before they are presented to the
Board for approval. In addition to this, its duties include
reviewing and reporting on the Company’s internal
financial controls, risk-management initiatives and
governance structures.
The Audit Committee is responsible for recommending
the appointment of the auditors and reviewing and
monitoring their independence and objectivity. The
Committee has unrestricted access to the auditors.
To assist the Audit Committee in executing its
responsibilities, an Internal Audit and Risk function was
established, as described more fully under Principle 4
above.
Meetings are held at least three times a year at appropriate
intervals in the financial reporting and audit cycle, and as
otherwise required.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Corporate Governance Report continued
The role of the Audit Committee and the duties it fulfilled
during 2020 are more fully described in the Report of the
Audit Committee on page 75.
Upon the appointment of a replacement Independent
Non-Executive Director for Dolly Mokgatle, the Audit
Committee will again have three members considered
independent.
Remuneration Committee
The Remuneration Committee, comprising Michael
Kirkwood, as chair, Ian Watson and Jeremy Friedlander,
determines the framework for the remuneration of the
Company’s Chairman and Executive Directors and, as
appropriate, other senior management, including pension
entitlements, share-option schemes and other benefits.
Remuneration of Non-Executive Directors is a matter for
the Board. No Directors or senior managers are involved
in any decisions on their own remuneration.
A comprehensive Remuneration Report can be found on
page 77.
Disclosure Committee
The purpose of the Disclosure Committee is oversight of
the implementation of the governance and procedures
associated with the assessment, control, and disclosure of
inside information in relation to the Company. Ian Watson
is Chairman of the Disclosure Committee, with Jeremy
Friedlander and Fortune Mojapelo as members.
Nomination Committee
The Nomination Committee is responsible for reviewing
the structure, size and composition of the Board, making
recommendations to the Board with regard to any
changes, succession planning for Directors and senior
management, preparing a description of the role and
capabilities required for a particular appointment and
nominating candidates to fill Board positions as and when
they arise. The Committee also makes recommendations
to the Board concerning membership of the Audit,
Remuneration and Disclosure Committees, in consultation
with the Chairman of each of those committees. The
Nomination Committee comprises Ian Watson, Michael
Kirkwood and Fortune Mojapelo, with Ian Watson as chair.
Builds Trust
Principle 10:
Communicate how the Company is governed
and is performing by maintaining a dialogue
with shareholders and other relevant
stakeholders
The Board is committed to providing effective
communication with shareholders and attaches great
importance to delivering clear and transparent
information on the Company’s strategy, activities and
financial position.
Results of the Annual General Meeting, significant
developments and regular operational updates are
disseminated through stock exchange announcements
via RNS and can be found on the Company’s website at
http://www.bushveldminerals.com/regulatory-news-
rns/.
The Company’s website has a wealth of corporate
information, including a corporate video, project
descriptions, investor presentations, financial and
technical reports, analyst research, webcasts and certain
shareholder information.
As more fully described under Principle 2, the Bushveld
Minerals Investor Relations team is dedicated to
communicating the Bushveld Minerals’ value proposition
to shareholders, as well as the broader market. This is
successfully achieved through active engagement with
investors, research analysts and journalists via a
combination of investor roadshows, proprietary webinars,
attendance at conferences and engagement with
selected media.
The Head of Investor Relations is the primary point of
contact for shareholders and plays a key part in
encouraging shareholder interaction and listening to
feedback.
Any shareholder enquiries can be directed to
info@bushveldminerals.com
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Governance
Report of the
Audit Committee
This report provides details of the role of the Audit
Committee and the duties it has undertaken during the
year under review.
The Audit Committee meets at least three times a year
at appropriate intervals in the financial reporting and
audit cycle and as otherwise required. Other Directors
including the Finance Director and other individuals,
as well as the external auditor, may be invited to attend
all or part of any meeting, as and when required.
The Audit Committee compromised of Independent
Non-Executive Directors Michael Kirkwood, Jeremy
Friedlander, Dolly Mokgatle (up until 9 January 2021) and
Non-Executive Director Anthony Viljoen.
The members of the Audit Committee have relevant
financial experience through the various leadership roles
they have held, as set out in their biographical details
on pages 62 and 63.
The Audit Committee has access to sufficient resources
in order to carry out its duties, including access to the
Company Secretary for assistance as required. The
committee gives due consideration to applicable laws and
regulations, the Quoted Companies Alliance Corporate
Governance Guidelines for Small and Mid-Sized Quoted
Companies and the requirements of the London Stock
Exchange’s rules for AlM companies, as appropriate.
The Audit Committee reviews its effectiveness
periodically and will conduct an annual review of its
constitution and terms of reference to ensure it is
operating at maximum effectiveness. Changes arising
from these reviews are recommended to the Board for
approval.
The Chairman of the committee reports formally to
the Board on its proceedings after each meeting on all
matters within its duties and responsibilities, and how
it has discharged its responsibilities.
Responsibilities of the Audit Committee
Key duties of the Audit Committee include:
• Monitoring the integrity of the Company’s financial
statements.
• Reviewing the consistency of, and any changes to,
accounting policies both on a year-on-year basis and
across the Company and its group and reviewing
whether management has followed appropriate
accounting standards and made appropriate estimates
and judgements, taking into account the views of the
external auditor.
• Reviewing and reporting to the Board of Directors on
significant financial reporting issues and judgements
which they contain, having regard to the matters
communicated to it by the auditor.
• Reviewing the Company’s internal financial controls,
systems of internal control and risk.
• Reviewing the adequacy and security of the
Company’s whistleblowing facilities and ensuring
that appropriate investigations and follow up action
is conducted in respect of concerns raised.
• Reviewing the adequacy of the Company’s systems,
procedures and controls for detecting fraud, bribery
and corruption.
• Making recommendations to the Board on the
appointment of the external auditor.
• Managing and overseeing the relationship with the
external auditors, including their terms of engagement
and remuneration.
• Meeting regularly with the external auditors and
reviewing their findings.
Financial reporting
The Audit Committee reviewed and assessed the
Company’s financial reporting in the period, including its
half-year report, results announcements and this Annual
Report. This review included an assessment of the
consistency of, and changes to, accounting policies,
estimates and judgements; the methods used to account
for significant or unusual transactions; the appropriateness
of the accounting standards used; the clarity and
completeness of disclosures and the context in which
statements are made; and a review of material disclosures
regarding audit and risk management in the financial
statements, including in the strategic report and this
corporate governance statement.
In reviewing the Company’s financial statements, the Audit
Committee has considered the Company’s accounting
policies, particularly in relation to the treatment of the
accounting estimates and judgements as described on
pages 114 and 115. A further significant focus for the Audit
Committee has been the impact of COVID-19 on the
going concern assumptions and viability of the Group. The
potential risks to the Group include a decline in vanadium
prices as well as operational stoppages, resulting in reduced
ability to sell its products as well as volatile market
conditions, all of which could impact the Group’s cashflows
and ability to comply with its financial covenants. In
mitigation, the Group has modelled a variety of scenarios
around cash preservation and cost containment that show
the Group’s ability to continue to operate sustainably.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Report of the Audit Committee continued
In addition to the publicly-released reports, the
Committee’s review covered management reports as well
as reports from and discussions with the external auditor.
The Audit Committee provided comment and feedback
on this Annual Report before finalisation and approval.
The review concluded that, taken as a whole, this Annual
Report is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Company’s position, performance, business model and
strategy.
Internal audit
The appointment of the Group Head: Internal Audit and
Risk was concluded in 2020. The Board, on
recommendation by the Audit Committee has mandated
and given effect to the Internal Audit and Risk functions.
The scope of the internal audit function has been
summarised as below;
• Provide independent and objective assurance through
evaluating the Company’s governance, risk and
internal control systems.
• Evaluating the adequacy and effectiveness of internal
financial controls over financial reporting and internal
controls in general.
• Reviewing the extent of compliance with laws,
regulations, standards and codes.
The Committee is satisfied, having considered the
assurance provided by Group Internal Audit, that no
significant or material issues have been identified that
would render the Group’s system of internal financial
controls ineffective. Subsequently the Committee is of
the view that reasonable assurance was provided and the
financial records may be relied upon for the preparation
of the annual financial statements.
External auditor
RSM UK Audit LLP is the Company’s auditor and the
Audit Committee has recommended to the Board that
shareholders be asked to approve the re-appointment
of RSM UK Audit LLP as auditor at the Annual General
Meeting.
Non-audit services
A policy is in place to govern the supply of non-audit
services by the external auditor, in order to safeguard
independence and objectivity. The policy sets out the
recommended maximum fees that should be payable
for non-audit services as a percentage of the audit fee
and contains guidelines as to the circumstances where
a proposed engagement should be subject to a
tender process.
In the current period, following the appointment of
RSM UK Audit LLP as statutory auditor, non-audit fees
of GBP15,000 were paid in respect of agreed upon
procedures on the interim financial statements for the
period ended 30 June 2020.
Whistleblowing
The Company has a whistleblowing policy to encourage
stakeholders and employees to raise suspected breaches,
malpractice or impropriety without fear of reprisals. The
policy aims to provide a secure platform for stakeholders
and employees to raise concerns and prompt
management to investigate each case reported. The
policy commits the Company to treat all such disclosures
made in good faith, in a confidential and sensitive
manner. The group receives reports regarding any
significant allegations made, details of investigations and
the outcomes. No significant issues were reported during
the year.
Risk management and internal control
The Audit Committee is mandated to provide oversight
on the Company’s governance, internal control and
risk management systems. Internal controls and risk
management systems are in place to support the integrity
of the financial reporting process and the preparation of
accounts. These systems include policies and procedures
to ensure that adequate accounting records are
maintained and transactions are recorded accurately
and fairly to permit the preparation of financial statements
in accordance with IFRS.
The key elements of the Company’s system of internal
controls are discussed on page 97 of this report.
The Audit Committee discharged its duties, in accordance
with its terms of reference, during the period to
31 December 2020, including:
• Approving the engagement of the external auditor,
reviewing and approving the annual audit plan;
The Audit Committee’s review of the system of internal
controls is supplemented by reports from the external
auditors regarding issues identified during their
engagement, particularly those relating to control
weaknesses, and the responses from management.
• Meeting regularly with the external auditor;
• Reviewing the findings of the audit of the financial
statements for the period ended 31 December 2020
with the external auditor;
• Reviewing the management representation letter
requested by the external auditor before it was signed
by management and management’s response to the
auditor’s findings and recommendations; and
• Reviewing the effectiveness of the audit process.
I would like to thank the Finance team and my Audit
Committee colleagues for their work during the year.
Michael J. Kirkwood
Audit Committee Chair
29 June 2021
Bushveld Minerals
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Bushveld Minerals | Annual Report and Financial Results 2020
Governance
2020 Remuneration
Report
Part 1: Background Statement From The Remuneration Committee Chairman
Dear Shareholders,
The 2020 financial year was a challenging year for all of our stakeholders: for you as our shareholders, for our executives
who worked relentlessly as a result of the impact of the COVID-19 pandemic, for the board who had to and continue
to navigate the Company despite the economic challenges faced, and for all of our employees and the communities
in which we operate. Despite these challenges, on behalf of the Bushveld Minerals Limited Remuneration Committee
(the “Committee”), I am pleased to provide you with the Remuneration Report for the year ended 31 December 2020.
Our aim in preparing this report is to ensure that our shareholders and stakeholders better understand our approach
to remunerating executives and the wider employee base. This includes the key principles we use to determine our
reward framework to ensure that our executives are focused on delivering long-term shareholder value consistent
with our vision and strategy.
In line with the practice adopted in 2019, this report is again presented in the King IV™ recommended format, while
taking cognisance of the requirements of being an AIM-listed company during the review period. As Bushveld is not
subject to Johannesburg Stock Exchange listing requirements, the policy and implementation reports are not put to
non-binding shareholder votes.
The Committee is pleased to report the roll-out of the Group’s remuneration policy to all our subsidiaries in early 2021.
Business Performance Overview and Impact on Remuneration Outcomes
The table below outlines key performance indicators for the Bushveld Minerals Group over a two-year period. The
Group reported resilient underlying performance in its subsidiaries in the form of production volumes and operational
improvements during the 2019 performance year. These improvements did not however translate into commensurate
improvements in the financial indicators owing to a marked decline in vanadium prices during 2019 relative to 2018.
Further detail on the Group’s performance is detailed in the Finance Director’s statement. Please refer to page 34 of
this report for further analysis and an account of the Group’s financial performance.
Indicator (US$)
Underlying EBIT
Underlying Earnings (EBITDA)
Closing Cash & Cash Equivalents
Adjusted ROIC*
Closing Share Price
FY20
FY19
(37 667 417)
(14 940 940)
50 540 672
N/A
19.5p
22,253,811
32,641,956
34,011,557
33%
20p
* Adjusted ROIC includes the bargain gain benefit from the strategic acquisition, which was acquired at a consideration below the fair value of
the business.
For FY20, the overall short-term incentive (“STI“) performance achievement of business targets was 75 per cent,
resulting in the achievement of a “between threshold and target” business performance outcome and the payment
of STIs to employees and executives. Full details of the STI measures used together with the outcomes are disclosed
in part 3.
Role of the Committee and key decisions taken
The Committee was established by the Bushveld Minerals Board (“Board”) to act as the Remuneration Committee
of the Group and its subsidiaries (the “Group”). The Committee is responsible for and oversees the governance of all
Group remuneration matters. It is specifically responsible for determining the individual remuneration of Directors
(Executive and Non-Executive) and senior executives. In order to discharge its responsibility in this regard, the
Committee is required to:
a. Oversee the establishment of a remuneration policy that will promote the achievement of strategic objectives,
encourage individual performance and support Bushveld’s long-term interests. The final approval of the policy rests
with the Board;
b. Determine the remuneration framework applicable to executives of Bushveld Minerals; and
c. Review the Group’s remuneration strategy and its implementation on an annual basis.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Remuneration Report continued
Part 1: Background Statement From The Remuneration Committee Chairman continued
In the 2020 financial period the Committee delivered the following:
Executive remuneration
a. Reviewed the total remuneration against external benchmarks.
b. Recommended individual remuneration for executives.
c. Reviewed and considered director remuneration best-practices to ensure that Bushveld’s current practices remain
progressive and relevant.
d. Appointed an operations director.
Non-Executive Director remuneration
a. In light of prevailing market conditions, the Committee did not recommend any adjustments to the NED fees
for 2021.
Group-wide remuneration matters
a. Reviewed the impact of COVID-19 on remuneration decisions.
b. Considered remuneration trends updates.
c. Reviewed the Group-wide remuneration policy and the roll-out of the Group remuneration policies.
d. Considered fair and responsible pay (see details below).
e. Reviewed retirement and risk benefits across the Group.
f. Approved STI targets for all Group companies.
h. Performed progress testing pertaining to the 2019 performance share award.
Performance – relating to forthcoming performance cycle
a. Set short-term performance targets.
Compliance
a. Reviewed and approved the Committee’s annual work plan.
b. Reviewed and approved the Remuneration Report for publication aligned to best practice.
Fair and Responsible Remuneration
During the past year the Committee actively engaged on the subject of fair and responsible remuneration. The
Committee’s stance is that ‘fair’ remuneration is impartial and free from discrimination. It is also free from self-interest,
prejudice or favouritism.
It is rational, and not based on an irrational or emotional basis. ‘Fair’ does not mean ‘the same’ and remuneration levels
will differ according to a number of factors, such as productivity, performance, skill, experience, risk and complexity,
degree of challenge, level of responsibility of decision making, consequence and impact on the organisation. Equal
contributions to performance should, however, be rewarded equally. The Company’s policy on fair and responsible
remuneration can be summarised as follows:
Responsible pay
a. All variable pay is subject to the achievement of performance metrics, carefully calibrated and selected by
the Committee, ensuring a close alignment with shareholder value creation over the long term.
b. A portion of the STI is deferred and delivered in shares (bonus awards) which will be determined following
the publication of the accounts, ensuring greater alignment with shareholders. The LTI, taking the form of
prospective Conditional Shares, may also be subject to a post vesting holding period which further enforces
shareholder alignment.
c. The link between pay and performance is publicly disclosed by the Company in its remuneration report.
d. The Committee and ultimately the Board reviews and approves the remuneration of Directors and senior
management, ensuring independence and transparency.
e. Although remuneration is benchmarked, affordability is a key consideration when making pay adjustments.
Variable pay is subject to reduction (malus) and recoup (claw-back). Executives are also expected to build and
maintain a minimum shareholding in the Company.
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Bushveld Minerals | Annual Report and Financial Results 2020
Fair pay
a. Proper job profiles are in place for all roles within the organisation. Jobs are evaluated in accordance with a robust
methodology and employees are remunerated in accordance with the determined pay scales.
b. The Group is committed to eliminating any existing unfair or unjustified differentiation within its remuneration
dispensation and preventing future practices of discrimination/differentiation.
c. Horizontal fairness is applied and employees performing the same or similar job requirements at the same or similar
level of performance receive similar remuneration, aligned to the Group pay scale.
d. Vertical fairness is applied by assessing the pay ratio between the CEO and the pay levels of employees below the
executive level.
e. Pay is well administered, with employees paid accurately, on time and in a way that is convenient.
The Company conducted the following benchmarks and pay analysis during the period to test the principles of
responsible and fair pay:
Gini coefficient
a. An internal Gini coefficient was determined on a total reward basis and compared to both the South African mining
specific and national Gini (based on the REMchannel. database). The outcome was considered by the Committee.
b. The Committee will continue to monitor this on an annual basis.
Executive pay benchmarks
a. Executives and Executive Directors are paid in line with the Group’s pay policy. Their guaranteed packages are
pegged between the lower quartile and median of the market.
b. Executive pay is benchmarked against a bespoke comparator group with similar company features to the Group or
subsidiary to ensure the reliability and validity of the data against which we benchmark ourselves.
Pay policy for shareholder alignment
a. All STI and LTI participants are subjected to malus and claw-back provisions.
b. Furthermore, incentives (STI and LTI) are directly linked to business performance by way of Group and subsidiary
performance targets.
Shareholder engagement
As our shareholder register reflects more institutional shareholders, we will engage to obtain views and comments on
our remuneration policy and its implementation. For the time being, the Remuneration Committee will respond to any
inward enquiries relating to this report.
Future focus areas
In 2021 the focus is to continue embedding and strengthening the Group’s Remuneration and Performance philosophy
into the wider people management framework.
Furthermore, the Committee will prioritise the consolidation of Provident fund and Risk Benefits in order to achieve
economics of scale on cost incurred and standard offerings across the group.
Remuneration advisors
The Committee re-employed the services of PricewaterhouseCoopers (“PwC”), an independent professional services
firm with a global remuneration practice, to act as independent advisors to the Committee. The Committee is satisfied
that they act independently.
We encourage and pursue open and regular dialogues with all our stakeholders. Your constructive input is valued and
appreciated as we continue to improve the remuneration system. On behalf of the Remuneration Committee, I thank
you for your continued support and feedback regarding our remuneration framework.
Michael J. Kirkwood
Chairman of the Remuneration Committee
29 June 2021
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Part Two: Remuneration Policy
General Remuneration Policy
The Group Remuneration Policy seeks to enable Bushveld Minerals, to attract, motivate and retain high-performing
individuals. It guides decision-making in relation to all aspects of remuneration and supports the execution of strategic
deliverables, as expressed in the Group’s performance framework.
The policy applies to Bushveld Minerals’ head-office employees, Bushveld Energy, Bushveld Vanchem and Lemur.
Employees of Bushveld Vametco Alloys are excluded at this stage, but the Committee aims for the policy to be rolled
out to all subsidiaries where it makes sense, taking into account existing contractual obligations and terms and
conditions of employment. The remuneration policy conforms to the Quoted Companies Alliance governance code
and is anchored on the following remuneration philosophy statements and principles:
Total guaranteed remuneration
is primarily set between the
lower quartile and the median
in the relevant market.
Incentive-based rewards
are earned by achieving stretch
performance conditions
consistent
with shareholder
interests over the
short, medium and
long term.
ENCOURAGE A
CULTURE THAT
SUPPORTS
SUSTAINABLE AND
ENTREPRENEURIAL
BUSINESS GROWTH.
PROMOTE THE
ACHIEVEMENT
OF STRATEGIC
OBJECTIVES WITHIN
THE ORGANISATION’S
RISK APPETITE.
Remuneration
practices are aligned
with corporate
strategy.
Incentive plans,
performance measures
and targets are
structured to operate
effectively throughout
the business cycle and
include an overall cap.
Short-term incentives
relate to financial and
ESG measures.
Long-term incentives
include measures of
Free Cash Flow margin
and Total Shareholder
Return.
PROMOTE POSITIVE
OUTCOMES ACROSS
THE ECONOMIC,
SOCIAL AND
ENVIRONMENTAL
CONTEXT IN WHICH
THE GROUP
OPERATES.
PROMOTE A CULTURE
OF RESPONSIBLE
CORPORATE
CITIZENSHIP.
Remuneration is
aimed at being fair
and responsible.
The remuneration policy,
principles and benchmarking
approaches will be transparent.
The design of long-term
incentives is prudent and does
not expose shareholders to
unreasonable financial risk.
Bushveld’s remuneration philosophy through the application of this policy, aims to:
• Encourage a culture that supports sustainable and entrepreneurial business growth through the provision of appropriate
individual and Group short-term and long-term performance-related rewards that are fair and responsible;
• Promote the achievement of strategic objectives within the organisation’s risk appetite;
• Promote positive outcomes across the economic, social and environmental context in which the Group operates; and
• Promote a culture and responsible corporate citizenship.
Elements of remuneration
The Bushveld Minerals remuneration structure is made up of a combination of fixed and variable pay. The fixed pay
component is referred to as the TGP and the variable component includes the Group’s STIs and LTIs. The main
objective of the TGP is to provide individuals with a fixed income, priced in line with the market and aligned with the
job that they do.
The variable pay component is performance-related, designed to reward superior performance and to align the
interests of executives and management with those of the shareholders over the medium-and long-term. Below
is a summary of the policy as it applies to designated employees in the organisation (exclusions as explained above),
together with the link to strategy.
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Overview and eligibility:
Fixed Pay
Element
Definition
Base Salary
Total
Guaranteed
Pay (TGP)
Standard Benefits
It is the rate of remuneration an employee receives in
exchange for services. An employee’s base salary
can be expressed as an hourly rate or as a weekly,
monthly, or annual salary.
Benefits are over and above the base salary and
include the Company contribution towards
retirement fund and any other employer-funded
group benefits.
Conditional Benefits
or allowances
Benefits received based on job specific requirements,
and legislative requirements e.g. shift allowance.
Production Bonus
Short-Term
Incentives
(STI)
Annual Bonus
Cash bonus paid monthly, as per the scheme rules,
aimed to achieve alignment between the Company
and employees in the achievement of production,
safety, and productivity targets at an operational level.
Annual bonus is paid in cash and gives employees an
incentive for the achievement of the Group’s short
and medium-term goals, with payment levels based
on both business unit and individual performance,
depending on the level of the job.
Certain job categories, (D-F) STI is paid partly in cash
(annual bonus) and partly as equity (deferred bonus).
The deferred bonus is settled as bonus shares under
the CSP (as described below) scheme.
Applicable Grades
All employees
All employees
Employees
represented in the
bargaining council
Employees
represented in the
bargaining council
D, E and F Bands
CSP
Long-Term
Incentives
(LTI)
The vesting of conditional share awards is subject to
forward-looking Group performance conditions and
continued employment.
D, E and F Bands
Bonus Shares
Bonus shares are based on the STI deferral and
therefore not subject to forward-looking
performance vesting conditions, but continued
employment is used as a vesting condition.
D, E and F Bands
Policy Applicable to the Various Elements
Remuneration element
Policy
TGP, comprising fixed cash salary plus benefits
Policy
Policy’s link to Company strategy
Our policy is to set TGP for all levels of staff between the lower quartile and
median while the total package opportunity (inclusive of incentives) is set at
the median or above in the case of the achievement of stretch targets,
subject to discretion in the case of business needs to attract scarce skills to
the company.
In light of the fact that the Group is still in a growth phase, the Committee has
determined to set fixed pay for all employees between the lower quartile and
the median.
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Part Two: Remuneration Policy continued
Remuneration element
Policy
Approach to benchmarking and
salary adjustments
For executives, the benchmark is derived from listed companies with a similar
profile to that of Bushveld Minerals. Other employees are benchmarked
against the mining circle of the REMchannel® Remuneration Survey.
The total cost of annual increases for all employees who fall outside
collective bargaining agreements is approved by the Committee and set in
accordance with expected market movement and affordability.
Distribution of increases to employees outside the bargaining forums is done
with reference to individual performance, inflation, internal equity, competence
and potential. Increases occur annually with effect from 1 January.
Benefits include a Medical Aid, Retirement Fund, Group Life Cover, Disability
Benefit and Death Benefit.
The purpose of the STI is to align the interest of employees with those of
shareholders on an annual basis. For managerial level employees, the STI has
a deferred component, aligning employees with shareholders beyond the
short-term.
The STI is partly paid in cash and partly deferred into shares for employees at
managerial levels, while non-managerial employees receive their STI in cash.
The STI gives employees an incentive to achieve the Group’s annual goals,
with payment levels based on both business (Group and/or subsidiary) and
personal performance, depending on the level of the employee.
The STI is designed to encourage and reward superior performance and to align
the interests of employees as closely as possible with the interests of shareholders.
Annual Group performance targets as well as subsidiary targets and measures are
set and approved by the Board. Following the annual Board strategy review
process, it approves the strategic focus areas for the year, and these are translated
into a Group performance balanced scorecard which reflects on-target and
stretch deliverables for the year. These would include measures such as:
• Consolidated Economic Profit;
• Group Strategic Priorities (as mandated by the Board);
• Production Costs (Mining and Processing);
• Production Volumes (Mining and Processing);
• Normalised Revenue (Mining and Processing);
• LTIFR (“Lost time injury frequency rate “), Community Development and
Environmental Targets.
Participants with line of sight on Group financial targets as well as strategic
priorities will be allocated a split weighting between the Group performance
targets and functional targets. As a consequence of COVID-19, only targets
that could be approved for 2021 are disclosed below.
The targets for FY21 are disclosed on page 85.
The STI operates as follows:
• Qualifying Annual TGP x On-Target Incentive Percentage x ((Personal
Score x Personal Weighting) + (Business Score x Business Weighting));
• For qualifying participants (middle management and above), the STI is
partly paid in cash (annual bonus) and partly deferred (deferred bonus)
settled as bonus awards under the LTI (as described below);
• The remainder of the participants (non-managerial) receive the full STI in cash.
The on-target incentive percentages are determined per grade and expressed as a
percentage of an employee’s qualifying TGP. The on-target incentive percentages
will be determined by the Remuneration Committee from time to time, informed
by prevailing market trends. The on-target ranges are indicated below.
Benefits
STIs
Purpose
Policy’s link to Company strategy
and performance measures
Bonus formula
On-target incentive percentages
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Remuneration element
Policy
Performance measure weightings
A combination of financial and personal measures are used, each with an
assigned weighting depending on seniority. Executive performance is heavily
weighted toward business performance, to ensure executive and shareholder
alignment.
The following weightings apply at Group and subsidiary level respectively:
Group:
Level
CEO and CFO
Executives
Senior management
Middle management or professional specialists
Non-managerial
Subsidiary:
Level
Executives
Senior management
Middle management or professional specialists
Non-managerial
Business
weighting
Personal
weighting
80%
70%
60%
50%
0%
20%
30%
40%
50%
100%
Business
weighting
Personal
weighting
60%
50%
40%
0%
40%
50%
60%
100%
Subsidiary weightings for Vametco executives are implemented as follows:
Personal weighting
Business – Vametco
Business – Group
40%
40%
20%
Business performance measures
and targets
As mentioned above, the business score will include a combination of
financial and non-financial performance measures. The applicable targets
are disclosed below. Performance outcomes are measured on the following
business sliding scale:
Performance achievement
Threshold performance
Target performance
Stretch performance
Business score
50%
100%
150%
As a result of the volatility in the market regarding the Vanadium price and
exchange rate, RemCo implemented a collar and cap approach for the
“consolidated economic profit” target. The intention of the collar and cap on
the vanadium price and foreign exchange rate is to ensure that management
are protected from factors that are beyond their control but also to limit the
upside, should the vanadium price and exchange rate work in their favour.
For FY20, the collar and cap for the Vanadium price was set at US$40 with a
tolerance band of +-25 per cent while the exchange rate was set at ZAR14.45
with a tolerance level of 10 per cent up and down.
The personal score will be dependent on the personal performance rating
of the employee for the relevant financial year. Personal performance
achievement will translate into the following personal scores. A personal
score below threshold acts as a gatekeeper, which means even if the business
score was achieved, a participant with a personal score below threshold will
not qualify for any bonus.
Rating
Description
1
2.5
3
4
5
Non performance
Threshold
On target
Exceeds expectation
Stretch performance
Performance
score
0%
50%
100%
125%
150%
Personal performance measures
and targets and related
personal score
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Part Two: Remuneration Policy continued
Remuneration element
Policy
STI opportunity
Deferral operation
LTIs
Purpose
Policy’s link to Company strategy
Nature of LTI
Threshold, target and stretch performance levels are set for each
performance target. No bonus is payable if threshold performance is not
achieved. The on-target and stretch bonus levels for executives are explained
below under the heading “Package Design”.
For employees who hold jobs graded between Paterson Grades D and F, the
STI is partly paid in cash (annual bonus) and partly deferred (deferred bonus)
which is then settled as bonus awards under the LTI (as described below). The
deferral is designed to further align management’s short-term interests with
those of the shareholders. The cash versus deferred on-target percentages
are as follows:
On-target bonus as
a % of qualifying TGP
Occupational level
CEO and CFO
Executives
Senior management
Middle management or professional specialists
Annual
bonus
Deferred
bonus
45%
35%
30%
20%
28%
23%
18%
8%
The Company adopted a new LTI, namely the CSP during 2018. The purpose
of the CSP is to align the interests of executives with those of shareholders
over the medium to long-term. Awards vest after a three-year period and are
then subject to a further two-year holding period.
LTIs are inherently retentive but there are no schemes specifically in place for
the sole purpose of retaining key employees. Through the delivery of real
equity, employees will become shareholders in the Company.
In terms of the CSP, eligible employees will receive conditional rights to
shares and the following instruments are available:
• Performance awards are subject to forward-looking Company
performance conditions, measured over a three-year performance period.
Awards will vest subject to the achievement of the performance measures
and continued employment for the duration of the vesting period.
• Bonus awards are linked to STI performance which is deferred, and
subject to continued employment but is not subject to forward-looking
performance vesting conditions.
Eligibility
Middle management and above
Instruments and their application
A mix between performance and bonus awards will be awarded. The policy
as it applies to executives is explained in the “Package Design” section below.
Performance measures and period
Performance awards are subject to performance measures over a three-year
period. To ensure Group alignment, all performance awards will be subject to
Group performance measures.
Applicable performance measures will be determined by the Committee
each time an award is made and will be communicated to participants in the
award letter. Once the CSP has been implemented, retrospective
achievement against targets will be disclosed. The LTI targets include:
• Free cash flow margin | 40 per cent
• TSR (Absolute TSR) | 60 per cent
As a consequence of COVID-19, the RemCo has not yet decided if awards will
be made in 2021 and the threshold, target and stretch performance targets
can, as a consequence, not be disclosed at this stage.
Award levels
Intended on-target award levels are expressed as a percentage of TGP and
are disclosed in the package design section below.
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Remuneration element
Policy
Vesting levels
Vesting period
Dilution limit
In recognition of the fact that TGP is set between the lower quartile and
median, the CSP will comprise of an out-performance element in the case of
superior performance as follows:
• Threshold performance – 50% linear vesting
• Target performance – 100% linear vesting
• Stretch performance – 250% linear vesting
Bonus awards vest in equal tranches after 12 and 18 months, after the end of
the performance period to which the deferral relates. Bonus awards are not
subject to a holding period.
Performance awards are subject to a three-year vesting period, whereafter the
shares will be settled. In addition, at the discretion of the Committee, 50 per
cent of vested performance shares are subjected to additional holding periods
of one year (25 per cent of the shares) and two-years (the remaining 25 per
cent) during which they cannot be disposed of, post-vesting retrospectively.
During the holding period the vested shares may also be subject to claw-back,
as explained in further detail below.
The Company voluntarily imposed a dilution limit for the CSP. Up to five per
cent of the issued share capital can be issued in settlement of awards granted
under the CSP. When required under listing rules, the Company would seek
to formalise the limit in a general meeting.
2021 STI performance targets
The Committee has agreed the following financial and non-financial targets for the year:
Company targets for FY21:
Performance measure
Weighting
Consolidated economic
profit
Environment, Social and
Governance (“ESG”), as
outlined in further detail
below
70%
30%
Threshold
(50%)
WACC
Target
(100%)
Stretch
(150%)
WACC + 1.5%
WACC + 3%
The approved ESG targets are outlined below:
Key performance
area
Weighting
Key performance
indicator
Threshold
On target
Stretch
Occupational
health &
safety
30%
40%
Total Recordable
Injury Frequency
Rate (“TRIFR”)
≥5% performance
improvement
≥18% performance
improvement
≥20% performance
improvement
40%
LTIFR
≥5% performance
improvement
≥18% performance
improvement
≥20% performance
improvement
20%
New occupational
disease cases
N/A
0
N/A
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Remuneration Report continued
Part Two: Remuneration Policy continued
Key performance
area
Weighting
Key performance
indicator
Environment 25%
Threshold
On target
Stretch
70%
Responsible
environmental
stewardship
No major
environmental
incidents
Additional:
Compliance rating on
environment
assessment audits
Additional:
Environmental
management system
that incorporates
international standards
such as International
Finance Corporation
30%
Global vanadium
advocacy
Active participation in
Vanitec processes that
address Vanadium
environmental
matters
Additional: Active
advocacy on benefit
of vanadium to
sustainability, in areas
such as the circular
economy
Social licence
to operate
25%
100%
Acquire and
maintain social
license to operate
Compliance to
applicable regulatory
frameworks (MCII,
B-BBEE & DTI Codes,
etc)
Additional: Adherence
to MCIII plan
milestones and the
development of Value
Beyond Compliance
strategies
Additional: Effective
cross-functional
internal forums such
as transformational
forums inclusive of
General Management,
Finance,
Procurement, HR and
Stakeholder
Governance
20%
100%
Adherence to the
QCA Corporate
Governance Code
Full adherence to the
QCA Code
Threshold + 100%
year-on-year
improvement as per
Board approved
Governance annual
workplan
The Committee will continue to keep a close eye on the impact of COVID-19 on the business and will monitor its
financial performance accordingly. As the year progresses, and in the event that the full impact of COVID-19 on the
business becomes more apparent, the Committee will be better placed to make appropriate amendments to the STI
metrics that would be fair to all stakeholders, both employees and shareholders.
Package design
The remuneration policy is linked to our strategy and is an enabler for the achievement of the Group’s key performance
indicators. The structure of the remuneration package supports the Group’s strategic objectives and is made up of fixed
and variable remuneration.
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Bushveld Minerals | Annual Report and Financial Results 2020
The mix between fixed and variable pay for executive directors linked to various performance outcomes (Threshold,
On-target and Stretch) under the terms of the policy are indicated in the following graphs:
CEO (%)
CFO (%)
400%
350%
300%
250%
200%
150%
100%
50%
0%
400%
350%
300%
250%
200%
150%
100%
50%
0%
Stretch
Target
Threshold
Stretch
Target
Threshold
TPG
STI
Deferred STI
LTI
Further detail relating to executives and directors
Minimum Shareholding Requirements
To ensure further shareholder alignment, executives are required to build up and maintain a percentage of their TGP in
unencumbered Company shares over a three-year period from date of implementation of the policy, or appointment.
This shareholding can be built up as desired by executives. Any existing shareholding, as well as vested CSP shares
(including those that are subject to the holding period), will be taken into consideration when calculating the
shareholding percentage.
The required shareholding levels, as a percentage of TGP (before tax) are as follows:
Chief Executive Officer
Finance Director
Other Executives
200%
175%
150%
Malus and Claw-Back Policy
As a result of increased corporate governance requirements pertaining to executive remuneration, variable
remuneration is subject to malus and claw-back. The purpose of such a policy is to give the board the discretion to
recoup vested, settled and/or paid incentives (also referred to a “claw-back”) and to reduce and cancel any unvested
and/or unpaid incentive remuneration (also referred to as “malus”) when trigger event(s) occur.
The policy may be implemented by the Board where there were material misstatements of financial results or other
calculation errors that resulted in the overpayment of incentives and gross misconduct on the part of the employee
leading to dismissal. The policy applies to all variable pay as follows:
• Unpaid STIs and unvested LTIs are subject to malus as a pre-vesting forfeiture provision.
• Paid STI and 50 per cent of vested LTIs may be subject to claw-back as a post vesting recoupment of paid and
vested incentives.
• LTIs that are subject to a holding period will be subject to claw-back as follows: 25 per cent can be clawed back for
a one-year period post vesting and the final 25 per cent for a two-year period post vesting.
Executive employment contracts and termination of employment
During this period the Committee appointed ENS Africa, one of the largest independent law firms in South Africa, to
review existing and draft new executive employment contracts that include restraint of trade provisions. All newly-
appointed executives are engaged on the basis of the new contract and tied to a six-month restraint period.
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The STI and LTI make a distinction between fault and no-fault terminations as follows:
STI & LTI
Fault termination (resignation and dismissal)
The incentive is forfeited
No-fault termination (termination due to death, ill health,
disability, retrenchment, sale of an employer, retirement)
A pro-rata portion of the incentive is received, based on
the number of complete months in service, and in the
case of performance shares awards are adjusted for
performance. The unvested or unpaid portion will lapse
Shareholder engagement
Bushveld Minerals is committed to fair, responsible and transparent remuneration. As such the Company invites
shareholders to engage with the Group on remuneration-related matters. In response to shareholder queries, where
appropriate, the Board may resolve to amend relevant elements of the remuneration policy.
Non-executive director fees
Non-executive directors are appointed to the Bushveld Minerals Group based on their ability to contribute competence,
insights and experience appropriate to assisting the Group to set and achieve its objectives. Consequently, fees are set
at levels to attract and retain the calibre of directors necessary to contribute to a highly effective board.
They do not participate in either the STI or LTI. No arrangements exist for compensation in respect of loss of office. The
aggregate fees of all directors shall not exceed GBP500,000 per annum, or such higher amount as may be determined
by ordinary resolution (excluding amounts payable under any other provisions of the Articles).
The current approved fee structure is as follows:
Board Position
Chairman
Non-executive director
Senior non-executive director
Board Committee Chairperson
Remuneration committee
Audit committee
Nominations committee
Disclosure committee
Annual Fee – US$
96,278
51,348
64,185
Annual Fee – US$
6,419
6,419
3,209
3,209
Part Three: Remuneration Implementation Report
TGP increases awarded to executives versus other employees
In line with the company’s philosophy to address the wage gap, higher increases were awarded to lower levels of staff.
The following TGP increases were awarded with effect from January 2021:
Occupational Level
Top Management
Executives
Middle management/professional specialists
Non-management
% Increase
0%
3%
3%
5%
There would be no annual adjustment for Vametco management, instead their percentage allocation would offset the
reduction of the employer contribution towards their retirement fund from 11.75 per cent to 7.5 per cent.
2020 STI outcomes
Metrics and weightings
The relative weighting and composition of Group and Individual objectives for 2020 were:
Performance category
Personal performance
Business performance
CEO and CFO Other Executives
20%
80%
30%
70%
Subsidiary
Executives
40%
60%
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Bushveld Minerals | Annual Report and Financial Results 2020
Business targets and outcomes
Measure
Weighting
Threshold
Target
Stretch
2020 Target
Consolidated Economic Profit (EVA =
RONA vs WACC)
70%
RONA =
WACC
ESG (all measures are equally weighted as
illustrated below)
Safety performance
Health (compliance)
Community (number of business disruptions)
30% 80% of target
33%
33%
33%
5%
90%
2
RONA =
WACC +
1.5%
100% of
target
10%
95%
0
RONA =
WACC + 3%
150% of
target
15%
100%
0
2020
outcomes
60%
113%
100%
100%
100%
For FY20, for the business performance measure, the collar was applied to the Vanadium price at US$30/kgV while the
rand dollar exposure was capped using the higher end of the exchange rate at ZAR15.90.
The overall STI performance achievement for business targets is 75 per cent, resulting in the achievement of a
“between threshold and target” business performance outcome.
Personal targets and outcomes
Depending on the participant’s role, personal metrics and targets were set and evaluated with reference to the
following performance categories:
a. Strategy Implementation
b. Production Volumes
c. Production Costs
d. Capital Projects
e. Sustainability
f. Organisational Health
STI calculation and payments
The STI is calculated based on the following formula, which incorporates six variables derived from the end of year
performance evaluation scores:
Qualifying Annual TGP x On-Target Incentive Percentage x ((Personal Score x Personal Weighting) + (Business Score x
Business Weighting)).
To ensure alignment with shareholders are maintained and considering the lack of a CSP performance share allocation
in FY20, it was concluded that a significant part of the STI will rather be settled in equity (shares in lieu of cash), which
will be subject to a vesting period and forfeiture conditions until 31 December 2021, together with the normal deferral
component in terms of the remuneration policy.
In this context, the STIs (cash and deferred shares) were as follows for the Company’s two executive directors, the CEO
and CFO during 2021.
Name
TGP
USD
On-target
incentive
percentage
Personal
Score
Personal
weighting
Business
score
Business
weighting
F. Mojapelo 381,107 73%
T. Chikanza 285,760 73%
100%
102%
20%
20%
75%
75%
80%
80%
Total
calculated
STI (USD)
137,198
64,330
STI settled in
cash USD
STI settled in
shares (USD)
45,687
21,422
91,511
42,908
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Part Three: Remuneration Implementation Report continued
Actual CEO STI against on-target and stretch
Actual CFO STI against on-target and stretch
STI outcome (US$ (millions))
1,000,000
750,000
500,000
250,000
0
1,000,000
750,000
500,000
250,000
Stretch
Target
Actual
0
Stretch
Target
Actual
TGP
STI (cash)
STI (deferred)
2020 conditional shares awarded
The CSP comprises two elements: performance shares and bonus shares. During 2020, no conditional performance
shares were granted while bonus shares will be awarded during 2021 for performance relating to the 2020 financial year.
Minimum shareholding requirements
Minimum shareholding requirements for the executives were adopted at the beginning of this financial year. Executives
are given three years from this date, or the date of their employment, to build up the required shareholding. The current
levels of ownership are depicted below:
Executive
F. Mojapelo
T. Chikanza
% of TGP held in shares
(as at 31 Dec 2020)
MSR target and
target date
589%
0%
200% (31 Dec 2021)
150% (1 Oct 2022)
Remuneration disclosure
Remuneration paid to executive directors during the year
Single figure of remuneration table:
Name
Executive directors
F Mojapelo 2,3
T Chikanza 3,4
Year
2020
2019
2020
2019
Guaranteed
pay
USD
381,107
416,230
285,760
78,043
Benefits
USD
STI 1
USD
LTI Reflected
USD
Other
Total single
figure of
Remuneration
USD
–
–
–
–
137,198
85,368
246,772
153,547
103,388
64,330
–
–
–
–
–
–
603,673
816,550
453,478
78,043
Footnotes:
1. The STI included in the 2019 and 2020 financial years relates to the cash component accrued to incumbents relating to performance in the
2019 and 2020 financial year respectively, however the STI is only paid after year end. For FY20, 1/3 of the STI will be settled in cash and 2/3
in shares which will vest in December 2021.
2. The LTI reflected in the 2019 financial year includes the bonus share awards which relate to performance in the 2019 financial year.
3. The LTI reflected in the 2020 financial year includes the bonus share awards which relate to performance in the 2020 financial year and will
be awarded after year end.
4. T Chikanza was employed as CFO on 1 October 2019 and therefore only 3 months remuneration is included. She did not quality for an STI or
LTI award during the 2019 financial year.
* All amounts for the 2020 single figure disclosure were converted to USD using the average exchange rate of 16.4622 for the 2020 financial
year (2019: 14.4513).
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Bushveld Minerals | Annual Report and Financial Results 2020
Schedule of unvested awards and cash flow on settlement
Names
Award date Vesting date
Opening
balance
on 1 Jan
2019
Granted
during
2019
Forfeited
during
2019
Settled
during 2019
Closing
balance
on 31 Dec
2019
Cash value
of receipts
2019
(USD) 1
Estimated
closing fair
value on
31 Dec
2019
(USD) 2
Aug-18
Aug-19
7,000,000
–
–
(7,000,000)
– 2,532,206
–
Jan-19
Jan-22
–
678,572
– Bonus share award
Jul-20
50% in Dec
2020 and
50% in June
2021
–
–
–
–
–
678,572
–
136,863
–
–
–
–
Granted
during 2020
Forfeited
during 2020
Settled during
2020
Closing
balance on
31 Dec 2020
Cash value
of receipts
2020 (USD) 1
Estimated
closing fair
value on 31
Dec 2020
(USD) 2,3
Executive directors
F Mojapelo
– Retrospective
share award
CSP awards:
– Performance
share award
Names
Executive directors
F Mojapelo
– Retrospective
share award
CSP awards:
– Performance
share award
– Bonus share award
880,745
–
–
–
–
–
–
–
–
678,572
–
–
–
–
(440,373)
440,373
117,319
117,319
Includes the proceeds from the awards settled during the year, based on the market value on vesting date.
1.
2. The performance share awards are included at the year end share price of US$0.27 (2019: US$0.26) with an estimated vesting percentage
of 0% (2019: 76.8%).
3. The bonus share awards made in the 2020 financial year are included at the year end share price of US$0.27.
Bonus share award 2021: A bonus share award will be made under the CSP to the CEO and CFO in the 2021 financial year relating to
performance in the 2020 financial year.
Non-executive director fees paid during the year
No increases to the fees of non-executive directors were approved for the 2020 year. The fees paid during 2020
compared to 2019 are disclosed below.
Non-executive
directors
Ian Watson
Michael Kirkwood
Jeremy Friedlander
Anthony Viljoen
Dolly Mokgatle
Board
96,278
64,185
51,348
51,348
39,945
2020 Fees received by non-executive directors (USD)
Remuneration
Committee
Chair
Audit
Committee
Chair
Nominations
Committee
Chair
Attendance
of ad-hoc
meetings
Disclosure
Committee
Chair
Total fees
received
2020
–
6,419
–
–
–
–
6,419
–
–
–
3,209
–
–
–
–
6,419
5,135
6,419
3,851
2,562
3,209
–
–
–
–
109,115
82,157
57,767
55,199
42,507
Total fees
received
2019
116,655
90,440
64,226
61,604
–
Annual Report and Financial Results 2020 | Bushveld Minerals
91
Financial StatementsSupplementary InformationGovernanceBusiness Overview Governance
Directors’
Report
The Directors of Bushveld Minerals Limited (“Bushveld” or the Group”) hereby present their report together with the
consolidated financial statements for the year ended 31 December 2020.
Principal activities, business review and future developments
Bushveld Minerals is a low-cost, vertically-integrated primary vanadium producer. As the owner of two of the world’s four
operating vanadium processing facilities, the Company is one of only three primary producers globally. In 2020,
Bushveld Minerals produced more than 3,600 mtV, representing approximately three per cent of the global vanadium
market. With a diversified vanadium product portfolio serving the needs of the steel, energy and chemical sectors, the
Company participates in the entire vanadium value chain through its two main pillars: Bushveld Vanadium, which mines
and processes vanadium ore; and Bushveld Energy, an energy storage solutions provider.
Bushveld Vanadium is targeting to materially grow its vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by the end of 2022, from projects currently being
implemented. Beyond that, pre-feasibility studies are in progress to determine the optimal path to increase production
even further to a steady state production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in the medium-term and
to a steady state production run rate of 8,400 mtVp.a. in the long term. Bushveld Energy is focused on developing and
promoting the role of vanadium in the growing global energy storage market through the advancement of vanadium-
based energy storage systems, specifically Vanadium Redox Flow Batteries (“VRFBs”).
The Company held an initial interest in Invinity of 8.71 per cent. Bushveld Energy has since sold its stake in Invinity, for
which it received about US$13 million. Similarly, Bushveld Energy holds an indirect interest in Cellcube of 25.25 per cent.
In addition, the Company holds a 4.76 per cent shareholding in AIM-listed AfriTin Mining Limited, an African mining
company with a portfolio of near-production tin assets in Namibia and South Africa. It was demerged from Bushveld
Minerals in November 2017. Furthermore, the Group also has interests in Lemur, an integrated thermal coal mining and
independent power producer project in Madagascar.
Bushveld Minerals is the holding company of several companies. The Group structure is described in Note 1 of the
financial statements.
Reviews of the Group’s financial and operational performance and future developments are provided in the Chairman’s
Statement, Chief Executive Officer’s review and the Finance Director’s review on pages 8, 10 and 34 respectively.
Results and dividend
The Group’s results show a loss before tax for the year of US$37.7 million (2019: profit of US$83.3 million). While its value
proposition to shareholders is primarily of a capital growth nature, the intention is to create shareholder value through
delivering on strategy. Further analysis of the results is disclosed in the Finance Director’s statement.
Share capital and funding
Full details of the authorised and issued share capital, together with details of the movements in the Company’s issued
share capital during the year, are shown in note 23. The Company has one class of ordinary shares which carry no right
to fixed income. Each share carries the right to one vote at general meetings of the Company.
Directors
The Directors who served the Company since 1 January 2020 are as follows:
Fortune Mojapelo
Tanya Chikanza
Ian Watson
Michael J. Kirkwood
Anthony Viljoen
Jeremy Friedlander
Dolly Mokgatle
Chief Executive Officer
Finance Director
Chairman and Independent Non-Executive Director
Senior Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director (Appointed March 2020, deceased January 2021)
Directors’ interests
The Directors’ beneficial interests in the shares of the Company at 31 December 2020 were:
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Bushveld Minerals | Annual Report and Financial Results 2020
Fortune Mojapelo
Tanya Chikanza
Ian Watson
Michael J. Kirkwood
Anthony Viljoen
Jeremy Friedlander
Dolly Mokgatle
Ordinary shares of 1p
each 31 December 2020
Ordinary shares of 1p each
31 December 2019
12,580,000
–
3,555,000
300,000
12,746,667
1,050,000
–
12,580,000
–
3,555,000
300,000
12,746,667
1,050,000
–
Fortune Mojapelo held 8,500,000 Ordinary Shares in Bushveld Minerals directly and has a beneficial interest in a further
8,160,000 shares held through VM Investment Company (Pty) Ltd, a company in which he has a 50 per cent interest,
resulting in a total of 12,580,000 shares.
Anthony Viljoen held 8,666,667 Ordinary Shares in Bushveld Minerals directly and has a beneficial interest in a further
8,160,000 Ordinary Shares held through VM Investment Company (Pty) Ltd, a company in which he has a 50 per cent
interest, resulting in a total of 12,746,667 shares.
The Bushveld Minerals remuneration structure includes an incentive component which includes the Short-term
Incentives (“STI”) and Long-term Incentives (“LTI”) schemes. Refer to the remuneration report for details of options
awarded and the vesting thereof.
Directors’ indemnity insurance
The Group has maintained insurance throughout the year for its Directors and officers against the consequences of
actions brought against them in relation to their duties for the group.
Employee involvement policies
The Group places considerable value on the awareness and involvement of its employees in the Group’s activities.
Within the bounds of commercial confidentiality, information is disseminated to all levels of staff about matters that
affect the progress of the Group, and that are of interest and concern to them as employees.
Creditor payment policy and practice
The group’s policy is to ensure that, in the absence of disputes, all suppliers are dealt with in accordance with its standard
payment policy and it abides by the terms of payment agreed with suppliers when agreeing the terms of each
transaction. Suppliers are made aware of the terms of payment.
Related party transactions
Details of related party transactions are detailed in note 35 of the financial statements.
Events after the reporting date
Events after the reporting date are detailed in note 36 of the financial statements, including the COVID-19 pandemic, the
impact of which is also described in the Chairman’s Statement, Chief Executive’s Review and Finance Director’s Report.
Statement as to disclosure of information to auditor
The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they
are aware, there is no relevant audit information of which the auditor is unaware. Each of the Directors have confirmed
that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any
relevant audit information and to establish that it has been communicated to the auditor.
Auditor
The Company’s auditor is RSM UK Audit LLP.
Electronic communications
The maintenance and integrity of the Group’s website is the responsibility of the Directors. The work carried out by the
auditor does not involve consideration of these matters and, accordingly, the auditor accepts no responsibility for any
changes that may have occurred to the financial statements since they were initially presented on the website.
The Group’s website is maintained in compliance with AIM Rule 26.
By order of the Board
K Bredin
Company Secretary
29 June 2021
Annual Report and Financial Results 2020 | Bushveld Minerals
93
Financial StatementsSupplementary InformationGovernanceBusiness Overview Governance
Statement of Directors’
Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Guernsey company law requires the Directors to prepare group financial statements for each financial year in
accordance with generally-accepted accounting principles. The Directors are required by the AIM Rules of the London
Stock Exchange to prepare group financial statements in accordance with International Financial Reporting Standards
(“IFRS”) in conformity with the requirements of the Companies Act of 2006.
The financial statements of the Group are required by law to give a true and fair view of the state of the group’s affairs
at the end of the financial year and of the profit or loss of the Group and are required by IFRS, in conformity with the
requirements of the Companies Act of 2006 to fairly present the financial position and performance of the Group.
The Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and of the profit or loss of the Group for that year.
In preparing the Group financial statements, the Directors are required to:
(i) select suitable accounting policies and apply them consistently;
(ii) make judgements and accounting estimates that are reasonable and prudent;
(iii) state whether they have been prepared in accordance with IFRS in conformity with the requirements of the
Companies Act of 2006; and
(iv) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s transactions, and disclose with reasonable accuracy, at any time, the financial position of the Group and enable
them to ensure that the financial statements comply with applicable law. They are also responsible for safeguarding
the assets of the Group and taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Group’s website. Legislation in Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Directors confirm they have discharged their responsibilities as noted above.
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Bushveld Minerals | Annual Report and Financial Results 2020
Independent
Auditor’s Report
Opinion
We have audited the financial statements of Bushveld Minerals Limited and its subsidiaries (the ‘group’) for the year
ended 31 December 2020 which comprise of the Consolidated Statement of Profit or Loss and Other Comprehensive
Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated
Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and International
Accounting Standards in conformity with the requirements of the Companies Act 2006.
In our opinion, the financial statements:
• give a true and fair view of the state of the group’s affairs as at 31 December 2020 and of the group’s loss for the year
then ended;
• are in accordance with International Accounting Standards in conformity with the requirements of the Companies
Act 2006; and
• comply with the requirements of The Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of
the group’s ability to continue to adopt the going concern basis of accounting included audit of the group’s cashflow
forecasts, challenge of the key inputs and assumptions and discussion with management regarding the group’s current
and future funding options. Our key observation is that the forecasts are sensitive to vanadium price assumptions.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Summary of our audit approach
Key audit matters
Materiality
Scope
Group
•
Impairment of property, plant and equipment and intangible exploration
and evaluation assets
Group
• Overall materiality: US$3,000,000 (2019: US$2,240,000)
• Performance materiality: US$2,250,000 (2019: US$1,680,000)
Our full-scope audit procedures covered 99% of revenue, 97% of total assets
and 83% of profit before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
group financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall
audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters
Annual Report and Financial Results 2020 | Bushveld Minerals
95
Financial StatementsSupplementary InformationGovernanceBusiness Overview Independent Auditor’s Report continued
were addressed in the context of our audit of the group financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Impairment of property, plant and equipment and intangible assets
Key audit matter description
The group has made of loss of US$36.0 million in the year for the reasons
described in the Strategic Report.
As a result, there is a risk that the carrying value of the group’s property, plant
and equipment and intangible exploration and evaluation may be impaired.
The use of estimates and judgements in respect of impairment is disclosed
in the “use of estimates and judgements” section of note 3 and details of
intangible exploration and evaluation assets and property, plant and
equipment are disclosed in notes 13 and 14 respectively.
This is considered to be a Key Audit Matter due to the use of management
estimates and judgements in estimating the recoverable amount of the assets
based on long-term forecasts which require the use of assumptions,
including future vanadium price and production volumes and costs.
How the matter was addressed in
the audit
Our work included:
• Checking the integrity and arithmetic accuracy of the cashflow forecasts
as provided to the Board of directors by management
• Challenging management on the reasonableness of the assumptions
made in the forecasts, particularly in respect of production levels,
vanadium prices, operating costs and capital expenditure
• Corroborating the reasonableness of assumptions and explanations
provided by management to supporting information where available
• Stress-testing management’s cashflow forecasts to assess the impact
of assumptions worse than those included in management’s forecasts
• Considering mitigating actions available to management and the level
of headroom in the forecasts under various scenarios
• Review of the work of component auditors on impairment
• Discussing our findings with management and the Audit Committee
• Auditing the accuracy and completeness of disclosures made in the
financial statements in respect of going concern and the impact of
COVID-19
Key observations
Management use a consolidated financial model to assess impairment and
the model is sensitive to vanadium price assumptions.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing
and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on
the financial statements as a whole, could reasonably influence the economic decisions of the users we take into
account the qualitative nature and the size of the misstatements. Based on our professional judgement, we determined
materiality as follows:
Overall materiality
$3,000,000 (2019: US$2,240,000)
Group
Basis for determining overall
materiality
Rationale for benchmark applied
Formula based on 10% of result before tax
As a listed entity, result before tax is considered to be the most appropriate
benchmark for users of the financial statements.
Performance materiality
US$2,250,000 (2019: US$1,680,000)
Basis for determining performance
materiality
75% of overall materiality
Reporting of misstatements to the
Audit Committee
Misstatements in excess of US$150,000 and misstatements below that
threshold that, in our view, warranted reporting on qualitative grounds.
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Bushveld Minerals | Annual Report and Financial Results 2020
An overview of the scope of our audit
The group consists of 30 components, located in the following countries:
• Guernsey
• South Africa
• Mauritius
• Madagascar
• United States of America
• United Kingdom
The coverage achieved by our audit procedures was:
Full scope audit
Specific audit procedures
Total
Number of
components
Revenue
Total assets
Loss before tax
5
6
11
99%
1%
100%
97%
2%
99%
83%
16%
99%
Analytical procedures at group level were performed for the remaining components.
Of the above, full scope audits for 4 components and specific audit procedures for 3 components were undertaken by
component auditors.
Other information
The other information comprises the information included in the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where The Companies (Guernsey) Law 2008 requires us
to report to you if, in our opinion:
• proper accounting records have not been kept by the parent company; or
•
• we have failed to obtain all the information and explanations which, to the best of our knowledge and belief,
the financial statements are not in agreement with the accounting records; or
are necessary for the purposes of our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 94, the Directors are responsible
for the preparation of the group’s financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the Directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Annual Report and Financial Results 2020 | Bushveld Minerals
97
Financial StatementsSupplementary InformationGovernanceBusiness Overview Independent Auditor’s Report continued
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain
sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the
determination of material amounts and disclosures in the financial statements, to perform audit procedures to help
identify instances of non-compliance with other laws and regulations that may have a material effect on the financial
statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations
identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the
financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to
fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to
ensure that the entity’s operations are conducted in accordance with the provisions of laws and regulations and for the
prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit
engagement team and component auditors:
• obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks,
•
that the group operate in and how the group is complying with the legal and regulatory frameworks;
inquired of management, and those charged with governance, about their own identification and assessment of the
risks of irregularities, including any known actual, suspected or alleged instances of fraud;
• discussed matters about non-compliance with laws and regulations and how fraud might occur including
assessment of how and where the financial statements may be susceptible to fraud.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could have a material
effect on the consolidated financial statements were communicated to component auditors. Any instances of
non-compliance with laws and regulations identified and communicated by a component auditor were considered in
our group audit approach.
The most significant laws and regulations were determined as follows:
Legislation/Regulation
IFRS and The Companies (Guernsey)
Law 2008
Additional audit procedures performed by the Group audit engagement team and component
auditors included:
• Review of the financial statement disclosures and testing to supporting
documentation;
• Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance regulations in the
jurisdictions in which the group
operates
Inspection of advice received from internal/external tax advisors;
•
• Consideration of whether any matter identified during the audit required
reporting to an appropriate authority outside the entity.
Mining Charter of South Africa and
associated laws
• Enquiry of management as to whether any breaches had been identified;
• Review of relevant supporting documentation.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the Group audit engagement team and component auditors
Revenue recognition
Tests of controls, tests of details, analytical procedures and cut-off testing.
Management override of controls
• Testing the appropriateness of journal entries and other adjustments;
• Assessing whether the judgements made in making accounting estimates
are indicative of a potential bias; and
• Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is included in appendix 1 of this auditor’s
report. This description, which is located on page 99, forms part of our auditor’s report.
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Bushveld Minerals | Annual Report and Financial Results 2020
Use of this report
This report is made solely to the company’s members, as a body, in accordance with section 262 of The Companies
(Guernsey) Law 2008. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as
a body, for our audit work, for this report, or for the opinions we have formed.
RSM UK Audit LLP, Auditor
Chartered Accountants
25 Farringdon Street
London, EC4A 4AB
Date: 29 June 2021
Appendix 1: Auditor’s responsibilities for the audit of the financial Statements
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the group to cease to continue as a
going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, including the FRC’s Ethical Standard, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Annual Report and Financial Results 2020 | Bushveld Minerals
99
Financial StatementsSupplementary InformationGovernanceBusiness Overview Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 31 December 2020
Continuing operations
Revenue
Cost of sales
Gross (loss) profit
Other operating income
Selling and distribution costs
Other mine operating costs
Idle plant costs
Share-based payment
Administration expenses
Operating (loss)/profit
Finance income
Finance costs
Gain on bargain purchase
Movement in earnout estimate
(Loss) profit before taxation
Taxation
(Loss) profit for the year
Consolidated other comprehensive income:
Items that may not be reclassified to profit or loss:
Changes in the fair value of financial assets at fair value through other comprehensive income
Other fair value movements
Total items that may not be reclassified to profit or loss
Items that may be reclassified to profit or loss:
Currency translation differences
Total comprehensive (loss) income for the year
(Loss) profit attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive (loss) income attributable to:
Owners of the parent
Non-controlling interest
Earnings per share
Profit per ordinary share
Basic (loss)/earnings per share (cents)
Diluted (loss)/earnings per share (cents)
All results relate to continuing activities.
Note
2020
US$
2019
US$
5
89,988,078
(91,260,760)
116,514,112
(56,198,919)
6
9
10
8
26
11
21
(1,272,682)
2,304,528
(4,828,710)
(4,699,892)
(4,152,153)
(375,008)
(19,783,176)
(32,807,093)
1,077,991
(5,732,247)
–
(206,066)
60,315,193
922,385
(7,556,687)
(3,865,303)
(2,893,286)
–
(24,668,491)
22,253,811
3,593,142
(1,669,456)
60,586,633
(1,510,572)
(37,667,417)
484,654
83,253,558
(14,005,965)
(37,182,763)
69,247,593
13,483,194
103,448
13,586,642
(359,045)
110,175
(248,870)
(10,425,238)
6,413,737
(34,021,359)
75,412,460
(36,680,615)
(502,148)
61,968,301
7,279,292
(37,182,763)
69,247,593
(32,640,348)
(1,381,011)
67,136,957
8,275,503
(34,021,359)
75,412,460
12
12
(3.00)
(3.00)
–
5.51
5.45
–
The accounting policies on pages 105 to 115 and the notes on pages 104 to 141 form an integral part of the consolidated financial statements.
100
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements Consolidated Statement
of Financial Position
As at 31 December 2020
Assets
Non-Current Assets
Intangible assets
Property, plant and equipment
Investment property
Deferred tax
Financial assets – investments
Total Non-Current Assets
Current Assets
Inventories
Trade and other receivables
Restricted investment
Current tax receivable
Financial assets at fair value
Cash and cash equivalents
Total Current Assets
Total Assets
Equity and Liabilities
Share capital
Share premium
Retained income
Share-based payment reserve
Convertible loan note reserve
Foreign currency translation reserve
Fair value reserve
Equity attributable to owners of the parent
Non-controlling interest
Total Equity
Liabilities
Non-Current Liabilities
Post-retirement medical liability
Environmental rehabilitation liability
Deferred consideration
Loans
Borrowings
Lease liabilities
Total Non-Current Liabilities
Current Liabilities
Trade and other payables
Provisions
Borrowings
Lease liabilities
Deferred consideration
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
Note
2020
US$
2019
US$
13
14
15
16
17
18
19
20
21
22
23
23
23
23
23
24
25
26
27
28
29
30
31
28
29
26
59,003,825
167,579,993
2,811,017
5,085,154
–
59,408,821
185,269,063
2,905,449
173,892
4,420,891
234,479,989
252,178,116
34,081,625
10,425,363
3,111,465
814,067
22,452,877
50,540,672
35,082,342
4,516,287
6,605,465
493,178
1,952,227
34,011,557
121,426,069
82,661,056
355,906,058
334,839,172
15,858,428
117,065,907
46,734,823
375,008
54,814
(11,202,236)
12,966,294
15,357,271
111,067,064
83,415,438
–
–
(1,655,861)
(620,349)
181,853,038
32,146,712
207,563,563
33,527,723
213,999,750
241,091,286
2,076,023
17,998,366
1,802,884
1,597,972
70,909,370
4,376,483
2,331,325
17,844,066
7,108,819
–
41,756,152
4,677,338
98,761,098
73,717,700
22,065,601
3,296,894
13,337,406
625,661
3,819,648
15,809,996
3,432,619
–
787,571
–
43,145,210
20,030,186
141,906,308
93,747,886
355,906,058
334,839,172
The consolidated financial statements and the notes on pages 100 to 141, were approved by the board of directors on the 29 June 2021 and
were signed on its behalf by:
Tanya Chikanza
Finance Director
The accounting policies on pages 105 to 115 and the notes on pages 104 to 141 form an integral part of the consolidated financial statements.
Annual Report and Financial Results 2020 | Bushveld Minerals
101
Financial StatementsSupplementary InformationGovernanceBusiness Overview Consolidated Statement
of Changes in Equity
for the year ended 31 December 2020
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102
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
Cash flows from operating activities
(Loss)/profit before taxation
Adjustments for:
Depreciation property, plant and equipment
Gain on bargain purchase
Movement in earnout estimate
Finance income
Finance costs
Changes in working capital
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Finance income
Acquisition of business
Purchase of property, plant and equipment
Payment of deferred consideration
Purchase of investments
Purchase of exploration and evaluation assets
Net cash from investing activities
Cash flows from financing activities
Net proceeds from loans
Finance costs
Net proceeds/(repayment) of borrowings
Lease payments
Dividends paid
Disposal of financial assets held at fair value
Net cash from financing activities
Total cash movement for the year
Cash at the beginning of the year
Effect of translation of foreign rate
Total cash at end of the year
Notes
2020
US$
2019
US$
14
8
26
9
10
9
8
14
26
17&21
13
27
28
(37,667,417)
83,253,558
17,866,153
–
206,066
(1,077,991)
5,732,249
1,253,029
(3,452,492)
10,388,145
(60,586,633)
1,510,572
(3,593,142)
1,669,456
4,586,737
(8,767,312)
(17,140,403)
28,461,381
985,901
–
(9,269,924)
(1,680,459)
(1,883,208)
(1,471,142)
3,593,142
(30,713,500)
(13,320,897)
(3,600,000)
(4,420,891)
(1,268,697)
(13,318,832)
(49,730,843)
1,597,972
(3,115,205)
49,417,161
(753,302)
–
286,643
–
(108,596)
18,582,864
(726,668)
(4,460,226)
–
47,433,269
13,287,374
16,974,034
34,011,557
(444,919)
(7,982,088)
42,019,123
(25,478)
22
50,540,672
34,011,557
The accounting policies on pages 105 to 115 and the notes on pages 104 to 141 form an integral part of the consolidated financial statements.
Annual Report and Financial Results 2020 | Bushveld Minerals
103
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements
For the year ended 31 December 2020
1. Corporate information and principal activities
Bushveld Minerals Limited (“Bushveld”) was incorporated and domiciled in Guernsey on 5 January 2012 and admitted to the AIM market in
London on 26 March 2012.
The address of the Company’s registered office is Oak House, Hirzel Street, St Peter Port, Guernsey, GY1 3RH. The consolidated financial
statements of the Company as at and for the year ended 31 December comprise of the Company and its subsidiaries (The “Group”) and the
Group’s interest in equity accounted investments.
As at 31 December 2020, the Bushveld Group comprised of:
Company
Bushveld Minerals Limited
Bushveld Resources Limited
Ivanti Resources (Pty) Limited
Pamish Investments No 39 (Pty) Limited
Amaraka Investments No 85 (Pty) Limited
Bushveld Minerals SA (Pty) Limited
Bushveld Vanchem (Pty) Limited
Great 1 Line Invest (Pty) Limited
Gemsbok Magnetite (Pty) Limited
Caber Trade and Invest 1 (Pty) Limited
Bushveld Vanadium 2 (Pty) Limited
Bushveld Energy Limited
Bushveld Energy Company (Pty) Limited
Bushveld Vametco Hybrid Mini Grid Company (RF) (Pty) Limited
Bushveld Electrolyte Company (Pty) Ltd
VRFB Holdings Limited
Vanadium Electrolyte Rental Limited
Enerox Holdings Limited
Bushveld Vametco Limited
Strategic Minerals Connecticut LLC
Bushveld Vanadium 1 (Pty) Limited
Bushveld Vametco Holdings (Pty) Limited
Bushveld Vametco Alloys (Pty) Limited
Bushveld Vametco Properties (Pty) Limited
Lemur Holdings Limited
Coal Mining Madagascar SARL
Imaloto Power Project Limited
Imaloto Power Project Company SARL
Lemur Investments Limited
Lemur SA (Pty) Ltd
Note
1
2
2
2
2
13
2
2
2
2
1
4
12
12
4
1&4
4
2
7
8
11
9
10
1
5
3
6
3
3
Equity holding
and voting
rights
Country of
incorporation
Nature of activities
N/A
100%
100%
64.00%
68.50%
100%
100%
62.5%
74%
51%
100%
84.00%
100%
100%
55%
35%
40% & 30% UK
50%
100%
100%
100%
74%
100%
100%
100%
99%
100%
99.00%
100%
100%
Guernsey
Guernsey
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Mauritius
South Africa
South Africa
South Africa
Guernsey
Guernsey
Guernsey
United States
South Africa
South Africa
South Africa
South Africa
Mauritius
Madagascar
Mauritius
Madagascar
Mauritius
South Africa
Ultimate holding company
Holding company
Mining and manufacturing company
Mining right holder
Vanadium and iron ore exploration
Group support services
Processing company
Vanadium and iron ore exploration
Vanadium and iron ore exploration
Vanadium and iron ore exploration
Holding company
Holding company
Energy development
Energy development
Energy development
Holding company
Energy development
Holding company
Holding company
Holding company
Holding company
Mining right holder
Mining and manufacturing company
Property owning company
Holding company
Coal exploration
Holding company
Power generation company
Holding company
Coal trading
1 Held directly by Bushveld Minerals Limited
2 Held by Bushveld Resources Limited
3 Held by Lemur Holdings Limited
4 Held by Bushveld Energy Limited
5 Held by Lemur Investments Limited
6 Held by Imaloto Power Project Limited
7 Held by Bushveld Vametco Limited
8 Held by Strategic Minerals Connecticut LLC
9 Held by Bushveld Vametco Holdings (Pty) Limited
10 Held by Bushveld Vametco Alloys (Pty) Limited
11 Held by Bushveld Vanadium 1 (Pty) Limited
12 Held by Bushveld Energy Company (Pty) Limited
13 Held By Bushveld Vanadium 2 (Pty) Limited
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Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements 2. Adoption of new and revised standards
Accounting standards and interpretations applied
Definition of a Business
(Amendments to IFRS 3)
The new standard is aimed at resolving the difficulties that arise when an entity determines whether it has acquired a
business or a group of assets.
Definition of a Business (Amendments to
IFRS 3) Amendments to References to the
Conceptual Framework in IFRS Standards
and Definition of Material (Amendments to
IAS 1 and IAS 8)
Interest Rate Benchmark Reform
(Amendments to IFRS 9, IAS 39 and IFRS 7)
The amendments clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework
and the standards themselves.
The new standard is aimed at resolving the potential effects the IBOR reform could have on financial reporting.
Accounting standards and interpretations not applied
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group:
COVID-19-Related Rent Concessions
(Amendment to IFRS 16)
The new standard provides lessees with an exemption from assessing whether a COVID-19-related rent concession
is a lease modification.
Interest Rate Benchmark Reform —
Phase 2 (Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16)
Reference to the Conceptual Framework
(Amendments to IFRS 3)
The new standard addresses issues that might affect financial reporting after the reform of an interest rate
benchmark, including its replacement with alternative benchmark rates.
The amendments update an outdated reference in IFRS 3 without significantly changing its requirements.
Onerous Contracts — Cost of Fulfilling a
Contract (Amendments to IAS 37)
The amendments address costs a company should include as the cost of fulfilling a contract when assessing
whether a contract is onerous.
Property, Plant and Equipment —
Proceeds before Intended Use
(Amendments to IAS 16)
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from
selling items produced while bringing that asset to the location and condition necessary for it to be capable of
operating in the manner intended by management.
IFRS 17 ‘Insurance Contracts’
The new standard provides a more uniform measurement and presentation approach for all insurance contracts.
Classification of Liabilities as Current or
Non-current (Amendments to IAS 1)
The amendments provide a more general approach to the classification of liabilities under IAS 1 based on the
contractual arrangements in place at the reporting date.
The Directors anticipate that the adoption of these Standards and Interpretations, which become effective for annual periods beginning on or
after 1 January 2020, in future periods will have no material impact on the financial statements of the Group.
Annual Report and Financial Results 2020 | Bushveld Minerals
105
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
3. Significant accounting policies
Basis of preparation
In accordance with Section 244 of The Companies (Guernsey) Law 2008, the Group confirms that the financial information for the year ended
31 December 2020 is derived from the Group’s audited financial statements and that this preliminary announcement does not include the
statutory accounts and, as such, does not contain all information required to be disclosed in the financial statements prepared in accordance
with International Financial Reporting Standards (“IFRS”).
The statutory accounts for the year ended 31 December 2020 have been audited and approved, but have not yet been filed. The Group’s
audited financial statements for the year ended 31 December 2020 received an unqualified audit opinion and the auditor’s report contained no
statement under section 263(2) or 263(3) of The Companies (Guernsey) Law 2008. The financial information contained within this preliminary
statement was approved and authorised for issue by the Board on 29 June 2021.
The consolidated financial statements have been prepared under the historical cost basis, except for the revaluation of certain financial
instruments and investment properties to fair value. Historical cost is generally based on the fair value of the consideration given in exchange
for the assets. The principal accounting policies are set out below.
Going concern
During the 2020 financial year COVID-19 introduced a significant level of uncertainty in the market as well as multiple challenges from an
operating and logistic perspective. Our operations resumed in early May following a 35-day national COVID-19 lockdown in South Africa during
which Vanchem was non-operational and Vametco was classified as essential services and had limited production. This disruption coupled with
the depressed prices realised during 2020 financial year, resulted in an operating loss for the financial period 2020. This loss has increased the
financial pressure on the business.
The Group however, closely monitors and manages its liquidity risk, cash forecasts are regularly produced, and sensitivities run for different
scenarios including, but not limited to, changes in commodity prices and different production profiles from the Group’s producing assets.
The Group will continue to prioritise operational performance, cost efficiencies and synergies across Vametco and Vanchem, and will maintain
a disciplined approach towards managing capital expenditure and optimising operating margins. Based on the current status of the Group’s
finances, having considered going concern forecasts and reasonably possible investments, downside and COVID-19 scenarios, the Group’s
forecasts demonstrate it will have sufficient liquidity headroom to meet its obligations in the ordinary course of business for the next 12 months
from the date of approval of the financial statements. This has been further supported by the improvement in the market price of vanadium.
Further details of the group’s current funding situation and strategy are included in the Going Concern and Outlook section of the Finance
Director’s Report.
Accordingly, the directors are satisfied that the Group continues to adopt the going concern basis of accounting in preparation of the
31 December 2020 financial statements.
Basis of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date
that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis,
either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
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Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree
is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.
Subsequent transactions that do not result in the obtaining of control are accounted for as equity transactions as follows:
• The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary
• Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid is
recognised directly in equity and attributed to the owners of the parent
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IFRS 9 either in profit or loss or
as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent
settlement is accounted for within equity.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform to the Group’s accounting policies.
Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost,
with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling
shareholders that present ownership interests entitling their holders to a proportionate share of the net assets upon liquidation are initially
measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial
recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-
controlling interests even if this results in the non-controlling interests having a deficit balance.
Black Economic Empowerment (“BEE”) interests are accounted for as non-controlling interests on the basis that the Group does not control
these entities.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the board of directors, which makes strategic decisions.
Foreign currencies
Functional and presentation currency
The individual financial statements of each Group company are prepared in the currency of the primary economic environment in which they
operate (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group
company are expressed in US Dollars, which is the presentation currency for the consolidated financial statements.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Annual Report and Financial Results 2020 | Bushveld Minerals
107
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
3. Significant accounting policies continued
Foreign currencies continued
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:
a) assets and liabilities for each statement of financial position presented are translated at the closing rate;
b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at
the rate on the dates of the transactions); and
c) all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
Revenue recognition
Sale of goods/products
IFRS 15 requires revenue from contracts with customers to be recognised when the separate performance obligations are satisfied, which is
when control of promised goods or services are transferred to the customer.
The entity satisfies a performance obligation by transferring control of the promised goods/products to the customer. In the standard “control
of an asset” refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. Control includes the
ability to prevent other entities from directing the use of, and obtaining the benefits from, an asset.
The Group recognises revenue at the amount that reflects the consideration to which the entity expects to be entitled in exchange for
transferring goods or services to a customer. Revenue with contract customers is generated from sale of goods and is recognised upon delivery
of the goods to the customer, at a point in time and comprises the invoiced amount of goods to customers, net of value added tax.
Cost of sales
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is
recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the
period in which the write-down or loss occurs.
Share based payments
The Group may issue equity-settled share based payment instruments to BBE shareholders to either obtain or retain BEE credentials.
Equity-settled share-based payments are measured at the fair value of the instruments at the date of the grant.
In addition, equity-settled share-based compensation benefits are provided to directors and employees under the Group’s incentive schemes.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial
or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the
option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The
cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that
are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount
calculated at each reporting date less amounts already recognised in previous periods.
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Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to
vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense
is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit
as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised
immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a
modification.
Finance income
Interest revenue is recognised when it is probable that economic benefits will flow to the Group and the amount of revenue can be measured
reliably. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which
is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying
amount on initial recognition.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax charge is based on taxable profit for the year. The Group’s liability for current tax is calculated by using tax rates that have been enacted
or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the “balance sheet liability”
method.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable
that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that
are expected to apply to the year when the asset is realised or the liability is settled based upon rates enacted and substantively enacted at the
reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items credited or charged to other comprehensive
income, in which case the deferred tax is also dealt with in other comprehensive income.
Intangible exploration and evaluation assets
All costs associated with mineral exploration and evaluation including the costs of acquiring prospecting licences; mineral production licences
and annual licences fees; rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching,
sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource; are capitalised as intangible
exploration and evaluation assets and subsequently measured at cost.
If an exploration project is successful, the related expenditures will be transferred at cost to property, plant and equipment and amortised over
the estimated life of the commercial ore reserves on a unit of production basis (with this charge being taken through profit or loss). Where a
project does not lead to the discovery of commercially viable quantities of mineral resources and is relinquished, abandoned, or is considered to
be of no further commercial value to the Group, the related costs are recognised in profit or loss.
The recoverability of capitalised exploration costs is dependent upon the discovery of economically viable ore reserves, the ability of the Group
to obtain necessary financing to complete the development of ore reserves and future profitable production or proceeds from the extraction or
disposal thereof.
Annual Report and Financial Results 2020 | Bushveld Minerals
109
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
3. Significant accounting policies continued
Impairment of exploration and evaluation assets
Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, the asset is reviewed for
impairment. Assets are also reviewed for impairment at each reporting date in accordance with IFRS 6. An asset’s carrying value is written down
to its estimated recoverable amount (being the higher of the fair value less costs to sell and value in use) if that is less than the asset’s carrying
value. Impairment losses are recognised in profit or loss.
title to the asset is compromised; or
An impairment review is undertaken when indicators of impairment arise but typically when one of the following circumstances applies:
• unexpected geological occurrences that render the resources uneconomic; or
•
• variations in mineral prices that render the project uneconomic; or
• variations in the foreign currency rates; or
•
the Group determines that it no longer wishes to continue to evaluate or develop the field.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation, except for investment properties which are carried at
fair value. Depreciation is calculated on the straight line method to write off the cost of each asset (less residual value) over its estimated useful
life as follows:
Buildings and other improvements
Plant and machinery
Motor vehicles, furniture and equipment
Decommissioning asset
Waste stripping asset
20-25 years
15-20 years
4-10 years
Life of mine
21 months
Repairs and maintenance is generally charged in profit and loss during the financial period in which it is incurred. However renovations are
capitalised and included in the carrying amount of the asset when it is probable that future economic benefits will flow to the Group. Major
renovations are depreciated over the remaining useful life of the related asset.
An item of property, plant and equipment is derecognised upon disposal or when no future benefits are expected from its use or disposal. Any
gain or loss arising from de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount
of the asset) is included in the income statement in the year the asset is derecognised.
Investment property
Investment property is initially measured at cost and subsequently at fair value with any change therein recognised in profit or loss. Any gain or
loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the
item) is recognised in profit or loss.
Impairment of property, plant and equipment
At each reporting date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible impairment in a cash-generating unit, the recoverability of the
net book value relating to that field is assessed by comparison with the estimated discounted future cash flows based on management’s
expectations of future commodity prices and future costs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease. Where conditions giving rise to impairment subsequently reverse, the effect of the impairment
charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.
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Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements
Inventories
Inventories are valued at the lower of cost or estimated net realisable value. Cost is determined on the following basis:
Raw materials
Consumable stores
Work in progress
Finished product
weighted average cost
weighted average cost
weighted average cost
weighted average cost
The cost of finished product and work in progress comprises of raw materials, direct labour, other direct costs, and related production overheads
(based on normal operating capacity) but excludes borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less costs of completion and selling expenses.
Financial assets and liabilities
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the
contractual provisions of the instrument. Financial instruments are classified into specified categories dependent upon the nature and purpose
of the instruments at the time of initial recognition. All financial assets are recognised as loans and receivables or available for sale investments
and all financial liabilities are recognised as other financial liabilities.
Financial assets
Measurement
At initial recognition, the Group measures all financial assets at fair value plus, in the case of a financial asset not at fair value through profit or
loss, transaction costs. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets are classified at initial recognition and subsequently measured at amortised cost, fair value though other comprehensive income
(FVOCI) or fair value through profit or loss (FVPL).
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s
business model for managing them.
Debt instruments
In order for a financial asset to be classified and measured at amortised cost or FVOCI, it needs to give rise to cash flows that are ‘solely
payments of principal and interest’ (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows.
The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is
subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains
and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the
Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other
changes in fair value.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership.
Annual Report and Financial Results 2020 | Bushveld Minerals
111
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
3. Significant accounting policies continued
Financial assets continued
Impairment
The Group assesses on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost and
FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Trade and other receivables
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components,
when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and
therefore measures them subsequently at amortised cost using the effective interest method, less any allowance for expected credit losses.
To determine the expected credit loss allowance for trade and other receivables, the Group applies the simplified approach permitted by IFRS 9,
which requires expected lifetime losses to be recognised from initial recognition of the receivables, see note 32 for further details.
Other receivables consist of prepayments and deposits, which are initially recognised as non-financial assets and realised over time.
Restricted investment
Restricted investment comprises of short-term deposits with an original maturity of three months or less and an investment in an investment
fund. These funds are dedicated towards future rehabilitation expenditure on the mine property.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
Investments and other financial assets
Investments are equity instruments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them at
FVOCI.
The fair value of such investments is determined by reference to quoted market prices.
Use of estimates and judgement
Impairment of financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in
making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions
as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in note 32.
Convertible loan
Interest-bearing loans are recorded initially at their fair value, net of direct transaction costs. Such instruments are subsequently carried at their
amortised cost and finance charges, including premiums payable on settlement, redemption or conversion, are recognised in profit or loss over
the term of the instrument using the effective rate of interest.
Instruments where the holder has the option to redeem for cash or convert into a pre-determined quantity of equity shares are classified as
compound instruments and presented partly as a liability and partly as equity.
Instruments where the holder has the option to redeem for cash or convert into a variable quantity of equity shares are classified separately as
a loan and a derivative liability.
Where conversion results in a fixed number of equity shares, the fair value of the liability component at the date of issue is estimated using the
prevailing market interest rate for a similar non-convertible instrument. The difference between the proceeds of issue and the fair value assigned
to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity. Where
conversion is likely to result in a variable quantity of equity shares the related derivative liability is valued and included in liabilities.
The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt
to the instrument. The difference between this amount and the interest paid is added to the carrying value of the convertible loan note.
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Financial Statements Derivative liabilities are revalued at fair value at the reporting date, and changes in the valuation amounts are credited or charged to the profit
or loss.
Warrants
Warrants issued by the company are recorded at fair value on initial recognition net of transaction costs. The fair value of warrants granted is
recognised as an expense or as share issue costs, with a corresponding increase in equity. The fair value of the warrants granted is measured
using the Black-Scholes valuation model for options without market conditions and using the binomial method for those with market
conditions, taking into account the terms and conditions under which the options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of warrants that vest.
Leases
The Group assesses whether a contract is or contains a lease, at inception of a contract. The Group recognises a right-of-use asset and a
corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with
a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating
expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by
using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. The discount rate
used ranges between 10% – 11% depending on the nature of the underlying asset.
fixed lease payments (including in-substance fixed payments), less any lease incentives;
Lease payments included in the measurement of the lease liability comprise:
•
• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
•
•
• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
The lease liability is presented as a separate line in the Statement of Financial Position. The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect
the lease payments made. The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
•
the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount rate.
the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which
cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments
change is due to a change in a floating interest rate, in which case a revised discount rate is used).
•
• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured
by discounting the revised lease payments using a revised discount rate.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs.
They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the
underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. The
costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of
the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use
asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use
assets are presented as a separate line in the Statement of Financial Position. The Group applies IAS 36 Impairment of Assets to determine
whether a right-of-use asset is impaired and accounts for any identified impairment loss.
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Financial Statements continued
For the year ended 31 December 2020
3. Significant accounting policies continued
Provisions
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the
statement or comprehensive income, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific
to the liability. Where discounting is used the increase in the provision due to the passage of time is recognised as a finance cost.
i. Environmental rehabilitation liability
The Group is exposed to environmental liabilities relating to its operations. Full provision for the cost of environmental and other remedial work
such as reclamation costs, close down and restoration costs and pollution control is made based on the estimated cost as per the
Environmental Management Program Report. Annual increases in the provisions relating to change in the net present value of the provision and
inflationary increases are shown in the statement of comprehensive income as a finance cost. Changes in estimates of the provision are
accounted for in the year the change in estimate occurs, and is charged to either the statement of comprehensive income or the
decommissioning asset in property, plant and equipment, depending on the nature of the liability.
ii. Post-retirement medical liability
The liability in respect of the defined benefit medical plan is the present value of the defined benefit obligation at the reporting date together
with adjustments for actuarial gains/losses. Any actuarial gains or losses are accounted for in other comprehensive income. The defined benefit
obligation is calculated annually by independent actuaries using the projected unit of credit method.
iii. Provident fund contributions
The Group’s contributions to the defined contribution plan are charged to profit and loss in the year to which they relate.
Use of estimates and judgements
In the application of the Group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates In particular, information about
significant areas of estimation uncertainty considered by management in preparing the financial statements is described below:
i. Decommissioning and rehabilitation obligations
Estimating the future costs of environmental and rehabilitation obligations is complex and requires management to make estimates and
judgements as most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. The
resulting provisions are further influenced by changing technologies, political, environmental, safety, business and statutory considerations.
ii. Asset lives and residual values
Property, plant and equipment are depreciated over its useful life taking into account residual values, where appropriate. The actual lives of the
assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as
technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues
such as future market conditions, the remaining life of the asset and projected disposal values.
iii. Post-retirement employee benefits
Post-retirement medical aid liabilities are provided for certain existing employees. Actuarial valuations are based on assumptions which include
employee turnover, mortality rates, the discount rate, health care inflation costs and rates of increase in costs.
iv. Revaluation of investment properties
The Group carries its residential investment properties at fair value. The Group engaged an independent valuation specialist to assess the fair
value as at 31 December 2020 for residential properties. For residential properties, it measures land and buildings at revalued amounts with
changes in fair value being recognised in other comprehensive income. Land and buildings were valued by reference to market-based evidence,
using comparable prices adjusted for specific market factors such as nature, location and condition of the property. The key assumptions used
to determine the fair value of the residential properties are provided in note 15.
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Financial Statements v. Impairment of non-current assets
Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment,
including by reference to specific impairment indicators prescribed in IFRS 6 – Exploration for and Evaluation of Mineral Resources. If there is
any indication of potential impairment, an impairment test is required based on value in use of the asset. The valuation of intangible exploration
assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future vanadium and iron ore
prices, future capital expenditures and environmental and regulatory restriction.
The group also reviews and tests the carrying value of tangible assets when events or changes in circumstances indicate that the carrying
amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows
of other assets, which is generally at the individual operating asset level. If there are indications that impairment may have occurred, estimates
are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of tangible
assets are inherently uncertain and could materially change over time and impact the recoverable amounts. The cash flows and value in use are
significantly affected by a number of factors including published reserves, resources, exploration potential and production estimates, together
with economic factors such as spot and future metal prices, discount rates, foreign currency exchange rates, estimates of costs to produce
products and future capital expenditure. At the reporting date the group assesses whether any of the indicators which gave rise to previously
recognised impairments have changed such that the impairment loss no longer exists or may have decreased. The impairment loss is then
assessed on the original factors for reversal and if indicated, such reversal is recognised.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. The recoverable amount is estimated based on the positive indicators. If an
impairment loss has decreased, the carrying amount is recorded at the recoverable amount as limited in terms of IAS 36 Impairment of Assets.
The directors have concluded that there are no indications of impairment in respect of the carrying value of intangible assets but have done an
impairment review on tangible assets at 31 December 2020 based on planned future development of the projects and current and forecast
commodity prices. See note 13 and note 14 for details.
vi. IFRS 3 business combination
In accounting for the acquisition of Vanchem in the prior year as a business combination, the company assessed whether Vanchem met the
IFRS 3 definition of “a business”. IFRS 3 states that “a business consists of inputs and processes applied to those inputs that have the ability to
create outputs” and we have concluded that, at the date of acquisition, Vanchem had inputs (inventories and plant and equipment with installed
capacity), processes (methodology, manufacturing ability, intellectual property and a skilled workforce) and the ability to produce outputs in the
form of vanadium products.
IFRS 3 requires an acquirer to measure the cost of the acquisition at the fair value of the consideration paid, and measure acquired identifiable
assets and liabilities at their fair values, with any excess of acquired assets and liabilities over the consideration paid (a ‘bargain purchase’)
recognised in profit or loss immediately. As detailed in note 8, the company engaged an independent valuation expert to value the assets
acquired using the cost approach, which we consider to be the most appropriate fair value measurement technique given the nature of the
assets acquired and the circumstances of the acquisition.
Where a business combination results in a bargain purchase, IFRS 3 requires that the acquirer to reassess whether it has correctly identified all of
the assets and liabilities acquired and to review the procedures used to measure the fair values recognised at the acquisition date.
4. Segmental reporting
Bushveld Minerals Limited’s operating segments are identified by the Chief Executive Officer and the Executive Committee, collectively named
as the Chief Operating Decision Makers (CODM). The operating segments are identified by the way the Group’s operations are organised. As at
31 December 2020 the Group operated within four operating segments, vanadium mining and production, energy, mineral exploration
activities for vanadium and coal exploration. Activities take place in South Africa (iron ore, vanadium and energy), Madagascar (coal), other
African countries (energy project development) and global (battery investment, vanadium sales).
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
4. Segmental reporting continued
Segment revenue and results
The following is an analysis of the Group’s revenue and results by reportable segment.
Year ended 31 December 2020
Results
Segment revenue
Segment costs
Segmental (loss)/profit
Year ended 31 December 2019
Results
Segment revenue
Segment costs
Segmental (loss)/profit
Vanadium, iron
ore and coal
exploration
US$
Vanadium
mining and
production
US$
Energy
US$
Total
US$
–
89,920,958
– (110,750,141)
67,120
(1,050,735)
89,988,078
(111,800,876)
–
(20,829,183)
(983,615)
(21,812,798)
Vanadium, iron
ore and coal
exploration
US$
Vanadium
mining and
production
US$
Energy
US$
Total
US$
–
–
–
116,442,585
(83,752,365)
71,527
(530,041)
116,514,112
(84,282,406)
32,690,220
(458,514)
32,231,706
During the year there were no costs incurred for the exploration of vanadium and iron ore as well as the coal segment. Costs attributable to
both segments were of a capital nature.
The reconciliation of segmental profit to the Group’s profit before tax is as follows:
Segmental (loss)/profit
Unallocated costs
Gain on bargain purchase
Movement in earnout estimate
Finance income
Finance costs
(Loss)/profit before tax
Year ended
31 December
2020
US$
(21,812,798)
(10,994,295)
–
(206,066)
1,077,991
(5,732,249)
Year ended
31 December
2019
US$
32,231,706
(9,977,896)
60,586,633
(1,510,572)
3,593,142
(1,669,455)
(37,667,417)
83,253,558
Unallocated costs relate primarily to corporate costs and parent company overheads not attributable to a specific segment.
Other segmental information
31 December 2020
Intangible assets – exploration and evaluation
Total reportable segmental net assets
Unallocated net liabilities
Vanadium
and iron ore
exploration
US$
Vanadium
mining and
production
US$
54,950,331
54,950,331
–
–
168,285,858
–
Coal
exploration
US$
4,053,494
4,053,494
–
Bushveld
Energy
US$
Total
US$
–
21,388,618
–
59,003,825
248,678,301
(34,678,551)
Total consolidated net assets
–
–
–
– 213,999,750
31 December 2019
Intangible assets – exploration and evaluation
Total reportable segmental net assets
Unallocated net liabilities
Vanadium
and iron ore
exploration
US$
Vanadium
mining and
production
US$
56,827,085
56,827,085
–
–
201,456,855
–
Coal
exploration
US$
2,581,736
2,581,736
–
Bushveld
Energy
US$
Total
US$
–
6,760,468
–
59,408,821
267,626,144
(26,534,858)
Total consolidated net assets
–
–
–
–
241,091,286
Unallocated assets and liabilities relate to corporate and parent company assets and liabilities not attributable to a specific segment.
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Financial Statements 5. Revenue
Revenue from contracts with customers
Sale of goods
Bushveld Energy services rendered
Disaggregation of revenue from contracts with customers
The company disaggregates revenue from customers as follows:
Sale of goods
Local sales of vanadium – NV12
Local sales of vanadium – NV16
Local sales of vanadium – MVO
Export sales of vanadium – NV12
Export sales of vanadium – NV16
Export sales of vanadium – VCM
Export sales of vanadium – AMV
Rendering of services
Bushveld Energy services rendered
Total revenue from contracts with customers
2020
US$
2019
US$
89,920,958
67,120
116,442,585
71,527
89,988,078
116,514,112
2,161,420
1,055,785
370,686
16,452,321
61,537,773
230,248
8,112,725
4,118,063
87,076
2,406
17,083,662
95,011,546
–
139,832
89,920,958
116,442,585
67,120
71,527
89,988,078
116,514,112
Revenue with contract customers is generated from sale of goods and is recognised upon delivery of the goods to the customer, at a point in
time and comprises the invoiced amount of goods to customers, net of value added tax.
6. Administrative expenses by nature
Staff costs
Depreciation of property, plant and equipment
Professional fees
Bad debts
Other
Total administrative expenses
2020
US$
2019
US$
8,146,473
256,929
6,017,782
–
5,361,992
9,616,139
232,131
7,619,272
3,016,120
4,184,829
19,783,176
24,668,491
7. Staff costs
Details of directors’ remuneration are included in note 35 (related party transactions) and the Remuneration Report on page 141.
8. Acquisitions
8.1 Acquisition of Bushveld Vanchem Business
On 7 November 2019, the Bushveld Group completed the acquisition of 100% of the Vanchem Plant as well as 100 per cent of Ivanti Propriety
Limited from Duferco Investments (“Duferco”).
A viable business case for Vanchem Vanadium Products “VVP” was formulated with key focus on ore feedstock from within the Group
(Mokopane) and a refurbishment programme, and presented to the Board of Directors (“BoD”) in June 2018. The BoD approved that Bushveld
reopened negotiations with Duferco, including revised commercial terms and an extended exclusivity period. An approach to Duferco was
made and an initial agreement was reached with Duferco which resulted in the execution of the term sheet on 5 December 2018. The
agreement was for a Transaction consideration of US$68 million. The US$68 million was made up of deposit of US$6.8 million payable when
the definitive agreements had been executed (01 May 2019) with the balance of US$61.2 million payable on then-envisaged Transaction closing
dates of 30 June 2019 or 30 September 2019 (long stop date). The final executed purchase price of US$53.5 million plus a working capital
adjustment for the acquisition was renegotiated in September 2019, the fair value of the consideration price is reflected in section C below.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
8. Acquisitions continued
8.1 Acquisition of Bushveld Vanchem Business continued
Acquisition rationale remained clear:
• Would significantly contribute toward Bushveld’s Vanadium production growth strategy of 8,400 tVpa in the next five years;
• Brownfields expansion (total acquisition and refurbishment capex was estimated to be around US$140 million for circa 4,200 tVpa capacity
including Mokopane mine development, this compared favourably against the then estimated US$350 million capital requirement to
develop and build 5,400tV facility at Mokopane);
• Would facilitate the expeditious development of Mokopane, preserving the tenure of the project and ensuring the option for an end-to-end
production facility would be crystalised;
• Would provide geographic diversification with Bushveld production now in two geographic locations;
• Would provide production diversification – moving from a one kiln company to a four-kiln Group;
• Would provide product diversification – moving from a single product offering to a wider range of products comprised of Nitrovan, FeV, V2O5
and specialized chemical products;
• Significant NPV at long term FeV price estimates at a conservative long term FeV price;
Increased footprint reduces Group overhead cost structure;
•
•
Improved IP and market presence adds value with long term off-take agreements;
• Assist and expedites the development of Bushveld’s own marketing channel; and
•
In a benign vanadium price environment of 2018, Vanchem’s 6 months annual financial statements to 31 March 2019 presented net profit
amount in excess of ZAR200 million operating at less than 20% of capacity.
This acquisition of Vanchem demonstrates the value in the Company’s growth strategy of targeting brownfields processing infrastructure which
can be acquired at a lower price compared to the cost of building a greenfield operation, providing a lower risk and a quicker path to production.
This has been reflected in Bushveld agreeing and paying an amount far less than the fair value of the assets and liabilities assumed. The
Mokopane resource will also enable Bushveld to create a fully integrated vanadium production facility within the Group.
A. Consideration transferred
The following table summarises the acquisition date fair value of each major class of consideration transferred.
Fair value consideration
Cash
Deferred Consideration (i)
Working Capital Adjustment (ii)
Convertible Loan (iii)
Total fair value of consideration
US$
30,713,500
409,323
1,665,063
23,000,000
55,787,886
i. Deferred consideration
The Group has agreed to pay the selling shareholder a deferred payment of US$0.5 million, payable in cash 2 years post completion of the
acquisition.
ii. Working capital adjustment
The working capital adjustment was the difference between the original working capital included in the agreement versus the final balances
transferred to Bushveld. The amount is payable in cash after 2 years post completion of the acquisition and disclosed as deferred consideration.
iii. Convertible loan
A payment of US$23.0 million satisfied through the issue of Bushveld Minerals unsecured convertible loan notes (“Loan Notes”) with the
following repayment, redemption and conversion terms (in addition to customary covenants, warranties and acceleration provisions):
•
• Repayable in cash after the second anniversary of Transaction Closure, plus any accrued interest;
• Convertible at the holder’s option in two tranches of up to US$11.5 million each, after the first and second anniversary of Transaction Closure
Interest at a coupon of 5% per annum payable annually in arrears or on conversion or redemption;
respectively, at a 5% discount to the prevailing 10-day volume weighted average Bushveld Minerals share price leading up to conversion;
• Early redemption of the Loan Notes at the election of Bushveld Minerals, subject to the condition that the holder will have an option of
converting up to 50% of the early redemption amounts into Bushveld Minerals shares on the same terms set out above;
• Scope for acceleration of redemption of up to US$5 million of the Loan Notes 12 months after Transaction Closure if an average
ferrovanadium price of US$40/kgV is realised during any nine-month period during the12 month period after Transaction Closure;
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Financial Statements • Obligation to repay an amount equal to 40% of any cash received on a new share issue which raises more than US$30m, provided no more
than 50% of the Loan Notes have already been paid, redeemed or converted;
• Obligation to repay an amount equal to 50% of any debt raised over US$15 million, provided no more than 50% of the Loan Notes have been
repaid, redeemed or converted;
• Obligation to repay on a substantial sale of assets or change of control;
• The holder will not be able to divest any Bushveld Minerals shares received for six months following conversion and be subject to an orderly
market arrangement for the following six months.
Acquisition-related costs
The Group incurred acquisition-related costs of US$1,519,969. These costs have been included in the calculation of the bargain purchase below.
B. Identifiable assets and liabilities acquired
The following table summarises the recognised amounts of assets acquired, and liabilities assumed at the date of acquisition:
Assets and liabilities acquired
Property, plant and equipment
Land and buildings
Inventories
Trade and other receivables
Cash and cash equivalents
Environmental rehabilitation liability
Trade and other payables
Provisions
Total identifiable net assets acquired at Fair Value
US$
114,668,826
6,137,787
7,480,482
900,154
10,492
(10,382,628)
(906,727)
(13,899)
117,894,487
Measurement of fair values
An independent valuer was appointed to determine the fair value of the property plant and equipment. The fair values of other assets and
liabilities were estimated by the directors.
Property, plant and equipment
Marsh (Propriety) Limited was appointed for the valuation.
Marsh has been in the industry in South Africa since 1984. Marsh’s global experience coupled with professionals, who maintain the highest
certifications and advanced professional accreditations, enable them to deliver accurate and timely valuations. Marsh adheres to the
International Valuation Standards, strict ethical code of conduct and best practice prescribed by the South African Council for the Property
Valuers Profession, South African Institute of Valuers, American Society of Appraisers and the Royal Institution of Chartered Surveyors.
The determination of Fair Market Value (FMV) was based on the estimate cost of acquiring and installing a new or similar equivalent to the
current asset at hand. Marsh then determined the remaining life of the asset and therefore calculated the difference obtained from the new
replacement value similar or to the next model in the market determining the effective age or life span and minus the remaining life. This
determines the economic life of the asset which in turn is the condition rating percentage.
The cost of erecting the building, together with the cost of ancillary site works, was estimated. This cost included relevant professional fees and
other associated expenses directly related to the construction of the building and ancillary site works but excluded any finance charges. The
cost is then depreciated according to physical, functional and economic conditions to give the Depreciated Replacement Cost of the buildings.
The Market Value of the land, as if vacant, has been determined by the comparison of recent sales of similar properties in the area and similar
areas. The sum of these values reflect the Depreciated Replacement Value of the property.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
8. Acquisitions continued
8.1 Acquisition of Bushveld Vanchem Business continued
B. Identifiable assets and liabilities acquired continued
Key procedures conducted:
Plant, machinery & equipment (movable assets)
• A Fair Market valuation was performed.
• A physical on-site survey was performed to inspect and value all the assets on a per asset basis.
• Production asset per location was assessed for Useful life, Remaining Life and Condition rating.
• Assets were recorded per location and department.
• Sufficient detail and specifications was collected in order to value the assets according to the Fair Market.
Buildings (fixed assets)
• A Fair Market valuation was performed
• Each building was individually assessed for Useful life, Remaining Life and Condition rating.
• Building costs in the area was used to establish a Rate/m2.
• Professional fees, escalations, demolition, and debris removal costs were included.
• Land Values for the plant and waste site were included.
Valuation process
The valuation process took place over four core components. These components are designed to ensure the highest degree of valuation
accuracy while ensuring limited interruption to the operations of our clients.
An overview of the four main components is as follows:
Initial project research and preparation
This phase of the valuation program involved research, information gathering and preparation by Marsh Valuation Services to ensure a
preliminary understanding of Bushveld Minerals SA (PTY) LTD operations, locations and accounting principles.
This is a crucial stage in the valuation process ensuring reduced time spent at each location as part of the physical inspection.
Physical inspection and information gathering
The aim of this step of the process was information gathering and data collection while ensuring minimal impact on the operations. The
valuation process, whilst on site, was generally undertaken via the following process:
Research, analysis and reporting
This phase of the valuation process involves utilising the information gained during the inspection process, our internal databases of
information, external sources of data, recent and planned capital expenditure details, information from suppliers and international research to
undertake the valuation calculations. The analysis and calculations were then extrapolated and input into a detailed valuation report.
Delivery and findings
After the valuation research and reporting was completed, a valuation report was provided including the list of assets identified as well as the fair
market values of those assets with remaining useful lives.
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Financial Statements C. Accounting for the acquisition
The acquisition has been accounted for as follows:
Vanchem Acquisition
Property, plant and equipment
Residential properties
Inventories
Trade and other receivables
Cash and cash equivalents
Environmental rehabilitation liability
Trade and other payables
Provisions
Total identifiable net assets acquired at Fair Value
Fair Value of Consideration
Acquisition related costs
Gain on Bargain Purchase
US$
114,668,826
6,137,787
7,480,482
900,154
10,492
(10,382,628)
(906,727)
(13,899)
117,894,487
(55,787,885)
(1,519,969)
60,586,633
IFRS 3 requires an acquirer to measure the cost of the acquisition at the fair value of the consideration paid, and measure acquired identifiable
assets and liabilities at their fair values, with any excess of acquired assets and liabilities over the consideration paid (a ‘bargain purchase’)
recognised in profit or loss immediately. The Group engaged an independent valuation expert to value the assets acquired using the cost
approach, which we consider to be the most appropriate fair value measurement technique given the nature of the assets acquired and the
circumstances of the acquisition.
Where a business combination results in a bargain purchase, IFRS 3 requires the acquirer to reassess whether it has correctly identified all of the
assets and liabilities acquired and to review the procedures used to measure the fair values recognised at the acquisition date.
We have completed this assessment and concluded that the recognition of a bargain purchase is appropriate. In coming to this conclusion we
have considered the circumstances of the sale as Vanchem was in business rescue and therefore not an open market transaction, and the
advantages of Vanchem which fit into the Group’s diversity and growth strategy, advantages of which are disclosed above.
9. Finance income
Bank interest
10. Finance costs
Interest on unsecured convertible loan notes
Interest on rehabilitation liability
Interest on borrowings
Interest on lease liabilities
Other finance costs
2020
US$
2019
US$
1,077,991
3,593,142
2020
US$
2019
US$
1,614,577
1,663,602
1,749,386
466,032
238,652
173,288
665,738
366,179
463,513
738
5,732,249
1,669,456
Annual Report and Financial Results 2020 | Bushveld Minerals
121
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
11. Taxation
The tax expense represents the sum of the tax currently payable and the deferred tax adjustment for the year.
(Loss)/profit before tax
Tax at the applicable tax rate of 30% (2019: 30%)
South African tax – current tax
South African tax – deferred tax
USA – deferred tax
USA – current tax
Taxation expense for the year
2020
US$
2019
US$
(37,667,417)
–
3,237,060
(3,721,714)
–
–
83,253,558
–
13,033,205
267,538
2,665,603
(1,960,381)
(484,654)
14,005,965
Management believe that any unrecognised deferred tax assets relating to the accumulated losses in the subsidiary undertakings of the Group,
would be immaterial to these financial statements.
USA – current tax charge in the prior year comprises irrecoverable withholding tax on dividends received and a tax liability pertaining to the
conversion of a subsidiary from a corporation into a limited liability company in the United States of America resulted in an upfront prepayment
of US$5,000,000 being payable to Internal Revenue Service (IRS) in 2018. In 2020 this amount was subsequently refunded once the final tax
calculation was completed. Due to the conversion all tax credits including deferred tax assets were neutralised in 2019.
12. (Loss)/earnings per share from continuing operations
Basic (loss)/earnings per share
The calculation of a basic (loss)/earnings per share of (3.00) cents (December 2019: 5.51 cents), is calculated using the total loss for the
year attributable to the owners of the company of US$36,680,615 (December 2019: Profit of US$61,968,301) and 1,164,710,352 shares
(2019: 1,125,562,148) being weighted average number of share in issue during the year.
Diluted (loss)/earnings per share
Due to the Group being loss making for the period, instruments are not considered dilutive and therefore the diluted loss per share is the same
as basic loss per share.
13. Intangible assets
Vanadium and Iron ore
Coal
Total
2020
2019
Cost/
Valuation
US$
Accumulated
amortisation
US$
Carrying
value
US$
Cost/
Valuation
US$
Accumulated
amortisation
US$
Carrying
value
US$
54,950,331
4,053,494
59,003,825
–
–
–
54,950,331
4,053,494
56,827,085
2,581,736
59,003,825
59,408,821
–
–
–
56,827,085
2,581,736
59,408,821
Reconciliation of intangible assets – 2020
Vanadium and Iron ore
Coal
Reconciliation of intangible assets – 2019
Vanadium and Iron ore
Coal
Opening
balance
US$
Additions
US$
Exchange
differences
US$
Total
US$
56,827,085
2,581,736
89,764
1,381,378
(1,966,518)
90,380
54,950,331
4,053,494
59,408,821
1,471,142
(1,876,138)
59,003,825
Opening
balance
US$
55,639,067
1,511,358
Additions
US$
198,319
1,070,378
Exchange
differences
US$
Total
US$
989,699
–
56,827,085
2,581,736
57,150,425
1,268,697
989,699
59,408,821
122
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements
Vanadium and iron ore
The Company’s subsidiary, Bushveld Resources Limited has a 64% interest in Pamish Investment No 39 (Proprietary) Limited (“Pamish”) which
holds an interest in Prospecting right 95 (“Pamish 39”). Bushveld Resources Limited also has a 68.5% interest in Amaraka Investment No 85
(Proprietary) Limited (“Amaraka”) which holds an interest in Prospecting right 438 (“Amaraka 85”).
The Department of Mineral Resources and Energy (“DMRE”) granted a mining right to Pamish Investments No. 39 (Pty) Ltd (“Pamish”) on the
28th of August 2019, in respect of the five farms Vliegekraal 783 LR, Vogelstruisfontein 765 LR, Vriesland 781 LR, Schoonoord 786 LR and
Bellevue 808 LR situated in the District of Mogalakwena, Limpopo, which make up the Mokopane Project.
Mokopane is one of the world’s largest primary vanadium resources, with a 298 Mt JORC compliant resource and a weighted average V2 O5
grade of 1.75 per cent in magnetite (1.41 per cent in-situ). The Mokopane deposit is a layered orebody along a 5.5 km north-south strike at a dip
of between 18 degrees and 22 degrees west. The project comprises three adjacent and parallel magnetite layers namely the Main Magnetite
Layer (“MML”), the MML Hanging Wall (“MML-HW”) layer and the AB Zone. 298 Mt (JORC) resources and reserves run across three parallel
overlying magnetite layers with grades ranging from 1.6 per cent to over 2 per cent V2O5 as follows:
• MML: 52 Mt @ 1.48 per cent V2O5 (1.75 per cent V2O5 in magnetite);
• MML-HW & Parting: 233 Mt @ 0.8 per cent V2O5 (1.5-1.6 per cent V2O5 in magnetite); and
• AB Zone: 12 Mt @ 0.7 per cent V2O5 (greater than 2 per cent V2O5 in magnetite).
The mining right allows for the extraction of several other minerals over the entire Mokopane project resource area, including, titanium,
phosphate, platinum Group metals, gold, cobalt, copper, nickel and chrome.
Brits vanadium project
Bushveld Minerals Limited 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 company has also applied for Section 102 of the Mineral and Petroleum Resources Development Act (MPRDA) and waiting for approval to
incorporate NW 30/5/1/1/2/11069 PR into NW 30/5/1/1/2/11124 PR.
Bushveld Minerals Limited 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 expired Prospecting Right NW 30/5/1/1/2/11124 PR was lodged for Great 1 Line on Farm Uitvalgrond 431 JQ Portion 3.
This prospecting right expired on the 3rd of November 2019 and currently awaiting approval.
Coal
Coal Exploration licences have been issued to Coal Mining Madagascar SARL a 99% subsidiary of Lemur Investments Limited.
The exploration is in South West Madagascar covering 11 concession blocks in the Imaloto Coal basin known as the Imaloto Coal Project and
Extension.
Annual Report and Financial Results 2020 | Bushveld Minerals
123
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
14. Property, plant and equipment
Buildings and
other
improvements
US$
Motor
vehicles
furniture and
equipment
US$
Plant and
machinery
US$
Decommissioning
assets
US$
Right of use
asset
US$
Waste
stripping
asset
US$
Assets under
construction
US$
Total
US$
Cost
At 1 January 2019
Additions
Disposals
Assets under construction
capitalised
Foreign exchange differences
1,259,049
42,878,860
6,714,835 113,453,458
(2,134,666)
(414,250)
241,295
1,371,514
(239,102)
1,575,896
942,121
–
–
5,727,902
–
–
3,920,684
–
7,455,662
11,883,121
–
53,410,762
144,013,635
(2,788,018)
268,304
368,583
8,992,207
3,179,724
48,833
51,570
–
79,271
–
7,988
–
–
(9,309,344)
639,339
–
4,326,475
At 31 December 2019
8,196,521 166,369,583
1,474,110
2,597,288 5,735,890
3,920,684 10,668,778 198,962,854
Additions
Disposals
Transfers
Revaluations
Foreign exchange differences
–
(336,491)
190,930
–
(344,926)
2,256,794
(2,490,766)
11,645,072
–
(6,179,154)
62,665
(192,023)
121,070
–
(559,874)
–
–
–
(695,244)
33,180
–
–
–
–
(231,619)
–
–
–
–
(156,242)
6,950,465
–
(11,957,072)
–
(718,321)
9,269,924
(3,019,280)
1
(695,244)
(8,156,956)
At 31 December 2020
7,706,034 171,601,529
905,948
1,935,224 5,504,271
3,764,442
4,943,850 196,361,298
Depreciation
At 1 January 2019
Disposals
Depreciation charge for the year
Foreign exchange differences
(237,758)
414,251
(1,177,756)
(21,021)
(5,028,852)
1,804,752
(5,947,944)
(211,965)
(179,873)
234,711
(617,794)
27,246
(83,106)
–
(848,939)
(22,543)
–
–
(627,475)
(1,488)
–
–
(1,168,237)
–
–
–
–
–
(5,529,589)
2,453,714
(10,388,145)
(229,771)
At 31 December 2019
(1,022,284)
(9,384,009)
(535,710)
(954,588)
(628,963)
(1,168,237)
– (13,693,791)
Disposals
Depreciation charge for the year
Foreign exchange differences
336,491
(385,785)
3,367
2,407,463
(14,468,628)
301,705
248,586
(175,976)
(151,754)
–
(53,233)
31,352
–
(434,768)
(150,129)
–
(2,347,763)
(248,442)
–
–
–
2,992,540
(17,866,153)
(213,901)
At 31 December 2020
(1,068,211)
(21,143,469)
(614,854)
(976,469) (1,213,860)
(3,764,442)
– (28,781,305)
Net Book Value
At 31 December 2019
7,174,237 156,985,574
938,400
1,642,700 5,106,927
2,752,447 10,668,778 185,269,063
At 31 December 2020
6,637,823 150,458,060
291,094
958,755 4,290,411
– 4,943,850 167,579,993
Refer to 3(v) on management’s assumptions for the impairment of non-current assets.
15. Investment property
Investment properties
2,905,449
(94,432)
2,811,017
2,816,007
89,442
2,905,449
Opening
balance
US$
2020
Fair value
movements
US$
Closing
balance
US$
Opening
balance
US$
2019
Fair value
movements
US$
Closing
balance
US$
Investment properties comprise residential housing in Brits and Elandsrand, North West Province.
Investment properties are stated at fair value, which has been determined based on valuations performed by Domus Estate Management, an
accredited independent valuer, as at 31 December 2020. Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
The following valuation techniques and key inputs were used in the valuation of the investment properties:
i. Physical inspection of each property;
ii. Consultation with estate agencies to discuss current sales market trends; and
iii. Comparative sales reports for locations where properties are situated were obtained from South Africa.
124
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements 16. Deferred tax
Deferred tax assets
As at 31 December 2020
2020
US$
5,085,154
5,085,154
2019
US$
173,892
173,892
The evidence supporting recognition of a deferred tax asset is forecasts for the component to which the losses relate which indicate with
reasonable certainty the availability of sufficient future taxable profits in the next 3 years against which the losses can be utilised.
17. Financial assets – investments
Name of company
Enerox Holdings Limited
Avalon
2020
US$
–
–
–
2019
US$
420,891
4,000,000
4,420,891
Avalon
The Company agreed to support the merger of Avalon Battery Corporation (“Avalon”) and redT energy plc (“’redT”) (the “Merger”) with interim
funding of US$5 million which would give Bushveld the opportunity to acquire a strategic interest in the merged energy storage company.
In July 2019, AIM-quoted energy storage provider redT and Avalon, a North American-based vanadium redox flow battery (“VRFB”)
manufacturer, announced their plans to merge. The resulting business would be a leading player in the growing energy storage market. Traded
on AIM in London, the merged entity had a global sales footprint, a robust near-term project pipeline, operations in North America, Europe and
Asia, market-leading technology, and a strong management team.
Bushveld agreed to provide a convertible loan of up to US$5 million to Avalon (the “Interim Funding”), half of which was loaned by Avalon to
redT, to support the companies through the due diligence process, finalisation of the Merger negotiation and completion of the Fundraising.
These funds also allowed both companies to continue delivering on their current project pipelines.
The investment was in line with the Company’s strategy of building a leading downstream vanadium-based energy storage platform, by:
Increasing Bushveld’s exposure to the massive potential of the stationary energy storage market, for the first time directly with a
•
manufacturer of the VRFB technology;
• Partnering with selective VRFB companies with attractive upside potential, including the establishment of a VRFB Investment Platform; and
• Demonstrating upstream support from the vanadium industry for the development of the VRFB sector and encouraging additional
investment into the combined company.
Refer to note 21 for details of the conversion of the loan into shares, which are now classified as financial assets at fair value.
18. Inventories
Finished goods
Work in progress
Raw materials
Consumable stores
Inventories
2020
US$
2019
US$
12,070,061
7,454,987
1,761,551
12,795,026
17,062,028
4,544,303
1,702,062
11,773,949
34,081,625
35,082,342
The amount of write-down of inventories due to net realisable value provision requirement is nil (2019: nil).
Annual Report and Financial Results 2020 | Bushveld Minerals
125
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
19. Trade and other receivables
Trade receivables
Other receivables
Loss allowance
Non-financial instruments:
VAT
Total trade and other receivables
Categorisation of trade and other receivables
Trade and other receivables are categorised as follows in accordance with IFRS 9: Financial Instruments:
At amortised cost
Non-financial instruments
2020
US$
2019
US$
3,854,461
1,610,261
(32,826)
2,762,448
1,753,839
–
4,993,467
–
10,425,363
4,516,287
2020
US$
2019
US$
5,431,896
4,993,467
4,516,287
–
10,425,363
4,516,287
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally
due for settlement within 15-90 days and therefore are all classified as current.
Other receivables consist of prepayments and deposits, which are realised overtime.
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.
Impairment and risk exposure
Information about the impairment of trade receivables and the Group’s exposure to credit risk, foreign currency risk and interest rate risk can be
found in note 32.
20. Restricted investments
Rehabilitation trust fund and insurance fund
2020
US$
2019
US$
3,111,465
6,605,465
The Group is required by statutory law in South Africa to hold these restricted investments in order to meet decommissioning liabilities on the
statement of financial position (refer to notes 25 and 33 for further details).
21. Financial assets at fair value
As at 1 January
Additions
Disposals
Fair value movement
As at 31 December
2020
US$
1,952,227
7,304,099
(286,643)
13,483,194
2019
US$
2,311,272
–
–
(359,045)
22,452,877
1,952,227
AfriTin Mining Limited
The Group measures the fair value of the investment in AfriTin Mining Limited using the quoted price in an active market for that instrument. A
market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information
on an ongoing basis.
126
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements
Invinity Energy Systems
On 1 November 2019, Bushveld announced it had agreed to support the Merger with funding of US$5 million through a convertible loan to
Avalon Battery, a Canadian VRFB company, to facilitate a Merger with redT Energy, a UK VRFB company, and a listing on the London AIM
exchange. In accordance with the terms of the convertible loan, on successful completion of the Merger in March 2020, the loan was
converted into shares in Invinity Energy Systems (AIM: IES). The previously provided US$5 million loan (together with the accrued interest and
commitment fee) has been converted into 302,978,063 Ordinary Shares at a price of 1.65 pence in Invinity, representing up to 8.71 per cent
of Invinity on 1 April 2020. The shares issued to Bushveld are not subject to a lock-in arrangement. In addition to the funding from Bushveld,
Invinity has raised £7.9 million in equity and £3 million in convertible debt through an equity placing at 1.65 pence per share at the time.
Subsequently, Invinity raised a further £22.5 million through a placing and open offer on 3 December 2020.
Post year end, the investment in Invinity was realised, resulting in capital appreciation. The proceeds of the sale were used towards Bushveld
Energy’s 2021 projects.
Enerox Holdings Limited
The investment in Enerox Holdings Limited is in line with Bushveld Minerals’ strategy of partnering with Vanadium Redox Flow Battery (“VRFB”)
companies.
The Consortium, which currently includes Bushveld Energy Limited, a private North American investor and an East Asian Investment Holding
Company, held 90% of EHL after an initial acquisition of 24.9% under an initial sale and purchase agreement (“ISPA”). In terms of the ISPA,
the members of the Consortium have acquired, in equal proportions, 24.9 per cent of the issued share capital of Enerox for €150,000 from
Cellcube Energy Storage Systems Inc (the “Seller”). The investment of US$2,304,099 (2019: US$420,891) represents Bushveld’s share of the
investment, which the directors consider to equate to the fair value of the investment at the recording date.
As of 31 December 2020, Bushveld Energy anticipates contributing not more than 50 per cent of the funds to be invested by the Consortium
and is considering additional investors to participate as part of the Consortium. The Enerox investment is part of Bushveld Minerals’ strategy of
partnering with VRFB Original Equipment Manufacturers (“OEMs”) that includes supply of vanadium and electrolyte, deployments and
investment into the rapidly growing energy storage market.
22. Cash and cash equivalents
Cash at hand and in bank
2020
US$
2019
US$
50,540,672
34,011,557
Cash and cash equivalents (which are presented as a single class of assets on the face of the Statement of Financial Position) comprise cash
at bank and other short-term highly liquid investments with an original maturity of three months or less. Short-term deposits include funds
received from Orion Mine Finance (“Orion”) under the Production Financing Agreement (PFA) and Convertible Loan Notes Instrument (CLN).
The PFA capital is ringfenced to provide the necessary funding for the Phase III expansion project to grow production at Vametco to more than
4’200 mtV per annum.
The total cash and cash equivalents denominated in South African Rand amount to US$34,165,671 (2019: US$17,469,385).
The directors consider that the carrying amount of cash and cash equivalents approximates their fair value.
Refer to Note 28 for further information in relation to the Production Financing Agreement and Convertible Loan Notes Instrument.
Annual Report and Financial Results 2020 | Bushveld Minerals
127
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
23. Share capital and share premium
At 1 January 2019
Shares issued – Yellow Dragon Holdings
At 1 January 2020
Shares issued – Duferco
At 31 December 2020
Shares
Number
Share
capital
US$
Share
premium
US$
Total share
capital and
premium
US$
1,119,727,953
33,914,729
14,921,079
436,192
101,003,256
10,063,808
115,924,335
10,500,000
1,153,642,682
37,115,210
15,357,271
501,157
111,067,064
5,998,843
126,424,335
6,500,000
1,190,757,892
15,858,428
117,065,907
132,924,335
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 the 31 December 2020 the Company owns 670,000 (2019: 670,000) treasury shares with a nominal value of 1 pence.
Shares issued
Duferco Participations Holding S.A. (“Duferco”)
As part of the acquisition of Vanchem on the 7th of November 2019, Bushveld Minerals Limited subscribed to US$23 million unsecured
convertible loan notes (“Loan Notes”).
Duferco, the previous owner of Vanchem, agreed to accept the partial early repayment of US$11.5 million of their US$23 million convertible
loan notes, originally issued in accordance with the terms of the acquisition of Bushveld Vanchem as announced on 23 October 2019. Bushveld
Minerals Limited repaid US$5 million of the Duferco loan notes, plus interest of US$1.28 million, in cash and satisfied the balance of US$6.5
million by the issue of 37,115,210 new Bushveld shares, using a conversion price of 12.97p, which is a 5 per cent discount to the prevailing 10-day
volume weighted average Bushveld Minerals share price leading up to conversion.
Refer to note 28 for details on the Convertible Loan Note details.
Yellow Dragon
As part of the Vametco acquisition terms announced on 30 November 2017, Bushveld Minerals agreed to make further deferred payments to
Yellow Dragon as follows:
• Two deferred payments of US$0.6 million each, payable following publication of the accounts for Vametco Holdings Limited for respectively
the years ending 31 December 2018 and 31 December 2019; and
• A final payment to be made on publication of the Vametco Holdings Limited accounts for the year ended 31 December 2020 to be
calculated by reference to Vametco Holdings Limited’s EBITDA for the 2020 financial year. The payment being calculated on the following
basis 4.5 x EBITDA (as shown in the 2020 Accounts) x 5.91 per cent.
The Company paid the first of the two US$0.6 million payments, following which the two parties agreed on an early settlement for the balance
of amounts payable to be settled as follows:
• Full and final settlement of the earn out of US$13,500,000, being an all-in total payment comprising:
- A cash component payment totalling US$3,000,000; and
- A total of US$10,500,000 payable in 33,914,729 Bushveld Minerals Limited ordinary shares of 1.0 penny each to be issued at a price of
£0.24 (which favourably compared to the 10 day volume weighted average price of £0.235 and the 20 day volume weighted average
price of £0.226, as at 22 October 2019).
The shares issued to Yellow Dragon are subject to a 6 month lock-in arrangement and a further 6 month orderly market arrangement which are
subject to certain exceptions and may otherwise only be waived with the consent of the Company’s brokers.
128
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements Nature and purpose of other reserves
Share premium
The share premium reserve represents the amount subscribed for share capital in excess of nominal value.
Share-based payment reserve
The share-based payment reserve represents the cumulative fair value of share options granted to employees.
Convertible loan note reserve
This reserve represents the equity portion of a convertible loan.
Foreign exchange translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of financial statements of foreign operations.
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of financial assets at fair value through other comprehensive
income until the assets are derecognised or impaired.
Accumulated profit/loss
The accumulated profit/loss reserve represents other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
24. Post-retirement medical liability
Benefit liability
Present value of the defined benefit obligation – wholly unfunded
Present value of the defined benefit obligation – partially or wholly funded
Balance at 31 December
2020
US$
2019
US$
2,331,325
(255,302)
2,377,737
(46,412)
2,076,023
2,331,325
The benefit comprises medical aid subsidies provided to qualifying retired employees. Actuarial valuations are made annually, and the most
recent valuation was made on 31 December 2019.
Key assumptions used
Actual age
Discount rates
Health care cost inflation
Duration of liability
2020
US$
77.3 years
10.60%
7.30%
9.1 years
2019
US$
76.9 years
9.80%
7.30%
9.7 years
A one percentage point change in the assumed rate of healthcare costs would have the following effect on the present value of the unfunded
obligation: Plus 1%: US$2.5 million; Less 1%: US$2.2 million.
A one percentage point change in the assumed interest rate would have the following effect on the present value of the unfunded obligation;
Plus 1%: US$0.24 million; Less 1%: US$0.20 million.
Annual Report and Financial Results 2020 | Bushveld Minerals
129
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
25. Environmental rehabilitation liability
Provision for future environmental rehabilitation costs
2020
US$
2019
US$
17,998,336
17,844,066
The Group makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted basis at the time
of developing the mine and installing and using those facilities.
The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred up to
2037, which is when the producing mine properties are expected to cease operations. These provisions have been created based on the
Group’s internal estimates. Assumptions based on the current economic environment have been made, which management believes are a
reasonable basis upon changes to the assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices for the
necessary rehabilitation works required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely
to depend on when the mines cease to produce at economically viable rates. This, in turn, will depend upon future vanadium prices, which are
inherently uncertain.
The discount rate used in the calculation of the provision as at 31 December 2020 was 10.93% (2019: 10.07%).
26. Deferred consideration
Opening balance
Cash payment
Shares settlement (see note 28)
Unwinding of discount
Movement in earnout estimate
Consideration for Vanchem acquisition (see note 8)
Foreign exchange
Split between non-current and current portions
Non-current
Current
2020
US$
2019
US$
7,108,819
(1,680,459)
–
–
206,066
–
(11,894)
17,427,512
(3,600,000)
(10,500,000)
34,434
1,510,572
2,074,385
161,916
5,622,532
7,108,819
1,802,884
3,819,648
7,108,819
–
5,622,532
7,108,819
At the year-end management have updated their estimate of the earnout payable to EVRAZ on the acquisition of the Vametco Group, which is
based on the expected EBITDA for the year ended 31 December 2020, to a maximum of US$3.53 million. The remaining balance relates to the
consideration attributable to the acquisition of Vanchem.
27. Loans
Industrial Development Corporation
2020
US$
1,597,972
2019
US$
–
The loan represents The Industrial Development Corporation’s contribution and is governed by the tripartite agreement between Bushveld
Energy Company (Pty) Ltd, Bushveld Electrolyte Company (Pty) Ltd & The Industrial Development Corporation of South Africa Limited. The loan
represents the initial capitalised costs of US$260,366 plus the initial subscription amount of US$1,367,559 of the total US$3,821,028 to be
advanced to Bushveld Electrolyte Company Pty Ltd. Bushveld Electrolyte Company is a South African producer of vanadium electrolyte. The
company is jointly owned by Bushveld Energy and the IDC, with shareholding of 55% and 45% respectively. Its first manufacturing facility is
under construction and located in East London, South Africa.
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Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements The loan is interest free, unsecured, subordinated in favour of Bushveld Electrolyte Company’s creditors and have no fixed term of repayment in
the next 12 months.
Split between non-current and current portions
Non-current liabilities
28. Borrowings
Development Bank of Southern Africa
Nedbank Term Loan and Revolving Credit Facility
Convertible Loan Notes – Duferco
Production Financing Agreement – Orion Mine Finance
Convertible Loan Notes Instrument – Orion Mine Finance
Split between non-current and current portions
Non-current
Current
2020
US$
1,597,972
2020
US$
845,588
8,636,535
11,585,068
30,105,886
33,073,699
2019
US$
–
2019
US$
511,522
18,071,342
23,173,288
–
–
84,246,776
41,756,152
70,909,370
13,337,406
41,756,152
–
84,246,776
41,756,152
Development Bank of Southern Africa – facility agreement
Lemur Holdings Limited, a subsidiary undertaking, entered into a US$1,000,000 facility agreement with the Development Bank of Southern Africa
Limited in March 2019. The purpose of the facility is to assist with the costs associated with delivering the key milestones to the power project.
The repayment is subject to the successful bankable feasibility study of the project at which point the repayment would be the facility value plus
an amount equal to an IRR of 40% capped at 2.5 times which ever is lower. As at 31 December 2020, only US$845,588 was drawn down.
Nedbank term loan and revolving credit facility
Bushveld Minerals Limited secured ZAR375 million (approximately US$25 million) in debt facilities through its subsidiary Bushveld Vametco Alloys
Proprietary Limited (“the Borrower”) with Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division), a South
African based financial institution, in the form of a ZAR250 million loan and a ZAR125 million revolving credit facility.
Key highlights of the ZAR250 million loan which was drawn in November 2019:
• Five-year amortising loan;
•
•
• Principal repayments will be made semi-annually in arrears over four years in eight equal instalments, with first payment due 18 months after
Interest rate calculated using the three year or six months JIBAR1 as selected by the Company plus a 3.4% margin;
Interest payments are due semi-annually with first payment due in six months from financial close;
financial close.
The Nedbank term loan was retired in December 2020.
Key highlights of the ZAR125 million revolving credit facility, which was drawn in March 2020 (2019: undrawn):
• Three-year term;
•
•
Interest rate calculated using the three year or six months JIBAR1 as selected by the Company plus a 3.6% margin;
Interest payments are due semi-annually with first payment due in six months from financial close.
The security provided is customary for a secured financing of this nature, including cession of shares in the Borrower, security over the assets of
the Borrower, and a parent guarantee.
Annual Report and Financial Results 2020 | Bushveld Minerals
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
28. Borrowings continued
Financial covenants undertaken
The Borrower shall ensure that for so long as any amount is outstanding under a Finance Document or any Commitment is in force, in respect
of each Measurement Period:
•
•
•
the Cumulative DSCR exceeds 1.4 times;
the Interest Cover Ratio; and
the Net Debt to EBITDA Ratio at a Borrower level shall not exceed 2.5 times.
Convertible loan note – Duferco
As part of the consideration related to the Bushveld Vanchem acquisition, a payment of US$23.0 million is to be satisfied through the issue of
Bushveld Minerals unsecured convertible loan notes (“Loan Notes”) with the following repayment, redemption and conversion terms (in addition
to customary covenants, warranties and acceleration provisions):
•
• Repayable in cash after the second anniversary of Transaction Closure, plus any accrued interest;
• Convertible at the holder’s option in two tranches of up to US$11.5 million each, after the first and second anniversary of Transaction Closure
Interest at a coupon of 5% per annum payable annually in arrears or on conversion or redemption;
respectively, at a 5% discount to the prevailing 10-day volume weighted average Bushveld Minerals share price leading up to conversion;
• Early redemption of the Loan Notes at the election of Bushveld Minerals, subject to the condition that the holder will have an option of
converting up to 50% of the early redemption amounts into Bushveld Minerals shares on the same terms set out above;
• Scope for acceleration of redemption of up to US$5 million of the Loan Notes 12 months after Transaction Closure if an average
ferrovanadium price of US$40/kgV is realised during any nine-month period during the 12 month period after Transaction Closure;
• Obligation to repay an amount equal to 40% of any cash received on a new share issue which raises more than US$30m, provided no more
than 50% of the Loan Notes have already been paid, redeemed or converted;
• Obligation to repay an amount equal to 50% of any debt raised over US$15 million, provided no more than 50% of the Loan Notes have been
repaid, redeemed or converted;
• Obligation to repay on a substantial sale of assets or change of control;
The holder will not be able to divest any Bushveld Minerals shares received for six months following conversion and be subject to an orderly
market arrangement for the following six months.
In 2020 Bushveld Minerals Limited settled US$11.5 million of the US$23 million convertible loan notes. US$5 million plus interest of US$1.28 million
was settled in cash and the balance of US$6.5 million was satisfied by the issue of 37,115,210 new Bushveld shares, using a conversion price of
12.97p, which is a 5 per cent discount to the prevailing 10-day volume weighted average Bushveld Minerals share price leading up to conversion.
Duferco continues to hold a total of US$11.5 million convertible loan notes, which are due for repayment on 8 November 2021.
Production Financing Agreement – Orion Mine Finance
Bushveld Minerals Limited signed a long-term Production Financing Agreement of US$30 million (or the “PFA”) with mining-focused investment
business Orion Mine Finance (“Orion”), primarily to finance its expansion plans at Bushveld Vametco Alloys (Pty) Ltd and debt repayment.
Exchange control authorization from the South Africa Reserve Bank Financial Surveillance Department was granted in October 2020.
PFA transaction details
The Company will repay the principal amount and pay interest via quarterly payments determined initially as the sum of:
• a gross revenue rate (set at 1.175 per cent for 2020 and 2021 and 1.45 per cent from 2022 onwards, subject to adjustment based on
applicable quarterly vanadium prices) multiplied by the gross revenue for the quarter; and
• a unit rate of US$0.443/kgV multiplied by the aggregate amount of vanadium sold for the quarter.
Once the Company reaches vanadium sales of approximately 132,020 mtV during the term of the facility, the gross revenue rate and unit rate
will reduce by 75 per cent (i.e. to 25 per cent of the applicable rates).
On each of the first three loan anniversaries, the Company has the option to repay up to 50 per cent of both constituent loan parts (each may only
be repaid once). If the Company utilises the loan repayment option, the gross revenue rate and/or the unit rate will reduce accordingly. The PFA
capital will provide funding to continue to grow production at Vametco to more than 4,200 mtV per annual production level and debt repayment.
Part of the proceeds of the Instrument were used by the Company to prepay in full the Nedbank ZAR250 million term loan.
132
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements Convertible loan notes instrument – Orion Mine Finance
Bushveld Minerals Limited, through an affiliate of Orion Mine Finance, agreed to subscribe for US$35 million convertible loan notes instrument
(the “Instrument”). The conversion price of the convertible loan notes was set at 17pence. The Instrument’s proceeds will go towards the first
phase of Vanchem’s critical refurbishment programme and debt repayment.
Financing terms of the Instrument and convertible loan notes
• A fixed 10 per cent per annum coupon with a three year maturity date from the drawdown date.
• All interest will accrue and be capitalised on a quarterly basis in arrears but compounded annually.
• Accumulated capitalised and accrued interest is convertible into Bushveld ordinary shares. All interest and principal, to the extent not
converted into ordinary shares, is due and payable at maturity date.
• Funds raised are to be used for capital investment purposes for the first phase of Vanchem’s critical refurbishment programme, and the
balance for debt repayment purposes.
Conversion feature
Between drawdown and the Instrument’s maturity date Orion may, at their option, convert an amount of the outstanding debt, including
capitalised and accrued interest, into Bushveld ordinary shares as follows:
• First six months: Up to one third of the outstanding amount;
• Second six months: Up to two thirds of the outstanding amount (less any amount previously converted);
• From the anniversary of drawdown until the maturity date: the outstanding amount under the Instrument may be converted;
• Bushveld also has the option to convert all, but not some, of the amount outstanding under the Instrument, if its volume weighted average
share price is more than 200 per cent of the conversion price over a continuous 15 trading day period, a trading day being a day on which
the AIM market is open for the trading of securities.
At any time until the convertible maturity date, Orion may convert the debt as above mentioned into an amount of ordinary shares equal to the
total amount available for conversion under the Instrument divided by the conversion price of 17 pence.
The Orion and Nedbank borrowings are secured against certain group companies and associated assets.
29. Lease liabilities
A reconciliation of total operating lease commitments to the IFRS 16 lease liability at 31 December 2020 is as follows:
As at 1 January
Additions
Accretion of interest
Payments
Foreign exchange
Non-current lease liabilities
Current lease liabilities
2020
US$
5,464,909
–
497,042
(753,302)
(206,505)
2019
US$
–
5,735,890
455,687
(726,668)
–
5,002,144
5,464,909
2020
US$
2019
US$
4,376,483
625,661
4,677,338
787,571
5,002,144
5,464,909
Annual Report and Financial Results 2020 | Bushveld Minerals
133
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
30. Trade and other payables
Financial instruments:
Trade payables
Accruals and other payables
Non-financial instruments: VAT
2020
US$
2019
US$
17,074,422
4,991,179
–
12,651,751
3,069,751
88,494
22,065,601
15,809,996
Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken
for trade purchases is 30 days.
The Group has financial risk management policies in place to ensure that all payables are paid within the pre-arranged credit terms. No interest
has been charged by any suppliers as a result of late payment of invoices during the year.
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
The total trade and other payables denominated in South African Rand amount to US$15,895,209 (2019: US$12,027,091).
31. Provisions
Reconciliation of provisions – 2020
Leave pay
Performance bonus
Other
Reconciliation of provisions – 2019
Leave pay
Performance bonus
Surface lease
Other
Opening
balance
US$
1,193,630
2,098,565
140,424
Additions
US$
504,394
1,602,991
221,983
Utilised
during the year
US$
–
(2,290,117)
(92,680)
Foreign
exchange
US$
(42,567)
(36,292)
(3,437)
Total
US$
1,655,457
1,375,147
266,290
3,432,619
2,329,368
(2,382,797)
(82,296)
3,296,894
Opening
balance
US$
836,455
809,085
622,616
2,052,809
Additions
US$
387,945
2,640,764
(622,616)
147,869
Utilised
during the year
US$
–
(1,327,699)
–
(2,057,581)
Foreign
exchange
US$
(30,770)
(23,585)
–
(2,673)
Total
US$
1,193,630
2,098,565
–
140,424
4,320,965
2,553,962
(3,385,280)
(57,028)
3,432,619
Leave pay and bonus
Leave pay represents employee leave days due multiplied by their cost to the company employment package. The bonus represents the
estimated amount due to employees based on their approved bonus scheme.
Performance bonus
The performance bonus represents an incentive bonus due to senior employees, calculated in terms of an approved scheme based on the
company’s operating results.
Other
The other provisions represents estimates for Group tax, legal and consulting fees to be charged.
134
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements 32. Financial instruments
The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and processes of the
Group for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented
throughout these financial statements.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising returns to
shareholders. In order to maintain or adjust the capital structure, the Group may issue new shares or arrange debt financing. At the reporting date,
the Group had borrowings of US$84,246,776 (2019: US$41,756,152).
The capital structure of the Group consists of cash and cash equivalents, equity and borrowings. Equity comprises of issued capital and retained
profits.
The Group is not subject to any externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement and the
bases for recognition of income and expenses for each class of financial asset, financial liability and equity instrument are disclosed in note 3.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
• Trade and other receivables
• Cash at bank
• Trade and other payables
• Borrowings
Investments
•
Categories of financial instruments
The group holds the following financial assets:
Financial assets at amortised cost
Trade and other receivables
Restricted investment
Cash and cash equivalents
Financial assets – Investment
Total financial assets at amortised cost
Financial assets at fair value
Total financial assets
The group holds the following financial liabilities:
Financial liabilities at amortised cost
Trade and other payables
Lease liabilities
Deferred Consideration
Loans
Borrowings
Total financial liabilities
2020
US$
2019
US$
10,451,736
3,111,465
50,540,672
2,785,507
66,889,380
20,439,565
4,427,793
6,605,465
34,011,557
4,420,891
49,465,706
1,952,227
87,328,945
51,417,933
2020
US$
2019
US$
23,853,676
5,002,144
5,416,466
1,597,972
84,246,776
15,721,502
5,464,909
7,108,819
–
41,756,152
120,117,034
70,051,382
Annual Report and Financial Results 2020 | Bushveld Minerals
135
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
32. Financial instruments continued
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The Board receives reports
through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. Further details regarding these policies are set out below:
Price risk
The Group’s exposure to commodity price risk is dependent on the fluctuating price of the various commodities that it mines, processes and sells.
The average market price of each of the following commodities was:
Vametco
NV
MVO
AMV
FEV
Vanchem
Vanadium Pentoxide Flake (FVP)
Vanadium Pentoxide Chemical (VCM)
Sodium Ammonium Vanadate (SAV)
Ammonium Metavanadate (AMV)
Ferro Vanadium (FEV)
Vanadyl Oxalate Solution (VOX)
2020
US$/kgV
23.56
17.18
17.53
22.33
2020
US$/kgV
19.86
22.79
32.97
26.79
22.56
–
2019
US$/kgV
48.87
–
19.09
–
2019
US$/kgV
76.10
38.47
–
–
–
14.17
If the average price of each of these commodities increased/decreased by 10%, the total sales related to each of these commodities would have
increased/decreased as follows:
Vametco
NV
MVO
AMV
FEV
Vametco
NV
FEV
MVO
AMV
136
Effect on
2020
revenue
US$
7,733,450
25,272
14,352
32,194
Effect on
2020
net income
US$
5,568,084
18,196
10,334
23,180
7,805,268
5,619,794
Effect on
2019
revenue
US$
11,692,487
–
–
14,391
Effect on
2019
net income
US$
8,418,591
–
–
10,361
11,706,878
8,428,952
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements
Vanchem
Vanadium Pentoxide Flake (FVP)
Vanadium Pentoxide Chemical (VCM)
Sodium Ammonium Vanadate (SAV)
Ammonium Metavanadate (AMV)
Ferro Vanadium (FEV)
Effect on
2020
revenue
US$
831,607
114,420
5,246
12,704
994,299
Effect on
2020
net income
US$
598,757
82,382
3,777
9,147
715,896
1,958,276
1,409,959
Credit risk
Credit risk is the risk that the counterparty fails to repay its obligation to the Group in respect of the amounts owed.
Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments carried at amortised cost, at fair value through
other comprehensive income (FVOCI) and at fair value through profit or loss (FVPL), as well as credit exposures to customers, including
outstanding receivables.
Risk management
Credit risk is managed on a Group basis. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are
accepted.
If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of
the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external
ratings in accordance with limits set by the board. The compliance with credit limits by customers is regularly monitored by line management.
The Group’s investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for
credit deterioration.
Security
At 31 December 2020, the company held no collateral as security against any financial asset. The carrying amount of financial assets recorded
in the financial statements, net of any allowances for losses, represents the company’s maximum exposure to credit risk without taking account
of the value of any collateral obtained. At 31 December 2020, no financial assets were past their due date. As a result, there has been no
impairment of financial assets during the year. An allowance for impairment is made where there is an identified loss event which, based on
previous experience, is evidence of a reduction in the recoverability of the cash flows. Management considers the above measures to be
sufficient to control the credit risk exposure.
Impairment of financial assets
The Group’s only financial assets that are subject to the expected credit loss model are third party trade receivables.
Trade receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables and contract assets.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31 December 2020 and the corresponding
historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identified the GDP and the unemployment
rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based
on expected changes in these factors.
Annual Report and Financial Results 2020 | Bushveld Minerals
137
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
32. Financial instruments continued
On that basis, the loss allowance as at 31 December 2020 was determined as follows for trade receivables:
Subsidiary
Bushveld Vametco Alloys (Pty) Ltd
Bushveld Vanchem (Pty) Ltd
Bushveld Minerals SA (Pty) Ltd
Bushveld Energy Company (Pty) Ltd
Bushveld Vametco Limited
Expected
credit loss
rate
Gross carrying
amount
US$
Loss allowance
US$
0.95%
1.94%
1.94%
1.94%
0.93%
312,230
38,169
69,189
72,651
2,835,340
2,966
740
1,342
1,409
26,369
32,826
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of
recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual
payments for a period of greater than 120 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts
previously written off are credited against the same line item. There were no impairment losses on trade receivables for the 2020 financial year.
It is the Group’s policy that all suppliers who wish to trade on credit terms are subject to credit verification procedures. Credit risk arises from
credit exposure to customers, including outstanding receivables and committed transactions.
Trade account receivables comprise a limited customer base. Ongoing credit evaluation of the financial position of customers is performed and
granting of credit is approved by directors.
The Group’s credit risk is considered by counterparty, geography and by currency. The Group has a significant concentration of cash held on
deposit with large banks in South Africa, Mauritius and the United Kingdom and America with A ratings and above (Standard and Poors).
The concentration of credit risk by currency was as follows:
Currency
Sterling
South African Rand
United States Dollar
2020
US$
2019
US$
663,914
34,165,671
15,711,087
169,071
17,469,394
16,373,092
50,540,672
34,011,557
At 31 December 2020, the Group held no collateral as security against any financial asset. The carrying amount of financial assets recorded in
the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of
the value of any collateral obtained. At 31 December 2020, no financial assets were past their due date. As a result, there has been no
impairment of financial assets during the year. An allowance for impairment is made where there is an identified loss event which, based on
previous experience, is evidence of a reduction in the recoverability of the cash flows. Management considers the above measures to be
sufficient to control the credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Ultimate responsibility for
liquidity risk management rests with the Board of directors. The Board manages liquidity risk by regularly reviewing the Group’s gearing levels,
cash-flow projections and associated headroom and ensuring that excess banking facilities are available for future use.
The Group maintains good relationships with its banks, which have high credit ratings and its cash requirements are anticipated via the
budgetary process. At 31 December 2020, the Group had US$50,540,672 (2019: US$34,011,557) of cash reserves and borrowings of
US$84,246,776 (2019: US$41,756,152). The Group will maintain its ability to service its borrowings over the next 12 months.
138
Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements Market risk
The Group’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates and interest rates.
Interest rate risk
The Group has interest bearing assets and liabilities, the Group’s income and operating cash flows are dependent of changes in market interest rates.
As part of the process of managing the Group’s interest rate risk, interest rate characteristics of new borrowings and the refinancing of existing
borrowings are positioned according to expected movements in interest rates.
2020
Interest bearing instruments
Borrowings
Cash and cash equivalents
2019
Interest bearing instruments
Borrowings
Cash and cash equivalents
Value of loan
84,246,776
40,260,188
Interest
change by 100
basis point
1 %
1 %
Value of loan
41,756,172
25,462,528
Interest
change by 100
basis point
1 %
1 %
Effect
(842,468)
402,602
(439,866)
Effect
(417,562)
254,625
(162,937)
Foreign exchange risk
As highlighted earlier in these financial statements, the functional currency of the Group is US Dollars. The Group also has foreign currency
denominated assets and liabilities. Exposure to exchange rate fluctuations therefore arise. The carrying amount of the Group’s foreign currency
denominated monetary assets and liabilities, all in US Dollars, are shown below:
Cash and cash equivalents
Other receivables
Trade and other payables
2020
US$
2019
US$
34,829,585
4,818,931
(17,715,850)
17,638,465
2,170,847
(11,563,170)
21,932,666
8,246,142
The group has transactional foreign exchange exposures, which arise from sales or purchases by an operating unit in currencies other than
the unit’s functional currency. The Vanadium market is predominately priced in US dollars which exposes the group to the risk of fluctuations
in the SA rand/US dollar. The Group monitors and manages risk via the newly established internal audit function.
The Group does not enter into any derivative financial instruments to manage its exposure to foreign currency risk.
Fair value
The directors are of the opinion that the book value of financial instruments approximates fair value. The carrying value less impairment
provision of trade receivables and payables are assumed to approximate their fair values.
The Group used the following hierarchy for determining and disclosing the fair value of financial instruments which are measured at fair value
by valuation technique:
• Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or
indirectly.
• Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
Of the Group’s financial assets at fair value as described in note 21, US$20,148,778 is measured using level 1 techniques and US$2,304,099 is
measured using level 3 valuation techniques.
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139
Financial StatementsSupplementary InformationGovernanceBusiness Overview Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2020
32. Financial instruments continued
Financial liabilities
Trade and other payables
Borrowings
Deferred consideration
Loans
2020
Carrying
amount
23,853,676
84,246,776
5,416,466
1,597,972
Fair value
23,853,676
84,246,776
5,416,466
1,597,972
2019
Carrying
amount
15,721,500
41,756,153
7,108,819
–
Fair value
15,721,500
41,753,153
7,108,819
–
* Management assessed that the fair values of cash and cash equivalents, restricted investment, trade and other receivables and trade and other payables, approximate their
carrying amounts largely due to the short-term maturities of these instruments.
Financial assets
Trade and other receivables
Restricted investments
Financial assets – investments
Financial assets at fair value
Cash and cash equivalents
2020
Carrying
amount
6,692,165
3,111,465
2,785,507
20,439,565
50,540,672
Fair value
6,692,165
3,111,465
2,785,507
20,439,565
50,542,672
2019
Carrying
amount
4,427,793
6,605,465
4,420,891
1,952,227
34,011,557
Fair value
4,427,793
6,605,465
4,420,891
1,952,227
34,011,557
33. Contingent liabilities
Bank guarantee
As required by the Minerals and Petroleum Resources Act (South Africa), a guarantee amounting to US$6,204,018 (2019: US$6,461,513) before
tax and US$4,446,893 (2019: US$4,652,290) after tax was issued in favour of the Department of Mineral Resources for the unscheduled closure
of the Bushveld Vametco Alloys mine. This guarantee was issued on condition that a portion be deposited in cash with Guard Risk Insurance
Company Ltd with restricted use by the Group, as per the below.
Restricted cash
As required by the Minerals and Petroleum Resources Act, a guarantee amounting to US$6,204,018 before tax and US$4,466,893 after tax was
issued in favour of the Department of Mineral Resources for the unscheduled closure of the mine. This guarantee was issued on condition that
a portion be deposited in cash with Centriq Insurance Company Ltd with restricted use by the Group as per the below:
The restricted cash disclosed as a current asset consist of US$3,111,465 (2019: US$ Nil) paid to Centriq Insurance Company Limited; US$ Nil
(2019: US$3,051,487).
For commercial reasons, the Company decided to consolidate its rehabilitation obligations into one insurance product. Guarantees previously
held with Guardrisk Insurance Company Ltd (2019: US$3,553,978) and the Environmental Rehabilitation Trust (2019: US$3,051,487) where
therefore consolidated into one guarantee from Centriq Insurance Company Ltd.
The guarantee is valid for three years, commencing on 1 June 2020 and the funds are only available if the agreement is terminated with a six
months’ notice period.
Suretyship
On 22 May 2019, the Company announced that it had agreed to provide a short-term standby working capital support facility to AfriTin for the
amount of ZAR 30,000,000 (approximately US$2.1 million on 22 May 2019). AfriTin has subsequently secured a working capital facility for the
amount of NAD 35,000,000 from Nedbank Namibia (the “Nedbank Facility”), with the support of Bushveld Minerals providing to stand surety for
the Nedbank Facility to the value of NAD 30,000,000 (approximately US$2.0 million).
In the unlikely event of default, Nedbank will first call on the suretyship of the parent company of the AfriTin Group (i.e. AfriTin Mining Limited). In
the event that AfriTin Mining Limited cannot meets its obligations under the facility, Nedbank will call upon the Bushveld Minerals suretyship.
The above is less onerous on Bushveld Minerals as it is not a cash collateralised guarantee. In addition, the terms agreed for the Working Capital
Facility announced on the 22 May 2019 remain unchanged with respect to Bushveld Minerals. The Company is comfortable with the progress
that AfriTin has made towards production at its Namibian flagship project and with the security it retains from AfriTin for the suretyship in the
form of a notarial bond over the AfriTin processing plant.
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Bushveld Minerals | Annual Report and Financial Results 2020
Financial Statements 34. Capital commitments
Authorised and contracted for
Authorised but not contracted for
2020
US$
–
–
–
2019
US$
2,449,568
608,778
3,058,346
35. Related parties
Relationships
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note.
VM Investments Limited is a related party due to two of the Executive Directors (Fortune Mojapelo and Anthony Viljoen) of Bushveld Minerals
Limited being majority shareholders of VM Investments. VM Investments owns the offices rented by Bushveld Minerals Limited. The rent paid in
2020 financial period is US$159,651 (2019: US$176,474).
Services rendered by Ondra LLP for the amount of US$566,056 (2019: US$376,800) is classified as a related party transaction due to a non
executive director (Michael Kirkwood) being a senior advisor at the firm.
The remuneration of key management personnel, being the directors and other executive committee members, is set out below. Further
information about the remuneration of individual directors is provided in the Directors’ remuneration report.
Salaries and fees
Short-term incentives
Long-term incentives
2020
US$
2,181,022
144,055
564,420
2019
US$
1,772,702
881,934
346,157
2,889,497
3,000,793
36. Events after the reporting period
The unprecedented impact of the COVID-19 pandemic, as well as the depressed governing sales price has had a negative impact on the
Group’s operational and financial position during the 2020 financial year. As such the Group has proactively engaged with Nedbank and have
agreed to a covenant waiver for the testing periods 29 June 2021.
Bushveld Minerals Limited’s strong balance sheet, including significant cash holdings, coupled with the actions it has taken to date demonstrates
the Groups capacity to navigate through the uncertainties caused by the impacts of the COVID-19 pandemic. The subsequent price recovery
has also improved the overall financial position of the business as its ability to operate as a going concern for the foreseeable future.
Enerox GmbH investment
On 31 March 2021 Bushveld Energy invested US$5.0 million into VRFB-H and invested approximately another US$2.7 million to retain its 50.5
percentage holding of VRFB-H. In turn, VRFB-H has invested US$15 million into EHL to fund its part of the US$30 million investment into Enerox.
The investment of VRFB-H into Enerox is in line with Bushveld Minerals’ strategy to mobilise capital to scale up growth and capacity of VRFB
manufacturers, either through self-funding mechanisms or through funding sharing arrangements. This strategy has been recently and
successfully illustrated by Bushveld Minerals’ investment and subsequent realisation of an interest in AIM-quoted Invinity Energy Systems.
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141
Financial StatementsSupplementary InformationGovernanceBusiness Overview Supplementary Information
Mineral Resources
and Reserves
Mineral Resources are the estimated quantities of
material with potential for eventual economic
extraction from the Group’s properties.
Ore Reserves are a subset of Measured and/or Indicated Mineral Resources that can be
demonstrably extracted, economically and legally.
Ore Reserves are declared for open pits inside the Life of Mine pit design (the optimised pit shell in this instance), including diluting materials and
allowances for losses which may occur when the material is mined or extracted. They are defined by studies at pre-feasibility or feasibility level,
as appropriate, that include the application of modifying factors. Those studies demonstrate that, at the time of reporting, extraction could
reasonably be justified (JORC, 2012). Ore Reserves are declared for in-whole rock tonnes in the pits and exclude any stockpiles. Economic
assumptions used to estimate reserves change from one period to another as additional technical and operational data is generated.
Bushveld Minerals: vanadium resource and reserves
Vametco mine
The Vametco Mine is situated about 6.5 km northeast of the town of Madibeng (formerly known as Brits). The mine is an operational opencast
vanadium mine, located in the Bojanala Platinum District within the North-West Province of the Republic of South Africa.
The operation comprises an open pit mine which supplies ore directly to the vanadium processing plant which is located on the same property.
The open pit is approximately 3.5 km long, in an east-west direction. The vanadium is extracted from magnetite layers occurring near the basal
contact of the Upper Zone of the Bushveld Igneous Complex. The mine has been in operation since 1967.
The location of the Vametco Mine is shown in Figure 1.
Mineral resources & reserves
The Mineral Resources and Reserves estimates for Vametco Mine reported herein are based on the Competent Person’s depletion statement
prepared by an independent consultancy company, MSA Group, as at 31 December 2020.
Key highlights
• Ore Reserves have been depleted after 12 months of mining by approximately two per cent from previous Ore Reserve estimate as at
31 December 2019. As at 31 December 2020, Ore Reserves are reported at 267,200 tonnes V2O5 in magnetite at a grade of 2.02 per cent
V2O5 in magnetite (previously 274,100 tonnes V2O5 in magnetite).
• Combined Inferred and Indicated Mineral Resource across three Seams (The Lower, Intermediate and Upper Seams) reported as at
31 December 2020 is 184.2 Mt at an average grade of 1.98 per cent V2O5 in magnetite, with an average magnetite content of 35.0 per cent in
whole rock for 709.8 thousand tonnes of contained vanadium (previously 185.5 Mt at an average grade of 1.98 per cent V2O5 in magnetite,
with an average magnetite content of 35.0 per cent in whole rock for 714.7 thousand tonnes of contained vanadium).
• Within this, the Ore Reserve in the Probable Category is reported as 46.4 Mt at an average grade of 2.02 per cent V2O5 in magnetite, with an
average magnetite content of 28.4 per cent in whole rock for 149,700 tonnes of vanadium (previously 47.4Mt V2O5 in magnetite across the
same three seams at an average grade of 2.02 per cent V2O5 in magnetite, with an average magnetite content of 28.5 per cent in whole rock
for 156,300 tonnes of vanadium).
• The Lower Seam is the main ore seam and the thickest, ranging from 13.8 to 52.0 metres in thickness, comprising a Probable Reserve of
38.8 Mt at an average grade of 2.05 per cent V2O5 in magnetite, with an average magnetite content of 29.3 per cent in whole rock for
130,500 tonnes of vanadium.
• The decrease in the 2020 Mineral Resource, by 0.68 per cent less tonnes than the 31 January 2019 estimate, is attributed to mining of the
seams over the last nine months. No Mineral Resource Exploration was carried out over this period.
• The decrease in the ore tonnages to 46.4 Mt as at 31 December 2020 is due to the depletion of lower and Intermediate seams over the nine
month period based on the pit to plant reconciled production data from Vametco.
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Bushveld Minerals | Annual Report and Financial Results 2020
Table 1: Vametco mineral resource at a cut-off grade of 20% magnetite, as at 31 December 2020 – gross basis
Class
Indicated
Inferred
Indicated and Inferred
Seam name
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Tonnes
(Millions)
V2O5 grade of
whole rock
%
Magnetite grade
of whole rock
%
V2O5 grade
in-magnetite
%
Tonnes V2O5
in-magnetite
(Thousands)
Tonnes V
in-magnetite
(Thousands)
5.7
27.9
107.9
141.5
10.3
7.0
25.4
42.7
16.0
35.0
133.3
184.2
1.44
0.67
0.72
0.74
1.46
0.67
0.74
0.90
1.45
0.67
0.72
0.78
65.9
32.8
32.3
33.8
63.6
32.1
31.3
39.2
64.4
32.7
32.1
35.0
1.78
1.91
2.03
2.00
1.75
1.92
2.00
1.93
1.76
1.91
2.03
1.98
66.2
174.8
709.4
950.5
114.8
43.3
158.4
316.6
181.0
218.1
867.9
1,267.2
37.1
97.9
397.4
532.4
64.3
24.3
88.7
177.3
101.4
122.2
486.1
709.8
Notes:
1. All tabulated data have been rounded and as a result minor computational errors may occur.
2. Mineral Resources which are not Ore Reserves have no demonstrated economic viability.
3. Mineral Resources are inclusive of Ore Reserves (not indicated in the table).
4. Magnetite content (grade) is determined as the proportion of magnetite concentrate recovered using Davis Tube methodology.
5. Due to the magnetite grade being a recovered grade, differences will occur between whole rock V2O5 grades back-calculated from concentrate, versus those derived from
whole rock assays.
6. Depleted using 31 December 2020 pit survey.
7. Reported on a Gross Basis. Bushveld Minerals shareholding in Vametco Alloys is 74%.
Table 2: Vametco mineral resource at a cut-off grade of 20% magnetite, as at 31 December 2020 – attributable basis
Class
Indicated
Inferred
Indicated and Inferred
Seam name
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Tonnes
(Millions)
4.2
20.7
79.9
104.7
7.6
5.2
18.6
31.6
11.8
25.9
98.7
136.3
V2O5 grade of
whole rock
%
Magnetite grade
of whole rock
%
V2O5 grade
in-magnetite
%
Tonnes V2O5
in-magnetite
(Thousands)
Tonnes V
in-magnetite
(Thousands)
1.44
0.67
0.72
0.75
1.46
0.67
0.74
0.90
1.45
0.67
0.72
0.79
65.8
33.2
31.8
33.9
63.7
32.1
31.3
39.3
64.4
32.9
31.6
35.5
1.78
1.91
2.03
1.99
1.75
1.92
2.00
1.93
1.76
1.91
2.02
1.97
49.0
129.3
525.0
703.4
84.9
32.1
117.2
234.3
133.9
161.4
642.2
937.7
27.4
72.4
294.0
394.0
47.5
17.9
65.6
131.2
75.0
90.4
359.7
525.2
Notes:
1. All tabulated data have been rounded and as a result minor computational errors may occur.
2. Mineral Resources which are not Ore Reserves have no demonstrated economic viability.
3. Mineral Resources are inclusive of Ore Reserves (not indicated in the table).
4. Magnetite content (grade) is determined as the proportion of magnetite concentrate recovered using Davis Tube methodology.
5. Due to the magnetite grade being a recovered grade, differences will occur between whole rock V2O5 grades back-calculated from concentrate, versus those derived from
whole rock assays.
6. Depleted using 31 December 2020 pit survey.
7. Reported on an Attributable Basis. Bushveld Minerals shareholding in Vametco Alloys is 74%.
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Supplementary Information
Mineral Resources and Reserves continued
Table 3: Vametco ore reserves, 31 December 2020 – gross basis
Class
Indicated
Seam name
Upper
Intermediate
Lower
Total
Tonnes
(Millions)
V2O5 grade of
whole rock
%
Magnetite grade
of whole rock
%
V2O5 grade
in-magnetite
%
Tonnes V2O5
in-magnetite
(Thousands)
Tonnes V
in-magnetite
(Thousands)
0.9
6.8
38.8
46.4
0.57
0.52
0.63
0.62
26.8
23.4
29.3
28.4
1.77
1.88
2.05
2.02
4.1
30.0
233.1
267.2
2.3
16.8
130.5
149.7
Notes:
1. All tabulated data have been rounded and as a result minor computational errors may occur.
2. Ore Reserve tonnes and grades reported on dry ROM (plant feed) basis after mining modifying factors have been applied but before beneficiation down-stream recoveries/
losses have been applied.
3. Reporting was prepared on a Mineral Resource model developed by MSA.
4. Ore Reserves depleted as at 31 December 2020 using 31 December 2020 pit survey.
5. Reported on a Gross Basis. Bushveld Minerals shareholding in Vametco Alloys is 74%.
6. Ore Reserve estimate depleted using latest topography supplied by Vametco as of 31 December 2020, based on the pit design and Ore Reserves compiled in March 2019.
Table 4: Vametco ore reserves, 31 December 2020 – attributable basis
Class
Indicated
Seam name
Upper
Intermediate
Lower
Total
Tonnes
(Millions)
V2O5 grade of
whole rock
%
Magnetite grade
of whole rock
%
V2O5 grade
in-magnetite
%
Tonnes V2O5
in-magnetite
(Thousands)
Tonnes V
in-magnetite
(Thousands)
0.6
5.0
28.7
34.4
0.57
0.52
0.63
0.62
26.8
23.4
29.3
28.4
1.77
1.88
2.05
2.02
3.0
22.2
172.5
197.8
1.7
12.4
96.6
110.7
Notes:
1. All tabulated data have been rounded and as a result minor computational errors may occur.
2. Ore Reserve tonnes and grades reported on dry ROM (plant feed) basis after mining modifying factors have been applied but before beneficiation down-stream recoveries/
losses have been applied
3. Reporting was prepared on a Mineral Resource model developed by MSA
4. Ore Reserves depleted as at 31 December 2020 using 31 December 2020 pit survey.
5. Reported on an Attributable Basis. Bushveld Minerals shareholding in Vametco Alloys is 74%.
6. Ore Reserve estimate depleted using latest topography supplied by Vametco as of 31 December 2020 based on the pit design and Ore Reserves compiled in March 2019.
Brits
This project is located directly east of the Bushveld Vametco Vanadium Mine in the Bojanala Platinum District within the North-West Province
(Figure 2) and hosts high-grade vanadium mineralisation in several magnetite layers. The mineralisation, which is outcropping in places, is a
continuation of the Vametco strike. The project offers a potential extension of Vametco’s Life of Mine and a cheap source of near-surface ore for
the Vametco plant.
Brits has the potential to provide additional feed tonnage for Vametco and, if required, concentrate feed for the Vanchem plant.
The Company’s interest in the asset ranges between 51 per cent and 74 per cent through three different companies, one of which is Caber
Trade Mining and Invest 1 (Pty) Ltd (“Caber Trade”), the mining right applicant, in which the Company holds an interest of 51 per cent.
Caber Trade is currently waiting for the Department of Mineral Resource and Energy to make a decision on the appeal that was lodged against
the decision by the Department to refuse the Mining Right Application.
The Caber Trade properties were not included in the CPR, therefore the refusal of the mining right has no impact on the mineral resource statement.
Minerals resources
A JORC compliant maiden Mineral Resource was declared in June 2019 on Portion 3 of the farm Uitvalgrond 431 JQ of the project and no
further exploration work has been conducted on the project after this mineral resource estimate. This resource was classified into the Indicated
and Inferred categories.
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Bushveld Minerals | Annual Report and Financial Results 2020
The aggregate Inferred and Indicated Mineral Resource distributed across the three seams (the Lower, Intermediate, and Upper Seams) is
reported as 66.8Mt at an average grade of 1.58 per cent V2O5 in magnetite, at a cut-off grade of 20 per cent magnetite in whole rock for 175,400
tonnes of contained vanadium.
The Mineral Resource is reported up to a depth of 150m below the surface and based on the drilling on the western and central blocks of the
farm Uitvalgrond Portion 3 which extends over a strike length of approximately 1.65km to the most eastern fault where the last line of drilling
was completed. As such there is potential to increase the resource on the remaining eastern unexplored portion of the farm on a strike length of
1km.
Key highlights
• The aggregate Inferred and Indicated Mineral Resource distributed across the three seams (the Lower, Intermediate, and Upper Seams) is
reported as 66.8 Mt at an average grade of 1.58 per cent V2O5 in-magnetite, at a cut-off grade of 20 per cent magnetite in-whole rock for
175,400 tonnes of contained vanadium.
• The Indicated Mineral Resource tonnages account for 67 per cent of the total combined Mineral Resource and stand at 44.9 Mt with an
average grade of 1.59 per cent V2O5 in-magnetite for 115,600 tonnes of contained vanadium across the three seams.
• The Lower Seam represents a major portion of the total combined Mineral Resource tonnages at the cut-off grade of 20 per cent, with 55.5
Mt at an average grade of 1.58 per cent V2O5 in-magnetite for 137,000 tonnes of contained vanadium. This represents approximately 83 per
cent of the total combined tonnage of the maiden Mineral Resource.
• Within the combined Mineral Resource, the Intermediate Seam has the highest grade of the three seams at 1.76 per cent V2O5 in-magnetite,
although the tonnages are low at the current cut-off grade of 20 per cent magnetite in-whole rock.
• A geological trend of decreasing grade in vanadium for magnetite-rich layers from west to east in the Bushveld Complex accounts for the
lower grades on the Brits Project in comparison to the grades at the operating Vametco Mine.
• The Mineral Resource is reported up to a depth of 150 meters below surface and is based on the drilling on the western and central blocks of
the farm Uitvalgrond Portion 3 which extends over a strike length of approximately 1.65 kilometres to the most eastern fault where the last
line of drilling was completed. There is potential to increase the resource on the remaining eastern unexplored portion of the farm on a strike
length of 1 km.
Table 5: Brits vanadium mineral resource at a cut-off grade of 20% magnetite, as at 18 June 2019 – gross basis
Class
Indicated
Inferred
Indicated and Inferred
Seam name
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Tonnes
(Millions)
V2O5 grade of
whole rock
%
Magnetite grade
of whole rock
%
V2O5 grade
in-magnetite
%
Tonnes V2O5
in-magnetite
(Thousands)
Tonnes V
in-magnetite
(Thousands)
2.0
1.9
41.0
44.9
7.1
0.4
14.5
22.0
9.2
2.2
55.5
66.8
0.66
0.47
0.56
0.56
0.65
0.44
0.50
0.55
0.65
0.46
0.54
0.56
43.64
21.52
28.54
28.94
43.89
21.13
26.09
31.78
43.84
21.46
27.90
29.87
1.51
1.75
1.59
1.59
1.50
1.85
1.55
1.54
1.50
1.76
1.58
1.58
13.4
7.0
185.9
206.3
46.7
1.4
58.8
106.9
60.1
8.4
244.6
313.2
7.5
3.9
104.2
115.6
26.2
0.8
32.9
59.9
33.7
4.7
137.0
175.4
Notes:
1. All tabulated data have been rounded and as a result minor computational errors may occur.
2. Mineral Resources which are not Ore Reserves have no demonstrated economic viability.
3. Magnetite grade is determined as the proportion of magnetite concentrate recovered using Davis Tube methodology.
4. Due to the magnetite grade being a recovered grade, differences will occur between whole rock V2O5 grades back calculated from concentrate, versus those derived from
whole rock assays.
5. The Mineral Resource is reported as 100% of the Mineral Resource for the project. Bushveld Minerals shareholding in Brits is 62.5%.
6. Bushveld Minerals is the operator of Brits Vanadium Project.
Annual Report and Financial Results 2020 | Bushveld Minerals
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Financial StatementsSupplementary InformationGovernanceBusiness Overview Supplementary Information
Mineral Resources and Reserves continued
Table 6: Brits vanadium mineral resource at a cut-off grade of 20% magnetite, as at 18 June 2019 – net attributable basis
Class
Indicated
Inferred
Indicated and Inferred
Seam name
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Tonnes
(Millions)
V2O5 grade of
whole rock
%
Magnetite grade
of whole rock
%
V2O5 grade
in-magnetite
%
Tonnes V2O5
in-magnetite
(Thousands)
Tonnes V
in-magnetite
(Thousands)
1.3
1.2
25.6
28.0
4.4
0.2
9.1
13.7
5.7
1.4
34.7
41.8
0.66
0.47
0.56
0.56
0.65
0.44
0.50
0.55
0.65
0.46
0.54
0.56
43.64
21.52
28.54
28.94
43.89
21.13
26.09
31.78
43.84
21.46
27.90
29.87
1.51
1.75
1.59
1.59
1.50
1.85
1.55
1.54
1.50
1.76
1.58
1.58
8.4
4.4
116.2
129.0
29.2
0.9
36.7
66.8
37.6
5.2
152.9
195.8
4.7
2.4
65.1
72.2
16.3
0.5
20.6
37.4
21.0
2.9
85.6
109.7
Notes:
1. All tabulated data have been rounded and as a result minor computational errors may occur.
2. Mineral Resources which are not Ore Reserves have no demonstrated economic viability.
3. Magnetite grade is determined as the proportion of magnetite concentrate recovered using Davis Tube methodology.
4. Due to the magnetite grade being a recovered grade, differences will occur between whole rock V2O5 grades back calculated from concentrate, versus those derived from
whole rock assays.
5. Bushveld Minerals shareholding in Brits is 62.5%.
6. Bushveld Minerals is the operator of Brits Vanadium Project.
Mokopane
Mokopane is located on the central portion of the northern limb of the Bushveld Complex. The project is in the Mokopane District of Limpopo
Province of South Africa, approximately 65 kilometres west of the provincial capital, Polokwane and 45 kilometres northwest of Mokopane town
(Figure 2). The project includes one of the world’s largest primary vanadium resources, with an average grade of 1.80 per cent V2O5 in-magnetite.
Licensing
On 29 January 2020, the Department of Mineral Resources and Energy in South Africa executed a 30-year mining right in favour of the
company’s subsidiary, Pamish Investments No. 39 (Pty) Ltd (“Pamish”), over five farms: Vogelstruisfontein 765 LR; Vriesland 781 LR; Vliegekraal
783 LR; Schoonoord 786 LR; and Bellevue 808 LR (Figure 2).
Ownership
While the Mokopane’s mining right is subject to Mining Charter II regulations, the Company is committed to adopting Mining Charter III regulations in
respect of host community and employee shareholding requirements. In accordance with Mining Charter III, a free-carried interest of five per cent of
the equity in Pamish, will in due course, be transferred by the existing shareholders (Bushveld Minerals and Izingwe Capital (Pty) Ltd) to the Bakenberg
Community Trust, a trust established for the benefit of the local communities. Bushveld Minerals’ interest in the Mokopane Project will accordingly
reduce from 64 per cent to 60.8 per cent, while Izingwe’s shareholding will reduce from 36.0 per cent to 34.2 per cent. Pamish has further
committed to allocate an additional five per cent to an Employee Share Ownership Participation Scheme once the mine is operational, which
will result in Bushveld Minerals ultimately holding 57.6 per cent and Izingwe 32.4 per cent.
Geology & mineral resources & reserves
The Mokopane deposit is a layered orebody along a 5.5 kilometre north-south strike, dipping at between 18 and 22 degrees west. The project
comprises three adjacent and parallel magnetite layers, namely the Main Magnetite Layer (“MML”), the Main Magnetite Layer-Hanging Wall
(“MML-HW”) layer and the AB Zone. Its 298 Mt (JORC) resources and reserves run across three parallel overlying magnetite layers with grades
ranging from 1.6 per cent to over 2.0 per cent V2O5 as follows:
• MML: 52 Mt @ 1.48 per cent V2O5 (1.6-1.8 per cent V2O5 in-magnetite);
• MML-HW & Parting: 233 Mt @ 0.8 per cent V2O5 (1.5-1.6 per cent V2O5 in-magnetite); and
• AB Zone: 12 Mt @ 0.7 per cent V2O5 (greater than 2.0 per cent V2O5 in-magnetite.
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Bushveld Minerals | Annual Report and Financial Results 2020
Mokopane resources and reserves
The Mokopane Project has a 298 Mt JORC-compliant Resource, including 28.5 Mt Reserves and a weighted average V2O5 grade of 1.41 per cent
in-whole rock and 1.75 per cent in-magnetite.
Table 7:
Layer name
UG-C
UG-A
UMG1
UMG2
MAG1 HW GAB**
MAG1
MAG2
MML HW
Total
MAG3
PART
MAG4
Mineral
resource
category
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Indicated
Indicated
Indicated
Width
(m)
Tonnes
(Mt)
Density
(t/m)
V2O5
(%)
Fe
(%)
Fe2O3
(%)
TiO2
(%)
SiO2*
(%)
Al2O3*
(%)
P2O5*
(%)
S*
(%)
V2O5
(kt)
Fe
(Mt)
4.04
1.64
3.24
2.03
17.53
1.31
1.10
5.89
36.77
4.09
2.16
3.59
31.8
12.7
25.5
15.7
72.3
12.0
9.2
42.3
221.5
27.5
11.4
24.3
3.48
3.31
3.30
3.40
3.02
3.96
3.57
3.01
3.21
4.08
3.16
4.00
0.64
0.59
0.59
0.69
0.31
1.07
0.83
0.32
0.50
1.50
0.58
1.46
25.7
23.2
22.9
25.9
13.1
40.0
30.2
13.4
19.8
45.5
20.9
43.9
36.7
33.1
32.7
37.0
18.8
57.1
43.1
19.2
28.3
65.1
29.9
62.7
57.8
5.9
5.3
5.4
6.2
2.9
9.7
7.2
2.5
4.4
10.0
3.5
9.3
8.6
5.4
30.2
32.5
32.6
29.4
42.0
15.6
25.1
42.2
35.7
10.6
34.5
11.8
15.4
31.2
15.4
17.5
17.6
16.7
21.9
10.8
15.1
21.6
18.9
7.8
19.0
8.9
10.2
17.0
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.02
0.01
0.01
0.01
0.01
0.01
0.01
202.8
0.12
75.6
0.01
150.4
0.01
107.7
0.01
223.3
0.12
128.7
0.06
76.3
0.06
0.11
136.0
0.08 1,100.8
412.5
0.12
66.3
0.17
354.9
0.24
8.2
3.0
5.8
4.1
9.5
4.8
2.8
5.7
43.8
12.5
2.4
10.7
0.18
833.7
25.6
0.10 1,934.5
69.4
Total
Indicated
9.84
63.2
3.85
1.32
40.4
Total Mineral Resources
46.61 284.8
3.33
0.68
24.4
34.8
Included for information purposes only, no value will be derived from these materials.
*
** A 0.30 per cent V2O5 cut-off has been applied laterally across this layer, so only material greater than 0.30 per cent V2O5 is included in the tonnage listed in this table.
Table 8: MML probable ore reserves as at 19 January 2016
Orebody
MML Upper, MAG 3
MML Lower, MAG 4
*Total/Average
True Thickness
(m)
4.09
3.59
7.68
SG (t/m³)
Tonnes (million)
V₂O₅ (%)
4.08
4.00
4.04
15.3
13.2
28.5
1.425
1.387
1.41
Table 9: AB zone mineral resource at 0.3 Per cent V2O5 cut-off, ≤120 m vertical depth, as at 15 October 2017
Layer
Upper AB
AB Parting
Lower AB
Total
Category
Inferred
Inferred
Inferred
Inferred
Tonnes
(Millions)
Thickness 1
(metres)
Density
t/m3
V2O5
%
Fe2O3
%
2.7
3.7
6.0
12.5
1.93
2.86
4.51
9.30
3.29
3.07
3.21
3.18
0.89
0.48
0.75
0.70
34.7
20.9
29.1
27.9
TiO2
%
5.41
2.98
4.32
4.16
P2O5
%
0.01
0.01
0.01
0.01
SiO2
%
30.3
40.0
34.6
35.3
Al2O3
%
17.1
19.7
18.6
18.6
MgO
%
1.05
1.93
1.29
1.43
CaO
%
6.54
9.29
7.52
7.83
Cu ppm
466
47
33
132
Note:
1. Refers to stratigraphic thickness.
The PQ iron & titanium and PQ phosphate projects
The PQ Iron & Titanium Project is a multi-commodity project which forms part of the Mokopane Project, located 45 kilometres north-
northwest of the town of Mokopane in Limpopo Province, South Africa.
Both projects are based on the same licence area as Mokopane, where there is a mining right held by Pamish Investments No. 39 (Pty) Ltd
(“Pamish”). Bushveld Minerals currently owns an effective controlling interest of 64 per cent in the PQ Iron & Titanium and PQ Phosphate projects.
While the mining right is subject to Mining Charter ll regulations, the Company is committed to adopting Mining Charter III regulations in respect
of host community and employee shareholding requirements. Therefore, a five per cent share for these stakeholders will be vendor-financed and
repaid from future proceeds from the mine. Bushveld Minerals’ interest in the PQ Iron & Titanium Project and PQ Phosphate Project will
accordingly reduce from 64 per cent to 60.8 per cent, while Izingwe’s shareholding will reduce from 36 per cent to 34.2 per cent.
Annual Report and Financial Results 2020 | Bushveld Minerals
147
Financial StatementsSupplementary InformationGovernanceBusiness Overview Supplementary Information
Mineral Resources and Reserves continued
Pamish has further committed to allocate an additional five per cent to an Employee Share Ownership Participation Scheme once the mine is
operational, which will result in Bushveld Minerals ultimately holding 57.6 per cent and Izingwe 32.4 per cent.
Progress to date has been limited to understanding the economic parameters necessary for success and how these projects can be configured
in line with the Company’s approach towards developing projects. No further work is planned on these projects while the Company advances
its vanadium platform.
PQ iron & titanium mineral resources
The Project has a JORC-compliant Inferred and Indicated Mineral Resource of 955 Mt, with an average grade of 33.7 per cent Fe and 10.8 per
cent TiO2 in magnetite as shown in the tables 10, 11 and 12.
The project boasts some of the highest in-magnetite grades of titanium in the world and could be developed as a titanium and pig iron project
in the long run, depending on the evolution of low capital-intensive methods for processing the ore. Bushveld Minerals is following, with
interest, advances in metallurgical processing used for similar deposits and exploring partnerships with technology partners. No further work is
planned on the project at this stage.
The Mineral Resources and Reserves estimates are based on the Competent Person’s Report prepared by MSA Group as at 15 October 2017.
Table 10: N-Q zone (weathered+unweathered) indicated mineral resource less than 200 meters depth, as at 8 March 2013
Fe Metal
Millions
tonnes
43.99
34
8.58
11.15
18.13
0.98
2.23
Fe Metal
Millions
tonnes
42.05
37.27
7.66
11.70
20.49
0.61
3.34
Layer
Q3
Q2
Q1
PMAG
PFWDISS*
OMAG*
NMAG
Total
Layer
Q3
Q2
Q1
PMAG
PFWDISS*
OMAG*
NMAG
Total
Tonnes
(Millions)
SG
(g/cm3)
Fe
(%)
Fe2O3
(%)
TiO2
(%)
V2O5
(%)
SiO2
(%)
Al2O3
(%)
P2O5
(%)
S
(%)
138.63
81.17
26.36
34.44
67.28
2.63
4.58
355.09
3.61
4.01
3.59
3.62
3.38
4.00
4.41
3.67
31.7
41.9
32.5
32.4
26.9
37.2
48.7
45.5
59.1
45.6
45.4
38.5
53.2
69.6
10.2
15.2
10.5
10.1
7.1
11.1
16.0
0.13
0.28
0.28
0.29
0.22
0.49
0.56
0.22
25.2
12.6
22.3
21.3
30.1
18.5
6.9
9.9
6.5
9.9
10.5
12.8
7.9
5.3
22.37
9.66
0.06
0.02
0.02
0.03
0.03
1.01
0.03
0.05
0.40
0.27
0.27
0.80
0.33
0.12
0.11
0.38
33.51
47.65
119.06
10.85
* Layer reported at a 35 per cent Fe2O3 cut-off; no geological losses applied.
Table 11: N-Q zone (unweathered) inferred mineral resource, 200 meters to 400 meters depth, as at 8 March 2013
Tonnes
(Millions)
SG
(g/cm3)
Fe
(%)
Fe2O3
(%)
139.03
92.64
23.42
38.28
76.51
1.87
7.22
378.97
3.59
3.99
3.64
3.58
3.37
3.77
4.32
3.66
30.2
40.2
32.7
30.6
26.8
32.4
46.3
43.3
57.5
46.8
43.7
38.3
46.3
66.2
32.47
46.47
123.12
TiO2
(%)
V2O5
(%)
SiO2
(%)
Al2O3
(%)
P2O5
(%)
S
(%)
8.80
14.10
10.80
9.80
6.90
9.5
15.6
10.07
0.09
0.23
0.27
0.26
0.21
0.4
0.49
0.19
28.3
15.3
22.2
23.5
30.2
23.1
8.3
10.3
7.6
10.6
11.5
12.8
10.4
5.8
24.24
10.20
0.13
0.02
0.02
0.04
0.03
0.02
0.02
0.06
0.61
0.55
0.36
0.74
0.43
0.10
0.14
0.55
* Layer reported at a 35 per cent Fe2O3 cut-off; no geological losses applied.
148
Bushveld Minerals | Annual Report and Financial Results 2020
Table 12: P-Q zone inferred mineral resource, less than 300 meters vertical depth at a 35 per cent Fe2O3 cut-off for the farms schoonoord
786LR and bellevue 808LR, as at 28 February 2014
Layer
Name
Q3
Q2
Q1
PMAG
PFWDISS*
Total
Tonnes
(Millions)
Density
t/m3
Fe
(%)
Fe2O3
(%)
75.3
85.5
13.1
19.7
27.3
220.8
3.77
4.14
3.82
3.52
3.45
3.85
34.3
42.6
36.4
27.6
27.8
36.2
49.1
60.9
52.1
39.5
39.8
51.9
Fe Metal
Millions
tonnes
25.82
36.40
4.76
5.45
7.60
80.03
TiO2
(%)
V2O5
(%)
SiO2
(%)
Al2O3
(%)
P2O5
(%)
S
(%)
10.5
14.9
12.2
8.3
8.0
11.8
0.10
0.26
0.30
0.23
0.22
0.2
23.0
13.1
19.1
29.1
28.3
20.1
9.4
6.9
9.8
12.4
12.9
9.2
0.28
0.03
0.03
0.06
0.06
0.12
0.55
0.50
0.46
1.00
0.55
0.57
Notes:
1. Total = All tabulated data has been rounded and as a result minor computational errors may occur.
* Layer reported at a 35 per cent Fe2O3 cut-off; no geological losses applied.
The PQ phosphate project mineral resources
The PQ Phosphate Project resource lies immediately above the iron ore and titanium resource of the PQ Project. The Company reported on
3 June 2014, a maiden phosphate resource statement for the PQ deposit of 442 Mt, with average phosphate grades of 3.6 per cent P₂O₅ as
shown in Table 13. Although the grades are low, the PQ Phosphate deposit is in the immediate hanging wall of the PQ Project and would be
mined concurrently with the stripping of the latter. Of particular interest is that laboratory-scale test work has shown that 37 per cent P₂O₅
concentrate grades are achievable from this deposit.
Figures are based on the Competent Person’s report prepared by MSA Group as at 15 October 2017.
Table 13: Summary of the phosphate zone resource at a three per cent P2O5 cut-off for the farms Vliegekraal 783LR, Malokong 784LR,
Schoonoord 786LR and Bellevue 808LR, at 12 April 2014.
Farm
Vliegekraal
Malokong
Schoonoord
Bellevue
Total 1
Tonnes
(Millions)
330.0
1.8
104.9
5.0
441.6
P2O5
%
3.6
3.2
3.6
3.6
3.6
Fe2O3
%
32.1
35.5
34.1
34.4
32.6
S
%
0.39
0.37
0.40
0.42
0.39
SiO2
%
34.0
35.4
33.0
33.3
33.7
CaO
%
9.1
8.6
8.8
8.9
9.0
Density
g/cm3
3.30
3.27
3.37
3.36
3.32
Note:
1. All tabulated data has been rounded and as a result minor computational errors may occur.
Lemur Holdings Limited
The Mineral Resource estimates are based on the competent person’s report prepared by Sumsare Consulting Group CC as at 30 November
2017.
Table 14: Resource for the Imaloto coal project
Category
Coal Resource per asset
Measured
Indicated
Inferred
Sub total
Total
Gross
Net attributable (99%)
Operator
Raw Coal Quality (ADB)
Raw Coal quality (ADB)
Tonnes
(Millions)
91.613
31.497
12.627
135.737
135.737
Ash (%)
CV (MJ/Kg)
32.5
35.7
34.4
33.4
33.4
19.62
18.14
18.80
19.20
19.20
Tonnes
(Millions)
90.697
31.182
12.501
134.380
134.380
Ash (%)
CV (MJ/Kg)
32.5
35.7
34.4
33.4
33.4
19.62
18.14
18.80
19.20
19.20
Lemur Holdings
Limited
Annual Report and Financial Results 2020 | Bushveld Minerals
149
Financial StatementsSupplementary InformationGovernanceBusiness Overview TiO₂
TIFR
TGP
TSR
Titanium Dioxide
Total Injury Frequency Rate
Total guaranteed pay
Total Shareholder Return
Vametco
Vametco mine & processing plant
VCN
V2O5
V2O3
VRFB
VIP
Vanadium Carbon Nitride
Vanadium Pentoxide
Vanadium Trioxide
Vanadium Redox Flow Battery
VRFB Investment Platform
Vanchem Vanchem Vanadium Plant
WACC
Weighted Average Cost of Capital
Supplementary Information
Acronyms
AET
AMV
AGM
Adult Education and Training
Ammonium Meta Vanadate
Annual General Meeting
Avalon
Avalon Battery Corporation
Brits
BV
Brits Vanadium Project
Bureau Veritas
CAGR
Compound Annual Growth Rate
CSP
DFS
Conditional Share Plan
Definitive feasibility study
Enerox
Enerox GmbH
EIA
EMS
EPC
ESG
FeV
GW
GWh
HRD
IDC
IRP
IWUL
IFC
Environmental Impact Assessment
Environmental Management System
Engineering, Procurement and Construction
Environment, Social and Governance
Ferrovanadium
Gigawatt
Gigawatt hour
Human Resources Development
Industrial Development Corporation
Integrated Resource Plan
Integrated Water Use Licence
International Finance Corporation
Invinity
Invinity Energy Systems plc
JSE
JORC
kt
LTI
LTIFR
MML
Johannesburg Stock Exchange
Joint Ore Reserves Committee
Thousands of tonnes
Long-term incentive
Lost time injury frequency rate
Main Magnetite Layer
MML-HW Main Magnetite Layer Hanging Wall
mtV
Metric ton of Vanadium
MtVp.a.
Metric ton of Vanadium per annum
MW
MWh
Mt
MVO
OEM
P₂O₅
QMS
Megawatt
Megawatt hour
Millions of tonnes
Modified vanadium oxide
Original Equipment Manufacturer
Phosphate
Quality Management System
QCA Code Quoted Companies Alliance Corporate Governance Code
redT
RONA
STI
redT energy plc
Return on Net Assets
Short-term incentive
SMMEs
Small, Medium and Micro Enterprises
150
Bushveld Minerals | Annual Report and Financial Results 2020
Glossary
Mining terms
Beneficiation
Any process that improves (benefits) the economic value of the ore by
removing the gangue minerals prior to further metallurgical treatment.
Life of Mine
Life of Mine (“LoM”) is the time in which the ore reserves (or such
reasonable extension of the reserves as conservative geological
analysis may justify) will be mined economically to completion.
Brownfield
The development or exploration of assets located inside the area of
influence of existing mine operations which can share infrastructure/
management.
Competent Person’s Report
A report on the technical aspects of a project or mine prepared by a
Competent Person (“CP”). The contents are determined by the nature/
status of the project/mine being reported and may include a techno-
economic model as appropriate for the level of study. A Competent
Person must have a minimum of five years’ relevant experience in the
style of mineralisation or type of deposit under consideration and in
the activity that the person is undertaking (JORC Code, 2012).
Crushing
First stage of mineral processing which involves reducing large rocks
or boulders into smaller sizes using equipment such as gyratory
crushers, jaw crushers and cone crushers.
Greenfield
The development or exploration of assets located outside the area of
influence of existing mine operations/infrastructure.
Hanging Wall
The strata situated above the targeted mineralised ore zone.
Indicated Mineral Resource
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for
which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence sufficient
to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic
viability of the deposit. The estimate is based on detailed and reliable
exploration and testing of information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough for geological and
grade continuity to be reasonably assumed.
Inferred Mineral Resource
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for
which quantity and grade (or quality) are estimated on the basis of
limited geological evidence and sampling. Geological evidence is
sufficient to imply but not verify geological and grade (or quality)
continuity. It is based on exploration, sampling and testing of
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes.
Leaching
The process by which a soluble metal can be economically recovered
from minerals in ore by dissolution.
Magnetic Separation
The process of concentrating magnetic ore where the magnetic rock
particles are separated from non-magnetic rock particles by using a
magnet.
Magnetite
A naturally occurring mineral form of iron ore with the chemical
formula Fe3O4.
Main Magnetite Layer
The vanadium-bearing magnetite layer in the lower portion of the
upper zone of the Bushveld Complex, consisting of heavy to
disseminated magnetite. It varies in thickness from 1 to 10 metres.
Measured Mineral Resource
A Measured Mineral Resource’ is that part of a mineral resource for
which quantity, grade (or quality), densities, shape and physical
characteristics are so well established that they can be estimated with
sufficient confidence to allow the appropriate application of technical
and economic parameters to support production planning and
evaluation of the economic viability of the deposit. The estimate is
based on detailed and reliable exploration, sampling and testing of
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough to confirm both geological and grade
continuity
Milling
The process of breaking down aggregate rock material into even
smaller sizes (usually into powder-like form) using equipment such as
a ball mill.
Mineralisation
A concentration (or occurrence) of material of possible economic
interest, in or on the Earth’s crust, for which quantity and quality
cannot be estimated with sufficient confidence to be defined as a
Mineral Resource. Mineralisation is not classified as a Mineral Resource
or Mineral Reserve and can only be reported under Exploration
Results. The data and information relating to it must be sufficient to
allow a considered and balanced judgement of its significance.
Mineral Deposits
A mass of naturally occurring mineral material, usually of economic
interest, without regard to mode of origin.
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151
Financial StatementsSupplementary InformationGovernanceBusiness Overview
Supplementary Information
Glossary continued
Mineral Reserves
Mineral Reserves are sub-divided into two categories. The proven
category is the highest level of reserves or the level with the most
confidence. The probable category is the lower level of confidence
of the reserves. Reserves are distinguished from Resources as all the
technical and economic parameters have been applied and the
estimated grade and tonnage of the resources should closely
approximate the actual results of mining. The guidelines state:
“Mineral Reserves are inclusive of the diluting material that will be
mined in conjunction with the Mineral Reserve and delivered to the
treatment plant or equivalent facility.” The guidelines also state that,
“The term ‘Mineral Reserve’ need not necessarily signify that
extraction facilities are in place or operative or that all government
approvals have been received. It does signify that there are reasonable
expectations of such approvals.”
Mineral Resource
A Mineral Resource is a concentration or occurrence of solid material
of economic interest in or on the earth’s crust in such form, grade or
quality and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade, continuity and
other geological characteristics of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and
knowledge, including sampling.
Mineral Resource/Reserve Depletion
Reconciling the metal quantity within the latest resource/reserve
estimate that has been mined from a previous resource/reserve
estimate.
Modified Vanadium Oxide ("MVO")
An oxide form of vanadium (a mixture of V2O5, V2O4 and V2O3)that
is chemically produced by reducing Ammonium Metavanadate
(NH4VO3) and is used as feedstock for final vanadium products such
as Nitrovan (NV) and Ferrovanadium (FeV).
Open Pit Mining
A method of mining rock or minerals by removing them from an open
pit commencing from the earth’s surface.
Ore Reserves
A subset of Measured and/or Indicated Mineral Resources that can be
demonstrably extracted, economically and legally.
Ore Reserves are declared for open pits inside the Life of Mine pit
design (the optimised pit shell in this instance), including diluting
materials and allowances for losses which may occur when the
material is mined or extracted. They are defined by studies at
pre-feasibility or feasibility level, as appropriate, that include the
application of modifying factors. Those studies demonstrate that, at
the time of reporting, extraction could reasonably be justified (JORC,
2012). Ore Reserves are declared for in-whole rock tonnes in the pits
and exclude any stockpiles. Economic assumptions used to estimate
reserves change from one period to another as additional technical
and operational data is generated.
Qualified Person
A professionally qualified member in good standing of an appropriate
recognised professional association who has at least five years’
relevant experience within the sector. A professional association is
a Recognised Professional Organisation (RPO) of engineers and/or
geoscientists.
Reserve Life
Current stated Ore Reserves estimate divided by the current approved
nominated production rate at the end of the financial year.
Run of Mine
Ore mined in the course of regular mining activities and extracted
from the mining operation. Tonnes include allowances for diluting
materials and for losses that occur when the material is mined.
Salt Roasting
Process where a magnetite concentrate is roasted with salts (sodium
carbonate and sodium sulphate) in an extremely high temperature
rotary kiln with temperatures of up to 1,150˚C to form water soluble
solids containing vanadium.
Strike
Horizontal direction or trend of a geological structure, perpendicular
to its down dip direction.
Other terms
Bankable Feasibility Study
A feasibility study is bankable if it has been prepared in detail and with
objectivity so that the company could submit it to investors or lenders
when seeking financing for the project.
Definitive Feasibility Study
A feasibility study based on the best alternative identified in the
preliminary feasibility study, and suitable as a basis for detailed design
and construction. The definitive feasibility study is based on indicated
and measured mineral resources.
Pre-feasibility Study
A pre-feasibility study is an early stage analysis of a potential mining
project. It is conducted and designed to give company stakeholders
the basic information required to choose between potential
investments.
EBITDA
Earnings before interest, tax, depreciation and amortization is a
measure of a company’s operating performance.
Free Cash Flow
Free cash flow represents the net cash generated from operating
activities, after taking into consideration capital expenditure.
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Bushveld Minerals | Annual Report and Financial Results 2020
Supplementary Information
Notice of Annual
General Meeting
Bushveld Minerals Limited
(Incorporated in Guernsey under registered number 54506)
Registered Office:
Oak House, Hirzel Street, St Peter Port, Guernsey, GY1 3RH
29 June 2021
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to what action you should take, you are recommended to seek your own financial advice immediately from your
stockbroker, bank manager, solicitor, accountant or other independent financial advisor who specialises in advising on shares or other securities
and who is, in the case of UK shareholders, authorised under the Financial Services and Market Act 2000.
If you have sold or transferred your shares in Bushveld Minerals Limited, please forward this document at once to the purchaser or transferee or
to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. If you have
sold or transferred part of your registered holding of shares, please consult the stockbroker, bank or other agent through whom the sale or
transfer was effected.
Notice of an Annual General Meeting of Bushveld Minerals Limited to be held at 11.00 am on 5 August 2021 at Oak House, Hirzel Street,
St Peter Port, Guernsey, GY1 3RH.
PLEASE READ CAREFULLY – ARRANGEMENTS FOR THE ANNUAL GENERAL MEETING IN LIGHT OF COVID-19
The Company is carefully monitoring the COVID-19 situation, including the guidance issued by the States of Guernsey, and will continue to do
so in the lead up to the Meeting.
At the date of this Notice, restrictions on movement within Guernsey have been lifted but persons arriving into the Bailiwick of Guernsey are
presently required to self-isolate for periods of up to 14 days depending on the country from and/or through which they have travelled (and
subject to one or more negative COVID-19 tests). With effect from 1 July 2021, persons who are fully vaccinated and who in the previous 14
days have only been within the Common Travel Area of the UK, Ireland, Jersey and the Isle of Man will be able to travel to Guernsey without
having to self-isolate or undergo a COVID-19 test. However, this concession may change prior to the date of the Meeting.
It is expected that shareholders in Guernsey, or those who wish to travel to Guernsey for the Meeting subject to quarantine measures, will be
able to attend the Meeting as normal. However, the Board recognises that this may not be possible for the majority of shareholders and has put
in place the following precautions (the “COVID-19 Precautions”):
1. The Company urges shareholders to vote by proxy and to appoint the chairman of the Meeting as their proxy for that purpose. If a
shareholder appoints someone other than the chairman of the Meeting as their proxy, that proxy, if not present in Guernsey, may not be able
physically to attend the Meeting or cast the shareholder’s vote. All votes on the resolutions contained in this Notice will be held by poll, so
that all voting rights exercised by shareholders who are entitled to do so at the Meeting will be counted.
2. The Board encourages all shareholders to exercise their votes by proxy, and to submit any questions in respect of the Meeting in advance.
This should ensure that your votes are registered in the event that attendance at the Meeting is not possible. Shareholders are encouraged to
use the online voting facilities detailed below where possible rather than submitting a paper proxy card, as in the current circumstances the
Board cannot guarantee that there will be staff at the office of the Company’s Registrar to receive post.
3. Shareholders who do choose to attend the Meeting in person are asked to comply with the States of Guernsey’s guidance on respecting
personal space and practising good hand hygiene, and with any distancing requirements requested by the Chairman.
4. The security arrangements proposed by the Board are subject to constant review, and should they be subject to change in line with
changing guidance from the States of Guernsey, or in the event that the situation surrounding COVID-19 should affect the plans to hold the
Meeting at the proposed date and time or at the proposed address, the Company will update shareholders through a market announcement
and will provide further details on the Company’s website. The Board reserves the right, should it become necessary, to restrict attendance
at the Meeting as part of security arrangements pursuant to Article 73.2 of the Articles of Incorporation of the Company (the “Articles”).
ORDINARY RESOLUTIONS
1. To receive and adopt the Annual Financial Statements of the Company and the Directors report and the report of the Auditors for the
financial year ended 31 December 2020.
2. To approve the Directors Fees as reflected in Remuneration Report and in Note 35 of the Annual Financial Statements.
3. That Messrs RSM UK Audit LLP be reappointed as Auditors to the Company.
4. That the Directors be authorised to approve the remuneration of the Company’s Auditors to the Company.
5. That Anthony Viljoen shall be re-elected as a Director, having retired by rotation and offered himself for re-election.
6. That Michael Kirkwood shall be re-elected as a Director, having retired by rotation and offered himself for re-election.
Annual Report and Financial Results 2020 | Bushveld Minerals
153
Financial StatementsSupplementary InformationGovernanceBusiness Overview Supplementary Information
Notice of Annual
General Meeting continued
7. The Company be generally and unconditionally authorised for the purposes of Articles 50.3 of the Articles to make on market acquisitions
(as defined in Article 50.5 of the Articles) of Ordinary Shares on such terms and in such manner as the Directors determine provided that:
(i) the maximum aggregate number of Ordinary shares which may be purchased is 119,156,154 Ordinary Shares;
(ii) the minimum price (excluding expenses) which may be paid for each Ordinary share is £0.01;
(iii) the maximum price (excluding expenses) which may be paid for any Ordinary Share does not exceed 105 per cent of the average closing
price of such shares for the 5 business days of AIM prior to the date of purchase; and
(iv) this authority shall expire at the conclusion of the next Annual General Meeting of the Company unless such authority is renewed prior
to that time (except in relation the purchase of Ordinary Shares the contract for which was concluded before the expiry of such authority,
in which case such purchase may be concluded wholly or partly after such expiry).
8. The Directors of the Company be and are hereby authorised to exercise all powers of the Company to issue, grant rights to subscribe for,
or to convert any securities into, up 397,187,181 shares (together “Equity Securities”) in the capital of the Company being approximately one
third of the issued share capital of the Company (excluding treasury shares) in accordance with Article 8.3 of the Articles of Incorporation
of the Company such authority to expire, unless previously renewed, revoked or varied by the Company by ordinary resolution, at the end
of the next Annual General Meeting of the Company or, if earlier, at the close of business on the date falling 15 months from the date of the
passing of this Resolution, but in each case, during this period the Company may make offers, and enter into agreements, which would, or
might, require Equity Securities to be issued or granted after the authority given to the Directors of the Company pursuant to this Resolution
ends and the Directors of the Company may issue or grant Equity Securities under any such offer or agreement as if the authority given to
the Directors of the Company pursuant to this Resolution had not ended. This Resolution is in substitution for all unexercised authorities
previously granted to the Directors of the Company to issue or grant Equity Securities; and
SPECIAL RESOLUTION
9. If Resolution 8 is passed, the Directors of the Company be and they are hereby authorised to exercise all powers of the Company to issue
or grant Equity Securities in the capital of the Company pursuant to the issue or grant referred to in Resolution 8 as if the pre-emption rights
contained in Article 9.9 of the Articles of Incorporation of the Company did not apply to such issue or grant provided that: (A) the maximum
aggregate number of Equity Securities that may be issued or granted under this authority is 119,156,154 shares, being approximately 10.0 per
cent of the issued share capital of the Company (excluding treasury shares); and (B) the authority hereby conferred, unless previously renewed,
revoked or varied by the Company by special resolution, shall expire at the end of the next Annual General Meeting of the Company or,
if earlier, at the close of business on the date falling 15 months from the date of the passing of this Resolution, save that the Company may
before such expiry make an offer or agreement which would or might require Equity Securities to be issued or granted after such expiry
and the Directors may issue or grant Equity Securities in pursuance of such an offer or agreement as if the authority conferred by the
above resolution had not expired. This Resolution is in substitution for all unexercised authorities previously granted to the Directors of the
Company to issue or grant Equity Securities in the capital of the Company as if the pre-emption rights contained in Article 9.9 of the Articles
of Incorporation of the Company did not apply to such issue or grant.
By order of the Board
K BREDIN
Company Secretary
29 June 2021
Notice of Meeting Notes:
The following notes explain your general rights as a shareholder and your right to attend and vote at this Meeting or to appoint someone else
to vote on your behalf.
1. To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the Company of the number of votes they
may cast), shareholders must be registered in the Register of Members of the Company at close of trading on 3 August 2021. Changes to
the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the
Meeting. As noted in the Notice convening the Meeting, it may be necessary to restrict the right of shareholders to attend the Meeting
in order for the Company to comply with any changes to guidelines or legal requirements in relation to COVID-19.
2. To allow effective constitution of the Meeting, if it is apparent to the chairman of the Meeting that no shareholders will be present in person
or by proxy, other than by proxy in the chairman’s favour, then the chairman may appoint a substitute to act as proxy in his stead for any
shareholder, provided that such substitute proxy shall vote on the same basis as the chairman.
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Bushveld Minerals | Annual Report and Financial Results 2020
3. Shareholders are entitled to appoint another person as a proxy as set out below to exercise all or part of their rights to attend and to speak
and vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided that each proxy
is appointed to exercise the rights attached to a different ordinary share or ordinary shares held by that shareholder. A proxy need not be a
shareholder of the Company, but please note that in accordance with the COVID-19 Precautions set out above, shareholders are encouraged
to appoint the Chairman of the Meeting as their proxy for the purposes of ensuring that their proxy will be able to attend the Meeting.
4. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the
most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s
Register of Members in respect of the joint holding (the first named being the most senior).
5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution.
If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. In the absence of any specific instructions
from you, your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
6. You can vote either:
- by logging on to www.signalshares.com and following the instructions. This system allows you to appoint a proxy and to instruct your proxy how
to vote. If you have note used the service before you will need to register online, for which you will need your investor code (IVC). In order for a
proxy appointment to be made in this way, you will need to submit your instructions via www.signalshares.com by 11.00 am on 3 August 2021;
- by requesting a hard copy form of proxy directly from the registrars, Link Group (previously called Link Asset Services), on Tel: 0371 664
0300. Calls cost 12p per minute plus your phone company’s access charge. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09.00 – 17.30, Monday to Friday excluding public holidays in England and Wales.
In order for a proxy appointment by way of a hard copy form of proxy to be valid, the form of proxy must be received by Link Group at
10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL by 11.00 am on 3 August 2021.
- in the case of shareholders holding their shares through CREST, by submitting a CREST Proxy Instruction utilising the CREST electronic
proxy appointment service in accordance with the procedures set out below.
7. If you return more than one proxy appointment, either by paper or electronic communication (including via www.signalshares.com), the
appointment received last by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms
and conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged.
8. The return of a completed form of proxy or any CREST Proxy Instruction (as described in note 10 below), or the submission of instructions
via www.signalshares.com, will not prevent a shareholder from attending the Meeting and voting in person if he/she wishes to do so.
9. Shareholders holding their shares through CREST who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available
from www.euroclear.com/site/public/EUI). Shareholders holding their shares through a CREST sponsor or service provider(s) should refer
to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
10. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ‘CREST Proxy
Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the
information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the
issuer’s agent (ID RA10) by 11.00 am on 3 August 2021. For this purpose, the time of receipt will be taken to mean the time (as determined
by the timestamp applied to the message by the CREST application host) from which the issuer’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should
be communicated to the appointee through other means.
11. Shareholders holding their shares through CREST and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and
limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the shareholder concerned to
take (or, if the shareholder is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that
his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means
of the CREST system by any particular time. In this connection, shareholders holding their shares through CREST and, where applicable,
their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Regulation 34(1) of the Uncertificated Securities (Guernsey) Regulations, 2009.
12. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers
as a shareholder provided that no more than one corporate representative exercises powers in relation to the same shares.
13. As at 29 June 2021 (being the latest practicable business day prior to the publication of this Notice), the Company’s ordinary issued share
capital (excluding treasury shares) consists of 1,191,561,543 ordinary shares, carrying one vote each. Therefore, the total voting rights in the
Company as at 29 June 2021 are 1,191,561,543.
14. You may not use any electronic address (within the meaning of Section 523(2) of the Companies (Guernsey) Law, 2008) provided in either this Notice
or any related documents (including the form of proxy) to communicate with the Company for any purposes other than those expressly stated.
15.A copy of this Notice can be found on the Company’s website at https://www.bushveldminerals.com/financial-reports/.
Annual Report and Financial Results 2020 | Bushveld Minerals
155
Financial StatementsSupplementary InformationGovernanceBusiness Overview Company Information
Bushveld Minerals
Registered Office
Oak House,
Hirzel Street
St Peter Port GY1 3RH
Principal Operating Address
2nd Floor, Building 3
Illovo Edge Office Park
9 Harries Road, Illovo
Johannesburg, 2116
South Africa
Tel: +27 11 268 6555
SP Angel
Nominated Adviser & Broker
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Peel Hunt
Joint Broker
120 London Wall,
London EC2Y 5ET
Gowling WLG
Legal Counsel – UK
4 More London Riverside
London SE1 2AU
RSM
Independent Auditor
RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
Link Group
Company Registrar
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Ms. Kate Bredin
Company Secretariat
Email: kate.bredin@bushveldminerals.com
Tel: +27 (0) 11 268 6555
Fax: +27(0) 11 268 5170
Ms. Chika Edeh
Head of Investor Relations
Email: Chika.edeh@bushveldminerals.com
Tel: +27 (0) 11 268 6555
Fax: +27(0) 11 268 5170
156
Bushveld Minerals | Annual Report and Financial Results 2020
The outer cover of this report has been
laminated with a biodegradable film.
Around 20 months after composting,
an additive within the film will initiate
the process of oxidation.
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BUSHVELD MINERALS
Registered Office
Oak House, Hirzel Street
St Peter Port
Guernsey, GY1 3RH
www.bushveldminerals.com