B
U
S
H
V
E
L
D
M
I
N
E
R
A
L
S
D
e
c
e
m
b
e
r
2
0
2
2
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
F
i
n
a
n
c
i
a
l
R
e
s
u
l
t
s
Life. Powered.
December 2022
ANNUAL REPORT AND FINANCIAL RESULTS
Bushveld Minerals is a vertically-integrated primary vanadium
producer. It is one of only three primary vanadium producers,
with ownership of two of the world’s four operating primary
vanadium processing facilities. Bushveld offers compelling
exposure to vanadium because it operates across both the
upstream and downstream value chains through Bushveld
Vanadium and Bushveld Energy.
Vanadium is an essential element in many modern processes.
It is playing a critical role in the transition to a low-carbon
economy to enable a more sustainable world. It reduces carbon
emissions generated during steel production and in advancing
utility-scale battery storage solutions. Bushveld’s mission,
as a producer of diversified vanadium products for the steel,
clean energy and chemical sectors, is to be a leader across the
vanadium value chain.
OUR PURPOSE
To mine, process and beneficiate vanadium in a way that
contributes to the sustainability of the planet while creating
tangible value for our stakeholders and society.
OUR STRATEGY
To build a sustainable, cash-generating, low-cost production
platform and leverage it to create a leading downstream
vanadium-based energy storage platform. By doing so,
we will create value as an investor, project developer and
manufacturer of electrolyte across the Vanadium Redox
Flow Battery (VRFB) value chain. In effecting this strategy,
our leadership prioritises the proactive identification and
mitigation of all business and operating risks that may
impede our objectives.
This report is also available at
www.bushveldminerals.com/financial-reports
Table of contents
2
BUSINESS OVERVIEW
48
GOVERNANCE
69
FINANCIAL STATEMENTS
69
75
76
77
78
79
80
Independent Auditor’s Report
Consolidated Statement of
Profit or Loss
Consolidated Statement of
Comprehensive Loss
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flows
Notes to the Consolidated
Financial Statements
4
6
8
10
12
13
14
16
21
23
24
28
34
44
Investment Case
Our business at a glance
Chairman’s statement
Chief Executive Officer’s review
Our strategy
Our business model
Performance and objectives
Finance Director’s review
Vanadium market overview
Energy storage overview
Operating assets and
operational review
Principal risks
Sustainability
Our people
50
51
52
56
58
67
68
Board of Directors
Executive Management Team
Corporate Governance Report
Report of the Audit Committee
2022 Remuneration Report
Directors’ Report
Statement of Directors’
Responsibilities
120
SUPPLEMENTARY
INFORMATION
122 Mineral Resources and Reserves
129 Acronyms
130 Glossary
132 Notice of Annual General Meeting
136 Company Information
Throughout this publication, the Boards are referred to collectively as the Board. In this
Annual Report, the terms “Bushveld Minerals Group”, “Bushveld”, “Company”, “Group”,
“we”, “us”, “our” and “ourselves” are used to refer to Bushveld Minerals Limited. The
terms “Vametco Mine and processing plant”, “Vametco 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”. Cross-
references refer to sections of the Annual Report, unless stated otherwise.
Annual Report and Financial Results 2022
1
GovernanceFinancial statementsSupplementary informationBusiness overview Business
overview
CONTENTS
Investment Case
Our business at a glance
Chairman’s statement
4
6
8
10 Chief Executive Officer’s review
12 Our strategy
13 Our business model
14 Performance and objectives
16
21 Vanadium market overview
23
24 Operating assets and
operational review
Finance Director’s review
Energy storage overview
28 Principal risks
34
Sustainability
44 Our people
2
Annual Report and Financial Results 2022
Annual Report and Financial Results 2022
3
GovernanceFinancial statementsSupplementary informationBusiness overview INVESTMENT CASE
Our key strengths drive
our investment case
We offer investors exposure to a future-focused energy commodity, both through our primary
vanadium production facilities and our investments in the energy storage value chain.
A GREEN, FUTURE-FOCUSED COMMODITY, WITH ATTRACTIVE FUNDAMENTALS
– As a strengthening alloy in steel manufacturing, vanadium increases the efficiency of steel production, while reducing the global
fossil carbon footprint by 0.4 percent.
– Vanadium’s application in stationary energy storage, through vanadium redox flow batteries (VRFBs), promotes the integration of
renewable energy sources, while increasing the efficiency of electricity grids. VRFB technology supports the global transition to
clean energy and emits fewer CO₂ than competing storage technologies.
– Demand for vanadium, which is underpinned by its use as a strengthening alloy in the steel sector, is expected to increase at a
Compound Annual Growth Rate (CAGR) of 3.1 percent through to 20301.
– Vanadium demand from VRFBs is expected to grow by a CAGR of 41 percent by 20312.
– Supply remains concentrated and constrained, with new primary supply from greenfields projects expected to be limited.
– The vanadium chemistry of the VRFB is fully reusable and recyclable at the end of the battery’s life.
OUR MISSION IS TO BECOME A LEADING
VANADIUM COMPANY
– Bushveld Minerals is one of only three operating
primary vanadium producers. We own two of the
world’s four operating primary vanadium processing
facilities and possess a diversified vanadium product
portfolio to serve our customers around the world.
– Our vertical integration business model allows us to
mine, process and manufacture vanadium-based
products in a single value chain, in the most
efficient manner.
– Our significant interest in a downstream vanadium-
based energy storage platform enables us to
participate in this rapidly-growing industry.
– The growth of the VRFB industry can support
vanadium demand and contribute to minimising
volatility in the vanadium price.
Vanchem plant
WE HAVE INVESTED SUBSTANTIAL
LONG-TERM CAPITAL
– After extensive capital investment, refurbishment and
optimisation of Vametco, it is operating consistently
and sustainably, and producing at a steady state.
– Refurbishment and stabilisation of Vanchem will help
the operation to produce at a significantly increased
production level.
– We have increased production over time and are
well positioned to deliver further growth. We are
targeting a sustainable production run rate of 5,000
to 5,400 mtV over the near-term, with a continued
focus on improving efficiencies and driving cost
saving initiatives.
Ferrovanadium
1 Project Blue, April 2023
2 Guidehouse Insights, White paper, Vanadium Redox Flow Batteries, 2022.
4
Annual Report and Financial Results 2022
Vametco plant
SOLID ASSET BASE AND POTENTIAL TO GROW PRODUCTION
– Our 546 Mt (100 percent basis) JORC-compliant resource is one of the world’s largest primary vanadium deposits, and it offers
significant growth potential.
– Bushveld Minerals’ ore bodies are large, long-life, opencast deposits, with grades of 1.6-2.0 percent V₂O₅ in-magnetite,
which are among the highest in the world.
– Our diverse range of vanadium products gives us flexibility to maximise sales and profit margins according to market demand.
SIMPLIFICATION OF THE GROUP STRUCTURE TO
DELIVER SIGNIFICANT BENEFITS
– The carve-out of Bushveld Energy into a standalone
energy storage focused company, will allow the
new entity to attract the appropriate energy storage
focused investors and achieve a market valuation that
is more reflective of underlying value.
– The sale of Bushveld’s interest in CellCube (also
referred to as Enerox GmbH (Enerox)) to LSE-listed
Mustang Energy Plc (Mustang), is an important part of
the Group’s process to carve-out Bushveld Energy.
– With a simpler structure, Bushveld Minerals will streamline
its organisational model and narrow its operational focus
on its upstream assets and Bushveld Electrolyte Company
(BELCO), while retaining a shareholding in Mustang.
– Following the carve-out, Bushveld Minerals will be well-
positioned to optimise its financing while delivering
stronger growth and margins.
Vametco stock pile
IMPROVED CAPITAL STRUCTURE FOLLOWING THE
CONVERTIBLE LOAN NOTE RESTRUCTURING
– Restructuring of the Orion Mine Finance (Orion)
convertible loan note will help reduce the overhang
on the stock from potential dilution.
– Determine a sustainable capital structure in
relation to the Group’s operations and longer-term
growth ambitions.
BELCO plant
The upside potential of Bushveld Minerals’ high-grade deposits and refurbished processing facilities offers investors an attractive
opportunity to gain exposure to vanadium through our vertically-integrated model.
Annual Report and Financial Results 2022
5
GovernanceFinancial statementsSupplementary informationBusiness overview OVERVIEW
OVERVIEW
Our business at a glance
BUSHVEL D
M IN E R AL S
BUSHVEL D
B E LC O
BUSHVEL D
M IN E R A LS Pty Ltd
BUSHVEL D
E N E R GY
BUSHVEL D
V A M ET C O
BUSHVEL D
V A NC H EM
7
-
7
-
BUSHVEL D
V A NA D I U M
A VERTICALLY INTEGRATED PRIMARY
VANADIUM PRODUCER
1. Vametco (74% ownership)
– Mine and processing facility
– Life-of-Mine of >30 years (Ore Reserves)
2. Vanchem (100% ownership)
– Processing facility
Geographical Market Sales
USA 44%
EUROPE 27%
ASIA 9%
RoW* 13%
SOUTH AFRICA 7%
Geographical Market Sales
3. Brits project (62.5 – 74% ownership)
– Outcropping, strike extension of the Vametco mine
– Potential for additional ore feed for Vametco and Vanchem
RoW* 13%
-
SOUTH AFRICA 7%
4
USA 44%
EUROPE 27%
ASIA 9%
BUSHVEL D
M IN E R AL S
BUSHVEL D
B E LC O
BUSHVEL D
V A M ET C O
4. Mokopane project (64% ownership)
– JORC-compliant 298 Mt resource, including 28.5 Mt
reserves with grade of 1.75% V₂O₅ in-magnetite
– 30-year Mining Right executed in January 2020
BUSHVEL D
M IN E R A LS Pty Ltd
BUSHVEL D
E N E R GY
AN ENERGY STORAGE SOLUTIONS PROVIDER,
FOCUSED ON VRFBs
5. Vametco mini-grid (40% ownership)
– 3.5 MW solar PV and 1 MW/4 MWh mini-grid project
– Currently under construction
BUSHVEL D
V A NC H EM
6. Bushveld Electrolyte Company (BELCO) (55% ownership)
BUSHVEL D
– 8 million litre electrolyte production plant
– Currently being commissioned
V A NA D I U M
7. CellCube (25.25% indirect ownership)
– A VRFB original equipment manufacturer (OEM)
– Deployed >140 systems across five continents
– Supplied 4 MWh VRFB to the mini-grid project
Geographical Market Sales
USA 44%
EUROPE 27%
ASIA 9%
RoW* 13%
SOUTH AFRICA 7%
-
-
-
5
1
3
5
1
3
2
4
2
6
6
* Rest of the world.
6
Annual Report and Financial Results 2022
7
-
-
-
4
2
5
1
3
6
7
-
ORE SOURCES
BRITS
VAMETCO MINE
THIRD-PARTY ORE
MOKOPANE
Geographical Market Sales
USA 44%
EUROPE 27%
ASIA 9%
RoW* 13%
VAMETCO PLANT
SOUTH AFRICA 7%
MAGNETITE
CONCENTRATE
VANCHEM PLANT
-
BELCO PLANT1
4
NITRO
VANADIUM
AMV2
MVO
ELECTROLYTE
5
V2O3
1
3
V2O5 POWDER
2
CHEMICALS
V2O5 FLAKE
FeV
SECTOR
USED
Steel
Chemicals
Chemicals
Energy
Storage
Chemicals
Chemicals
Chemicals
Aerospace
Steel
Current
Future
1. BELCO also can use third-party oxide.
2.
AMV (ammonium metavanadate), V2O3 (vanadium trioxide), MVO (modified vanadium oxide), V2O5 (vandium pentoxide), FeV (ferrovanadium)
Vametco’s AMV can be sent to Vanchem to produce FeV and V2O5, and Vanchem’s AMV can be sent to Vametco to produce nitro vanadium.
Annual Report and Financial Results 2022
7
-
6
GovernanceFinancial statementsSupplementary informationBusiness overview
GOING FORWARD AND FINDING SOLUTIONS
I prefaced my remarks by stating that the challenges
Bushveld has faced, and the consequential disappointing
financial results, mask the abundant opportunity that can
be realised as the Company stabilises, and in the mid-term
optimises, its operations and financial platform. Your Board
believes this is eminently achievable and is underway.
In the face of these challenges, management has and
continues to undertake various initiatives to ensure
profitability in the current year, to improve the Company’s
capital structure, to secure a more stable power supply
to support increased production, to contain costs and to
crystallise value for the Bushveld Energy assets. The BELCO
electrolyte plant will be commissioned and commence
production during the second half of 2023, making Bushveld
a fully-fledged vanadium electrolyte producer. Additionally,
we are making good progress with the Vametco mini-
grid, which is expected to supply just under 10 percent of
Vametco’s electrical energy and also be online during the
second half of 2023.
At Vanchem, an arrangement has been concluded with the
municipality to stabilise power supply and this has already
had a positive impact in the first quarter of 2023. Also, an
ore supply contract has been concluded with a third-party
operating in the Bushveld Complex for the supply of low-silica
high-grade ore that will have a positive impact on productivity
and costs at the plant.
CHAIRMAN’S STATEMENT
Abundant
opportunity
constrained by
several challenges
TO OUR SHAREHOLDERS,
I am pleased to preface this Annual Report for the
first time, having assumed the role of Chair from Ian
Watson during the course of the year under review.
There is a natural tendency for communications such as this to
dwell on the positive aspects of a company’s performance and to
understate or plead mitigation on the challenges and the negatives
that impact results. In my view, this approach arguably discredits
the overall content, and strains the credibility of what is, after all, the
most important annual communication to the current and prospective
owners of a company.
FINANCIAL AND OPERATIONAL PERFORMANCE
The Company remained loss-making, although it was able to report
free cash flow, which was used to pay down debt and partially fund
the Business’ other initiatives. The quick ratio approximately halved,
gearing increased, and equity accounts declined. This is not the
outcome we planned for, nor is it sustainable, and this is reflected in
our significantly discounted share price which more than halved in the
year under review. The Board and management fully recognise this
and have evolved plans to restore momentum in operational stability,
revenue generation, cost constraint, profitability and cash generation.
The results for 2022 were, admittedly, impacted negatively by a
combination of external and internal factors.
Externally, the conflict in Ukraine triggered an energy price and
supply crisis that in turn created an inflationary cycle that central
banks around the world responded to with monetary policy actions.
Additionally, global supply chains were disrupted. Within South
Africa, where the Company primarily operates, electricity supply
was constantly disrupted by loadshedding, the government logistics
infrastructure and services deteriorated, and raised inflation impacted
operating costs.
Internally, the Company faced issues with operational stability,
particularly at its Vanchem plant. Production at the newly
commissioned Kiln-3 was negatively impacted by the unreliable
municipal power supply. The ore supply from Vametco was found
to have a higher silica content than ideal resulting in the need for
system clearing shutdowns. Thus, although Vametco performed well,
Vanchem failed to hit its production target for the year resulting
in guidance misses and higher Group overall sustaining costs.
8
Annual Report and Financial Results 2022
Further to this, we have announced that co-founder and
Chief Executive, Fortune Mojapelo, has decided to step down
from his role as of 01 July 2023. He has led the Company for
over 11 years and has, through his vision and dedication to
the Company, built Bushveld Minerals from an exploration
business to a multi-asset vanadium producer, owning and
operating two of four global primary vanadium processing
facilities. We sincerely appreciate all that Fortune has done
to make Bushveld what it is today and wish him every success
in his future endeavours.
We are delighted that Craig Coltman is taking up the position
as CEO. Having worked with De Beers Consolidated Mines for
over 32 years in various operational and commercial roles,
and most recently as Chief Financial Officer and Executive
Director of the group, Craig is well qualified to take up the
leadership mantle and steer the Company going forward.
We look forward to working with him during a short period
of transition and thereafter.
CONCLUSION
We reinforce to our shareholders that our strategic aims are
robust and achievable. The foundations are laid, the edifice
is progressing but remains work in progress. The focus of the
Board and the Management is to deliver value and returns to
our owners through, and I am being intentionally repetitive,
achieving our operational targets, managing costs, generating
free cash flow, strengthening our balance sheet, and
investing capital prudently.
The Board has been incredibly engaged and supportive as
we tackle our challenges and it remains only for me, on their
behalf, to thank the entire Bushveld team for their efforts,
resilience and dedication during a challenging year and wish
them well for fairer winds ahead.
Michael J. Kirkwood
20 June 2023
As previously announced, plans are well advanced for
CellCube, one of Bushveld Energy’s assets, to be carved out
into a listed vehicle on the London Stock Exchange (LSE).
Your Company will retain a significant minority holding in
this vehicle and therefore keep a stake in the evolution of
vanadium as an energy storage resource. This carve-out will
help reduce central costs and permit greater focus on the
residual core businesses. The devolved pure energy storage
entity should also be able to attract capital, new investors,
and a valuation aligned to that sector.
We have previously announced that we are negotiating
a restructuring of the financing provided by Orion. The
objective of the proposed arrangements is to extend debt
maturities and to reduce the equity dilution overhang from
the convertible loan note. We are grateful to Orion for their
continuing support. The refinancing will be conditional
on a number of factors being worked on and also upon
shareholder approval which we expect will be sought at this
year’s General Meeting.
GOVERNANCE
During the year under review the Board of Directors has
been materially reconstituted. Ian Watson, who chaired the
Company since its inception, retired. Ian oversaw the early
development of Bushveld and its transformation into an
integrated vanadium producer. His long service and guiding
hand deserve our full appreciation and we wish him well for
the future.
On Ian’s retirement I assumed the role of Interim Chair and
subsequently the Board has seen fit to confirm my appointment
as Chairman on an ongoing basis. I thank my fellow Directors for
placing their trust in me and look forward to working with them
as a team to the benefit of all our stakeholders.
Additionally, two of our longest serving Directors, Anthony
Viljoen (a co-founder) and Jeremy Friedlander retired
from the Board. Their wise counsel and engagement in the
development of Bushveld should similarly be recognised.
We have been fortunate to attract a new slate of very capable
Directors to the Board with the appointments over the last
18 months of Kevin Alcock, Mirco Bardella and David Noko.
They bring relevant and valuable experience to the Board
(see their biographies on page 50 and are playing a key role
in guiding Bushveld in its next stage of development.
During the year we also welcomed Jacqueline Musiitwa
as a Non-Executive Director but unfortunately, she was
obliged to step down upon accepting a role within the United
States Agency for International Development (USAID) that
precluded her from remaining in private sector roles. We wish
her success in this important engagement.
Annual Report and Financial Results 2022
9
GovernanceFinancial statementsSupplementary informationBusiness overview its consistent production rates enabled it to report full-year
production of 2,705 mtV, exceeding the upper end guidance
of 2,550 – 2,650mtV.
In contrast to stable production at Vametco, Vanchem
production missed guidance for an overall production of
1,137mtV. Consequently, Group production, at 3,842 mtV,
was below the lower end of the revised guidance of 3,900-
4,100 mtV. Lower recovery rates from Kiln-1 at Vanchem as it
was taken out of service, a slower-than-anticipated ramp-up
of Kiln-3 post commissioning, higher silica content in the
ore supply, and the impact of loadshedding which affected
our ability to optimise output, meant production levels were
considerably lower than anticipated. Details on the Group’s
operational performance can be found in the Operating Assets
and Operational Review section of the Annual Report.
Although we did not achieve our Group production run rate
target of 5,000-5,400 mtV by the end of 2022, we remain
committed to meeting this target by attaining similar levels
of operational stability at Vanchem as Vametco – centred
around securing supply of suitable ore, stable power supply
and improved post commissioning operations – all three
areas that the Company has made progress in resolving.
Specifically, in November 2022, an agreement was reached
with the Emalahleni Local Municipality putting Vanchem
on a load-curtailment contract plan. This arrangement has
resulted in reduced/curtailed power supply rather than
an outright loss of power during periods of loadshedding.
While this has resulted in a marked improvement in power
security for Vanchem so far in 2023, we continue to pursue
a direct contract with Eskom, in line with Vametco’s power
supply arrangements. In addition to this, the access to low-
silica, third-party feedstock will also contribute to improved
production and less downtime at Vanchem.
Group production cash cost of US$27.7/kgV was higher
than in 2021 and above our guidance of between US$22.7/
kgV and US$23.5/kgV, driven by significantly higher
price inflation across most inputs and energy prices as
CHIEF EXECUTIVE OFFICER’S REVIEW
Progress with
more potential
in the pipeline
DEAR STAKEHOLDERS,
I am pleased to present the report on Bushveld
Minerals’ performance over the past financial year.
The year 2022 marks 10 years since the
Company’s listing on AIM as a junior mineral
exploration company. It also marks five years since
we embarked on our transformative journey from
an explorer into a vanadium producer, first with the
acquisition of Vametco, and later Vanchem. This
allowed us to produce a broad range of vanadium
products that enable the production of more
environmentally friendly steel and support the
global energy transition to green renewable energy
through the application of long-duration VRFBs.
In that time the Company has invested substantially to establish
a vertically-integrated primary vanadium production platform
comprising (a) two of only four operating primary-processing plants in
the world, supplying more than three percent of the global vanadium
market, with scope to grow this into the future and (b) a VRFB platform
that is positioned to play a meaningful role in the growing stationary
energy storage market.
While 2022 started with optimism on the back of a receding COVID-19
pandemic, several factors in the geopolitical developments continued
to plague the global economy and specifically the vanadium market.
Consequently, between 2021 and 2022, vanadium demand in steel
making dropped by 0.41 percent which was fortunately mitigated by a 79
percent increase in vanadium demand from the energy storage sector,
resulting in an overall increase of 0.48 percent in vanadium demand.
This global backdrop was exacerbated by unique local challenges, most
notably the national electricity crisis that saw Vanchem without a steady
flow of electrical supply at a pivotal time when it was commissioning and
optimising Kiln-3 after the refurbishment programme.
THE YEAR IN REVIEW
If external factors paint a bleak operating environment for the
Company in the past three years, they also cast a spotlight on
its resilience, as it continued to invest in its producing assets to
grow production and lower unit costs (particularly at the recently
refurbished and ramping up Vanchem) as well as continuing to
develop its vanadium energy storage platform.
The Group production increase from 3,592 mtV in 2021 to 3,842 mtV
in 2022, was underpinned by Vametco’s operational performance.
Having achieved operational stability during the second half of 2021,
10
Annual Report and Financial Results 2022
well as a higher fixed cost base not matched by expected
higher production at Vanchem. Next to stable production
performance, cost containment is an area receiving intense
focus across several areas of the business. Details on our cost
initiatives can be found in the Finance Director’s Review.
BUSHVELD ENERGY
Progress continues in advancing both the development of
the BELCO electrolyte plant in East London and the mini-
grid at Vametco. We have concluded that the full value and
potential of Bushveld Energy as a subsidiary business will be
constrained and for this reason we have been preparing its
carve-out into a stand-alone business.
As previously announced, we have entered into a conditional
agreement to sell our entire interest in CellCube to Mustang,
and, in exchange, we will receive shares in Mustang. The sale
is an important part of the carve-out process, as it effectively
gives Bushveld a significant stake in a London-listed energy
storage business. The transaction provides CellCube with
direct access to capital markets, allowing it to attain a
transparent market value and attract specialist investors
looking to participate in this exciting growth sector.
As we have communicated, it is the right time for this
emerging energy storage story to take on a life of its own,
while we retain an interest in the business through Mustang
and, most importantly, maintain our vertically-integrated
business model. Subject to various regulatory consents and
capitalisation, we expect to complete the carve-out during
the second half of 2023.
FINANCIAL PERFORMANCE AND CONVERTIBLE LOAN NOTE
Despite the operational challenges we faced during the year
under review, higher prices and sales meant we generated
Revenue of US$148.4 million, underlying EBITDA¹ of
US$22.3 million and a reduced adjusted EBITDA¹ loss of
US$1.7 million. During the year we repaid the entire Nedbank
revolving credit facility of US$5.9 million. We generated free
cash flow of US$14.6 million and ended the year with a cash
and cash equivalent balance of US$10.9 million.
A large proportion of our capital investment over the last five
years was funded by debt, which includes a US$35 million
convertible loan note held by Orion. With an advancing
maturity date of November 2023, the convertible loan note
was putting pressure on our balance sheet and creating a
potentially dilutive overhang on the share price. We are in
advanced discussions with Orion for the convertible loan note
to be restructured so as to substantially reduce the pressure on
the Company’s balance sheet. Details of the revised structure
are provided in Note 37 of the Financial Statements.
An extensive assessment of the financial position indicates
that the Group requires additional liquidity in order to meet
its obligations and activities over the next 12 months. We are
exercising levers within our control to improve the Group’s
liquidity. In addition to these internal mechanisms under
our control we are pursuing various financing alternatives
to increase our liquidity and capital resources. Details on
the Group’s Going Concern can be found in the Finance
Director’s Review and in Note 3 of the Financial Statements.
Annual Report and Financial Results 2022
SUSTAINABILITY AND SAFETY
Long-term sustainability depends on securing and
maintaining a solid social licence to operate by nurturing
strong partnerships with all our stakeholders, especially
our communities.
We also acknowledge that sustainability, for all companies,
is a journey. In 2022, we made notable progress in our
sustainability journey, highlighted by the establishment of
an Environment Social and Governance (ESG) Committee to
oversee and monitor the implementation of our ESG strategy.
Our longer-term ambitions remain unchanged, the details of
which can be found in the Sustainability section of this report.
The safety and well-being of our employees and contractors
is an absolute priority and we remain committed to the
objective of zero harm in our workplace. We had no fatalities
during the current reporting period, however, the Group’s
2022 Total Injury Frequency Rate (TIFR) of 10.32 was 33
percent higher than 2021. For this reason, in the year under
review, we commissioned an audit of our safety procedures
and performance. We understand what the gaps are and I am
heartened to report that this has started yielding results, as
evidenced by the 50 percent improvement in the TIFR in the
last quarter of 2022.
CONCLUSION
I extend my heartfelt thanks to every one of Bushveld Minerals’
employees. In spite of the many challenges we face, your
visible commitment to ensuring the success of this Company in
2022 was greatly appreciated by myself, senior management,
and the Board. I would like to thank our shareholders for their
patience, commitment, and faith in the Company.
I am confident in the opportunities that lie in the future for
the Business and firmly believe that the efforts of the past,
position the Company well to capture these going forward.
Finally, the Company and I announced today that after more
than 10 years as the founding CEO of Bushveld Minerals, I will
be stepping down and will not seek re-election to the board
of the Company. Simultaneously announced today is the
appointment of Craig Coltman as CEO of the Company with
effect from 01 July 2023.
Co-founding and leading Bushveld Minerals into an
integrated vanadium platform positioned to play an ever
increasing role in the growing vanadium industry has been
an immense privilege. While recognising the challenging
circumstances the Company has had to navigate in recent
years, my conviction in the potential and future success of
this Company remains.
To our shareholders and stakeholders, thank you for your
trust; and to the team at Bushveld under the leadership of
Craig, I wish you the success that all your hard work and the
trust of our stakeholders deserves.
Fortune Mojapelo
20 June 2023
1. Adjusted EBITDA is EBITDA excluding the Group’s share of losses from
joint ventures and other expenses. Underlying EBITDA is adjusted EBITDA
excluding impairment losses.
11
GovernanceFinancial statementsSupplementary informationBusiness overview STRATEGY
Our strategy: vertical integration
Our strategy is centred on building a sustainable, cash-generating, low-cost production
platform, comprising:
– High-grade, opencast and low-cost primary vanadium mines; and
– Refurbished, scalable production plants and a new electrolyte processing facility.
We have leveraged our production platform to build Bushveld Energy, a downstream vanadium-based
energy storage platform, creating value as a manufacturer of electrolyte, investor and project developer
across the VRFB value chain.
Through our vertical integration business strategy, Bushveld Minerals plays a role in both the upstream
and downstream vanadium value chains. Our vertical integration strategy and synergies across our
operations provide:
– A natural hedge against future vanadium price volatility; and
– Security of supply of vanadium required for downstream products.
BROWNFIELD DEVELOPMENT
We own two primary vanadium processing plants: Vametco
and Vanchem. This portfolio is capable of ramping up to a
combined output of 5,000-5,400 mtVp.a. through organic
growth, requiring no additional capital expenditure.
At Vametco, we have invested in refurbishment and
optimisation initiatives and have now achieved operational
stability at the mine and plant. At Vanchem, the initial phase of
refurbishment was completed in 2022. However, it has been
unable to achieve nameplate capacity due to a combination
of operational challenges and electricity shortages. We are
confident that, on the back of the actions we have taken,
Vanchem will be able to ramp up to a steady state.
DOWNSTREAM DEVELOPMENT
Bushveld Energy’s focus is to take advantage of downstream
opportunities for vanadium in long-duration energy storage,
where VRFBs are now playing a significant role. Bushveld
Energy established BELCO, a manufacturer of vanadium
electrolyte for VRFBs, which is expected to be commissioned
in mid-2023. It also took an equity stake in CellCube, a
VRFB OEM, and it is building a hybrid mini-grid at Vametco
mine, which will supply just under 10 percent of the mine’s
electricity needs.
The carve-out of Bushveld Energy into a standalone energy
storage focused company will allow it to be in a better
position to attract the appropriate market valuation. The
sale of Bushveld’s interest in CellCube to Mustang, for which
Bushveld Minerals will receive shares into Mustang, is an
important part of the carve-out and will allow us to retain our
vertically-integrated business model.
London Metal Bulletin, price as at 10 June 2022
12
Annual Report and Financial Results 2022
BUSINESS MODEL
Our business model: producing
differentiated vanadium-based products
Bushveld Minerals’ vertically-integrated business model combines mining and processing with further
beneficiation to produce products for the steel, energy, chemicals and aerospace industries. We are also
building an electrolyte production facility and have incubated energy assets.
Our sought-after products enjoy market premiums due to their superior quality. In all our activities, we
strive to be a responsible and respectable social partner, ensuring sustainable economic growth and
development for the communities around us while creating value for our shareholders. This is how we
create value for all our stakeholders:
Mining – We have access to some of the
highest grades of vanadium in the world
and focus on efficient, sustainable, safe
and low-cost extraction.
Processing – Our processing facilities,
which use standard salt-roast and leach
methods, have undergone continued
refurbishment and optimisation initiatives
to achieve stable processing and refining.
Sales and marketing – We supply products
to our customers’ specifications and
optimise our sales to higher-value
markets globally.
Downstream activities – Through Bushveld
Energy we provide utility-scale energy storage
solutions, including electrolyte production,
VRFBs (through our investment in CellCube)
and energy storage focused projects.
Vametco mine
Vametco plant
Vanchem plant
Belco plant
The combination of our people, processes and plants allows us to provide differentiated products to our customers.
Annual Report and Financial Results 2022
13
GovernanceFinancial statementsSupplementary informationBusiness overview PERFORMANCE AND OBJECTIVES
Group three-year performance indicators
We set Key Performance Indicators (KPIs) and targets each year and measure our success against the
achievements of these targets.
KPI
Production
Record Group production of 3,842 mtV, supported by operational
stability and improved performance at Vametco.
Sales
The 2022 sales volume of 3,584 mtV was eight percent higher than
in 2021.
Production (mtV)
Sales (mtV)
2022
2021
2020
2019
3,842
3,592
3,631
2,931
2022
2021
2020
2019
3,584
3,314
3,842
2,392
Revenue versus average realised price
2018
Group revenue of US$148.4 million was supported by an improved
realised price and higher sales volumes.
2,560
Underlying and Adjusted EBITDA
2018
Underlying EBITDA of US$22.3 million and Adjusted EBITDA loss of
US$1.7 million, due to impairment charges of US$24.0 million.
KPI
2,573
Revenue (US$ millions)/average realised price (US$/kgV)
Underlying and Adjusted EBITDA (US$ millions)
148.4
2022
2022
2021
2021
2020
2020
41.4
32.2
23.4
106.9
90.0
2019
2019
Revenue
Average realised price
48.9
116.5
2018
2018
74.0
22.3
-1.7
-7.5
-9.9
2022
2022
2021
2021
2020
2020
-14.9
-14.9
2019
2019
Underlying EBITDA
Adjusted EBITDA
192
2018
2018
Safety: Total Injury Frequency Rate (TIFR)
Group TIFR was 10.32 relative to 7.78 in 2021, this includes first aid
incidents recorded.
TIFR
2022
2021
2020
2019
14
2018
10.32
7.78
16.10
23.49
28.85
Annual Report and Financial Results 2022
We are building on 2022’s progress
HEALTH
AND SAFETY
FINANCIAL
2022 achievements
2023 objectives
Near-to-medium-term
objectives
– Reported zero fatalities, but regrettably
– Maintain a safe environment for all employees and contractors through
nine lost time injuries and one new case of
occupational health was recorded.
deliberate housekeeping and asset integrity programmes.
– Ensure that all hazards are fully understood and risks are assessed, through
reviewing and updating all safe operating and maintenance procedures.
– US$22.3 million Underlying EBITDA;
US$1.7 million Adjusted EBITDA loss.
– Impairment charges of US$24.0 million,
– Restructure the Orion convertible loan note
to a more sustainable capital structure.
– Achieve procurement cost savings of
mostly due to impairment loss of
US$17.2 million and US$5.1 million
recognised for Vanchem and the Imaloto
Coal Project, respectively.
approximately US$1.3 million.
– Strengthen the Company’s balance sheet.
– Increase Business profitability and free cash
flow generation.
– US$10.9 million cash and cash equivalents
as at 31 December 2022.
– Paid in full the Nedbank revolving credit
facility of US$5.9 million.
– Procurement cost savings of
US$1.5 million in 2022.
– Group cost per unit sold (incl. sustaining
capital) US$43.7/kgV
– Achieve a capital
structure that will enhance
shareholder value.
– Realise additional
cost savings through a
production increase and
other cost management
initiatives.
OPERATIONAL BUSHVELD VANADIUM
– Realised annual production of 3,842 mtV.
– Production cash cost of US$27.7/kgV
– Vametco achieved stable
operational performance.
– Commissioned Vanchem’s Kiln-3.
– Achieve production of 4,200-4,500 mtV.
– Attain operational stability and maintain
consistent performance.
– Reach our target of
5,000 to 5,400 mtVp.a.
– Achieve steady state
– Achieve weighted average cash cost of
US$26.1/kgV-US$27.0/ kgV, and continue
to contain costs.
production at Vanchem of
between 2,300 mtV and
2,500 mtV.
BUSHVELD ENERGY
– Secured the funding and started
construction of the Vametco mini-grid.
– Completed initial study on local VRFB
manufacturing with the Industrial
Development Corporation (IDC).
– Bring the BELCO electrolyte plant and the
Vametco mini-grid into operation.
– Continue the scale-up
of our electrolyte
rental product.
STRATEGIC
– Announced the carve-out of Bushveld
Energy to facilitate access to capital
markets, achieve a transparent valuation
and attract specialist investors.
– Complete the carve-out, while retaining
Bushveld Minerals’ vertically-integrated
business model.
– Entered into an agreement to sell our entire
interest in CellCube to Mustang.
Annual Report and Financial Results 2022
15
GovernanceFinancial statementsSupplementary informationBusiness overview FINANCE DIRECTOR’S REVIEW
Positive Underlying EBITDA as
Vametco attains target production
1. OVERVIEW
Revenue
Cost of sales
Other operating costs and income
Administrative costs
Adjusted EBITDA1
Impairment charges
Underlying EBITDA2
Operating loss
Average foreign exchange rate
Group production
Group sales
All-in sustaining cost
Average realised price
The 2022 financial results show an improvement on the prior year
in a number of line items although we remained loss making. Our
strategy to prioritise operational stability and increase investment
in maintenance paid off as Vametco achieved consistent and stable
operational performance which was reflected in the financial numbers.
We recorded an underlying EBITDA of US$22.3 million and adjusted
EBITDA loss of US$1.7 million. While an operating loss of US$20.1
million was incurred, this was a US$9.2 million positive change from
the prior year, as realised prices rose and we continued with our cost
management measures to mitigate any inflationary pressures and
electricity challenges. We realised savings of US$1.5 million owing
to initiatives related to procurement. The operating loss also
included impairment losses of US$24.0 million, U$21.5 million
higher than the prior year. US$17.2 million of the impairment
losses pertain to Vanchem.
Two years of volatile prices, operational challenges and the impact
of the COVID-19 pandemic have restricted our ability to pay down
the rest of the debt on our balance sheet. To this end we recently
announced a proposed refinancing of the Orion US$35 million
convertible loan notes and capitalised interest into a revised capital
structure. Details on the proposed refinancing are included in note 37
in the annual consolidated financial statements. The refinancing will
be conditional on several items, including due diligence, shareholder
approval at a general meeting and definitive documentation. We
have made significant progress with the legal documentation of
the restructuring.
The restructure of the convertible loan notes is expected to remove
the risk of a large cash outflow, which has been putting pressure on
Unit
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$:ZAR
mtV
mtV
US$/kgV
US$/kgV
FY 2022
148.4
(108.3)
(40.0)
(20.3)
(1.7)
(24.0)
22.3
(20.1)
16.35
3,842
3,584
43.7
41.4
FY 2021
106.9
(102.8)
(12.8)
(20.5)
(9.9)
(2.4)
(7.5)
(29.3)
14.79
3,592
3,314
37.4
32.2
our balance sheet and cash position. The new structure will enable the
Group to repay the debt over a longer time period and in line with the
Group’s planned internally generated cash flows.
2. INCOME STATEMENT
Analysis of results
The income statement summary below is adjusted from the “statutory”
primary statement presentation:
Year ended
31-Dec-22
US$’000
Year ended
31-Dec-21
US$’000
Revenue
Cost of sales excluding depreciation
Other operating costs and income3
Administration costs excluding
depreciation
Adjusted EBITDA
Depreciation
Operating loss
Other losses
Share of loss from joint ventures
Fair value gain on derivative liability
Net financing expenses4
Loss before tax
Income tax
Net loss for the year
Revenue
Group sales (mtV)
Average realised price (US$/kgV)
Revenue (US$’000)
148,448
(90,268)
(39,950)
(19,889)
(1,659)
(18,475)
(20,134)
(818)
(5,112)
2,934
(13,654)
(36,784)
1,345
(35,439)
106,857
(83,780)
(12,837)
(20,125)
(9,885)
(19,395)
(29,280)
(1,902)
(4,351)
9,010
(12,373)
(38,896)
4,671
(34,225)
Year ended
31-Dec-22
3,584
41.4
148,448
Year ended
31-Dec-21
3,314
32.2
106,857
1. Adjusted EBITDA is EBITDA excluding the Group’s share of losses from joint ventures, fair value gain on derivative liability and other losses. Refer to the reconciliation on page 18.
2. Underlying EBITDA is Adjusted EBITDA excluding impairment losses. Refer to reconciliation on page 18.
3. Other operating costs and income include other operating income, impairment losses, selling and distribution costs, other mine operating costs and idle plant costs.
4. Finance income less finance costs
16
Annual Report and Financial Results 2022
Other operating costs and income
Other operating costs and income increased to US$40.0 million
due to:
– A US$2.9 million increase in selling and distribution costs to
US$9.3 million, primarily driven by the higher commissions paid
which are a consequence of the increased revenue as well as
increased shipping and warehouse costs;
– A US$3.3 million increase in idle plant costs to US$6.7
million, primarily due to the unplanned downtime at Vanchem
associated with Kiln-1 during the first half of the year,
unplanned downtime due to loadshedding and higher
than anticipated silica content in the ore;
– A US$21.5 million increase in impairment losses to US$24.0
million, primarily due to an impairment loss of US$17.2 million
recognised for Vanchem given the slower than expected ramp
up. We previously recognised a gain on bargain purchase of
US$60.6 million on the acquisition of Vanchem in 2019, being
the difference between the fair value of the consideration paid
and the fair value of the acquired assets and liabilities. Also
included in impairment losses is US$5.1 million in respect of the
Imaloto Coal Project as there are no further planned expenditures
for this project as well as an impairment loss of US$1.6 million
recognised for property, plant and equipment; and
– Other operating income of US$2.7 million was unchanged
relative the prior year.
Cost per unit sold
The Group cost per unit sold for the year (including sustaining
capital expenditure) was US$43.7/kgV. This represents a 17
percent increase relative to the prior year primarily as a result
of the cost factors noted above, offset by the cost containment
measures we implement; higher sales volumes and a weaker
ZAR:US$ exchange rate.
Revenue
Revenue of US$148.4 million for the Group was 39 percent higher
than in the previous year, underpinned by the improved average
realised price of US$41.4/kgV (2021: US$32.2/kgV) and increased
Group sales volumes of 3,584 mtV, following record production
of 3,842 mtV.
The geographic split of Group sales in 2022 was 44 percent to the
USA, 27 percent to Europe, nine percent to Asia, seven percent to
South Africa, and 13 percent to the rest of the world.
During the year, nitro vanadium sales into North America were
prioritised due to the higher vanadium prices realised in this region
and we maximised worldwide sales into the aerospace and speciality
chemical products sectors, which attract price premiums.
Cost analysis
Cost of sales excluding depreciation
Other operating costs and income
Administrative costs excluding
depreciation
Total income statement operating
cost excluding depreciation
Total units sold (mtV)
Cost per income statement per unit sold
(excluding depreciation) (US$/kgV)
Sustaining capital
Total cost including
sustaining capital
Cost per unit sold including
sustaining capital (US$/kgV)
Year ended
31-Dec-22
(90, 268)
(39,950)
Year ended
31-Dec-21
(83,780)
(12,837)
(19,889)
(20,125)
(150,107)
3,584
(116,742)
3,314
41.9
(6,589)
35.2
(7,192)
(156,696)
(123,934)
43.7
37.4
Cost of sales
The cost of sales, excluding depreciation, for the year was US$90.3
million, contained to an inflationary 8 percent increase year-on-year,
primarily due to higher costs at both Vametco and Vanchem. The cost
increases included:
– Higher personnel costs at Vanchem associated with the
commissioning and ramp-up of Kiln-3 in order to seek to achieve
the anticipated production run rate of 2,600 mtVp.a which was
not attained in the financial year due to ore quality and electricity
supply issues;
– Inflationary increases in raw material prices from suppliers;
– Higher energy costs due to the increase in oil and diesel prices as
well as an increase in diesel usage during periods of loadshedding
at Vanchem;
– Higher maintenance costs, mainly at Vanchem, due to the
additional maintenance required on Kiln-1, as well as maintenance
costs to sustain the plants, production volumes and improve
operational stability; and
– Higher mining costs at Vametco, primarily due to increased activity
associated with mining the Upper Seam.
Annual Report and Financial Results 2022
17
GovernanceFinancial statementsSupplementary informationBusiness overview FINANCE DIRECTOR’S REVIEW CONTINUED
Administration costs
Administration costs, excluding depreciation charges for the year were
US$19.9 million. Below is a breakdown of the key items included in
administration costs:
Staff costs
Professional fees
Share-based payments
Other (incl. IT and security expenses)
Year ended
31-Dec-22
US$’000
Year ended
31-Dec-21
US$’000
9,327
6,007
315
4,240
19,889
10,746
5,861
(375)
3,893
20,125
Cost-saving programme
We continued with our cost-reduction measures, as previously
announced, and realised savings of US$1.5 million owing to
procurement initiatives for the 2022 financial year. We re-estimated
the projected savings for 2023, in light of inflationary pressures,
lingering product shortages, wage escalations, shipping challenges
and surging commodity prices, to US$1.3 million. The total expected
savings will be US$2.8 million over the two-year period, which is
still within the US$2.5 million to US$4.0 million cost-savings target
we had previously provided, despite the negative impact of factors
outside of our control such as inflation. While production volume
growth is expected to contribute the most to reducing unit costs, we
will continue to seek broader cost-saving opportunities to improve the
Group’s unit cost performance even further. These efforts are focused
on procurement, payroll, administration costs and maintenance.
Adjusted and underlying EBITDA
Adjusted EBITDA is a factor of volumes, prices and cost of production.
This is a measure of the underlying profitability of the Group, which
is widely used in the mining sector. Underlying EBITDA removes the
effect of impairment charges.
Revenue
Cost of sales
Other operating costs and income
Administration costs
Add: Depreciation and amortisation
Adjusted EBITDA
Add: impairment losses
Underlying EBITDA
2021 Underlying EBITDA
Revenue changes
Operating costs changes
Inventory movement
2022 Underlying EBITDA
Year ended
31-Dec-22
US$’000
148,448
(108,304)
(39,950)
(20,328)
18,475
(1,659)
23,965
22,306
Year ended
31-Dec-21
US$’000
106,857
(102,782)
(12,837)
(20,518)
19,395
(9,885)
2,439
(7,446)
US$’000
(7,446)
41,591
(20,163)
8,324
22,306
The Group delivered an adjusted EBITDA loss of US$1.7 million, an
improvement of US$8.2 million compared to 2021, primarily driven
by the higher average realised price and higher sales volumes, and
partially offset by the increase in cost of sales and other operating
and administration costs. The Group generated an underlying EBITDA
of US$22.3 million, which was an improvement of US$29.8 million
compared to the previous year.
Net financing expenses
Net financing expenses were US$13.7 million, US$1.3 million higher
than in the prior year. The increase was primarily due to interest on the
Orion PFA and Orion convertible loan notes. Below is a breakdown of
net financing expenses:
Finance income
Interest on borrowings
Unwinding of discount
Interest on lease liabilities
Other finance costs
Year ended
31-Dec-22
US$’000
Year ended
31-Dec-21
US$’000
(494)
11,189
1,726
974
259
13,654
(935)
10,687
1,915
459
247
12,373
Interest on borrowings mainly reflected the finance cost on the Orion
convertible loan notes of US$6.4 million (2021: US$5.4 million), interest
on the Orion PFA of US$4.4 million (2021: US$4.3 million), and interest
on the Nedbank revolving credit facility of US$0.2 million (2021:
US$0.6 million). Refer to note 36 in the annual consolidated financial
statements for details of the change in the accounting treatment for
the Orion convertible loan notes and its impact on finance costs.
Other non-cash costs
The share of loss from investments in joint ventures of US$5.1 million
(2021: US$4.4 million) is the Group’s share of the loss from its
investment in VRFB-H.
The fair value gain on the derivative liability on the Orion convertible
loan notes was US$2.9 million, a decrease from the US$9.0 million in
the prior year, as restated. The decrease was primarily driven by the
decrease in the Company’s share price compared to the conversion
price on the Orion convertible loan notes of 17 pence.
3. BALANCE SHEET
Assets
Non-current assets related to intangibles and property, plant
and equipment decreased compared to the previous year due to
impairment losses recognised, depreciation, and exchange rate
differences arising from a weaker ZAR:US$ exchange rate, partially
offset by capital expenditures.
Investment in joint ventures of US$3.2 million represents the
Group’s equity investments in VRFB-H and the Vametco mini-grid.
The investment in joint ventures decreased from 2021 owing to
the recognition of the Group’s share of the losses amounting to
US$5.1 million, partly offset by the US$1.2 million investment into
Vametco’s mini-grid.
Inventories of US$55.0 million increased by US$13.4 million
compared to the prior year, primarily due to an increase in work in
progress at Vanchem as a result of continued loadshedding. This
impacted the conversion of work in progress to finished goods.
5. Other operating costs and income include other operating income, selling and distribution costs, other mine operating costs and idle plant costs
6. Finance income less finance costs
18
Annual Report and Financial Results 2022
The decrease in cash and cash equivalents to US$10.9 million was
primarily due to capital expenditures incurred (US$18.2 million), the
repayment of the Nedbank revolving credit facility (US$5.9 million),
the payment of finance costs on the Orion PFA (US$2.9 million),
partially offset by cash generated from operations (US$21.2 million),
and the proceeds received from funding provided by the IDC to build
the BELCO electrolyte plant (US$3.4 million).
Equity
The increase in the share capital and share premium was primarily
due to the conversion of the convertible loan notes issued to Primorus
Investments Plc and the shares issued to Lind Global Macro Fund,
in accordance with the backstop agreement between the Mustang
convertible loan notes holders (see RNS dated 29 March 2022).
These transactions were entered into in the process of carving out
Bushveld Energy.
Liabilities
Total borrowings (excluding lease liabilities) of US$83.1 million
increased by US$3.2 million compared to the previous year, due to
capitalised finance costs of US$11.7 million and funding provided by
the IDC of US$3.4 million in respect of Belco, partially offset by the
repayment of the Nedbank revolving credit facility of US$5.9 million,
repayment of finance costs on the Orion PFA of US$2.9 million and
the fair value gain on the derivative liability of US$2.9 million. Current
borrowings increased in 2022 to US$47.9 million, as the Orion
convertible loan notes is due by the end of 2023.
The net debt reconciliation below outlines the Group’s total debt and
cash position:
Nedbank revolving credit facility
Orion Production Financing (PFA)
Arrangement
Orion convertible loan notes
Industrial Development
Corporation (IDC) loans
Other
Lease liabilities
Year ended
31-Dec-22
US$’000
Year ended
31-Dec-21
US$’000
Change
US$’000
–
(5,821)
5,821
(35,146)
(39,742)
(33,512)
(36,282)
(1,634)
(3,460)
(5,480)
(2,762)
(7,283)
(3,282)
(1,000)
(4,485)
(2,198)
(1,762)
(2,798)
Total debt
(90,413)
(84,382)
(6,031)
Total debt excluding PFA
Cash and cash equivalents
(55,267)
10,874
(50,870)
15,433
(4,397)
(4,559)
Net debt
(79,539)
(68,949)
(10,590)
Net debt excluding PFA
(44,393)
(35,437)
(8,956)
Net debt increased by US$10.6 million compared to the prior year due
to capitalised interest of US$3.4 million on the Orion convertible loan
notes, increase in lease liabilities of US$2.8 million due to additional
leases and extension of lease terms and the decrease in the cash and
cash equivalents balance of US$4.6 million.
The Group expects to repay the Orion debt obligations from internally
generated cash flows.
4. CASH FLOW STATEMENT
The table below summarises the main components of cash flow during
the year:
Operating loss
Impairment losses
Depreciation and amortisation
Other non-cash items
Changes in working capital and
provisions
Taxes received/(paid)
Cash inflow/(outflow) from operations
Sustaining capital expenditures
Free cash flow
Cash used in other investing activities
Cash used in financing activities
Cash outflow
Opening cash and cash equivalents
Foreign exchange movement
Closing cash and cash equivalents
Year ended
31-Dec-22
US$’000
(20,134)
23,965
18,475
(6,630)
6,154
(648)
21,183
(6,589)
14,594
(13,000)
(5,346)
(3,752)
15,433
(807)
10,874
Year ended
31-Dec-21
US$’000
(29,280)
2,439
19,395
–
(5,022)
394
(12,074)
(7,192)
(19,266)
(9,967)
(7,049)
(36,282)
50,541
1,174
15,433
Operating activities
The Group generated cash from operating activities of US$21.2
million, an increase of US$33.3 million from the previous year,
primarily driven by the improvement in adjusted EBITDA.
Investing activities
Cash used in investing activities (including sustaining capital
expenditure) of US$19.6 million was primarily driven by capital
expenditure on property, plant and equipment of US$18.2 million and
an equity investment into the Vametco mini-grid of US$1.2 million.
Capital Expenditure
2022 marks the end of a substantive capital investment phase, during
which we undertook extensive refurbishment and optimisation of
Vametco and Vanchem and constructed the BELCO electrolyte plant.
In addition, following the commissioning of Vanchem’s Kiln-3, the
Company’s capital expenditure rate has halved compared to 2021 as
spend has been limited mainly to sustaining capital, which is expected
to support positive cash generation.
Capital Expenditure (US$’ million)
Vametco
– Growth
– Sustaining
Vanchem
– Growth
– Sustaining
Bushveld Energy
– Growth
– Sustaining
Total
* Most of the spending will be on BELCO
2022
2023
6.5
4.5
0.1
7.1
–
18.2
–
3.7-3.9
–
3.2-3.4
2.3-2.4*
–
9.2-9.7
Annual Report and Financial Results 2022
19
GovernanceFinancial statementsSupplementary informationBusiness overview Current cashflow forecast indicates that the Group requires additional
liquidity to fund its obligations and activities during the next twelve
months. We have identified and are proactively exercising levers within
our control which will improve the Group’s liquidity. Importantly, we
are also actively pursuing various financing alternatives including
raising capital to increase liquidity and capital resources. We believe
shareholders will support the capital raising endeavours to ensure the
growth the Company is positioned for, can be delivered.
The Group’s ability to continue as a going concern is dependent on its
ability to complete the refinance of the Orion convertible loan notes
and obtain the necessary additional funding required through a capital
raise or alternative funding sources. These conditions indicate the
existence of material uncertainties that may cast significant doubt on
the Group’s ability to continue as a going concern.
The consolidated financial statements for the year ended
31 December 2022 have been prepared on a going concern basis
as, in the opinion of the Directors, the Group will be in a position to
continue to meet its operating and capital costs requirements and pay
its debts as and when they fall due for at least twelve months from the
date of this report. The going concern note included in the accounting
policies provides further information.
Tanya Chikanza
Finance Director
20 June 2023
FINANCE DIRECTOR’S REVIEW CONTINUED
Financing activities
Cash used in financing activities of US$5.3 million comprised the
repayment of the Nedbank revolving credit facility (including interest)
of US$5.9 million, repayment of finance cost on the Orion PFA of
US$2.9 million and repayment of lease liabilities of US$0.7 million,
partially offset by the proceeds received from borrowings of
US$4.2 million, primarily from the IDC (US$3.4 million).
5. FINANCIAL RISK
The primary financial risks faced by the Group relate to the availability
of funds to meet business needs (liquidity risk), the risk of default
by counterparties to financial transactions (credit risk), fluctuations
in interest and foreign exchange rates, and commodity prices
(market risk). These factors are more fully outlined in the notes to
the consolidated financial statements. They are important aspects
to consider when addressing the Group’s going concern status. We
proactively manage the risks within our control.
There are, however, factors outside the control of management.
These are volatility in the ZAR:US$ exchange rate, as well as the
vanadium price, which we do not currently hedge, and which can have
a significant impact on the cash flows of the business. The slower than
planned ramp up in production at Vanchem has hampered our ability
to introduce a hedging policy. However, we remain committed to
considering a hedging policy and assessing the potential to implement
a strategy to address the fluctuations in the ZAR:US$ exchange rate
when we attain steady state production at our operations.
6. GOING CONCERN AND OUTLOOK
We closely monitor and manage liquidity risk by ensuring that the
Group has sufficient funds for all ongoing operations. As part of the
annual budgeting and long-term planning process, the Directors
reviewed the approved Group budget and cashflow forecast through
to 31 December 2024. The current cashflow forecast has been
amended in line with any material changes identified during the
year. Equally, where funding requirements are identified from the
cashflow forecast, appropriate measures are taken to ensure these
requirements can be satisfied.
We entered into a non-binding term sheet with Orion subsequent to
year-end to refinance the convertible loan notes. The closing of the
transaction is still subject to certain conditions, including South Africa
Reserve Bank approval, shareholders’ approval at the general meeting
which we urge shareholders to support and the finalisation of definitive
binding documentation. We have made significant progress with the
legal documentation of the restructuring.
We have performed an assessment of whether the Group would be
able to continue as a going concern for at least twelve months from
the date of the annual consolidated financial statement. We took
into account the financial position, expected future performance of
the operations, the debt facilities and debt service requirements,
including those of the proposed refinancing of the Orion convertible
loan notes, the working capital and capital expenditure commitments
and forecasts.
20
Annual Report and Financial Results 2022
VANADIUM MARKET OVERVIEW
Vanadium market overview
Supply
Vanadium production is estimated to have dropped by 6.6 percent to
113,370t from 117,274t in 20212, due to the reasons mentioned.
Like most ferroalloys, vanadium is largely exposed to the market
characteristics of steel and specifically to the Chinese steel industry.
Total world crude steel production was 1,878.5 Mt in 2022, a 4.2 percent
decrease compared to 2021. As a result of China’s zero-COVID policy,
together with its faltering property and construction sectors, its crude
steel output was down 2.1 percent in 2022, with the country accounting
for 54 percent of global production. The Russia/Ukraine war had the
largest impact on production outside China in 2022, with output in the
Commonwealth of Independent States regions down 18.7 percent. Europe
also saw sharp declines of just less than 10 percent year-on-year, with the
war in Ukraine contributing to rising costs and concerns over energy prices.
Steel production and consumption in developed countries has also been
impacted by a deteriorating macro environment as supply disruption
concerns earlier in the year gave way to demand destruction fears in the
second part of 2022.
Vanadium plays a critical role in the world’s transition to a low-carbon
economy, both through the reduction of carbon emissions from steel
production and through its use in utility-scale battery storage solutions.
It can be regarded as a crucial metal in facilitating the energy transition
that enables a more sustainable world.
The addition of vanadium to steel and rebar has significant sustainability
benefits. Vanadium increases the tempering stability of quenched steel
and produces a secondary hardening effect, resulting in a stronger
product, capable of bearing greater load at high temperatures,
and resistant to corrosion, with a low density. In the construction of
infrastructure, particularly in comparison to regular steel, far less
vanadium micro-alloyed steel is needed for the same purpose, which in
turn leads to a significant reduction in carbon emissions from production.
This helps to build sustainable cities and communities. The increased
strength of vanadium micro-alloyed steel reduces the total global fossil
carbon footprint by as much as 0.4 percent1.
Vanadium is also a key component in VRFBs, which are used as utility-
scale, long-duration, energy storage solutions to store intermittent
renewable energy from solar and wind generation. It also enables power
systems to move away from polluting fossil fuels. Furthermore, VRFBs
can be used by electricity transmission and distribution system operators
to defer capital investment and improve the efficiency of their power
grids are operated. VRFBs help to combat climate change because they
produce 27-32 percent less CO₂ emissions than lithium-ion battery
technologies2. There is potential to reuse the electrolyte or recycle the
vanadium at the end of the batteries’ long life.
VANADIUM MARKET FUNDAMENTALS
In 2022, the vanadium market performed similarly to many other
commodity markets. Prices rose during the first quarter of 2022 owing to
continued post-COVID recovery and tightness, particularly in the European
market. Vanadium prices spiked in March in response to the Russian
invasion of Ukraine, as Russia is the second largest vanadium producer.
2022 Production by source
14%
16%
2022 Production by country
Prices started to fall back during the second quarter of 2022 and
continued a broadly downward trend during the third quarter of 2022.
The downturn reflected soft steel demand, particularly in China, related
to the impact of its zero-COVID policy, its faltering property sector,
and its depressed construction sector. These factors, together with
environmental cuts to production, reduced the country’s vanadium
demand, given vanadium’s exposure to the rebar segment. During the
fourth quarter of 2022, prices started to recover, supported by the
resumption of steel mill operations after some weeks of maintenance and
China’s relaxation of its zero-COVID policy.
3%
5%
8%
9%
18%
The decrease in steel demand for vanadium was partially offset by the
continued surge in demand from energy storage, especially in China.
According to some analysts, energy storage demand accounted for
about eight percent of all vanadium consumed in China and for the first
time surpassed the demand for other vanadium applications, such as
chemicals and non-steel alloys³.
On the supply side, surging inflation in most countries, other than China,
has had an impact on vanadium production costs.
2022 Primary production
48%
1. Vanitec, 2022
2. Project Blue, April 2023
3. Pangang market data, 2023
4. Guidehouse and EV Tank
Annual Report and Financial Results 2022
70%
Co-production
Primary
Secondary
57%
32%
20%
China
Russia
Other
South Africa
Brazil
USA
Brazil
China
South Africa
21
GovernanceFinancial statementsSupplementary informationBusiness overview VANADIUM MARKET OVERVIEW CONTINUED
2022 Consumption by sector
2022 Consumption by country
2%
3%
4%
3%
4%
4%
10%
12%
14%
Steel
Chemicals
Alloys
Batteries
91%
China
EU
North America
RoW
India
Japan
Korea
53%
Opportunities for growth in vanadium supply can be considered in
two categories: capacity expansions from current producers and
recommissioning of mothballed production plants. On a longer-term,
perspective, new supply will be required to meet the rising demand expected
to come from the VRFB sector. This new supply could come either existing
producers or from greenfield projects which are, for the vast majority, are still
in their early phases of development.
Demand
Global vanadium consumption dropped by approximately five percent
to 112,573t in 2022 from 118,422t in 20212. Increased vanadium
demand in steel applications is not only a factor of higher steel output,
but because the intensity of vanadium usage in steel has increased over
time. China’s vanadium usage intensity still lags behind that of developed
economies, suggesting more support for demand in future, even in a
market expecting Chinese steel output to have peaked.
The VRFB sector has created an additional rapidly growing market for
vanadium. In 2022 alone, VRFBs proportion of vanadium consumption
in the global market increased to 5.3 percent from 2.7 percent in 2021.
It has become the second largest user of vanadium after steel. In China,
Dalian Energy Storage Power Station, which was completed in November
2022, has a battery storage capacity of 400 MWh. This is expected
to double, bringing capacity to 800 MWh, and supporting 200,000
residents with their daily electricity needs. Construction has started on
a 1,000 MWh VRFB in Xinjiang which will be completed by the end of
2023. These developments are part of over 3 700 MWh of VRFB projects
either built or announced in China over the last 18 months. Project Blue
estimates that about 8 percent of the vanadium consumption came from
the VRFB sector in 2022.³ Several forecasting agencies expect China’s
VRFB market to grow at 30-50 percent per annum through 2030⁴.
Overview
Upside
Downside
Short-term
outlook²
Vanadium market is expected to stabilise, with an improvement
in the Chinese property market only expected in late 2023. The
bright spots for demand are aerospace and VRFBs.
Demand in the USA is expected to remain relatively robust,
while the outlook for European consumption appears more
subdued, with macro risks, a perduring conflict in Ukraine and
potentially volatile energy costs towards the end of the year.
Global supply appears adequate, while inventories have been
declining since the end of the first quarter of 2023.
Geopolitics impacting supply.
The announcement of multiple large-
scale VRFB projects and/or stronger
global demand, owing to an improved
macro-outlook.
China’s growth expectation is
clipped by a resurgence of COVID or
geopolitical/economic factors.
Global inflation/macro environment
pushes down demand in the rest of
the world.
Any stimulus announcement by China
could have a positive impact of the property
market and on the construction sector.
Lower-than-expected demand from
the battery sector.
Medium-term
outlook²
The market is expected to grow at a CAGR of 4.7 percent.
Geopolitics impacts supply.
Demand for vanadium in steel is set to increase at 3.6 percent
per year, supported by higher intensity of vanadium use.
The announcement of multiple large-
scale VRFB projects.
35 percent per year growth in VRFBs to 2028, with demand
to be driven by China.
Higher-than-expected steel output in
China increases demand.
Long-term
outlook²
Demand from the steel sector is expected to increase at a
CAGR of 1.5 percent, underpinned by increased intensity
of vanadium use in steel, in China and in developing countries.
Steady commercialisation of VRFBs from the mid-2020s
onwards, growing in scale over the net-zero horizon, which
will result in a long-term CAGR of 12.6 percent.
Geopolitics further impacts supply.
VRFBs ramp up at a faster-than-expected
rate.
New applications for vanadium are
discovered and add demand pressures.
Commercialisation of VRFBs fails to
materialise, reducing demand.
Chinese steel curbs or macro-related
factors reduce demand further.
High-case scenario secondary
material or higher coal stone output
causes over-supply.
Commercialisation of VRFBs fails to
materialise, reducing demand.
Higher-than expected drops in steel
and micro-alloy demand.
A few large-scale projects add to
supply, flattening the cost curve
and stabilising prices.
These trends will require more capacity from producers, with current estimated feedstock capacity likely to be insufficient by the end of the 2020s. New
capacity will be required, both from existing producers and new projects to meet the growing vanadium demand. With the vanadium demand coming from
steel expected to rely primarily on intensity rather than on volume, the main medium and long-term industry driver will be the VRFB market with upside,
should the technology expand faster than expected and downside should alternative storage technologies develop a competitive advantage to VRFBs.
3. Pangang market data, 2023
4. Guidehouse and EV Tank
22
Annual Report and Financial Results 2022
ENERGY STORAGE OVERVIEW
Vanadium Redox Flow
Batteries in energy storage
Stationary energy storage is essential to support growth in electricity
demand while the world transitions to carbon neutrality. It is now one
of the most dynamic and rapidly advancing sectors in the broader
technology industry.
TECHNOLOGY
The VRFB is the simplest and most developed flow battery in
commercial operation. VRFBs have a long lifespan, low operating
costs, are safe and have a low environmental impact in manufacturing.
The vanadium used in the batteries can be reused or recycled easily.
Annual Installed Utility and Commercial and Industrial VRFB
Deployment Energy Capacity by Region, All Application Segments,
World Markets: 2022-2031
h
W
M
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
North America
Western Europe
Eastern Europe
Asia Pacific
Source: Guidehouse Insights, 2022
Latin America
Middle East
Africa
Commercialisation of VRFBs is accelerating despite misconceptions
and comparisons based on upfront, rather than lifetime, costs especially
compared to the entrenched position of lithium-ion batteries. Increasing
understanding of the technology, reaching economies of scale in
supply chain and developing innovative funding solutions are starting
to overcome these barriers. The ability to recycle the vanadium or reuse
the entire electrolyte in a VRFB creates an opportunity for solutions
such as electrolyte rental. These solutions will accelerate adoption
of VRFBs at utility scale by reducing the upfront capital costs, while
creating new economic opportunities for vanadium producers.
OUTLOOK FOR VRFBs
Global deployment of VRFBs is starting to accelerate, due to
increasing demand for long-duration energy storage. According to
Guidehouse Insights, the market already exceeds 1 GWh per annum,
with Asia Pacific leading. By 2031, it is estimated that Asia Pacific
will reach around 14.5 GWh of annual VRFB energy capacity, out of
a global demand of 32 GWh¹.
China is leading the way in VRFBs, and currently accounts for 95 percent
of the global market. Its growth is a direct result of policies aimed at
diversifying the technologies used to store energy. Chinese policies
explicitly favour deployment of VRFBs and establishment of supply
chains, such as VRFB assembly and vanadium electrolyte production,
leading to innovation, manufacturing scale and cost decreases. China
already has nearly a dozen local VRFB companies.
Over 3,700 MWh of VRFB projects have been announced in China over
the last 18 months, and a recent white paper published by independent
research institute EVTank, forecast that China’s cumulative VRFB
installed capacity will reach 24 GW by 2030². This is in line with China’s
objective to reach a peak emission level in 2030 and being carbon
neutral by 2060.
Supply chain development is not limited to China. The Dutch
metallurgical company, AMG, announced a six million litre electrolyte
plant in Germany and a partnership with Shell to build a vanadium
processing facility in Saudi Arabia that will include an electrolyte
plant. In Australia, the government has included vanadium mining and
processing under its US$1.3 billion Modern Manufacturing Initiative,
which will include construction of an electrolyte plant. The USA and
EU consider vanadium to be a critical material, and the recent Inflation
Reduction Act is expected to further support the growth of the VRFB
supply chain in the USA. In the EU, a preliminary agreement set in 2023
raised the renewable energy target from 32 to 42.5 percent by 2030.
BUSHVELD MINERALS’ ROLE
Bushveld Minerals remains bullish on energy storage demand in Africa
and South Africa leading that growth, although recent reductions in local
content requirements for public procurement and minimal policy support
for vanadium-based value chains when compared to other countries may
adversely impact the competitiveness of VRFBs.
– Bushveld Energy’s development of the 3.5 MW solar PV plus a 1
MW/4 MWh VRFB hybrid mini-grid project for Vametco, the first
of its kind in South Africa, demonstrates the case for VRFBs in
energy storage. This project will serve as a VRFB reference site for
the mining industry, utilities and other power users, and showcase
the technological and commercial benefits of long-duration VRFB
systems coupled with renewable energy.
– The Department of Mineral Resources and Energy (DMRE) and
Independent Power Producers (IPP) Office have noted stand-alone
storage procurement of 513 MW in standalone, privately financed
energy storage, over five sites. A further 1,231 MW has also been
officially announced which is to follow the award of the first 513 MW.
– Eskom’s battery procurement programme for 350 MW/1,600 MWh
is under way, with 199 MW/833 MWh already awarded.
– Many municipalities and private customers, especially mining
companies, are increasingly considering storage to offset loadshedding,
with regulation of self-supply of electricity having been reduced.
Bushveld Minerals has positioned itself to support vanadium’s role in
the energy transition. Its vertical integration strategy combines primary
vanadium mining, beneficiation, and downstream energy storage
businesses to drive adoption of VRFBs.
1. Guidehouse Insights, 2022.
2. Fastmarkets, Vanadium redox flow batteries: a new direction for China’s
energy storage?, November 2022.
Annual Report and Financial Results 2022
23
GovernanceFinancial statementsSupplementary informationBusiness overview
OPERATING ASSETS AND OPERATIONAL REVIEW
Operating assets and
operational review
Bushveld Minerals owns three mineral assets: the Vametco mine, the
Brits resource and the Mokopane project. Together, the three deposits
constitute a 546 Mt (100 percent basis) JORC-compliant resource,
including 75 Mt (100 percent basis) of JORC-compliant reserves.
The Group’s principal vanadium processing facilities are the Vametco
processing plant (Vametco) and the Vanchem plant (Vanchem).
Vametco is an integrated mining and processing plant located eight
kilometres north-east of Brits in South Africa’s North West Province. It
operates an open-pit mine that supplies ore to a vanadium processing
plant located on the same property. Vametco produces Nitro
Vanadium, ammonium metavanadate and modified vanadium oxide.
Vanchem is a primary vanadium-processing facility at the Ferrobank
Industrial Park in Emalahleni Local Municipality in Mpumalanga
Province. It produces vanadium pentoxide, ferrovanadium and
vanadium chemicals, and is capable of producing vanadium trioxide.
KEY
Main Road
Railway
NORTHERN
LIMB
4
WESTERN
LIMB
1
5
3
Rustenburg
Brits
EASTERN
LIMB
2
Middelburg
Witbank
Pretoria
Johannesburg
0
20
40
60
kilometres
1. Vametco mine and plant
2. Vanchem plant
3. Brits resource
4. Mokopane project
5. Vametco mini-grid
24
24
Annual Report and Financial Results 2022
Annual Report and Financial Results 2022
PROCESSING
Vametco’s processing plant receives ore from the co-located Vametco mine. Vametco utilises the standard salt-roast and leach process to
produce a steel-alloying vanadium carbon nitride product called nitro vanadium. Vanchem’s ore supply is a blend between the Vametco Upper
Seam project and third-party ore, and also utilises the salt-roast beneficiation process. During the first half of 2023 a new supply agreement for
lower-silica ore than the Upper seam ore, was agreed at Vanchem with a third party, and it is anticipated to allow for higher recoveries, resulting
in a more stable production rates at no additional costs.
The process stages are shown in the below diagram.
2022 VAMETCO AND VANCHEM OPERATIONAL PERFORMANCE
AND 2023 GUIDANCE
Table 1: Operational highlights for Vametco and Vanchem (on a 100
percent basis)
Description
Group Production
Group weighted average
production cash cost1
Vametco weighted average
production cash cost1 (C1)
Vanchem weighted average
production cash cost1 (C1)
Unit
mtV
2022
2021
2021vs
2022
3,842
3,592
7.0%
US$/kgV
27.7
26.1
6.1%
US$/kgV
23.7
24.0 -1.3%
BRITS
The Brits Project hosts high-grade vanadium mineralisation in
several magnetite layers. The mineralisation, which is outcropping,
is a continuation of the Vametco strike. The project offers a potential
extension of Vametco’s life-of-mine and cost-effective source of near-
surface ore for the Vametco plant.
MOKOPANE
Mokopane is located on the central portion of the northern limb of
the Bushveld Complex. The project includes one of the world’s largest
primary vanadium resources, with an average grade of 1.80 percent
V2O5 in-magnetite.
US$/kgV
37.2
30.6 21.6%
An Ore Reserve of 28.56 Mt of Main Magnetite Layer mineralisation was
estimated as mineable, supporting a minimum 30-year life-of-mine.
1.
Includes direct costs of production. Excludes depreciation, royalties, movements in
finished goods inventories and selling, general and administrative expenses.
Group Production for 2022 of 3,842 mtV was below the revised
guidance of 3,900-4,100 mtV. Although Vametco’s production
of 2,705 mtV exceeded the upper end of guidance of 2,550 mtV-
2,650mtV, Vanchem lost approximately 200 mtV during the second
half of 2022 due to electricity load shedding. Vanchem’s performance
was further impacted by a slower-than-anticipated ramp-up of Kiln-3
post commissioning, and higher silica content in the ore supply which
resulted in further unplanned downtime.
Production guidance for 2023 is between 4,200 mtV and 4,500 mtV,
with volumes weighted towards the second half of 2023. Weighted
average Group production cash cost (C1) guidance is between
US$26.1/ kgV and US$27.0/kgV, (ZAR447/kgV and ZAR438/kgV).
BUSHVELD ENERGY
Bushveld Energy is 84 percent owned by Bushveld Minerals. It was
established to drive the positioning of VRFBs as a superior grid
storage technology and their greater adoption in the global energy
storage market. The company’s activities along the value chain are
described below.
VANADIUM ELECTROLYTE MANUFACTURING
Electrolyte manufacturing
BELCO is located in East London, South Africa. It is 55 percent owned
by Bushveld Energy and 45 percent by the IDC. Its targeted initial
capacity is eight million litres of vanadium electrolyte per year (each
litre of vanadium electrolyte will contain between 82 and 92 grams of
vanadium, with the plant using over 1,100 tonnes of vanadium oxide
Annual Report and Financial Results 2022
25
GovernanceFinancial statementsSupplementary informationBusiness overview OPERATING ASSETS AND OPERATIONAL REVIEW CONTINUED
equivalent at full production). It is able to scale up to 32 million litres
at the same location. This electrolyte plant is the largest publicly-
announced electrolyte plant outside of China.
The plant is designed to take vanadium oxide from Bushveld’s
Vanchem operation as the preferred feedstock provider. Oxide from
Bushveld Vametco or non-Bushveld suppliers may also be used.
Construction and cold commissioning of the electrolyte manufacturing
facility was completed during the first quarter of 2023 and hot
commissioning commenced during the period. The plant is expected
to be in operation during the second half of 2023. Further progress is
being made in the qualification process with manufacturers to use the
plant’s electrolyte. We are not providing any production guidance at
present, as production will be guided by sales and offtake contracts
with OEMs with whom we are holding ongoing discussions. The below
diagram outlines BELCO’s process flow-sheet.
Electrolyte rentals
Given the recyclable capability of vanadium electrolyte, Bushveld Energy
has partnered with various entities to pioneer the structure, design,
and supply of vanadium electrolyte rental products for VRFBs. We have
signed a 25-year lease agreement to rent 4 MWh of vanadium electrolyte
to the Vametco mini-grid independent power producer (IPP) company.
This project is currently under construction.
The strategic intention is to scale-up the rental product through an
off-balance sheet funding structure to match the global growth in
energy storage and VRFBs. The structure is innovative and it provides
investors with an annuity-type income and secure collateral in the form
of vanadium. With the increasing importance of the circular economy,
interest in such innovative mineral financing is growing.
VRFB manufacturing
We intend to play a catalytic role in mobilising third-party capital to
help VRFB OEMs scale up their sales and capacity to meet the fast-
growing demand for long-duration energy storage solutions. We hold a
stake in CellCube, a grid scale and micro-grid energy storage battery
manufacturer, headquartered in Austria. We have leveraged our
investment to mobilise more third-party capital into these companies.
BELCO process flow-sheet
CellCube’s recent developments
– CellCube has signed a strategic manufacturing co-operation
agreement with North Harbour Clean Energy Pty Ltd to build an
assembly and manufacturing line in Eastern Australia to meet
demand for long-duration energy storage in the national electricity
market. The first project executed by the partnership will be
developing the continent’s largest VRFB, which will generate 4
MW/16 MWh, based on CellCube’s proprietary technology.
– Enerox and G&W Electric have signed a strategic partnership to
offer resilience and cost savings to the rapidly expanding micro-grid
market in North America. The partnership was initiated through G&W
Electric’s construction of its own state-of-the-art micro-grid located
in Bolingbrook, Illinois, USA with solar energy generation coupled to
CellCube’s latest battery technology.
Bushveld Energy and the IDC started investigating the business case for
VRFB manufacturing in South Africa, following the model of our shared
research into the manufacture of vanadium electrolyte. This investigation
included a third-party competitiveness assessment that was completed
during the period under review.
During the first quarter, we successfully defended the litigation initiated
in 2021 by Garnet Commerce Limited, our joint venture partner in
CellCube, against VRFB-H and Enerox, concerning an alleged breach by
VRFB-H of the joint venture agreement in relation to Enerox. The success
in defending the litigation, which challenged the indirect investment by
Mustang into Enerox, means the indirect investment by Mustang into
Enerox remains in place.
Deployment of VRFBs
The Vametco mini-grid
Bushveld Energy has developed a commercial solar plus storage mini-
grid project for Vametco, with 3.5 MW of solar PV and 1MW/4 MWh
VRFB. The mini-grid is a funded IPP. Construction of the mini-grid is
at an advanced stage and it is expected to be in operation during the
second half of 2023. The total cost is ZAR113 million (approximately
US$7.25 million) and the Engineering procurement and construction
is provided on a turnkey basis. The mini-grid is owned and co-funded
by Bushveld Energy and NESA Capital. NESA holds 60 percent of the
equity in the project and we hold the remaining 40 percent. We received
a development fee as revenue from the project upon financial close
in June 2022. ABSA Relationship Banking approved a ZAR64 million
(approximately US$4.1 million) loan to part-fund the construction of the
mini-grid project.
26
Annual Report and Financial Results 2022
Vanadium OxidesVanadium OxideDissolutionElectrolysis in electrolyser systemsVanadium ElectrolyteDemineralisedWaterSulphuricAcidHydrogen Peroxide123456H2SO4H2O2 This will be one of the first solar mini-grid projects in Africa and currently
the largest with long-duration storage financed from the customer’s
balance sheet as a stand-alone project. When complete, it will supply
over 10 percent of Vametco’s electrical energy and will demonstrate
the technical and commercial capability of hybrid mini-grids using solar
PV and VRFB technology at grid parity pricing. Vametco sold 26 mtV to
produce electrolyte for the VRFB, but has not used any of its own capital
for the project. The battery, supplied by CellCube, was delivered and
installed during the second quarter of 2023. Installation of the solar PV
plant is ongoing but had been slowed due to unseasonably high rainfall.
The entire project is expected to be fully operational during the second
half of 2023
The hybrid mini-grid project will contribute towards reducing the carbon
footprint of Bushveld’s mining and processing operations, cutting
CO2 emissions by more than 8,000 metric tonnes per year (and nearly
200,000 tonnes over the 25-year life of the project). This will be a positive
contribution towards South Africa’s low-emission strategy and Bushveld
Minerals’ ESG objectives.
NON-CORE INTERESTS
The Company holds some non-core assets. It continually reviews
its options for these assets, which may include divestment, sale
or closure. No further work is planned on these projects while we
advance our vanadium platform.
1. Lemur Holdings
Lemur Holdings is developing an integrated power project, the
Imaloto Power Project, in Madagascar. It is at an advanced stage of
development, with a completed definitive feasibility study (DFS) for
the mine. The Imaloto Coal Project was impaired during the year as no
further expenditures were budgeted. Further details can be found in
Note 13 of the Financial Statements.
2. The PQ Iron & Titanium Project
The PQ Iron & Titanium project is a multi-commodity project on the
same licence area the Mokopane project. Progress to date has been
limited to understanding the project’s economic parameters.
The project won Power Project of the Year at the South African National
Energy Association (SANEA) awards in 2022, due to the number of in-
country firsts the project has achieved.
Captive opportunities
Bushveld Energy is targeting captive opportunities within the Group of
upto 120 MW of PV and 180 MWh of storage. These projects will also
reduce the Group’s reliance on the power grid, help to contain energy
costs, and reduce the carbon footprint of vanadium production, as part
of a broader, long-term ESG strategy.
These opportunities include a Phase 2 power plant at Vametco, where a
scoping study is under way to assess output of 100-300 MW of solar PV
plus a 15 MW/60 MWh VRFB to be built on site. Any excess power could
be wheeled and sold to Vanchem, another grid-connected electricity
customer or to one of the emerging electricity traders.
At Vanchem there is no capacity for self-generation due to site
constraints. We are currently assessing options for deploying a VRFB at
Vanchem and have begun exploratory talks with the municipality about
wheeling power from elsewhere to Vanchem.
Update on the carve-out
In June 2022, Bushveld Minerals announced our intentions to carve-out
Bushveld Energy. We believe that this will help to crystallise the value of
Bushveld Energy and position it in the capital markets.
In November 2022, Bushveld Energy entered into a conditional
agreement to sell its entire 50.5 percent interest in VRFB-H to Mustang.
VRFB-H own 100% of EHL, which in turn owns the entire issued share
capital of Enerox (also referred to as CellCube).
The transaction is an important step in carving out Bushveld Energy
from the Bushveld Minerals Group. On the assumption that all the steps
of Mustang’s acquisitions are achieved, Bushveld Minerals will hold an
interest of between 21 percent and 23 percent in Mustang and hence
CellCube. Bushveld Minerals’ holding in Mustang allows it to retain its
vertical integration proposition.
To ensure closer alignment of all vanadium operating facilities, the
BELCO electrolyte plant will remain within Bushveld Minerals, both
operationally and in ownership, after the Bushveld Energy carve-out.
Annual Report and Financial Results 2022
27
GovernanceFinancial statementsSupplementary informationBusiness overview PRINCIPAL RISKS
Principal risks
RISK MANAGEMENT
In 2021, Bushveld Minerals instituted a risk management strategy to gradually improve and position the
Company so that we can achieve a mature risk culture, operate risk-intelligently and optimise value by
2025. The strategy evolves and matures continually to ensure that risk management is firmly embedded
throughout the Company and is aligned to our overall strategic objectives.
The Company has adopted the ISO 31000 Enterprise Risk Management
(ERM) Framework, and accordingly our risk management strategy is
underpinned by the principles contained in ISO 31000 (2018) of value
creation and protection.
Risk management is one of the core responsibilities of the Board and
Management, and it is central to our decision-making processes. The
Board and Management have the following primary responsibilities in
relation to risk management:
– making a robust assessment of emerging and principal risks;
– continuously monitoring risk management and internal controls
and;
– embedding and promoting a risk-aware culture within the Group.
Understanding our risk management information and how it links to
our strategic objectives and goals, including the investment case,
is essential. Our risks are categorised and linked to the Company’s
strategy and objectives. We evaluate the risks in terms of likelihood
(probability) and impact (consequence), and they are then ranked
high, medium, or low. This enables us to prioritise the principal risks,
and appropriately allocate the resources and effort to effectively and
efficiently manage the risks.
OUR ERM ROAD MAP
2021
Basics – Risk Management
– ERM Framework (formalise
and structure)
– Basic risk assessment
(high level)
2023
2025
Risk Awareness
– Introduction – Risk management
process
Integration & Optimisation
– Integrate – Risk to decision
making
– Governance structure, system
– Influence value protection
and culture
and creation
– Principal risks identification
– Assess the risk management
– Automate and optimise
(Top 10)
process
We are
here
risk management
2022
2024
ERM Formalised & Structured
– Customised – ERM Framework and policy
– Leadership and commitment – ERM
– Review of principal risks (Board)
Improvement & Insight
– Improve the risk management process
– Align strategy, risk and decision-making
– Define risk tolerance and acceptance levels
28
Annual Report and Financial Results 2022
PRINCIPAL RISKS
Principal risk refers to a risk or combination of risks that could
materially affect the performance, future prospects or reputation of
Bushveld Minerals today or in the near future and have their origin
both inside and outside the Company. Principal risks comprise those
which could threaten the Company’s solvency, liquidity, performance,
strategic objectives, and its business model.
Strategic categories
S1
S2
S3
Sustainable high-grade vanadium mines
Low-cost primary vanadium production plants
Vanadium-based energy storage platform
Principal risks, by their nature, could individually or collectively have
material and adverse effects on the Company, prior to any mitigating
controls. They emanate from the worst-case scenario, without regard
to probability, and assuming all risk controls are ineffective.
Our focus for principal risks is to prevent their occurrence or minimise
their impact should they occur, but we also consider how to maximise
possible benefits that might be associated with strategic risks.
Principal risks are evaluated at least once a year, to determine whether
our exposure to them is within our risk appetite.
RISK CATEGORIES
Consistent with the prior year, we have categorised the 10 principal
risks according to the following categories:
OPPORTUNITIES
In addition, we have identified the following key opportunities, in line
with our strategy and investment case:
– Potential to disrupt the power storage industry with a sustainable
battery solution;
– Strong position and capacity in primary vanadium production;
– Opportunity to strategically position ourselves in the South African
market, owing to Eskom’s challenges; and
– Sustainable low-carbon power storage solution at reasonably
low cost.
The following pages provide a detailed analysis of our principal risks,
strategy link, risk appetite and mitigation measures.
Risk Categories
(E)
(S)
Economic
Strategic
(O)
Operational
The risk categories are supported by various sub-categories, and also
link to Company strategy.
Annual Report and Financial Results 2022
29
GovernanceFinancial statementsSupplementary informationBusiness overview PRINCIPAL RISKS CONTINUED
Nature of risk
Risk category
Risk rating
Mitigating action
1. FUNDING
WORKING CAPITAL
AND DEBT
Global market volatility affecting
demand and commodity prices:
− A significant decrease in vanadium
commodity prices.
− Adverse changes in global demand.
(E)
High
S1 AND S2
− Managing operations efficiently and cost-effectively.
− Commodity prices monitored on a regular basis.
− Significant portion of Bushveld’s sales are frame
contracts, ensuring sufficient level of production is
on offtake.
− Operational flexibility, enabling a wide spectrum of
vanadium products and developing a broad global
market strategy.
− Global vanadium market movements monitored on
a daily basis – arbitrage pricing differences across
markets and products.
− Reducing surplus finished goods stock levels to
generate additional cash.
– Growing trade protectionist policies
(E)
High
– Close and regular monitoring of international
in key markets.
Volatile exchange rate:
– Significant strengthening of the
exchange rate.
Going concern issues may materialise
in event of:
− Missing budgeted production, sales
and costs.
− Depleting cash resources due to
debt servicing.
legislation.
− Diversification of products and targeted international
markets.
− Proactive engagement with policymakers in high-
priority markets.
(E)
Medium
– Managing our operations to the lowest cost levels
possible.
− Current and forecast exchange rates monitored daily.
− Hedging considered as a mitigating strategy, if
exchange rates fall below specific thresholds.
(E)
High
– Robust budgeting processes and regular monitoring of
Servicing of the debt obligations.
(E)
High
(S)
High
2. ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE
S1 AND S3
Compliance with legislation:
− Mokopane Project water use
licence (WUL) application
not lodged.
− Mokopane Project has not
commenced mining a year after
receiving mining right, and
DMRE approval for extension
is outstanding.
− Vanchem WUL lapsed in
February 2022.
− Lack of governance frameworks
and policies, and compliance.
(S)
High
performance against budget.
− Cost containment measures and controls in place and
prioritisation of expenditure.
− Funding options reviewed and alternative funding
mechanisms proactively explored.
− Regular dialogue with debt funders.
– Regular monitoring of the working capital and
payments requirements to ensure compliance.
− Regular communication with lenders.
− Robust budgeting and cash flow forecasting processes
to meeting the required payments.
− Ongoing engagement with communities.
− Ongoing engagement with the DMRE.
− Groundwater feasibility conducted to determine
groundwater availability.
− Application for non-compliance with Mineral and
Petroleum Resources Development Act (MPRDA)
Section 25 lodged with DMRE.
− Amendment and renewal of Vanchem WUL to the
Department of Water and Sanitation (DWS) completed.
Awaiting the department’s response to the application.
− Corporate governance framework has been developed.
− Regulatory compliance framework in place.
− Continuous monitoring and review on compliance with
the established policies.
30
Annual Report and Financial Results 2022
Risk Category:
(E) Economic
(S) Strategic
(O) Operational
Nature of risk
Risk category
Risk rating
Mitigating action
− Community protest action or social
(S)
High
− Building trusted relationships with the stakeholders,
2. ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE
CONTINUED
unrest by communities due to
unhealthy relationships.
− Unreasonable procurement and
employment demands by local
communities.
− Non-compliance with minimum
emission standards (“MES”) at
Vanchem and Vametco.
(S)
(O)
− Groundwater pollution.
(O)
High
including host communities.
High
− Proactive and frequent consultations and engagement
with the local communities.
− Stakeholder engagement strategy in place.
High
− Kiln off-gas system has been installed and
commissioned.
− Application lodged for postponement to comply with
MES for Vanchem and awaiting National Air Quality
Officer response.
− Maintenance of pollution abatement system.
− Ongoing stack monitoring to monitor compliance with
MES and/or atmospheric emission licence.
− Groundwater pollution modelling completed.
− Ongoing monitoring of groundwater quality.
− Capital plan to implement groundwater remediation
plan for Vametco.
− Multi-stakeholder engagement to address groundwater
remediation at Vanchem.
− Lining trenches transporting hazardous spillages into
storage dams.
− Operate pollution plume boreholes at maximum
capacity – net increase in water balance at Vametco.
3. LICENCE TO
OPERATE (SOCIAL)
S1
− Compliance with Mining Charter III
Transitional Plan and MPRDA.
− Social unrest by communities due
to unhealthy relationships.
− Adverse actions by government or
communities resulting in project
delays, loss of licences or permits.
− Unreasonable demands by the
local communities.
(S)
High
− Regular engagement with DMRE relating to Social and
Labour Plan implementation.
− Building trusted relationships with stakeholders,
including host communities.
− Stakeholder engagement strategy in place.
− Proactive and frequent consultations and engagement
with stakeholders, including communities.
Annual Report and Financial Results 2022
31
GovernanceFinancial statementsSupplementary informationBusiness overview PRINCIPAL RISKS CONTINUED
4. OPERATIONAL
PERFORMANCE
S1 AND S2
Nature of risk
Risk category
Risk rating
Mitigating action
− Plant and equipment breakdowns
(O)
High
− Regular monitoring and constant review of planned
causing production delays.
− Quality of Vanchem feedstock.
− Vanchem Kiln-3 production targets
not met because of ramp-up
challenges.
– Unprotected strikes and actions.
− Legacy issues with labour unions
may lead to unprotected industrial
action.
(O)
High
versus actual performance.
− Prioritised and revised plant and equipment
maintenance strategy in progress.
− Daily monitoring and proactive response
to breakdowns.
− Prioritising repairs and maintenance.
− Capital allocated for refurbishment and maintenance.
− Management monitoring and supervision.
– Proactive stakeholder strategy in place resulting
in frequent consultations and engagement with
stakeholders, including communities.
− Continue embedding a partnership culture and
proactively engage with unions, in line with our
employee relations (ER) strategy.
− Addressing legacy and historical practices with
organised labour.
− Long-term wage agreements finalised.
− Unavailability of raw materials and
(O)
High
ore material and/or poor-quality raw
material/ore.
− Contracts in place with the suppliers of raw material.
− Inventory monitoring systems and controls in place to
monitor raw materials and ore.
− Quality monitoring and controls in place.
− Low or poor recovery performance.
(O)
High
– Continuous monitoring and control of the performance
and recovery by the plants.
− Off-grade production by the plants.
(O)
Medium
– Quality controls in place to monitor the product
through the production process.
− Increased costs.
(O)
High
− Cost-focused steering committee to monitor and
control cost items.
− Dedicated procurement programme that prioritises
contract spend over free spend.
5. ELECTRICITY
SUPPLY AND
COSTS
− Unstable electricity supply from
local municipality at Vanchem.
(O)
High
− Engagement with Eskom and government to create a
direct Eskom supply.
− Electricity supply arrangement in place with the
Vanchem local municipality.
− Excessive price increases for
(O)
High
− Stand-by generators and countermeasures in place in
the electricity from the supplier
(Eskom).
the case of loadshedding.
− Eskom grid constraints,
(O)
Medium
− Development of self-generation options, including on-
loadshedding, curtailment, and
rising diesel costs for running
generators.
site energy storage for all facilities.
− Inability to retain and recruit
(S)
High
− Continue embedding the Group-wide culture
talent among non-bargaining unit
staff in light of highly competitive
remuneration packages in the
market, as well as wider work/life
balance choices post-pandemic.
programme and our values to establish the Bushveld
way across the operations.
− Integrate talent management and succession planning
Group-wide into the business.
− Continually review our working model to improve
our hybrid model, where practical.
− Review and communicate our employee
value proposition.
− Benchmarking compensation against the market on an
annual basis to identify any gaps in compensation.
Annual Report and Financial Results 2022
S1 AND S3
6. HUMAN CAPITAL
(TALENT)
S1
32
Risk Category:
(E) Economic
(S) Strategic
(O) Operational
Nature of risk
Risk category
Risk rating
Mitigating action
7. DEVELOP
PRODUCTS FOR
ENERGY
TRANSITION
− Slow pace of developing products
to demonstrate proof of concept
in time to respond to the energy
transition.
(S)
High
− Secured the funding for Vametco mini-grid.
− Regular review of the market and continual raising
of awareness.
− Regular monitoring of products.
− Partnership strategy that reduces the cost and risk
to the Group while increasing the number of
participants in the technologies and products
supported by the Group.
S3
8. SAFETY
S1
− Compliance with safety and health
(O)
High
− Rigorous safety and health protocols implemented
processes and protocols.
− Insufficient plant maintenance
(O)
High
contributes to an unsafe workplace
and more safety incidents.
and observed.
− Continuous monitoring of leading and
lagging indicators.
− Rigorous pre-employment medical examinations,
pre-entry medical examination of contractors,
continuous medical examination and exit medical
examination by occupational medical practitioner.
− Safety given high priority in performance targets
of all staff.
− Increased safety awareness and campaigns.
− Regular and continuous safety briefings.
− Safety protocols strictly maintained and obeyed.
− Improved adherence to maintenance plans.
− Non-compliance with tailings
(O)
Medium
Storage facility factor of Safety
(FoS) at Vametco.
− Install central penstock to improve pool/ beach control
− Implement recommendation of the tailings storage
facility FoS report.
− Design and construct buttress.
9. PLANT &
EQUIPMENT
MAINTENANCE
− Plant and infrastructure
maintenance backlog.
(O)
High
− Capital prioritised for refurbishment and maintenance
of plant and equipment.
− Plant and infrastructure maintenance prioritised
during stay-in-business planning.
− Planned annual plant shutdown executed and
conducting routine maintenance and repairs.
S1 AND S2
10. SUPPLY CHAIN
DISRUPTION
S1 AND S3
– Lack of capital to perform the
(E)
Medium
– Robust budgeting processes and regular monitoring
necessary maintenance.
and prioritisation of maintenance.
– Reactive asset maintenance
(O)
Medium
and scheduling.
– Asset management strategy being developed.
− Asset register in place.
− Disrupted domestic and
(S)
High
international logistics channels,
including the effects of Russia/
Ukraine war and COVID-19.
− Maintaining minimum stock levels and managing
inventory levels at various global warehouses.
− Careful pre-planning of product shipping and
identifying multiple export channels.
− Long-lead time in delivery of our
(S)
Medium
− Regular review of market conditions and continually
product to customers, and receipt
of cash payment.
raising awareness.
− Continually monitor stock levels throughout the
supply chain.
− Global market volatility, resulting in
(S)
High
− Strategic partnership and agreements with service
supply chain disruptions.
providers, clients and customers.
The global pandemic risk has fallen off the top 10 principal risks in 2022. It has been replaced by supply chain disruption as the new and
emerging risk, following the conflict between Russia and Ukraine, and potential conflict between China, the USA and Europe.
Annual Report and Financial Results 2022
33
GovernanceFinancial statementsSupplementary informationBusiness overview SUSTAINABILITY
34
Annual Report and Financial Results 2022
OUR VISION FOR A GREENER FUTURE
To become one of the leading vanadium-focused companies
through our vertically-integrated platform. We are committed
to being a key player in the transition to a low-carbon
economy, being a social partner for good by creating shared
value, while meeting growing vanadium demand from the
global steel and energy storage industries, through our diverse
portfolio of products.
Sustainability and creating shared value for all our stakeholders are
at the heart of our operations. Our stakeholders include shareholders,
employees, communities, government and regulators, as well as
suppliers. We are committed to maintaining sustainable mining and
mineral processing practices across all our operations and projects,
while making a tangible contribution to our communities. We are fully
committed to achieving our ESG goals and continue to deploy every
available resource in support of our sustainability efforts.
Bushveld Minerals’ ESG approach
Our ESG strategy has four key objectives: to instil a culture of
sustainability throughout the organisation; to fully integrate this
culture into our business decision-making process; to report on key
ESG KPIs; and to communicate a consistent message about our ESG
commitments to all our stakeholders.
We are rolling out our strategy in four phases. In the first phase from
2020-2022, we devised a comprehensive ESG strategy aligned to the
United Nations’ Sustainable Development Goals (UN SDGs). We set
clear performance indicators to guide our efforts to build sustainable
development capability and ensure that ESG considerations are
integrated into all our business decisions.
In the second phase, which stretches across 2023, we are focusing
on ensuring compliance and alignment across the business. In the
third and fourth phases, from 2024 and beyond, we will focus on
fully achieving our ESG commitments to create a truly transformative
business. We intend to remain responsive to market conditions,
requirements and opportunities, and recognise that certain aspects
of the more ambitious second phase may materialise sooner.
OUR MISSION
Create value in a safe and sustainable way through a
true partnership with all our stakeholders, especially our
communities, while creating value for our shareholders.
Given recent market developments and the rapidly changing legislative
and reporting environment, we refreshed our ESG strategy in the last
quarter of 2022, to ensure our actions and ambitions in this space are
fit-for-purpose, and aligned to our current realities and future goals.
We have reprioritised the key short-term initiatives and actions we
need to take, while ensuring our medium-to longer-term commitments
and ambitions remain unchanged.
As part of our reporting standards, we continue to align our
sustainability efforts with the International Finance Corporation (IFC)
Environmental and Social Performance Standards and various other
global reporting standards such as the UN SDGs and we provide
biannual updates against these global benchmarks.
Additionally, In 2022, we established a Group ESG subcommittee of
the main Board, which met twice during the year. We have established
similar committees and forums at the subsidiary level of Vametco and
Vanchem, which report to the Group ESG Committee.
These forums will be responsible for the execution of the strategy
across the business, as well as the operational management of any
ESG issues and opportunities as they arise. We are enhancing our
current ESG reporting framework and systems, which will improve
the collation, disclosure and use of material ESG data for both internal
and external stakeholders.
Annual Report and Financial Results 2022
35
GovernanceFinancial statementsSupplementary informationBusiness overview SUSTAINABILITY CONTINUED
ESG Strategy 2023-2030
JOURNEY TO 2030
OVERALL VISION
TO BE A RESPONSIBLE MARKET LEADER
Environmental:
– Contribute to the development of a low-carbon economy.
– Proactively reduce our environmental footprint.
COMMITMENTS
Social:
– Ensure the health and safety of our employees.
– Foster a diverse and respectful working environment.
– Invest in the development of our people and host communities.
– Improve the socio-economic conditions of the communities in which we operate.
– Plan for sustainable mine closure and developing "life after mine" economic opportunities for the
surrounding communities and municipalities.
Governance:
– Engage proactively with our stakeholders and cultivate strong working relationships
– Report transparently and consistently.
– Assess and manage risks continuously.
Environmental:
– Reduce Scope 1 and 2 greenhouse gas (GHG) emissions and set goal for net zero emissions by 2050.
– Grow the Company’s electricity self-generation capacity.
– Increase the percentage of vanadium that is reused.
– Increase the amount of water recycled/reused and reduce freshwater consumption. Minimise the risks
associated with groundwater contamination.
– Align water reporting and management in line with ICMM Guidance.
– Reduce waste to landfill, actively pursue partnerships in communities and strive for zero waste
to landfill.
– Safely manage and decommission tailings storage facilities in line with the Global Industry Standard on
Tailings Management (GISTM) requirements.
– Develop an approach to biodiversity management and strive for biodiversity gains or no net loss
– Zero significant environmental fines or incidents
GOALS (2030)
Health & Safety:
– Zero fatalities.
– Improve Lost Time Injury Frequency Rate (LTIFR) in line with international best practice in the
mining industry.
Social:
– Improve attraction and retention of key talent.
– Reduction in external grievances recorded.
– Improved well-being of host communities, through increased procurement spend, creation of jobs
and provision of essential services.
– Increase procurement spend with host communities.
Governance:
– Obtain a Level 2 B-BBEE score.
– Equal representation of women on the Board and other leadership positions.
– Zero tolerance for unethical behaviour and corruption.
36
Annual Report and Financial Results 2022
Environment
STATUS OF ENVIRONMENTAL OPERATING LICENCES/
AUTHORISATIONS AND COMPLIANCE
All our operations have firm commitments to comply with all applicable
environmental laws and regulations (national, provincial and local)
at all times and to align 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 assess how we are complying with the conditions of the
Environmental Management Plan (EMP) and the mine’s environmental
authorisations. No major findings were reported from any of these
audits in 2022 and no environmental penalties were imposed by the
regulatory authorities.
The table below summarises our compliance with licence conditions
and authorisations.
Vametco
Vanchem
Integrated Environmental Authorisation (IEA)
Vametco was issued with an IEA by the DMRE in December 2021.
In May 2022, Vametco requested that the DMRE amend the IEA
conditions relating to:
– Annual audit of the IEA to biennial audit (hence there was no audit
in 2022); and
– Specific conditions relating to the waste management licence
(WML).
DMRE responded in December, confirming that the request is being
considered, and a decision is imminent.
Air emission licence (AEL)
The AEL is valid until August 2026.
– No compliance visit by the Authority in 2022.
– All mandatory reporting obligations were met.
Water use licence
Vametco’s WUL is valid until April 2037.
Environmental Authorisation (EA)
All Vanchem activities hold the relevant EAs.
– No compliance audit by the Department of Forestry, Fishery
Environmental Affairs (DFFE) in 2022.
– The focus in 2023 is to integrate the various EAs into a single EA.
Air emission licence
Vanchem Main Plant AEL issued on 24 Jan 2022 and valid until
31 January 2027. The ferrovanadium plant’s AEL was issued on
4 April 2022 and is valid until 31 March 2027.
– Vanchem’s main plant applied for a postponement to comply
with minimum emission standards (MES) on SO₂. Department of
Forestry, Fishery and Environmental Affairs decision due by end-
December 2022.
Water use licence
– Vanchem WUL expired in February 2022.
– Department of Water and Sanitation (DWS) has acknowledged
the application and processing the renewal of the WUL. The
application was submitted prior to the expiry.
Waste management licence
– Vametco WML is now integrated into the IEA, following DMRE
Waste management licence
– The Vanchem calcine and tailings storage facility operates under
approval in December 2021.
the WML, which is valid until August 2029.
– No major compliance issues at the calcine dump following the
– Permission to start dumping on the DWF extension was granted
2022 compliance audit.
by DFFE in March 2022.
Annual Report and Financial Results 2022
37
GovernanceFinancial statementsSupplementary informationBusiness overview SUSTAINABILITY CONTINUED
Environment continued
Environmental Incidents
In 2022, we recorded 17 environmental incidents, a 29 percent
reduction compared with 2021. Unfortunately, although the number
reduced, the severity of these incidents has increased from two
significant incidents in 2021 to six significant incidents in 2022.
However, no environmental directives or fines were issued. As we
show below, we are taking corrective measures.
Summary of significant incidents reported in 2022
Incident type
Vametco
Vanchem
Total
Minor environmental incidents
Significant environmental incidents
Major environmental incidents
Environmental directive/order
Fines for non-compliance
10
4
0
0
0
1
2
0
0
0
11
6
0
0
0
Nature of significant Incidents
Key learnings
Status of corrective actions
Storm water dam (SWD) overflow, resulting in
discharge of polluted water after rainfall.
– Divert unnecessary stormwater away
from SWD.
BELCO required to implement some of the
corrective actions in 2023.
– Desilt SWD to maintain storage capacity.
– Install silt trap upstream of SWD.
– Maximise use of storm water during
dry season to create adequate capacity
to accommodate wet season and
accidental spillages.
Energy Management and Climate Change
The table below summarises fuel consumption per source at
Vametco and Vanchem:
2022 Energy consumption
Unit
Vametco
Vanchem
Total Energy
consumption
Electricity (ESKOM)
MWh
88,285
63,418
151,703
n/a 124,523
124,523
Sasol gas
LPG bulk
Synthol fuel (heavy fuel)
Pea coal
Duff coal
LPG cylinder
(48 kg/cylinder)
Acetylene
(13.6 kg/cylinder)
Diesel
GJ
Kt
KL
Kt
Kt
Kt
Kt
KL
# = data not available, n/a = not applicable
89
779
12.81
21
1.2
2.2
2,976
n/a
n/a
0.8
17
#
1.5
524
89
779
13.6
38
1.2
GHG Emission Type
3.7
3,500
CO₂-eq
CH₄
N₂O
Based on the 2022 energy consumption data, the table below
summarises GHG emissions for each operation.
2022 GHG Emissions
Unit
Vametco
Vanchem
Totals
Tonne GHG/
Total products
(Nitrovan/ Chemicals (V₂0₅)
CO₂-eq
CH₄
N₂O
111, 305
1.1
1.5
90, 200
1.0
1.4
194, 538
1.6
2.3
Below is a summary of tons emitted per ton of product produced
between the two business units:
Vametco
Vanchem
Tons of emissions
per ton of product
produced (nitrovan)
Tons of emissions per
product produced
(chemical products)
41.1
0.00040
0.00055
43.4
0.00054
0.00071
38
Annual Report and Financial Results 2022
Water Management
Given how important water is to the functioning of our operations, we have a
robust system of water accounting in place at Vametco. A similar system is
being developed for Vanchem.
Water Intensity
Overall water intensity has increased from an average of 2 m³/ton of ore
milled in 2021 to an average of 3 m³/ton of ore milled in 2022. Vametco
achieved water intensity of 2.4 m³/ton of ore milled as opposed to
Vanchem’s 3.6 m³/ton of ore milled.
The focus in 2023 will be on implementing projects to reduce water wastage
and to reuse and recycle water.
Water Withdrawals
Total water used increased by 31 percent from 2,947 ML in 2021 to 3,869
ML in 2022. New water injected into or withdrawn from the system increased
by 16 percent from 1,491 ML (in 2021) to 1,727 ML in 2022. The chart
opposite shows the various sources of water and quantities withdrawn.
Increased water use in 2022 can also be attributed to better accounting due
to additional flow meters being installed during the year.
Water Discharge
Water discharge increased by 15 percent from 261 ML in 2021 to 300 ML in
2022. This increase correlates with more incidents caused by higher rainfall,
due to changing climatic conditions.
To ensure work can continue safely, the risk mitigation strategy allows for a
controlled release of water as a last resort. This is provided for in the WUL.
Groundwater Pollution Plume Remediation
Vametco’s WUL notes the existence of a historic groundwater pollution
plume which should be managed through a series of interceptor or
scavenger boreholes. Shown in bottom chart opposite is the performance
of scavenger boreholes against the targets set in the WUL.
Pollution Plume Abstraction
The performance of pollution plume abstraction boreholes has failed to meet
the minimum abstraction threshold in the WUL over the past four financial
years. In 2022, we managed to achieve 33 percent (67 ML) of the required
WUL abstraction volume of 202 ML per annum. The improvement in
pollution plume abstraction in 2022 over 2021 resulted from large efficient
abstraction pumps installed in 2022.
In 2022, Vametco conducted a feasibility study for the establishment of
a water treatment plant. Once this is in place, it will alleviate the risk of
pollution plume migration, while strengthening water conservation measures
within the operation.
Water intensity: water (m3)/ ton vanadium milled
Vametco water withdrawals (ML)
Vanchem water withdrawal (ML)
Table 4: Water discharge (ML)
Pollution plume abstraction vs WUL limit (ML)
Annual Report and Financial Results 2022
39
GovernanceFinancial statementsSupplementary informationBusiness overview00.511.522.533.54Vametco2.41.820212022Vanchem3.62.220212022040080012001600358778580498194173Purchased Water (Waterboard/Municipal)MineDewatering(Ground Seepage)BoreholeAbstractionFY 2021FY 20220100200300400240FY 2021397FY2022200225250275300261FY 2021300FY2022050100150200477644FY 2019FY2020FY202167FY2022WUL LimitActual SUSTAINABILITY CONTINUED
Environment continued
Water Recycling
The Group managed to recycle or reuse a total of 2,156 ML of water in 2022,
equivalent to a total reuse/recycling efficiency of 56 percent.
Waste generation and management
The tables below provide breakdowns of waste types generated per
business unit in the 2022 financial year.
Water recycling/reuse (ML)
Type
Vametco
Vanchem
Tailings storage facility (TSF)
Return water
Stormwater
Sewage effluent
1,511
161
19
363
101
0
Total
1,874
262
19
The Vanchem achieved 54 percent recycling efficiency, while Vametco
achieved an impressive 56 percent.
AIR QUALITY AND ENVIRONMENTAL DUST FALL-OUT
All facilities in business units hold AELs valid until 2027.
Summarised below is our compliance with AELs:
Sampled
parameter
(mg/Nm³)
PM
SO₂
NH₃
Ambient
dust
(DFO – mg/
m²/day)
Vanchem
(main
plant)
Vanchem
(FeV
plant)
Vametco
Comment
All business units did not meet the
MES for particulate matter (PM),
sulphate (SO₂), and ammonia
(NH₃). Vanchem main plant applied
for a postponement to comply
with MES SO₂ limits and awaits a
decision by the DFFE.
Upgrade of emissions abatement
technologies (cyclones, scrubbers
and baghouses) is required to meet
MES at both business units. It is a
focus for 2023 and beyond.
Vanchem main plant operates
within the Ferrobank industrial
area, which is experiencing a
resurgence of open cast coal
mining activities. This is the main
contributor to exceedance of dust
fall out (DFO).
Exceeds limit
Below limit
2022 Waste generation
Unit
Vametco
Vanchem
Total
Hazardous waste (off-site
disposed)
General waste (municipal
landfill)
Sewage effluent disposed
(municipal sewer system)
Hazardous waste – mineral
tailings (calcine)
Non-hazardous waste –
mineral tailings
Waste rock dumps
Recycled waste (paper)
Recycled waste (scrap metals)
Recycled waste (rubber)
Recycled waste (used oil)
Boiler ash – community brick
manufacturing
Kt
Kt
0.01
0.1
0.6
0.3
0.7
0.4
ML
0.36
147
147.4
Kt
Kt
Kt
Kt
Kt
Kt
Kt
Kt
392
187
579
770
817
0.002
0.5
0.01
37
3.6
44
n/a
0
0.4
0
2.1
0.1
814
817
0.002
0.9
0.01
39.1
3.6
Total waste generated in 2022 was 2,402 kt, a 36 percent decline from
the 2021 total waste of 3,726 kt.
LAND AND BIODIVERSITY MANAGEMENT
Of the 11,618 hectares of land that the Group owns or manages,
only 5 percent has been disturbed for operational activities.
Land management
Unit
Vametco
Vanchem Pamish
Total
Total land leased/
managed/owned
Total land disturbed
Total land rehabilitation
*cummulative
ha
ha
ha
1 508
543
8*
82 10 029 11 618
578
0
35
8
0
0
No land was rehabilitated in 2022, so significant efforts will be
required from 2023 and beyond to ensure concurrent rehabilitation.
Each business unit will need to develop rehabilitation targets to reduce
its land disturbance footprint.
40
Annual Report and Financial Results 2022
Social development
Case study
LIGHTING COMMUNITIES SUSTAINABLY
Safety is our number one priority, not just for our employees at our sites.
The safety and security of our communities is equally important to us.
Many community members, including our own employees, travel from
their homes to work in the darker hours of the day. Good street lighting
makes a difference in reducing crime incidents in the community, creating
safer neighbourhoods.
As part of the Vametco Social Labour Plan (SLP), we are installing solar high
mast lights, in partnership with the Madibeng Local Municipality. Equipped
with solar technology, the lights will stay on despite loadshedding.
The communities of Rankotea, Switch and Thetele and Ward 21 are
currently benefiting from this initiative, as we roll out the solar high
mast lights in the area.
To maximise the impact of the project on the local community and ensure
economic benefit for local businesses, Vametco has appointed service
providers from the same communities where the installations are taking place.
The expected spend for this project is over ZAR4 million (US$ 0.2 million).
It will create much-needed economic spin-offs, such as job opportunities
for locals and support for emerging entrepreneurs who are now afforded
the opportunity to do business with Bushveld Minerals.
Annual Report and Financial Results 2022
41
GovernanceFinancial statementsSupplementary informationBusiness overview SUSTAINABILITY CONTINUED
Social development continued
SOCIAL AND LABOUR PLAN
We are currently in the implementation phase of the projects we
committed to in Vametco’s 2018 to 2022 SLPs which was approved
by the DMRE. These projects are carried out in consultation and, in
some instances, in partnership with the municipality, beneficiary
communities and other relevant stakeholders. Our new SLP for the
period 2023 to 2027 has already been submitted to the DMRE. The
SLP is Vametco’s commitment to socio-economic and community
development for employees and its host communities.
To better strengthen relationships with communities and to fully
understand the socio-economic landscape of our host communities,
we plan to carry out a comprehensive socio-economic baseline study
in 2023. The study will inform the Company’s community development
strategy going forward, ensuring that we make a lasting impact on the
communities where we operate.
ENTERPRISE SUPPLIER DEVELOPMENT
In 2022, Vametco and Vanchem enrolled 10 community-owned
businesses into a business development support programme. The
programme is aimed at capacitating and strengthening core business
competencies such as strategy, marketing, brand awareness,
reputational risk and financial modelling. Additionally, we continue
to support Small, Medium and Micro Enterprises (SMME’s) currently
doing business with our operations by prioritising their invoice
payments, where possible. Programmes such as these allow us to
create a pipeline of local businesses that can, in future, participate
economically in the operation.
OUR APPROACH TO STAKEHOLDER RELATIONS
The Company continues to engage with different stakeholders,
including the three spheres of the South African government: the
national DMRE, provincial, and local government departments where
Bushveld Minerals’ operations are located.
Bushveld Minerals enjoyed healthy relationships with most of our host
communities in 2022.
Partnering with our stakeholders
Government
In 2022, we met regularly with various government departments to
discuss regulatory issues. The engagements on behalf of Vametco
were part of our licence to operate requirements. These included
health and safety inspections, Department of Labour compliance
meetings, and meetings about Vametco’s SLP.
Submissions made to the DMRE in the year under review centred
around legal compliance with different aspects of the SLP: Community
Development Programmes, Human Resources Development,
Preferential Procurement Plan, Process to Manage Downscaling and
Retrenchments, and Housing and Living Conditions.
Various meetings were held with the municipality’s administration and
technical departments to discuss project scope as well as to define the
areas where projects would be implemented.
Community forums (Vametco)
We meet regularly with various community groups in our host
communities. These range from unemployment forums to community
concern groups. Issues normally discussed with these forums range
from employment opportunities to community development initiatives.
In response to this need and to streamline engagements with the
forums, Vametco and the Madibeng Local Municipality have agreed
to set up a Community Engagement Forum (CEF) that will embrace
all recognised community structures within the Madibeng municipal
area and Vametco’s host communities. The CEF will be driven by
the municipality and will involve all interested and affected parties.
It will work with all relevant stakeholders to identify developmental
programmes that the mine can include in its future plans with the
communities.
Business forums (Vametco)
The business forums in the host communities at Vametco have
asked to discuss procurement-related opportunities with us. Most
of these forums represent our host communities of Uitvalgrond,
Rankotea, Mmakau, Switch and Thetele, and Mothotlung. Issues
raised included requests from local businesses to be registered on the
mine’s procurement database to access procurement opportunities
at Vametco as they become available. In 2022, Vametco increased
the number of local businesses that were given an opportunity to do
business with the mine. Currently we spend 12 percent of our total
procurement spend with local businesses. We are looking to improve
this in 2023.
Vametco’s community development projects
Vametco has identified a number of projects that will help to uplift the
communities around us. This is not only a legal requirement – it is vital
that our communities understand and share in the benefits of a well-
functioning mine and plant. These initiatives are laid out in our SLP,
the fulfilment of which maintains our licence under Mining Charter III
and the MPRDA.
Within our modest resources, we have identified projects that will help
raise the standards of living in our communities, through providing
street lighting, sports facilities, water and roads. The following projects
are under way:
1. Rankotea sports facility
In line with its SLP, Vametco is in the process of upgrading a
community sports field in Rankotea. The upgrade will include erecting
a fence around the stadium, fixing the goalposts, and installing a
sprinkler system. A service provider was recently appointed to assist
with project implementation, and at least eight local people are
expected to be employed during the project’s construction phase.
2. Roads and stormwater projects
The mine will work with Madibeng Local Municipality to re-gravel
some of the local roads in Rankotea, Switch and Thetele, and Ward
21. This project forms part of their Integrated Development Plan (IDP)
infrastructure development programmes. The project is currently at a
feasibility stage.
42
Annual Report and Financial Results 2022
ADDITIONAL PROJECTS
Uitvalgrond water system upgrade programme
During some of the interactions between Vametco and the Uitvalgrond
community, it emerged that, although Uitvalgrond has water systems
in place, the community is still experiencing serious challenges in
accessing water. Vametco worked with the leadership of the community
to get the main borehole pump working again and energised. This
project has been completed, and water is now supplied into the
reticulation system. The second phase of this project will commence in
2023. This phase will focus on repairing the water reticulation system
and equipping all the other boreholes with working pumps.
COMMUNITY PROJECTS
Mandela month project
We partnered with “Hope of the Nation”, a local NGO to help renovate
the South African National Tuberculosis Association (SANTA)
tuberculosis hospital in Ferrobank. Some of the wards' roofs were
leaking, there was a shortage of mattresses, no air conditioning, no
connections to TVs, and the children’s ward needed repainting. We
renovated the hospital on Mandela Day, provided DSTV connections,
an overhead projector, 10 mattresses, and table soccer for the kids
to enjoy. We also repaired all leaks, painted the children’s ward and
installed proper signage.
Back-to-school campaign
The Emalahleni Local Municipality requested support for the provision
of school shoes to needy learners in our host communities that were
identified by ward councillors.
We donated 67 school shoes, 100 school backpacks and 100 pencil
cases as part of our back-to-school campaign.
Vanchem Community Engagement
Vanchem in the community
Vanchem as a legal entity established a voluntary community
engagement forum (CEF), to maintain and sustain effective relations
with stakeholders within our host communities in Emalahleni
local municipality.
The forum meetings are used to discuss and give feedback on
socio-economic programmes that are planned in order to benefit
communities close to Vanchem. These programmes are implemented,
subject to availability of budget.
STAKEHOLDER ENGAGEMENTS
In 2022, Vanchem engaged community structures based in the
Emalahleni Local Municipality, including the Ferrobank business
community and various community development workers, in an effort
to ensure open dialogue and mutually beneficial relationships with all
stakeholders affected by our operations.
Community structures
Several community structures have been invited to join the CEF and in
2022, 15 of them submitted their applications to become part of the
forum. The terms of reference have been shared with all applicants.
We are positive that we will be able to launch the forum successfully
and proceed as planned in 2023.
Emalahleni Local Municipality
In 2022, engagements were held with the municipality to introduce
Vanchem to the newly elected councillors and to find areas of
mutual interest and collaboration on municipal community
development activities.
We have also met regularly to find workable solutions to the
persistent scourge of loadshedding. Additionally, the municipality
has agreed to include Vanchem in the Local Economic Development
Forum which allows us meaningful participation in municipal
development discussions.
Ferrobank businesses engagement
To build relationships with other businesses operating in the Ferrobank
area and share ideas and other social and economic activities in our
host communities, we have established the Ferrobank Industrial
Business Forum.
Annual Report and Financial Results 2022
43
GovernanceFinancial statementsSupplementary informationBusiness overview SUSTAINABILITY CONTINUED
Our people
HEALTH AND SAFETY
We care about our employees and communities and we have a
responsibility to ensure their safety and well-being. We take a risk-
based approach to health and safety. It starts with a Baseline Risk
Assessment, moving to an Issue-based Risk Assessment and then to a
Continuous Risk Assessment, which includes lag and lead indicators.
We do not tolerate any deviations from regulatory requirements,
whether by our own staff or contractors.
Vanchem
Bushveld Vanchem recorded zero fatalities and six lost time injuries in
2022, unchanged from 2021. The LTIFR rose from 4.37 in 2021 to 6.61
in 2022. The TIFR also increased from 4.37 in 2021 to 12.12 in 2022 as
there were more medical treatment cases. The Department of Labour
conducted 1 inspection at the ferrovanadium plant located at Highveld
Steel. No section 30 contravention or improvement notice was issued.
Safety indicators
In 2022, Vanchem was certified in ISO 9001:2015 Quality
management systems (QMS), while Vametco retained its QMS
certification. In 2023, the Group intends to ensure that both
Vanchem’s and Vametco’s Occupational Health and Safety
Management Systems are certified under ISO 45001:2018.
A safety diagnostic audit was conducted at both Vanchem and
Vametco to determine the safety and risk maturity levels and identify
opportunities for improvement. This included the field verification
of activities and the application of documented safety management
processes, using pre-defined assessment tools.
From the consolidated report, 10 top initiatives were identified.
These top 10 initiatives were proposed to improve the maturity level
from reactive to independent and ultimately to interdependent,
in line with the Bradley Safety Maturity Curve. A corrective action
plan was developed to address the gaps and these are tracked
for implementation and closure. The corrective action plans are
discussed at operational level, in operational committee and
Executive Committee meetings.
SAFETY
Our commitment to achieving zero harm while mining and processing
was evident in our zero-fatality record in 2022.
Land
Management
Injuries
Lagging
indicators
Incidents
Safety indicators
Vametco
Vanchem
First aid cases
Medical treatment cases
Fatalities
Total recordable injuries
Lost time injuries
14
7
0
10
3
2
2
0
8
6
Bushveld
Minerals
16
9
0
18
9
Time lost
LTIFR
TIFR
Critical incidents
High potential risk
incidents
Near miss incidents
reported
36
1.4
11.15
387
6.61
12.12
423
2.85
10.32
0
5
57
6
4
0
2
4
0
0
0
7
61
6
4
Authority
indicators
Section 55 directives
Section 54 directives
HEALTH
To protect our employees’ general health and wellness, we monitor
chronic diseases, screen for tuberculosis and provide HIV/AIDS voluntary
counselling and testing at on-site and off-site Occupational Health Clinics.
Category
Health Indicators
Vametco
Vanchem
Head
Office
Bushveld
Minerals
The TIFR rose from 7.78 in 2021 to 10.32 in 2022, this includes
recorded first aid incidents. This was due mainly to poor housekeeping
which resulted in failure to identify hazards (mainly slip, trip and fall
incidents) during routine activities. The safety team has intensified
its awareness campaign to employees and contractors to reduce
these incidents.
Occupational
diseases
Vametco
Vametco reported zero fatalities and three lost time injuries in 2022.
The TIFR increased from 8.62 in 2021 to 11.15 in 2022 due to an
increase in recorded first aid cases.
New “other”
cases
Total
occupational
diseases
New noise
induced hearing
loss cases
New respiratory
diseases
Non-
occupational
diseases
1
0
1
0
0
0
139
26
0
0
0
0
1
0
1
165
The DMRE’s Mine Health and Safety inspectors conducted 12
inspections in 2022 compared to four in 2021. Four section 55
instructions and four section 54 stoppage instructions were issued
in terms of the Mine Health and Safety Act. All instructions were
implemented, and reports were submitted to the DMRE.
In 2022 no noise-induced hearing loss cases were recorded, against
1 in 2021. The number of non-occupational diseases increased from
12 in 2021 to 165 across the Group. 1 tuberculosis case was reported
in 2022.
We have brought in a health and wellness specialist to help employees
achieve their wellness and healthy lifestyle goals by introducing
various programmes. These programmes also focus on mental health
and raise awareness of our Employee Assistance Programme.
44
Annual Report and Financial Results 2022
OUR VALUES
CARE
We care for the safety and health of our
people, safety of our assets, environment
and our communities
COURAGE
We are pioneering, resilient,innovative
curious and open to new ideas.
COLLABORATION
We collaborate for shared success by
building unity through our shared purpose
and effective communication
EXCELLENCE
We continuously strive for excellence through
rigour, effort and deliberate planning, focused
on the right performance outcomes
TRUSTED
We are trusted because we show integrity,
aspire to deliver on our promises, and go
beyond compliance
TALENT MANAGEMENT
Attracting, retaining and developing our talent is vital to our success.
One of the aspects that makes Bushveld Minerals a desirable place
to work is that we support every employee working for us to fulfil
their potential. By encouraging continuous learning, we ensure our
employees are equipped with the appropriate knowledge and skills
to perform at their best and help us to deliver our goals. We ensure
we have a pipeline of relevant technical skills by offering graduate,
internship, and bursary programmes to talented and needy learners.
To date, we have spent ZAR24.3 million (US$ 1.5 million) on skills
development. We have an unwavering commitment to building a
diverse workforce, with equitable representation at all levels,
including females.
Consistent and effective leadership is a priority to sustain our
organisation’s viability and future mission. Our talent review and
succession planning processes help us to identify and develop
people in the short, medium, and long term for mission critical roles
and we have put retention and succession plans in place for all our
leadership positions.
OUR CULTURE JOURNEY
An initial assessment based on conversations with different
stakeholders on how we have progressed over the past year
in implementing the Bushveld Minerals culture programme is
summarised below.
Our safety record generally remains good, and the recent safety
diagnostic exercise will further help our efforts. We are focused on
ensuring that we remain on top of all the issues which are vital to
our social licence to operate – both in law, as well as in line with our
values as an organisation.
As we continue to embed our values, we have been encouraged by
the level of collaboration between various teams across the business
units. This was evidenced on key projects throughout the year, with the
sharing of expertise between the Vametco and Vanchem teams. This
culture of collaboration is critical to our operational performance and
bodes well for our future planning and disciplined execution in future.
In order to further entrench our shared vision for the business and in
line with our visible leadership principle, we hosted CEO roadshows in
2022 where the executive team engaged with employees in the various
operations and at the corporate office on business values, business
performance, strategy and all matters that impact employees’
workplace experience.
One of our objectives for 2023 is to conduct a comprehensive base
level survey to determine the progress made so far.
Annual Report and Financial Results 2022
45
GovernanceFinancial statementsSupplementary informationBusiness overview SUSTAINABILITY CONTINUED
Our people continued
OVERALL GROUP STAFF COMPLEMENT
The Group employed a total of 814 people at the end of December
2022. The table below provides a breakdown by business unit:
Employment type
Permanent
Fixed-term contractors
Learners/apprentices/
interns/ graduates
Total
Corporate
incl. Bushveld
Energy and
Lemur
56
7
1
64
Vametco
Vanchem
427
22
21
470
240
27
13
280
DIVERSITY AND INCLUSION
In the year under review, our gender ratios improved, as we increased our
ratio to 23 percent (185) female staff and 77 percent (621) male staff,
compared with 2021 when we had 19 percent (140) female employees
and 81 percent (590) male staff. The biggest improvements in gender
representativity have been in our corporate office (including Bushveld
Energy), where at the end of 2022 the ratio improved to 49 percent (29)
females and 51 percent (31) male employees from December 2021’s
figures of 40 percent (19) female staff and 60 percent (29) male staff.
Gender representation will remain essential to our transformation plans
in the coming years.
EMPLOYEE WELLNESS
In line with our corporate values as an employer, we care about the
well-being of our employees. We seek to empower our employees to have
courage and to develop resilience and self-management competencies
to overcome life’s demands. We believe that when our employees are
psychologically and physically fit, they are more productive, and this
allows us to deliver with excellence. Our employees trust us to create a
workplace that helps them deal with the challenges they face in life.
To address the holistic well-being of our employees, we apply the four
Pillars of Wellness which include:
– Physical Well-being (#Commit to being fit)
– Financial Well-being (#Work to live)
– Emotional Well-being (#To thrive, not to survive)
– Work-life balance (#Work hard, play hard)
EMPLOYEE RELATIONS
The Group’s ER strategy aims to ensure peace and stability throughout
our workforce. It remains a sound basis for engagement with our
employees, organised labour and other relevant stakeholders. Overall,
the strategy has yielded functional relationships with organised labour,
employees and stakeholders. In collaboration with other functions, we
continue to monitor the peace and stability of our operations.
Highlights of 2022
– Monitored the implementation of the signed wage agreements both
at Vametco and Vanchem to ensure long-term operational stability.
– Continuous support and collaboration with Vanchem management
to achieve operational stability, including the kiln project.
– Capacitated the line supervisors on managing discipline at the
workplace and managing in a unionised environment.
– Work in progress on the BMN Policy project to be finalised by
May 2023.
Union stats
Vanchem
%
Vametco
%
AMCU
66
26%
320
68%
NUMSA
102
36.4%
0
0
NUM
SOLIDARITY
0
0
15
3%
0
0
15
3%
2023 focus areas
– Roll out a programme on business understanding across the
business units.
– Support the business cost saving initiatives and interventions i.e.,
Overtime project and shifts configuration.
– Identify and manage the employee relations risks on a
continuous basis.
– Capacitation of line managers and Shop stewards on handling
performance, managing in a unionised environment, workplace
mediation skills.
– Establish an annual alignment forum with key national union
leaders (AMCU and NUMSA).
– Facilitate the 2023 team-building goal and alignment sessions
at Vametco and Vanchem.
46
Annual Report and Financial Results 2022
Annual Report and Financial Results 2022
47
GovernanceFinancial statementsSupplementary informationBusiness overview 48
Annual Report and Financial Results 2022
Governance
CONTENTS
50 Board of Directors
51
Executive Management Team
52 Corporate Governance Report
56 Report of the Audit Committee
58
67 Directors’ Report
68
2022 Remuneration Report
Statement of Directors’ Responsibilities
Annual Report and Financial Results 2022
49
GovernanceFinancial statementsSupplementary informationBusiness overview BOARD OF DIRECTORS
Meet the Board of Directors
E
ESG Committee
D Disclosure Committee
N
Nomination Committee
R Remuneration Committee
A
Audit Committee
Denotes Chair
N
R
D
E
N
D
E
D
E
N
D
MICHAEL J. KIRKWOOD (76)
INDEPENDENT
NON-EXECUTIVE CHAIRMAN
FORTUNE MOJAPELO (47)
CO-FOUNDER AND CHIEF
EXECUTIVE OFFICER
TANYA CHIKANZA (57)
FINANCE DIRECTOR
DAVID NOKO (66)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Board appointment
April 2018
Board appointment
March 2012
Board appointment
October 2019
Board appointment
May 2022
Experience: After spending 31
years at Citigroup, Michael has
taken on the chairmanship of
Ondra LLP. He has held main
board roles at several listed
companies, including Kidde, Circle
Holdings, AngloGold Ashanti and
UK Financial Investments. He was
deputy chair of PwC’s Advisory
Board, chair of British American
Business, and President of the
Chartered Institute of Bankers.
Qualifications: Graduate of
Stanford University; Fellowships:
FCIB, HonFCT; Honours: CMG.
Experience: Fortune is co-founder
and Chief Executive of Bushveld
Minerals and co-founder and a
Director of Bushveld Energy. He
began his career at McKinsey
& Company as a consultant on
corporate strategy and went
on to play a leading role in the
origination, establishment and
project development of several
junior mining companies in Africa.
Qualifications: BSc (Actuarial
Science) from the University of
Cape Town.
Experience: Tanya has extensive
experience in managing publicly-
listed companies’ relationships with
financial markets, having worked
at Lonmin Plc, Smith’s Corporate
Advisory, and JP Morgan Cazenove.
Her expertise lies in international
equity and debt capital markets,
strategy, corporate finance, audit
and finance.
Qualifications: Chartered
Accountant; Member of the
Institute of Chartered Accountants
of Zimbabwe.
Experience: David’s
comprehensive business acumen
is the result of many years of
advising prominent companies.
He has held senior roles at
General Electric Company, Pepsi
Cola International, South African
Breweries, De Beers Group,
and AngloGold Ashanti. David is
chairman of the Council of the
University of the Free State.
Qualifications: Mechanical
Engineer; MBA from Heriot Watt
University; postgraduate Diploma
in Company Direction from the
Graduate Institute of Management
Technology.
R
A
D
A
E
R
D
KEVIN ALCOCK (60)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
MIRCO BARDELLA (64)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Board appointment
March 2022
Board appointment
March 2022
Experience: Kevin’s business
career has been focused on
financial services, management
consulting and technology. He
successfully founded an asset
management consultancy
business which was later sold to
a London listed Company, where
he became CEO. Over the past 12
years, He continues to be active
in various NED roles, including
Board positions at prominent
asset management and outsource
services companies in the UK and
Southern Africa.
Qualifications: Chartered
Accountant.
Experience: A Chartered
Accountant and former EY
Assurance Partner, Mirco has led
audits in the natural resources
sector and advised organisations
on a range of assurance and
governance services. Throughout
his career, he has been involved in
mentorship programmes, diversity
and inclusiveness initiatives,
as well as other aspects of
human resources.
Qualifications: Chartered
Accountant; Member of SAICA
and the Institute of Chartered
Accountants in Australia and
in Scotland.
50
Annual Report and Financial Results 2022
* The Disclosure Committee was expanded in March 2022 to include dealing
with ad hoc matters requiring attention outside of the quarterly Board
meetings but that did not necessitate a full Board meeting. However, all
meetings last year were treated as full Board meetings and there were no
Disclosure Committee meetings.
EXECUTIVE MANAGEMENT TEAM
Executive management team
FORTUNE MOJAPELO (47)
CO-FOUNDER AND
CHIEF EXECUTIVE OFFICER
Experience: Co-founder and Chief
Executive of Bushveld Minerals
and co-founder and Director of
Bushveld Energy. He began his
career at McKinsey & Company as
a consultant on corporate strategy
and went on to play a leading role
in the origination, establishment
and project development of
several junior mining companies
in Africa.
Qualifications: BSc (Actuarial
Science) from the University of
Cape Town.
TANYA CHIKANZA (57)
FINANCE DIRECTOR
Experience: Tanya has extensive
experience in managing publicly-
listed companies’ relationships
with financial markets, having
worked at Lonmin Plc, Smith’s
Corporate Advisory and JP
Morgan Cazenove. Her expertise
lies in international equity and
debt capital markets, strategy,
corporate finance and audit.
Qualifications: Chartered
Accountant; Member of the
Institute of Chartered Accountants
of Zimbabwe.
MIKHAIL NIKOMAROV (42)
CHIEF EXECUTIVE OFFICER
OF BUSHVELD ENERGY SINCE
APRIL 2015
PRINCE NYATI (45)
CHIEF EXECUTIVE OFFICER
OF LEMUR HOLDINGS SINCE
NOVEMBER 2017
Experience: Mikhail has over
15 years’ international business
experience in energy and finance.
He spent seven years with
McKinsey & Company in Moscow
and Johannesburg, advising
national governments, utilities and
manufacturers on growth strategy
and policy.
Qualifications: MBA from INSEAD;
Diploma in Economics from
London School of Economics; BA
(History) and BA (Economics) from
the University of Massachusetts.
Experience: Prince has over 16
years’ experience of developing
energy and mining projects
in sub-Saharan Africa. He
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.
Qualifications: MBA from the
University of Houston; BA from
the University of Zambia.
LUCAS MSIMANGA (52)
GROUP EXECUTIVE:
OPERATIONS SINCE JUNE 2022
Experience: Lucas is a seasoned
metallurgical engineer with over
25 years’ experience in the mining
and processing sectors. He has
held senior operational roles at Rio
Tinto, BHP Billiton and South32,
where he was exposed to different
commodities. He is also the former
Vice-President of Manganese
South Africa.
Qualifications: BSc (Hons)
Metallurgical Engineering;
Masters in Business Leadership.
VIKI RAPELAS (44)
GROUP EXECUTIVE:
LEGAL, GOVERNANCE AND
COMPLIANCE SINCE
JANUARY 2019
SIBU MAJOZI (39)
GROUP EXECUTIVE:
CORPORATE AFFAIRS AND
SUSTAINABILITY SINCE
AUGUST 2022
Experience: Viki was admitted as
an attorney of the High Court of
South Africa in 2004 and admitted
as a notary and conveyancer in
2012. She has been the legal
adviser to the Bushveld Minerals
Group since 2007. She has
over 20 years’ experience in
transactional advisory, mergers
and acquisitions and general
corporate and commercial law.
Qualifications: International Law
qualification from University
of Antwerp (Belgium); BProc
and LLB from Rand Afrikaans
University (now University
of Johannesburg).
Experience: Sibu has over 15
years’ experience in corporate
communications, gained in South
Africa and abroad. She spent
just over 9 years at the De Beers
Group and has worked in corporate
communications for Suntory and
Naspers/Prosus in the Netherlands.
She was previously the executive
manager for Corporate
Communications and Reputation
Management at Transnet
Freight Rail.
Qualifications: Bachelor of
Commerce (Economics and
Marketing), from University of
KwaZulu Natal.
PROFESSOR RICHARD VILJOEN
(81)
TECHNICAL ADVISER
SINCE MARCH 2012
Experience: With over 30 years’
experience in the mining industry
as a consulting geologist, Richard
has co-ordinated the development
of the Northam Platinum mine and
the Leeudoorn and Tarkwa gold
mines. He has advised exploration
and mining companies in multiple
mining jurisdictions across the
commodities sectors.
Qualifications: MSc and PhD
from the University of the
Witwatersrand; FGSSA; FSAIMM;
FRSSA; FSEG; FGSI; Pr. Sc. Nat.
Annual Report and Financial Results 2022
51
GovernanceFinancial statementsSupplementary informationBusiness overview GOVERNANCE
Corporate Governance Report
The Board collectively recognises that implementing an effective
corporate governance structure is of paramount importance to
continue delivering the Company’s strategy, create long-term value
for shareholders, and maintain our licence to operate. Bushveld
has elected to adopt the Quoted Companies Alliance Corporate
Governance Code (QCA Code), which takes key elements of good
governance and applies them in a manner that supports the different
needs of growing companies.
The Board believes that it is applying the 10 principles of the QCA
Code effectively across the business. These principles are set out
below, supplemented with details of how the Company is applying
them and how the principles will support the Company’s medium- to
long-term success.
DELIVER GROWTH
PRINCIPLE 1:
Establish a strategy and business model that promotes long-term
value for shareholders
Bushveld Minerals has a well-established strategy and business model.
Its objective is to unlock the value of assets in its diversified vanadium
product portfolio and deliver returns to shareholders through effective
management and efficient operations. The operating model defines
the structures in which Bushveld operates and the capabilities it
requires to achieve its goals.
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 communicates the
value proposition to both institutional and private investors, as well
as the broader market, using different forms of engagement. These
engagements provide valuable feedback for the Board’s decision-
making process and determine how the Company can best meet
shareholder expectations.
The Company disseminates news on significant developments and
regular operational updates in stock exchange announcements via
the Regulatory News Service (RNS). These are also available on the
Company’s website at http://www.bushveldminerals.com/regulatory-
news-rns/. The website contains a wealth of information for existing
and potential shareholders.
Conference calls are hosted by the Chief Executive Officer and
Finance Director after the release of quarterly operational updates and
the interim and full year results.
Any shareholder enquiries can be directed to info@bushveldminerals.com.
We provide details below of our shareholder engagements during the
past year.
Virtual roadshows
Full-year 2021 results
Reporting
Q1 2022 operational update
Q2 and H1 2022 operational update
Final results for the year ended 31 December 2021
Interim results for the six months to 30 June 2022
Q3 and nine months to 2022 operational update
Q4 and FY 2022 operational update
Annual General Meeting (AGM)
Conferences
SA Investment Conference
121 Mining Investment Conference
Africa Mining Indaba Virtual Investment Programme
RMB Morgan Stanley Off Piste Investor Conference
Green Energy Africa Summit
2022
July
April
July
June
September
October
January 2023
August
March
May
May
September
October
52
Annual Report and Financial Results 2022
PRINCIPLE 3:
Take into account wider stakeholder and social responsibilities
and their implications for long-term success
Bushveld’s strategic intent of value beyond compliance is anchored
on the principle of creating shared, long-lasting value for all its
stakeholders. It is recognised that the successful execution of its
business strategy requires the Company to build and maintain
meaningful, well-functioning relationships with multiple stakeholders,
including, and very importantly, the communities around our projects
and operations.
The Company’s sustainability strategy is focused on environmental,
social and governance (ESG) principles that aim to integrate material
ESG considerations into the decision-making process across the value
chain. Material ESG key performance indicators (KPIs) will be reported
on, and a consistent message communicated to stakeholders on key
ESG commitments.
To support our ESG strategy, we established an ESG Committee in
2022 to ensure sufficient oversight of Bushveld’s ESG strategy, ESG
risks that can affect the Company’s strategy and performance, and the
Company’s ESG disclosures.
More information and detail on this topic can be found within the
Sustainability Report.
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 address the risks to which it is exposed.
The oversight responsibility for reviewing the adequacy and
effectiveness of these has been delegated to the Audit Committee.
The Company developed an Enterprise Risk Management (ERM)
Framework in 2021, the primary purpose of which was to establish
and formalise a systematic and collaborated risk management
culture, as well as guide and direct the Company’s governance and
decision-making.
Further details on risk management are provided in the Principal Risks
section of this report.
Other important tools to identify, evaluate and manage significant
risks are frequent Board meetings, which consider detailed reports on
the operations of the Company, as well as reports received from the
Internal Auditor and the Company’s external, independent auditor, via
the Audit Committee, on the state of Bushveld’s internal controls.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
PRINCIPLE 5:
Maintaining the Board as a well-functioning, balanced team led
by the Chair
In 2022, a number of changes were made to the Board at different
intervals to ensure a level of continuity. Ian Watson, who had served
as Chairman for 10 years, retired at the AGM, and Michael Kirkwood
assumed the role. Two long-standing Non-Executive Directors,
Anthony Viljoen and Jeremy Friedlander, both of whom had served
the Board for 10 years, also retired. Four new independent Non-
Executive Directors with relevant qualifications and experience were
appointed: Kevin Alcock, Mirco Bardella, David Noko, and Jacqueline
Musiitwa. Jacqueline subsequently stepped down at year-end after
accepting a role with the United States Agency for International
Development (USAID).
As detailed in the Chairman’s Statement, further to the above
changes, the Chief Executive Officer, Fortune Mojapelo, has decided
to step down from his role as of 1st July after having led the Company
for over 11 years. Craig Coltman, who is deemed to be well qualified for
the role, has been identified as Fortune’s replacement.
Consequently, the Board currently, and will continue to, comprise of
an Independent Chairman, 3 independent Non-Executive Directors
and two Executive Directors.
The Board met formally four times during the year ended 31 December
2022, with an additional five meetings held to consider matters falling
outside the quarterly cycles. Every Director on the Board attended
all meetings.
The Board is supported by the Audit, Remuneration, ESG, Nomination
and Disclosure Committees, which operate within specific terms of
reference, as described in more detail 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 are appointed based on the
varied skills and experience they contribute, as well as their personal
qualities and capabilities. Their full biographical details are included
on page 50. The Board can also engage independent advisers, should
the need arise.
The Board is determined to maintain the right balance of Directors and
the Nomination Committee continually reviews the composition of the
Board to ensure that it has the necessary breadth and depth of skills
to support the Company’s strategy. Every year, at least one-third of
Directors retire by rotation and, if they offer themselves for re-election,
this is put to a vote of the shareholders at the AGM.
PRINCIPLE 7:
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
The Board recognises the importance of reviewing the effectiveness of
its performance and how the Directors and Committees work together
to achieve the Company’s objectives.
Annual Report and Financial Results 2022
53
GovernanceFinancial statementsSupplementary informationBusiness overview GOVERNANCE
Corporate Governance Report continued
Responsibility for assessing and monitoring the performance of
the Executive Directors lies with the independent Non-Executive
Directors, using agreed KPIs. Further details can be found in the
Remuneration Report.
The Board as a whole evaluates its own performance internally, as
well as the performance of the Committees, and uses the evaluation
process to identify opportunities for improvement. The last Board and
committee evaluation process was initiated in December 2022, led by
the Chairman and facilitated by the Company Secretary. This involves
the completion of a confidential questionnaire by each Director
covering a number of areas, including Board structure, strategy, risk
management, processes, Board dynamics, evaluation of the CEO and
Chairman, and culture matters. Committee-specific questionnaires
that address the functioning of the Committees are also completed.
A report is collated with the responses received, on an unattributed
basis, which is then presented to the Board for discussion.
PRINCIPLE 8:
Promote a corporate culture based on ethical values
and behaviours
Bushveld is committed to the highest standards of transparency
and accountability. It conducts its business in an honest and ethical
manner, following sound governance principles, and is determined
to ensure that ethical values and behaviours are fully embedded
throughout the Company. Bushveld 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 the Company’s strategy.
Bushveld has the following policies:
Conflicts of Interest, Anti-Corruption and Bribery Policy
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
of interest. Bribery and corruption in any shape or form is strongly
discouraged and employees found to be contravening 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
on managing fraud risk and to develop awareness of that risk in the
organisation. They provide guidance to those who find themselves
having to deal with fraud, and establish procedures and assign
responsibility for the investigation of fraud and related offences.
Whistle-blowing Policy
This policy is intended to help to counter silence and inaction and assist
in preventing corruption within Bushveld and the broader public sector
in which it operates. We want to encourage employees and stakeholders
to feel confident about raising breaches and concerns and ensure that
whistle-blowers will be protected from possible reprisals or victimisation
if and when disclosures are made in good faith.
Share Dealing Policy
The Company’s policy for dealing in its shares incorporates all
obligations under both Rule 21 of the AIM Rules for Companies and
Article 19 of the Market Abuse Regulations. The policy explains when
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 doing so. The Company has a memorandum
on inside information which provides additional information on
applicable laws and possible sanctions, market-abuse provisions
and communication requirements.
Social Media Policy
While the Company recognises the benefits of social media
engagement in reaching its 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 could affect its reputation.
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. It 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 is responsible 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. Its duties include reviewing and reporting on the
Company’s internal financial controls, risk management
initiatives, and governance structures.
The Committee is responsible for recommending the appointment
of the auditors and reviewing and monitoring their independence
and objectivity. It holds meetings at least three times a year at
appropriate intervals in the financial reporting and audit cycle,
and as otherwise required.
The Internal Audit and Risk function assists the Audit Committee in
executing its responsibilities.
The role of the Audit Committee and the duties it fulfilled during 2022,
along with membership details, are more fully described in the Report
of the Audit Committee.
54
Annual Report and Financial Results 2022
BUILDS TRUST
PRINCIPLE 10:
Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders
and other relevant stakeholders
Bushveld is committed to providing effective communication with
shareholders. We attach great importance to delivering clear and
transparent information on the Company’s strategy, activities and
financial position. Our strategies and activities for communicating
with shareholders, both existing and potential, are described under
Principle 2.
For other relevant stakeholders and social partners, Bushveld
Minerals has developed a stakeholder engagement strategy. This
provides a blueprint for building collaborative relationships and
forging meaningful social compacts with host communities and
various local, regional and national stakeholders in support of our
strategic objectives.
More information and detail on this issue can be found in our
Sustainability Report.
Remuneration Committee
In 2022, the Remuneration Committee comprised Kevin Alcock
(who assumed the chairmanship after the Q3 Board cycle), Michael
Kirkwood, Mirco Bardella and Jacqueline Musiitwa (who stepped
down in December). The Committee 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 pages 58-66. The Committee met four times during the year.
Nomination Committee
The Nomination Committee is responsible for reviewing the structure,
size and composition of the Board, making recommendations to the
Board on 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 Chair of each of those Committees. The Nomination Committee
comprises Michael Kirkwood (as Chair), David Noko and Fortune
Mojapelo. The Committee met three times during the year.
ESG Committee
The ESG Committee was established in the second half of 2022
to ensure sufficient oversight of Bushveld’s ESG strategy and
management system, ESG risks that can affect the Company’s
strategy and performance, and the Company’s ESG disclosures.
The ESG Committee’s members in 2022 were Jacqueline Musiitwa
(as Chair), David Noko, Mirco Bardella, Fortune Mojapelo, and Tanya
Chikanza. Subsequent to Jacqueline’s resignation from the Board in
December 2022, David assumed the chairmanship. The Committee
met twice during the year.
Disclosure Committee
The purpose of the Disclosure Committee is to oversee the
implementation of the governance and procedures associated with the
assessment, control, and disclosure of inside information in relation to
the Company. The Committee meets on an ad hoc basis, as required,
and consists of the Chairs of each of the other Committees and the
Executive Directors. The chairmanship of the Committee rotates
between its independent members.
Annual Report and Financial Results 2022
55
GovernanceFinancial statementsSupplementary informationBusiness overview GOVERNANCE
Report of the Audit Committee
The Audit Committee’s main function is to assist the Board of
Directors in the fulfilment of its responsibilities by overseeing key
areas such as financial reporting, regulatory compliance and risk
management. The Audit Committee’s work is essential to ensuring
the effectiveness of the Group’s internal controls and the integrity of
the Group financial statements.
This report provides details of the role of the Audit Committee and the
duties it undertook during the year under review.
The Audit Committee consisted of independent Non-Executive
Directors Mirco Bardella (Chairman) and Kevin Alcock. Mirco and
Kevin are both chartered accountants and bring a wealth of experience
with them, as set out in their biographical details on page 50.
The Audit Committee meets quarterly and at other appropriate times
in the financial reporting and audit cycle, if required. The Finance
Director, Company Secretary, Internal Auditor and external auditor are
all invited to attend the meetings. Other individuals may be invited to
attend all or part of any meeting, as and when required. In fulfilling its
duties, due consideration is given to applicable laws and regulations,
the requirements of the AIM Rules, and the QCA Code, as appropriate.
The Chairman of the Committee reports formally to the Board of
Directors on all matters within its remit and how it has discharged its
responsibilities after each meeting.
Key duties of the Audit Committee include:
– Monitoring the integrity of the Group’s financial statements;
– Reviewing the consistency of, and any changes to, accounting
policies both on a year-on-year basis and across the 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
external auditor;
– Reviewing the Group’s internal financial controls, systems
of internal control, and risk;
– Reviewing the adequacy and security of the Group’s whistle-
blowing facilities and ensuring that appropriate investigations and
follow-up action is conducted in respect of concerns raised;
– Reviewing the adequacy of the Group’s systems, procedures and
controls for detecting fraud, bribery and corruption;
– Making recommendations to the Board of Directors on the
appointment of the external auditor;
– Managing and overseeing the relationship with the external
auditors, including their terms of engagement and remuneration;
and
– Meeting regularly with the external auditors and reviewing
their findings.
The Audit Committee evaluates its performance periodically and will
conduct an annual review of its constitution and terms of reference to
ensure it is operating at maximum effectiveness. Any changes arising
from these reviews are then recommended to the Board of Directors
for approval.
Financial reporting
The Audit Committee reviewed and assessed the Group’s
financial reporting in the period, including its interim 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 Group financial statements.
In reviewing the Group financial statements, the Audit Committee has
considered the Group’s accounting policies, particularly in relation
to the treatment of the accounting estimates and judgements as
described on page 91. The Audit Committee reviewed the impairment
assessment made by management on Vanchem cash generating
unit in accordance with the requirements of the relevant accounting
standards. The Audit Committee found the key judgements made by
management in assessing the recoverable amount to be reasonable
and the impairment loss recognised appropriate. Further details
have been provided in note 14 of Group financial statements The
Audit Committee reviewed the Group’s cashflow forecasts taking
into account its financial position, expected future performance
of its operations, its debt facilities and debt service requirements,
including those of the proposed refinancing of the Orion convertible
loan note, its working capital and capital expenditure commitments
and forecasts. The Audit Committee is confident of obtaining the
support of the Company’s shareholders based on the progress it is
making towards the refinancing of the Orion convertible loan note
and securing equity investment for the Group. The Group continue to
adopt the going concern basis in preparing the consolidated financial
statements. Further details have been provided in note 3 of the Group
financial statements.
In addition to the publicly-released reports, the Audit 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 Group’s position,
performance, business model and strategy.
56
Annual Report and Financial Results 2022
Internal Audit
The scope of the Internal Audit function has been summarised
as below:
– Provide independent and objective assurance through evaluating
the Group’s governance, risk and internal control systems;
– Evaluate the adequacy and effectiveness of internal financial
controls over financial reporting and internal controls in general; and
– Review the extent of compliance with laws, regulations, standards
and codes.
The Audit 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. Consequently, the Committee
is of the view that reasonable assurance was provided and the
financial records may be relied upon for the preparation of the
Group financial statements.
External auditor
RSM UK Audit LLP (RSM) is the Group’s auditor and the Audit
Committee has recommended to the Board of Directors that
shareholders be asked to approve the re-appointment of RSM
as auditor at the Annual General Meeting.
The Audit Committee discharged its duties in accordance with its
terms of reference during the period, including:
– Approving the engagement of the external auditor, and reviewing
and approving the annual audit plan;
– Meeting regularly with the external auditor;
– Reviewing the findings of the audit of the Group financial
statements for the year ended 31 December 2022 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.
In the current period, audit fees of US$552,885 were paid in respect
of audit procedures on the Group financial statements for the year
ended 31 December 2022.
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, 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 2022.
Whistle-blowing
The Group has a Whistle-Blowing Policy, coupled with a whistle-
blowing reporting system (Bushveld Minerals – ethics & fraud
hotline), facilitated and managed by an independent external service
provider, Advance Call. The policy aims to encourage stakeholders
and employees to raise any suspected breaches, irregularities or
concerns, without fear of reprisal, and to provide a secure platform
for stakeholders and employees to anonymously raise suspected
breaches or concerns and to prompt management to investigate all
the reported cases. The policy commits the Group to treat all such
disclosures made in good faith, in a confidential and sensitive manner.
The Group receives reports regarding any allegations made, for
investigations in line with our Fraud Investigation Policy.
Ongoing communication and training are also offered to our employees
on the whistle-blowing line in order to improve their awareness, and
to educate them about the whistle-blowing process and associated
policies. No issues were reported on the whistle-blowing hotline during
the year.
Risk management and internal control
The Audit Committee is mandated to provide oversight on the Group’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 Group
financial statements in accordance with UK-adopted International
Accounting Standards.
The key elements of the Group’s system of internal controls
are discussed in this report.
The Group’s senior executive management – the Executive Committee
is responsible for managing and monitoring the risks under the
stewardship of the Group Head: Internal Audit and Risk, and the Audit
Committee actively reviews the key risks and mitigating controls.
The Audit Committee’s review of the system of internal controls is
supplemented by reports from the internal and external auditors
regarding issues identified during their engagement, particularly those
relating to control weaknesses and the responses from management.
Mirco Bardella
Chairman of the Audit Committee
20 June 2023
Annual Report and Financial Results 2022
57
GovernanceFinancial statementsSupplementary informationBusiness overview GOVERNANCE
2022 Remuneration Report
PART 1: BACKGROUND STATEMENT FROM THE REMUNERATION COMMITTEE CHAIRMAN
Dear Shareholders,
I am pleased to present my first Remuneration Report for Bushveld Minerals on behalf of the Remuneration Committee (the “Committee”).
I joined the Board and the Committee in March 2022 and assumed the role of Chairman of the Committee in the third quarter. Mirco Bardella
also joined the Committee as a member. I want to thank my predecessor, Michael Kirkwood, for his valuable years of service as the
Committee Chairperson.
It is important to note that, since Bushveld is not subject to the Johannesburg Stock Exchange listing requirements, the policy and
implementation reports are not put to non-binding shareholder votes.
In line with our planned actions to simplify our approach to remuneration, we have also simplified the disclosure in this year’s report whilst
maintaining the same level of transparency. This report aims to ensures that shareholders and stakeholders fully understand the approach to
remunerating Executive Directors, Non-Executive Directors, other executives, and the wider employee base, and how this approach aligns to the
Company’s vision and strategy.
The remuneration outcomes for FY2022 are as follows: Executive Directors were not awarded any short-term incentives (“STIs”) and the 2019
long-term incentive (“LTI”) performance awards did not vest. The 2022 LTI performance awards were approved in November 2022. The Non-
Executive Directors were not awarded increases, as Board members and Committee Chairs volunteered a 10 and 20 percent reduction in fees
respectively for FY2022. The reduction in fees in FY2022 was to accommodate the transition and overlap of Board members with four new
Directors joining the Board and three Directors, including the Chairman retiring from the Board.
ROLE OF THE COMMITTEE AND KEY DECISIONS TAKEN
The Committee was established by the Bushveld Minerals Board. The Committee’s main purpose is to ensure that the remuneration policies,
frameworks and practices are aligned with the Company’s strategy, objectives and values in order to drive long-term shareholder value.
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 all compensation matters, the Committee
retains full discretion to amend pay outcomes in light of performance and reasonableness. In order to discharge its responsibility, the Committee
is required to:
– 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;
– Determine the remuneration framework applicable to executives of Bushveld Minerals; and
– Review the Group’s remuneration strategy and its implementation on an annual basis.
In the 2022 financial period, the Committee executed on their various duties as set out in the Committee’s terms of reference, including:
Group-wide remuneration matters
– Reviewed the Group’s pay scales.
– LTI performance conditions and performance awards for FY2022.
– Considered fair and responsible pay (see details below).
– Reviewed retirement and risk benefits across the Group.
– Approved STI targets for all Group companies.
– Reviewed the mission-critical roles.
– Approved increases and adjustments for executives, management, and employees.
– Approved the STI and LTI rule amendments relating to unsettled awards and payment of a bonus during the notice period or termination date.
– Performed progress testing pertaining to the 2019 performance share award.
– Aligned the annual performance increase and annual performance bonus payment dates with the release of financial results.
– Reviewed production bonus and annual performance bonus metrics for operations (Vametco and Vanchem).
– Consolidated the provident fund and risk benefits under a single administrator, thereby reducing the investment and management fees.
SHAREHOLDER ENGAGEMENT
When the shareholder register reflects more institutional shareholders, the Company will engage to obtain views and comments on remuneration
policy and its implementation. For the time being, the Committee will respond to any inward enquiries relating to this report.
58
Annual Report and Financial Results 2022
FUTURE FOCUS AREAS
– In FY2023, the focus is to continue embedding and strengthening the Group’s remuneration and performance philosophy into the wider
people management framework.
– Simplification of the reward structure which will entail the removal of the deferred STI and re-calibration of the STI and LTI awarded as
performance shares. These changes will be implemented during FY2024.
– Review the existing performance management framework.
– Consider the introduction of a total reward statement for employees to better explain our employee value proposition.
REMUNERATION ADVISORS
The Committee used 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. Constructive input is valued and appreciated as we continue
to improve the remuneration system. On behalf of the Committee, I thank you for your continued support and feedback regarding our
remuneration framework.
Kevin Alcock
Chairman of the Remuneration Committee
20 June 2023
Annual Report and Financial Results 2022
59
GovernanceFinancial statementsSupplementary informationBusiness overview GOVERNANCE
2022 Remuneration Report continued
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 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 follows the general principles of the QCA 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.
STIs relate to financial
and ESG measures.
LTIs include measures
of free cash flow margin
and total shareholder
return.
ENCOURAGE
A CULTURE THAT
SUPPORTS SUSTAINABLE
AND ENTREPRENEURIAL
BUSINESS GROWTH.
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.
PROMOTE A CULTURE
OF RESPONSIBLE
CORPORATE CITIZENSHIP.
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.
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.
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. “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, and 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:
– All variable pay is subject to the achievement of performance metrics, carefully calibrated and approved by the Committee, ensuring a close
alignment with shareholder value creation over the performance period;
– 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;
– 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;
– The Group is committed to eliminating any unfair or unjustified differentiation within its remuneration implementation;
60
Annual Report and Financial Results 2022
– 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;
– Vertical fairness is applied by assessing the pay ratio between the CEO and the pay levels of employees below the executive level – this is
monitored by way of tools such as the Gini coefficient; and
– Pay is well administered, with employees paid accurately, on time and in a way that is convenient.
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 total guaranteed pay (TGP) and the variable component includes the Group’s STIs and LTIs.
Below is a summary of the policy as it applies to designated employees in the organisation (exclusions as explained above):
Total guaranteed pay, comprising fixed cash salary plus benefits
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.
TGP consists of a cash package and benefits which include a Medical Aid, Retirement Fund, Group Life Cover, Disability Benefit and Death-
in-Service-Benefit. 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 stretched targets, subject to discretion in the case of
business needs to attract scarce skills to the Company.
For executives, the benchmark is derived from a mix of foreign and South African listed companies with a similar profile to that of Bushveld
Minerals. Other employees are benchmarked against the mining circle of the REMchannel® remuneration survey.
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 July for Corporate, Vanchem and Vametco employees.
Short-term incentives
Middle management employees and above participate in the STI. Monthly cash production bonuses are in place for employees represented in
the bargaining counsel. The STI takes the form of a bottom-up structure, determined as the sum of business and personal performance and
calculated as:
Qualifying Annual TGP x On-Target Incentive Percentage x {(Personal Score x Personal Weighting) + (Business Score x Business Weighting)}
Earning potential:
The on-target incentive percentages are determined per grade and expressed as a percentage of an employee’s qualifying TGP and relates to the
potential STI that can be earned should on-target performance be achieve for the performance period. Current on-target cash STI is 45 percent
of TGP for the CEO and FD.
Weightings and performance measures:
A combination of business (using a combination of financial and non-financial measures) 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 CEO and FD’s performance is weighted 80 percent towards business measures and 20 percent towards personal measures. The
applicable targets are disclosed below.
As a result of the volatility in the market of the vanadium price and exchange rate, the Committee 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 partially insulated from factors that are beyond their control on both the upside and downside.
The personal score (with a 20 percent weighting) ranges between zero percent and 150 percent and will be dependent on the personal
performance rating of the employee for the relevant financial year. 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.
For FY2023, the collar and cap for the Vanadium price is set at US$35-US$45 while the exchange rate was set at R14.45 to $1 with a tolerance
level of 10 percent up and down.
Annual Report and Financial Results 2022
61
GovernanceFinancial statementsSupplementary informationBusiness overview GOVERNANCE
2022 Remuneration Report continued
PART TWO: REMUNERATION POLICY CONTINUED
2023 STI PERFORMANCE TARGETS:
The following Group financial and non-financial targets will apply for the year:
Key performance area
Consolidated
economic profit
Comprehensive ESG
Occupational
health and safety
Environment
Social licence
to operate
BUSINESS MEASURES: 80% weighted score
KPI
Threshold
On target
Stretch
RONA vs WACC
RONA = WACC
RONA = WACC +
1.5%
RONA = WACC + 3.0%
Compliance to IFC
Environmental and
Social Performance
Standards
n/a
100%
n/a
Weighting
100%
20%
100%
25%
30% Total Recordable Injury
Frequency Rate (TRIFR)
≥2.5%
performance
improvement
≥5% performance
improvement
≥10% performance
improvement
30%
20%
Lost time injury
New occupational
disease cases (No)
20% ISO 45001 Certification
20%
20%
20%
20%
Significant
environmental incidents
Major environmental
incidents
Environmental non-
compliance fines/
directives
Environmental
authorisations
20% ISO 14001 certifications
(Vametco)/ ISO
9001 accreditation
(Vanchem)
20%
100
Acquire and maintain
social licence to
operate.
9
2
0
6
2
2
6
1
3
0
Gap Audit (Stage 1)
Certified
5
1
1
4
0
0
80%
90%
100%
Retained with
major non-
conformances
Retained with more
than 5 minor non-
conformances
Retained with less
than 5 minor non-
conformances
Compliance
to applicable
regulatory
frameworks
(MCII, B-BBEE
and DTI Codes,
etc)
Additional:
Adherence to MCIII
plan milestones and
improvement on
previous year ratings
on DTI Scorecards
Additional: Effective
cross-functional
internal forums such as
transformational forums
inclusive of Business
Unit Management,
Finance, Procurement,
HR and Stakeholder
Engagement
Governance
15%
100% Adherence to the QCA
Code
n/a Full adherence to the
QCA Code
n/a
The personal score (with a 20 percent weighting) ranges between zero percent and 150 percent and will be dependent on the personal
performance rating of the employee for the relevant financial year. 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.
62
Annual Report and Financial Results 2022
Long-term incentives
The Company makes use of a conditional share plan (CSP). The CSP comprises of deferred bonus awards and performance awards – both
awarded as conditional rights to shares.
Deferred bonus awards are only awarded if an STI was earned and will be removed from the policy with effect from FY2024.
Eligible employees (middle management and above) may receive performance awards which 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. In addition, at the discretion of the Committee, 50 percent of
vested performance shares are subjected to additional holding periods of one year (25 percent of the shares) and two years (the remaining
25 percent) during which they cannot be disposed of, post vesting retrospectively. During the holding period the vested shares may also be
subject to claw-back.
The Company voluntarily imposed a dilution limit for the CSP: up to 5 percent 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.
The targets for the FY2023 CSP performance awards are as follows:
Measure
Weighting
Threshold (50% vesting)
Target (100% vesting)
Stretch (up to 250% vesting)
Free cash flow conversion
Absolute TSR
40%
60%
90% x budget
budget
110% x budget
US-based COE
US-based COE + 3%
US-based COE + 10%
PACKAGE DESIGN
The Remuneration Policy is linked to our strategy and is an enabler for the achievement of the Group’s KPIs. In line with Bushveld’s overall
remuneration philosophy, the largest portion of the CEO’s and FD’s total reward, in the scenario of stretch performance, is weighted towards
the stretch vesting of the performance LTI award. Consequently, to ensure that a strong pay for performance link is sustained, a stretch LTI
outcome is dependent on a significant delivery of total shareholder return. However, to ensure that the principle of fair and responsible pay
is maintained and to mitigate against a windfall gain outcome, the Committee retains full discretion to amend pay outcomes in the light of
performance and reasonableness.
The structure of the remuneration package supports the Group’s strategic objectives and is made up of fixed and variable remuneration. For
FY2023, the package design for the CEO and FD will include TGP, STI and LTI (performance awards). The on-target allocation percentages to
factor in the removal of the deferred STI, apply from FY2024 and the new package design will be presented in the next remuneration report.
Readers are referred to part 3 of the report for actual outcomes relating to FY2022.
FURTHER DETAIL RELATING TO EXECUTIVES AND DIRECTORS
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 (CEO) 200%
175%
Finance Director (FD)
150%
Other executives
The CEO and FD’s actual shareholding levels are set out in part 3 below.
Annual Report and Financial Results 2022
63
GovernanceFinancial statementsSupplementary informationBusiness overview
GOVERNANCE
2022 Remuneration Report continued
PART TWO: REMUNERATION POLICY CONTINUED
Malus and claw-back Policy
Variable remuneration is subject to malus and claw-back. The purpose of this policy is to give the Board the discretion to recoup vested, settled
and/or paid incentives (also referred to as “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 percent of vested LTIs may be subject to claw-back as a post vesting recoupment of paid and vested incentives; and
– LTIs that are subject to a holding period will be subject to claw-back as follows: 25 percent can be clawed back for a one-year period post
vesting and the final 25 percent for a two-year period post vesting.
Executive employment contracts and termination of employment
All newly appointed executives’ contracts include a six-month restraint period. The STI and LTI make a distinction between fault and no-fault
terminations as follows:
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 adjusted for performance. The
unvested or unpaid portion will lapse.
NON-EXECUTIVE DIRECTOR FEES
Non-Executive Directors are appointed to the Bushveld Minerals Group based on their ability to contribute competence, insights and experience
appropriately to assist 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 (US$ 609,459) per annum, or such higher amount as may be determined by ordinary resolution
(excluding amounts payable under any other provisions of the Articles). The fees paid to Non-Executive Directors did not exceeded the above
threshold in the current financial year.
The current approved fee structure was as follows:
Board Position
Chairperson
Non-executive director
Senior non-executive director
Board Committee Chairperson
Remuneration Committee
Audit Committee
Nominations Committee
Environmental, Social and Governance (ESS)Committee
Disclosure Committee
Annual fee – US$
92,848
49,519
61,898
Annual fee – US$
6,190
6,190
3,095
6,190
–
PART THREE: REMUNERATION IMPLEMENTATION REPORT
Remuneration paid to Executive Directors during the year: Single figure of remuneration table
The Company’s increase cycle has been changed to allow for the finalisation of the financial results prior to increases being awarded. Increases will
therefore be made in July of 2023 and reported retrospectively in the 2023 report. Similar to FY2021, no cash STI was payable for FY2022, this also
resulted in no deferred STI (bonus shares awards) for the FY2022 period. The FY2022 performance awards were approved during November 2022.
64
Annual Report and Financial Results 2022
As far as historic awards are concerned:
– The 2019 performance awards whose performance period was extended to 31 December 2022 did not vest due to the non-fulfilment of
performance conditions
– The July 2021 award of bonus shares were not settled to the executives due to a prolonged closed period and insider trading rules.
Name
Executive Directors
F. Mojapelo
T. Chikanza
Year
2022
2021
2022
2021
Guaranteed pay
US$
Benefits
US$
STI
US$
LTI Reflected
US$
374,280
424,067
280,647
318,050
–
–
–
–
–
–
–
–
–
–
–
–
Other
US$
Total single figure
of Remuneration
US$
–
–
–
–
374,280
424,067
280,647
318,050
1. All amounts for the 2022 single figure disclosure were converted to USD using the average exchange rate of 16.32 for the 2022 financial year (2021: 14.7854).
2. No cash STI were earned in relation to the 2022 financial year.
3. No bonus shares were earned in relation to the 2022 financial year and the performance awards whose performance period ended in 2022 did not vest
Table of unvested awards
Award
date
Vesting
date
Opening
balance
on 1 Jan
2021
Granted
during
2021
Forfeited
during
2021
Settled
during
2021
Closing
balance
on 31
Dec
2021
Cash
value of
receipts
2021
(US$)1
Estimated
closing
fair value
on 31
Dec 2021
(US$)2
Granted
during
2022
Forfeited
during
20223
Settled
during
20224
Closing
balance
on 31 Dec
2022
Cash
value of
receipts
2022
(US$)1
Estimated
closing
fair value
on 31
Dec 2022
(US$)5
Names
Executive directors
Oct–19
Oct–22
678,572
Nov–22
May–25
–
–
–
–
–
–
–
678,572
–
–
–
–
–
–
–
–
–
–
678,572
–
–
–
–
1,573,556
–
–
–
– 1,573,556
–
93,217
–
–
–
–
Jul–20
440,372
–
(440,372)
Bonus share
award
Jul–21
–
827,850
–
–
827,850
–
99,342
–
–
–
827,850
–
49,041
F Mojapelo
CSP awards:
Performance
share award
Performance
share award
Bonus share
award
50% in
Dec 2020
and 50%
in June
2021
75% in
Dec 2021
and 25%
in June
2022
T Chikanza
CSP awards:
Performance
share award
Bonus share
award
Nov–22
May–25
–
–
–
623,838
Jul–21
75% in
Dec 2021
and 25%
in June
2022
–
–
–
–
–
–
1,179,877
–
623,838
–
74,861
–
–
–
– 1,179,877
–
69,895
–
623,838
–
36,956
Includes the proceeds from the awards settled during the year based on the market value on vesting date.
1.
2. The performance share awards and bonus share awards were included in 2021 at the 2021 year end share price of $0.12 with an estimated vesting percentage of 0% for the performance
shares and 100% for the bonus shares.
3. The performance share awards in October 2019 were forfeited due to performance conditions not being met.
4. The settlement of the July 2021 bonus shares were delayed due to the extended closed period.
5. The share awards were included in 2022 at the 2022 year end share price of $0.06 with an estimated vesting percentage at target of 100% for performance shares and 100% for bonus shares.
Annual Report and Financial Results 2022
65
GovernanceFinancial statementsSupplementary informationBusiness overview
GOVERNANCE
2022 Remuneration Report continued
PART THREE: REMUNERATION IMPLEMENTATION REPORT CONTINUED
Minimum shareholding requirements
Executives are given three years from the date of adoption of the policy, or the date of their employment, to build up the required shareholding.
The FD was not able to build up her shareholding due to the prolonged closed period and in compliance with insider trading regulations. The
current levels of ownership are depicted below:
Executives
F. Mojapelo
T. Chikanza
% of TGP held in shares
(as at 31 December 2022) MSR target and target date
589%
200% (31 Dec 2021)
0%
175% (1 Oct 2022)
Non-executive director fees paid during the year
The fees paid during 2022 compared to 2021 are disclosed below.
Non-Executive Directors
Ian Watson5
Michael Kirkwood6
Jeremy Friedlander4
Anthony Viljoen1
David Noko2
Kevin Alcock3
Mirco Bardella3
Jacqueline Musiitwa3,7
Board
50,637
66,684
11,142
17,998
33,425
44,567
44,567
33,324
2022 fees received by Non-Executive Directors (US$)
Remuneration
Committee
Chair
Audit
Committee
Chair
Nomination
Committee
Chair
ESG
Committee
Chair
Total fees
received
2022
–
–
2,476
1,238
1,501
975
–
–
–
2,476
–
–
–
–
–
–
3,714
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,023
52,138
71,373
11,142
17,998
33,425
47,043
48,281
34,347
Total fees
received
2021
122,437
92,299
66,034
66,034
–
–
–
–
1. Anthony Viljoen retired from the Board on 27 May 2022.
2. David Noko was appointed to the Board as an independent Non-Executive Director on 27 May 2022.
3. Kevin Alcock, Mirco Bardella and Jacqueline Musittwa were appointed to the board as independent Non-Executive Directors 17 March 2022.
4. Jeremy Friedlander retired from the Board on 17 March 2022.
5.
6. Michael Kirkwood assumed the role of Interim Chair of the Board on 8 August 2022.
7. Jacqueline Musiitwa retired from the Board on 16 December 2022.
Ian Watson retired from the Board on 8 August 2022.
66
Annual Report and Financial Results 2022
Directors’ Report
The Directors of Bushveld Minerals Limited hereby present their report
together with the consolidated financial statements for the year ended
31 December 2022.
DIRECTORS’ INTERESTS
The Directors’ beneficial interests in the shares of the Company at
28 April 2023. were:
PRINCIPAL ACTIVITIES, BUSINESS REVIEW
AND FUTURE DEVELOPMENTS
Bushveld Minerals is a vertically-integrated primary vanadium
producer. It is one of only three primary vanadium producers, with
ownership of two of the world’s four operating primary vanadium
processing facilities. Bushveld offers a compelling exposure to
vanadium because it operates across both the upstream and
downstream value chains through Bushveld Vanadium and
Bushveld Energy.
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.
RESULTS AND DIVIDEND
The Group’s results show a loss before tax for the year of US$36.8
million. Consequently, the Directors will not be recommending the
declaration of a dividend.
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 of the financial statements. 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 during the year and to date are
as follows:
Fortune Mojapelo
Tanya Chikanza
Michael J. Kirkwood
Kevin Alcock
Mirco Bardella
David Noko
Jacqueline Musiitwa
Ian Watson
Anthony Viljoen
Jeremy Friedlander
Chief Executive Officer
Finance Director
Chairman and Independent Non-Executive
Director (appointed Chairman 8 August 2022)
Independent Non-Executive Director
(appointed 16 March 2022)
Independent Non-Executive Director
(appointed 16 March 2022)
Independent Non-Executive Director
(appointed 26 May 2022)
Independent Non-Executive Director
(appointed 16 March 2022, resigned
19 December 2022)
Chairman and Independent Non-Executive
Director (retired 8 August 2022)
Non-Executive Director (retired 26 May 2022)
Independent Non-Executive Director (retired
16 March 2022)
Fortune Mojapelo
Michael Kirkwood
Kevin Alcock
Ordinary shares of 1p
each 28 April 2023
Ordinary shares of 1p
each 31 December 2021
13,253,794
300,000
3,035,809
13,253,794
300,000
–
Fortune Mojapelo held 9,173,794 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 percent interest, resulting in a total of
13,253,794 shares.
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.
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 37 of the
financial statements.
AUDITOR
The Company’s auditor is RSM UK Audit LLP.
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.
By order of the Board.
K Bredin
Company Secretary
20 June 2023
Annual Report and Financial Results 2022
67
GovernanceFinancial statementsSupplementary informationBusiness overview GOVERNANCE
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the Group 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 and have elected under Guernsey
company law to prepare Group financial statements in accordance with UK-adopted International Accounting Standards.
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
period and of the profit or loss of the Group for that period and are required by UK-adopted International Accounting Standards to present fairly
the financial position and performance of the Group.
In preparing the Group financial statements, the Directors should:
(i) Select suitable accounting policies and apply them consistently;
(ii)
(iii)
(iv)
Make judgements and accounting estimates that are reasonable and prudent;
State whether they have been prepared in accordance with UK-adopted International Accounting Standards; and
Prepare the Group 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 Group financial
statements comply with the requirements of the Companies (Guernsey) Law 2008. The Directors are also responsible for safeguarding the
assets of the Group and hence for 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.
68
Annual Report and Financial Results 2022
Independent Auditor’s Report to the
members of Bushveld Minerals Limited
OPINION
We have audited the financial statements of Bushveld Minerals Limited and its subsidiaries (the ‘group’) for the year ended 31 December 2022
which comprise Consolidated Statement of Profit or Loss, Consolidated Statement of Comprehensive Loss, Consolidated Statement of Financial
Position, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and notes to the financial statements, including
significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted
International Accounting Standards.
In our opinion, the financial statements:
– give a true and fair view of the state of the group’s affairs as at 31 December 2022 and of the group’s loss for the year then ended;
– are in accordance with UK-adopted International Accounting Standards; 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.
SUMMARY OF OUR AUDIT APPROACH
Key audit matters
Group
– Impairment of property, plant and equipment
Materiality
Group
– Overall materiality: $1,850,000 (2021: $2,070,000)
– Performance materiality: $1,390,000 (2021: $1,550,000)
Scope
Our audit procedures covered 100% of revenue, 95.4% of total assets and 94.6% of loss 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 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.
In addition to the matter described in the Material uncertainty related to going concern section we have determined the matter described below
to be the key audit matter to be communicated in our report.
Annual Report and Financial Results 2022
69
GovernanceFinancial statementsSupplementary informationBusiness overview
FINANCIAL STATEMENTS
Independent Auditor’s Report to the
members of Bushveld Minerals Limited continued
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
Key audit matter description
The Vanchem cash generating unit has experienced lower than anticipated production levels and the group
recognised an impairment loss of US$17.27m in the year to 31 December 2022, resulting in a carrying value
of property, plant and equipment of US$127.4m.
As a result, there is a risk that the carrying value of the group’s property, plant and equipment may be
materially misstated due to the valuation of the recoverable amount of the Vanchem cash generating unit.
The use of estimates and judgements in respect of impairment is disclosed in the “Use of estimates and
judgements” section of note 3 on page 91 and details of property, plant and equipment are disclosed in note
14 on page 96-97.
This is considered to be a Key Audit Matter due to the use of significant 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, production volumes, foreign exchange rates, costs
and the discount rate.
How the matter was
addressed in the audit
Our work included:
– Visiting the key operational locations of the cash generating unit;
– Considering the appropriateness of the application of the fair value less costs of disposal model, to
determine recoverable value;
– Checking the integrity and arithmetic accuracy of the recoverable value calculation prepared by
management and as approved by the Board of directors;
– Challenging management on the reasonableness of the assumptions made in the forecasts, particularly in
respect of production levels, vanadium prices, operating costs, capital expenditure and the discount rate;
– Corroborating the reasonableness of assumptions and explanations provided by management to supporting
information where available;
– Discussing our findings with management and the Audit Committee;
– Reviewing the accuracy and completeness of disclosures made in the financial statements in respect
of impairment.
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
US$1,850,000 (2021: US$2,070,000)
Group
Basis for determining
overall materiality
Rationale for
benchmark applied
5% of results before tax averaged over the past three years
As a listed entity, result before tax is considered to be the most appropriate benchmark for users of the
financial statements. A three-year average is appropriate given the volatility caused by the Vanadium price.
Performance materiality
US$1,390,000 (2021: US$1,550,000)
Basis for determining
performance materiality
75% of overall materiality
Reporting of misstatements
to the Audit Committee
Misstatements in excess of US$92,800 and misstatements below that threshold that, in our view, warranted
reporting on qualitative grounds.
70
Annual Report and Financial Results 2022
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The group consists of 19 components, primarily located in Guernsey and South Africa. There are also operations of insignificant components in
Mauritius, Madagascar, United States of America and United Kingdom.
The coverage achieved by our audit procedures was:
Number of components
Revenue
Total assets
Loss before tax
Full scope audit
Specific audit procedures
Total
4
2
6
100%
0%
100%
89.9%
5.5%
95.4%
92.5%
2.1%
94.6%
Analytical procedures at group level were performed for the remaining 13 components.
Of the above, full scope audits for 2 components and specific audit procedures for 1 component were undertaken by component auditors.
Specific audit procedures for 2 components were undertaken in respect of property, plant and equipment and intangible assets respectively,
due to their significance to the total assets of the group.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to note 3 in the financial statements, which indicates that the group is dependent upon refinancing a convertible loan note
and the receipt of additional funding, both of which have yet to be confirmed. As stated in note 3, these events or conditions, along with the other
matters as set forth in note 3, indicate that material uncertainties exist that may cast significant doubt on the group’s ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
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:
– Reviewing the group’s cashflow forecasts, including challenge of the forward-looking assumptions used by management in their assessment;
– Reviewing the impact of mitigating options that may be available to management and considering the level of uncertainty inherent to
those options;
– Consideration of the timing of forecasted repayments of borrowings and interest;
– Discussion with management on the funding options available to the group; and
– Reviewing the accuracy and completeness of disclosures in the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
Annual Report and Financial Results 2022
71
GovernanceFinancial statementsSupplementary informationBusiness overview Independent Auditor’s Report to the
members of Bushveld Minerals Limited continued
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
– the financial statements are not in agreement with the accounting records; or
– we have failed to obtain all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes
of our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 68, the directors are responsible for the preparation of
the 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.
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 operates 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.
72
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
The most significant laws and regulations were determined as follows:
Legislation/Regulation
Additional audit procedures performed by the Group audit engagement team included:
UK-adopted International
Accounting Standards;
Review of the financial statement disclosures and testing to supporting documentation;
Completion of disclosure checklists to identify areas of non-compliance.
The Companies (Guernsey) Law,
2008; AIM listing rules.
Tax compliance regulations
Inspection of advice received from internal and external tax advisors where applicable.
Mining Charter of South Africa
and associated laws
Enquiry of management as to whether any breaches had been identified;
Review of supporting documentation where relevant.
UK Bribery Act
Enquiry of internal and external legal advisors;
Inspection of policies and procedures, internal reports and minutes of meetings of the Board,
Committees and management.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Revenue recognition
Impairment of property,
plant and equipment
Management override of controls
Audit procedures performed by the Group audit engagement team:
Matching of sales to third party cash receipts, to evidence occurrence and accuracy;
Tests of control in respect of occurrence and accuracy; and
Testing of transactions before and after the year-end date, to determine whether revenue is recognised in
the correct period.
See the Key audit matters section of this report for work performed on property plant and equipment.
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 at page 74, forms part of our auditor’s report.
USE OF OUR 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
20 June 2023
Annual Report and Financial Results 2022
73
GovernanceFinancial statementsSupplementary informationBusiness overview 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. We include an explanation in the auditor’s report of the extent to
which the audit was capable of detecting irregularities, including fraud.
– 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 the use of the going concern basis of accounting is appropriate and no material uncertainties have been
identified, we report these conclusions in the auditor’s report. 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 as applied to listed entities, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
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 period 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.
We are required to include in the auditor’s report an explanation of how we evaluated management’s assessment of the group’s ability to
continue as a going concern and, where relevant, key observations arising with respect to that evaluation.
74
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS Consolidated Statement of Profit or Loss
Revenue
Cost of sales
Gross profit
Other operating income
Impairment losses
Selling and distribution costs
Other mine operating costs
Idle plant costs
Administration expenses
Operating loss
Finance income
Finance costs*
Other losses
Fair value gain on derivative liability*
Share of loss from investments in joint ventures
Loss before taxation
Taxation
Loss for the year
Loss attributable to:
Owners of the parent
Non-controlling interest
Loss per ordinary share
Basic loss per share (cents)
Diluted loss per share (cents)
* Refer to note 36 for details of restatement.
Notes
5
13, 14
7
8
9
10
28
18
11
2022
US$ '000
148,448
(108,304)
2021
Restated*
US$ '000
106,857
(102,782)
40,144
2,733
(23,965)
(9,270)
(2,723)
(6,725)
(20,328)
(20,134)
494
(14,148)
(818)
2,934
(5,112)
(36,784)
1,345
(35,439)
(38,968)
3,529
(35,439)
4,075
2,619
(2,439)
(6,406)
(3,224)
(3,387)
(20,518)
(29,280)
935
(13,308)
(1,902)
9,010
(4,351)
(38,896)
4,671
(34,225)
(32,892)
(1,333)
(34,225)
12
12
(3.07)
(3.07)
(2.74)
(2.74)
The accounting policies on pages 81 to 92 and the notes on pages 80 to 119 form an integral part of the consolidated financial statements.
Annual Report and Financial Results 2022
75
GovernanceFinancial statementsSupplementary informationBusiness overview Consolidated Statement of Comprehensive Loss
Loss for the year
Consolidated other comprehensive income/(loss):
Items that will not be reclassified to profit or loss:
Losses on valuation of investments in equity instruments
Other fair value movements
Total items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss:
Currency translation differences
Other comprehensive loss for the year net of taxation
Total comprehensive loss
Total comprehensive loss attributable to:
Equity holders
Non-controlling interest
* Refer to note 36 for details of restatement.
Notes
2022
US$ '000
2021
Restated*
US$ '000
(35,439)
(34,225)
–
140
140
(15,712)
(15,572)
(51,011)
(53,323)
2,312
(51,011)
(3,772)
14
(3,758)
(9,713)
(13,471)
(47,696)
(48,031)
335
(47,696)
The accounting policies on pages 81 to 92 and the notes on pages 80 to 119 form an integral part of the consolidated financial statements.
76
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS Consolidated Statement of Financial Position
Notes
2022
US$ '000
2021
Restated*
US$ '000
2020
Restated*
US$ '000
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Investments in joint ventures
Restricted investment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Restricted investment
Current tax receivable
Financial assets
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Share capital
Share premium
(Accumulated loss)/retained income*
Share-based payment reserve
Foreign currency translation reserve
Fair value reserve
Attributable to equity holders
Non-controlling interest
Total equity
Liabilities
Non-current liabilities
Post retirement medical liability
Environmental rehabilitation liabilities
Deferred consideration
Borrowings*
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Provisions
Borrowings*
Lease liabilities
Deferred consideration
Current tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
* Refer to note 36 for details of restatement.
13
14
15
18
21
19
20
21
17
22
23
23
23
24
23
23
25
26
27
28
29
16
30
31
28
29
27
53,469
127,409
2,412
3,151
2,710
189,151
54,990
9,498
–
–
3,075
10,874
78,437
59,254
153,113
2,595
7,855
–
222,817
41,646
17,642
2,869
275
–
15,433
77,865
267,588
300,682
59,004
167,580
2,811
–
–
229,395
34,082
10,425
3,111
814
22,453
50,541
121,426
350,821
15,858
117,066
21,567
375
(9,470)
12,966
158,362
32,147
190,509
2,076
17,998
1,803
79,362
4,377
11,550
16,797
125,551
(179)
–
(20,851)
(1,938)
119,380
32,482
151,862
1,906
18,031
1,684
69,686
3,921
6,014
101,242
117,166
33,081
3,722
10,211
564
–
–
47,578
148,820
300,682
22,066
3,297
13,337
626
3,820
–
43,146
160,312
350,821
17,122
127,702
(39,147)
515
(35,346)
(1,798)
69,048
36,583
105,631
1,675
16,610
1,527
35,272
6,721
1,191
62,996
45,896
1,714
47,858
561
901
2,031
98,961
161,957
267,588
The consolidated financial statements and the notes on pages 75 to 119, were approved by the Board of Directors on the 20th of June 2023 and
were signed on its behalf by:
Tanya Chikanza
Finance Director
The accounting policies on pages 81 to 92 and the notes on pages 80 to 119 form an integral part of the consolidated financial statements.
Annual Report and Financial Results 2022
77
GovernanceFinancial statementsSupplementary informationBusiness overview Consolidated Statement of Changes in Equity
Share
capital
US$ '000
Share
premium
US$ '000
Foreign
currency
translation
reserve
US$ '000
Share-based
payment
reserve
US$ '000
Convertible
loan note
reserve
US$ '000
Fair value
reserve
US$ '000
(Accumulated
loss)/retained
income
US$ '000
Total
attributable
to equity
holders of
the Group
US$ '000
Non-
controlling
interest
US$ '000
Total
equity
US$ '000
15,858
117,066
(9,470)
375
55
12,966
28,367
165,217
32,147
197,364
–
–
–
–
(55)
–
(6,800)
(6,855)
–
(6,855)
15,858
117,066
(9,470)
375
–
–
–
–
–
–
–
–
–
(11,381)
–
(11,381)
939
8,485
–
–
–
–
–
–
–
16,797
125,551
(20,851)
–
–
–
–
–
–
–
–
–
(14,495)
–
(14,495)
325
2,151
–
–
–
–
–
–
–
–
–
–
–
–
(375)
–
–
–
–
–
–
–
515
–
17,122
127,702
(35,346)
515
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,966
21,567
158,362
32,147
190,509
–
(32,892)
(32,892)
(1,333)
(34,225)
–
(3,758)
–
–
(11,381)
1,668
(9,713)
(3,758)
–
(3,758)
(3,758)
(32,892)
(48,031)
335
(47,696)
–
–
–
–
9,424
(375)
(11,146)
11,146
–
–
–
–
9,424
(375)
–
(1,938)
(179)
119,380
32,482
151,862
–
(38,968)
(38,968)
3,529
(35,439)
–
140
–
–
(14,495)
(1,217)
(15,712)
140
–
140
140
(38,968)
(53,323)
2,312
(51,011)
–
–
–
–
–
–
2,476
515
–
–
2,476
515
–
1,789
1,789
(1,798)
(39,147)
69,048
36,583
105,631
Opening balance as
previously reported
Adjustments
Restatement
(note 36)
Restated balance at
1 January 2021*
Restated loss
for the year*
Other
comprehensive
income, net of tax:
Currency translation
differences
Other fair value
movements
Total comprehensive
loss for the year
Transaction
with owners:
Issue of shares
Share-based
payment
Transfer between
reserves
Balance at
1 January 2022
Loss for the year
Other
comprehensive
income, net of tax:
Currency translation
differences
Other fair value
movements
Total comprehensive
loss for the year
Transaction
with owners:
Issue of shares
Share-based
payment
Contribution from
non-controlling
interest (note 28)
Balance at
31 December 2022
* Refer to note 36 for details of restatement.
78
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS Consolidated Statement of Cash Flows
Cash flows from operating activities
Loss before taxation
Adjustments for:
Depreciation property, plant and equipment (including right-of-use assets)
Share of loss from joint ventures
Remeasurement of financial liabilities
Fair value gain on derivative liability*
Finance income
Finance costs*
Impairment losses
Other non-cash movements
Foreign exchange differences
Changes in working capital
Income taxes (paid)/received
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Finance income
Purchase of property, plant and equipment
Payment of deferred consideration
Purchase of investments
Purchase of exploration and evaluation assets
Disposal of financial assets held at fair value
Net cash used in investing activities
Cash flows from financing activities
Finance costs
Repayment of borrowings
Proceeds from borrowings
Lease payments
Net cash used in financing activities
Total cash and cash equivalents movement for the year
Cash and cash equivalents at the beginning of the year
Effect of translation of foreign exchange rates
Total cash and cash equivalents at end of the year
* Refer to note 36 for details of restatement.
Notes
2022
US$ '000
2021
Restated*
US$ '000
(36,784)
(38,896)
14
18
28
28
8
9
13, 14
27
18
13
28
28
28
29
22
18,475
5,112
–
(2,934)
(494)
14,148
23,965
1,138
(6,949)
6,154
(648)
21,183
336
(18,197)
–
(1,211)
(517)
–
(19,589)
(3,217)
(5,623)
4,222
(728)
(5,346)
(3,752)
15,433
(807)
10,874
19,395
4,351
1,902
(9,010)
(935)
13,308
2,439
–
–
(5,022)
394
(12,074)
935
(19,450)
(3,874)
(9,988)
(929)
16,147
(17,159)
(2,948)
(4,732)
1,336
(705)
(7,049)
(36,282)
50,541
1,174
15,433
The accounting policies on pages 81 to 92 and the notes on pages 80 to 119 form an integral part of the consolidated financial statements.
Annual Report and Financial Results 2022
79
GovernanceFinancial statementsSupplementary informationBusiness overview Notes to the Consolidated Financial Statements
1. GENERAL INFORMATION AND PRINCIPAL ACTIVITIES
Bushveld Minerals Limited (“Bushveld” or the "Company”) and its subsidiaries and interest in equity accounted investments (together the
“Group”) are an integrated primary vanadium producer and energy storage solutions provider. The Company was incorporated and domiciled in
Guernsey on 5 January 2012 and admitted to the AIM market in London on 26 March 2012. The address of the Company’s registered office is
Oak House, Hirzel Street, St Peter Port, Guernsey, GY1 3RH.
As at 31 December 2022, the Bushveld Group comprised of:
Note
Equity holding and
voting rights
Country of
incorporation
Nature of activities
n/a
100%
100%
64%
100%
100%
62.5%
74%
51%
100%
84%
100%
40%
55%
50.5%
40%&30%
50%
100%
100%
100%
74%
100%
100%
100%
99%
100%
99%
100%
100%
1
2
2
2
13
2
2
2
2
1
4
12
12
4
1&4
14
2
7
8
11
9
10
1
5
3
6
3
3
Guernsey
Guernsey
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Mauritius
South Africa
South Africa
Ultimate holding company
Holding company
Processing company
Mining right holder
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
South Africa
Holding company
Guernsey
Energy development
UK
Holding company
Guernsey
Guernsey
Sales of vanadium
United States Holding company
Holding company
South Africa
Mining right holder
South Africa
Mining and manufacturing company
South Africa
Property owning company
South Africa
Holding company
Mauritius
Coal exploration
Madagascar
Holding company
Mauritius
Power generation company
Madagascar
Holding company
Mauritius
Coal exploration
South Africa
Company
Bushveld Minerals Limited
Bushveld Resources Limited
Ivanti Resources (Pty) Limited
Pamish Investments No 39 (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
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 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 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
14. Held by VRFB Holdings Limited
80
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
2. ADOPTION OF NEW AND REVISED STANDARDS
Accounting standards and interpretations applied
In the current year, the Group has adopted the following standards and interpretations that are effective for the current financial year and that
are relevant to its operations:
Amendments to IFRS 1 First time adoption of
International Financial Reporting Standards
("IFRS"): Subsidiary as a first-time adopter
The amendments simplified the application of IFRS 1 by a subsidiary that becomes a first-time
adopter after its parent. Subsidiary, associate or joint venture can elect to apply exemption in
par D16(a) to the cumulative translation difference.
Amendments to IFRS 9 Financial Instruments:
Fees in the ’10 per cent’ test for derecognition
of financial liabilities
Amendments to IAS 37 Provisions, Contingent
Liabilities and Contingent Assets: Cost of
fulfilling a contract
Amendments to IAS 16 Property, Plant and
Equipment: Proceeds before intended use
Amendments to IFRS 3 Business
Combinations: Reference to the
conceptual framework
The amendments clarify what is included in the fees paid and fees received.
The amendments address costs a company should include as the cost of fulfilling a contract
when assessing whether a contract is onerous.
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.
The amendments update an outdated reference in IFRS 3 without significantly changing
its requirements.
The adoption of these Standards and Interpretations, which become effective for annual periods beginning on or after 1 January 2022,
had no material impact on the consolidated financial statements of the Group.
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:
Amendments to IAS 12 Income Taxes:
Deferred tax related to assets and liabilities
arising from a single transaction
Amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors:
Definition of accounting estimates
Amendments to IAS 1 Presentation of
Financial Statements and IFRS Practice
Statement 2:
Amendments to IAS 1 Presentation of
Financial Statements: Classification of
liabilities as current or non- current and
non-current liabilities with covenants
The amendments provide recognition exemption and no longer applies to transactions that,
on initial recognition, give rise to equal taxable and deductible temporary differences.
The amendments include the definition of accounting estimates to help entities to distinguish
between accounting policies and accounting estimates.
The amendments intend to help preparers in deciding which accounting policies to disclose in
their financial statements.
The amendments may change the classification of certain liabilities as current or non-current,
for example convertible debt. Entities may need to provide new disclosures for liabilities
subject to covenants.
IFRS 16 Leases: Lease liability in a sale
and leaseback
The amendments specify how a seller-lessee should apply the subsequent measurement
requirements in IFRS 16 to the lease liability that arises in the sale and leaseback transaction.
The Directors anticipate that the adoption of these Standards and Interpretations, which become effective for annual periods beginning on
or after 1 January 2023, in future periods will have no material impact on the consolidated financial statements of the Group, except for the
adoption of Amendments to IAS 1 Presentation of Financial Statements: Classification of liabilities as current or non-current and non-current
liabilities with covenants.
Annual Report and Financial Results 2022
81
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
3. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements of the Company and its subsidiaries and interest in equity accounted investments as at and for the year
ended 31 December 2022 have been prepared in accordance with the UK-adopted International Accounting Standards.
The consolidated financial statements have been prepared under the historical cost basis, except for certain financial instruments and
investment properties measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange
for the assets.
Going concern
The consolidated financial statements have been prepared on the going concern basis, which contemplates continuity of normal business
activities and the realisation of assets and discharge of liabilities in the normal course of business.
The Group recorded a net loss after tax of US$35.44 million for the year ended 31 December 2022 (31 December 2021: US$34.22 million)
and as at 31 December 2022 had cash and cash equivalents of US$10.87 million (31 December 2021: US$15.43 million) as well as total
borrowings of US$83.13 million, of which US$47.85 million is due within 12 months most of which comprised of the Orion convertible loan notes
(31 December 2021: total borrowing of US$79.90 million). In recent years, the Group has been loss making due to a combination of weaker
vanadium prices and losses incurred whilst the refurbishment work at Vanchem was completed. The refurbished Kiln-3 was commissioned
in June 2022,later than initially planned. However, due to unreliable municipal power supply and higher silica content in the ore supply, the
production ramp up was slower than expected and had not reached its targeted run rate at the end of 2022.
The Orion convertible loan notes are due to mature in November 2023 and given that the current share price is lower than the conversion price,
the convertible loan notes will likely require repayment or refinancing (see note 28). The Company entered into a non-binding term sheet with
Orion subsequent to year-end to refinance the convertible loan notes (see note 37). The closing of the transaction is still subject to certain
conditions, including South Africa Reserve Bank approval, shareholders’ approval at the general meeting which the Directors urge shareholders
to support and the finalisation of definitive binding documentation.
The Directors closely monitor and manage the liquidity risk of the Group by ensuring that the Group has sufficient funds for all ongoing
operations. As part of the annual budgeting and long-term planning process, the Directors reviewed the approved Group budget and cashflow
forecast through to 31 December 2024. The current cashflow forecast has been amended in line with any material changes identified during
the year. Equally, where funding requirements are identified from the cashflow forecast, appropriate measures are taken to ensure these
requirements can be satisfied.
The Directors have performed an assessment of whether the Group would be able to continue as a going concern for at least twelve months
from the date of this report. In their assessment, the Group has taken into account its financial position, expected future performance of its
operations, its debt facilities and debt service requirements, including those of the proposed refinancing of the Orion convertible loan notes,
its working capital and capital expenditure commitments and forecasts.
The cashflow forecast assumes that Vametco continues to perform in line with historical levels, planned maintenance shutdowns are
undertaken annually, these shutdowns proceed in line with the planned timetable and no unplanned shutdowns are experienced during
the going concern period.
The cashflow forecast for Vanchem takes into consideration the production levels achieved to date, the expected improvements from the
arrangement concluded with the municipality to stabilise power supply as well as the arrangement concluded with a third party for the supply
of low-silica high-grade ore. This forecast assumes an annual planned maintenance shutdown and these shutdowns proceed in line with the
planned timetable and no unplanned shutdowns are experienced during the going concern period.
With regards to pricing, the short to medium term assumptions are that the average price achieved by the Group will be US$36.2 through
to 31 December 2023 and average at US$35.5 throughout 2024. The year to date average price achieved by the group was US$37.99.
82
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
Current cashflow forecast indicates that the Group requires additional liquidity to fund its obligations and activities during the next twelve
months. The Group is actively pursuing various financing alternatives to increase its liquidity and capital resources including raising capital,
refinancing of debt facilities, securing additional working capital facilities, as well as disposing of assets and/or an interest therein and/or
joint-venture partnerships. The Directors believe shareholders will support the capital raising endeavours to ensure the growth of the Group
is positioned for, can be delivered.
The Group’s ability to continue as a going concern is dependent on its ability to complete the refinance of the Orion convertible loan note, and
obtain the necessary additional funding required through a capital raise or alternative funding sources. Although the Group has been successful
in the past in obtaining additional liquidity, there is no assurance that it will be able to do so in the future or that such arrangements will be on
terms advantageous to the Group.
These conditions indicate the existence of material uncertainties that may cast significant doubt on the Group’s ability to continue as a going
concern. The consolidated financial statements for the year ended 31 December 2022 have been prepared on a going concern basis as, in the
opinion of the Directors, the Group will be in a position to continue to meet its operating and capital costs requirements and pay its debts as and
when they fall due for at least twelve months from the date of this report. Accordingly, these consolidated financial statements do not include
adjustments to the recoverability and classification of recorded assets and liabilities and related expenses that might be necessary should the
Group be unable to continue as a going concern.
Basis of consolidation
The consolidated financial statements present the consolidated statement of financial position and changes therein, consolidated statement
of profit or loss, consolidated statement of comprehensive loss and consolidated statement of cash flows for the Group. Where necessary,
adjustments are made to the results of subsidiaries and equity accounted investments to ensure the consistency of their accounting policies
with those used by the Group. Intercompany transactions, balances and unrealised profits and losses between Group companies are eliminated
on 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. Where the Group’s interest in a subsidiary is less than 100 percent, the Group recognises a non-controlling interest.
Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is remeasured 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.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the
arrangement. Investments in joint ventures are accounted for using the equity method. Under the equity method, the share of the profits or
losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income.
Investments in joint ventures are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity’s
share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither
amortised nor individually tested for impairment. Income earned from joint venture entities reduce the carrying amount of the investment.
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.
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Annual Report and Financial Results 2022
83
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
Business combinations
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.
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 remeasured to fair value at the acquisition date; any gains or losses arising from such remeasurement 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 in profit or loss.
Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (“CODM”).
The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief
Executive Officer and the Executive Committee. Operating segments whose revenues, net earnings or losses or assets exceed 10 percent of the
total consolidated revenues, net earnings or losses or assets, are reportable segments.
In order to determine the reportable operating segments, various factors are considered, including geographical location and
managerial structure.
Functional and presentational currency
The functional currency of each entity in the Group is determined as the currency of the primary economic environment in which it operates.
For the purpose of the consolidated financial statements, the results and financial position of each entity within the Group are expressed in
US Dollars, which is the presentation currency for the consolidated financial statements.
Transactions denominated in foreign currencies are translated into the entity's functional currency as follows:
– Monetary assets and liabilities are translated at the exchange rate in effect at the balance sheet date;
– Non-monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction date;
– Deferred tax assets and liabilities are translated at the exchange rate in effect at the balance sheet date with translation gains and losses
recorded in income tax expense; and
– Revenues and expenses are translated at the average exchange rates throughout the reporting period, except depreciation, which is
translated at the rates of exchange applicable to the related assets, and share-based compensation expense, which is translated at
the rates of exchange applicable at the date of grant of the share-based compensation.
Exchange gains or losses on translation of transactions are included in the consolidated statement of profit or loss.
The results and financial position of all entities within the Group that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
– assets and liabilities for each statement of financial position presented are translated at the closing rate;
– 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
– all resulting exchange differences are recognised in other comprehensive income and accumulated in foreign currency translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
84
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS translated at the closing rate.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign currency translation reserve relating to that
entity up to the date of disposal are transferred to the consolidated statement of profit or loss as part of the profit or loss on disposal.
Revenue recognition - sale of goods
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 Group satisfies a performance obligation by transferring control of the promised goods or services to the customer. 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 transferring control 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 fair value of bonus shares granted to employees for nil consideration under the short-term incentive ("STI") scheme is recognised as
an expense over the relevant service period, being the year to which the bonus relates and the vesting period of the shares. The fair value is
measured at the grant date of the shares and is recognised in equity in the share-based payment reserve. The number of shares expected to vest
is estimated based on the non-market vesting conditions.
Where shares are forfeited due to a failure by the employee to satisfy the service conditions, any expenses previously recognised in relation to
such shares are reversed effective from the date of the forfeiture.
The fair value of the performance shares issued under the long-term incentive scheme ("LTI") is recognised as an expense over the vesting
period. Non-vesting conditions and market vesting conditions are factored into the fair value of the performance shares granted. An option
pricing model is used to measure the fair value of the performance shares.
Finance income
Interest income is recognised when it is probable that economic benefits will flow to the Group and the amount of income can be measured
reliably. Interest income 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.
Current and deferred income tax
The tax expense represents the sum of the tax currently payable and deferred income tax.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the reporting date in the countries where
the Group’s subsidiaries operate and generate taxable income.
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 or loss, 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.
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Intangible exploration and evaluation assets
Annual Report and Financial Results 2022
85
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
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 as an impairment loss in the consolidated statement of 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.
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 of disposal and value in use) if that is less than the asset’s
carrying value. Impairment losses are recognised in the consolidated statement of profit or loss.
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
– title to the asset is compromised; 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 (excluding right-of-use assets)
Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, except for
investment properties which are carried at fair value. Cost comprises the aggregate amount paid and the fair value of any other consideration
given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended.
Depreciation on assets commences when they are available for use by the Group. Depreciation for property, plant and equipment is charged on
a systematic basis over the estimated useful lives of the assets after deducting the estimated residual value of the assets, using the straight-line
method. The depreciation method applied, the estimated useful lives of assets and their residual values are reviewed at least at each financial
year end, with any changes accounted for as a change in accounting estimate to be applied prospectively. The depreciation charge for each
period is recognised in the consolidated statement of profit or loss.
The useful life of an asset is the period of time over which the asset is expected to be used. The estimated useful lives of items of property, plant
and equipment are as follows:
– Buildings and other improvements
– Plant and machinery
– Motor vehicles, furniture and equipment
– Decommissioning asset
– Waste stripping asset
20-25 years
5-20 years
3-10 years
Life of mine
21 months
Assets under construction are not depreciated.
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 derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is included in the consolidated statement of profit or loss in the year the asset is derecognised.
Impairment losses
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
86
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
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 ("CGU") to which the asset belongs.
In assessing whether an impairment is required, the carrying value of the asset or CGU is compared with its recoverable amount. The recoverable
amount is the higher of the CGU’s fair value less costs of disposal (“FVLCD”) and value in use (“VIU”). Given the nature of the Group’s activities,
information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are
taking place. Consequently, the FVLCD for each CGU is estimated based on discounted future estimated cash flows (expressed in real terms)
expected to be generated from the continued use of the CGUs using market-based commodity price and exchange assumptions, estimated
quantities of recoverable minerals, production levels, operating costs and capital requirements, including any expansion projects, and its
eventual disposal, based on the CGU 30 year plans and latest life of mine (“LOM”) plans. These cash flows were discounted using a real post-tax
discount rate that reflected current market assessments of the time value of money and the risks specific to the CGU.
Estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are sourced from the planning
process, including the LOM plans, two-year budgets and CGU-specific studies.
The determination of FVLCD for each CGU are considered to be Level 3 fair value measurements in both years, as they are derived from valuation
techniques that include inputs that are not based on observable market data. The Group considers the inputs and the valuation approach to be
consistent with the approach taken by market participants.
Investment property
Investment property is initially measured at cost and subsequently at fair value with any change therein recognised in the consolidated statement
of 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 the consolidated statement of profit or loss.
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.
Provision is made, if necessary, for slow-moving, obsolete and defective inventory.
Financial assets and liabilities
Financial assets and financial liabilities are recognised in the Group’s consolidated 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.
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
(“FVTPL”), transaction costs. Transaction costs of financial assets carried at FVTPL are expensed in the consolidated statement of profit or loss.
Financial assets are classified at initial recognition and subsequently measured at amortised cost, fair value though other comprehensive income
(“FVOCI”) or FVTPL.
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.
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
Annual Report and Financial Results 2022
87
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
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 FVTPL. A gain or loss on a debt investment that is
subsequently measured at FVTPL is recognised in the consolidated statement of profit or loss and presented net within other income/(expenses)
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 (however, the cumulative gain/loss on disposal is represented within equity), 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 FVTPL are recognised in other income/(expenses) in the consolidated 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.
Trade and other receivables
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing
components, then 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 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 33.6 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 an investment in an insurance 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.
Financial liabilities
Accounts payable, accrued liabilities and borrowings are accounted for at amortised cost, using the effective interest rate method.
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.
88
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
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.
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.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the
borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan
to the extent that it is probable that some or all of the facility will be drawn down.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference
between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
Borrowing costs are capitalized and allocated specifically to qualifying assets when funds have been borrowed, either to specifically finance a
project or for general borrowings during the period of construction. Qualifying assets are defined as assets that require more than a year to be
brought to the location and condition intended by management. Capitalization of borrowing costs ceases when such assets are ready for their
intended use.
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 percent to 11 percent depending on the nature of the underlying asset.
Lease payments included in the measurement of the lease liability comprise:
– fixed lease payments (including in-substance fixed payments), less any lease incentives;
– variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
– 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
– payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated 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.
Annual Report and Financial Results 2022
89
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Leases (continued)
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 Group
applies IAS 36 Impairment of Assets to determine whether a right-of- use asset is impaired and accounts for any identified impairment loss.
Provisions
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
consolidated statement of profit or loss, 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 liabilities
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 are shown in
the consolidated statement of profit or loss 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 consolidated statement of profit or loss 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.
90
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
Use of estimates and judgements
The preparation of consolidated financial statements in conformity with UK-adopted International Accounting Standards requires management
to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the
consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are
continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances.
Assumptions about the future and other major sources of estimation uncertainty at the end of the reporting period have a significant risk of
resulting in a material adjustment to the carrying amounts of assets and liabilities, within the next financial year. The most significant judgements
and sources of estimation uncertainty that the Group believes could have a significant impact on the amounts recognised in its consolidated
financial statements are described below.
Impairment of non-current assets
i.
Judgements made in relation to accounting policies
Both internal and external sources of information are required to be considered when determining the presence of an impairment indicator or
an indicator of reversal of a previous impairment. Judgement is required around significant adverse changes in the business climate which may
be indicators of impairment such as a significant decline in the asset’s market value, decline in resources and/or reserves including as a result
of geological reassessment or change in timing of extraction of resources and/or reserves which would result in a change in the discounted cash
flow, and lower commodity prices or higher input cost prices than would have been expected since the most recent valuation. Judgement is also
required when considering whether significant positive changes in any of these items indicate a previous impairment may have reversed.
Key sources of estimation uncertainty
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 recoverable amount of tangible assets are inherently uncertain and could materially change
over time and impact the recoverable amounts. The cash flows and recoverable amount 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
commodity prices, discount rates, foreign currency exchange rates, estimates of costs to produce products and future capital expenditure. Refer
to Note 14 for key assumptions.
ii. Impairment of exploration and evaluation assets
Judgements made in relation to accounting policies
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. If there is any indication of potential impairment, an impairment
test is required.
As disclosed in note 13, the Mokopane license held by the Group requires that mining operations commence prior to the end of January 2021.
As at 31 December 2022 no mining has taken place at the site. Based on the conditions included in the mining right, the Group has the right to
apply for an extension to the requirements to commence mining activities and an application has been submitted to the Department of Mineral
Resources and Energy (“DMRE”), however a response has not yet been received.
Based on the mining right conditions, including that the Minister has to give written notice regarding a potential suspension or cancellation of
the mining right and that the Group has the opportunity to provide reasons to the Minister on why this should not occur and the remedies put
in place, the directors are confident that the extension will be forthcoming and the license therefore remains valid. Consequently, the directors
have made a judgment that no impairment of the related intangible asset with a carrying amount of US$53.47 million is required.
iii. Environmental rehabilitation liabilities
Key sources of estimation uncertainty
Estimating the future costs of environmental and rehabilitation obligations is complex and requires management to make estimates and
judgements as most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. The
resulting provisions are further influenced by changing technologies, political, environmental, safety, business and statutory considerations.
Refer to note 26.
Annual Report and Financial Results 2022
91
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
iv. Valuation of derivative liability
Key sources of estimation uncertainty
The conversion option (embedded derivative liability) in connection with the Orion Mine Finance convertible loan note are carried at fair value.
The Group engaged an independent valuation specialist which calculated the fair value of the conversion option using a Monte-Carlo simulation.
The Monte-Carlo simulation captured the impact of movements in the US$/GBP exchange rate and the price per ordinary share over the life of
the convertible loan note.
4. SEGMENTAL REPORTING
Bushveld Minerals Limited’s operating segments are identified by the Chief Executive Officer and the Executive Committee, collectively named
as the CODM. The operating segments are identified by the way the Group’s operations are organised. As at 31 December 2022, the Group
operated within three operating segments, vanadium mining and production, which consists of the Vametco and Vanchem operations; energy
and mineral exploration activities for vanadium and coal exploration (together "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). Corporate includes the remaining balances within the Group.
Segment revenue and results
The following is an analysis of the Group’s revenue and results by reportable segment.
Consolidated statement of profit or loss
31 December 2022
Vanadium mining and production
Exploration
Energy
Corporate
Total
Revenues
US$ '000
148,446
–
2
–
148,448
Cost of sales(1)
US$ '000
Other costs(2)
US$ '000
Administrative
expenses(3)
US$ '000
Impairment
losses
US$ '000
(108,304)
–
–
–
(108,304)
(16,525)
–
171
369
(15,985)
(8,435)
(21)
(952)
(10,920)
(20,328)
(18,454)
(5,137)
(374)
–
(23,965)
Operating
loss
US$ '000
(3,272)
(5,158)
(1,153)
(10,551)
(20,134)
(1) Include depreciation of US$18.04 million.
(2) Other costs include other operating income, other mine operating costs, selling and distribution costs and idle plant costs.
(3) Include depreciation of US$0.15 million for Vanadium mining and production, US$0.10 million for Energy and US$0.18 million for Corporate.
Consolidated statement of profit or loss
31 December 2021
Vanadium and mining production
Exploration
Energy
Corporate
Total
Revenues
US$ '000
106,857
–
–
–
106,857
Cost of sales(1)
US$ '000
Other costs(2)
US$ '000
Administrative
expenses(3)
US$ '000
Impairment
losses
US$ '000
(102,782)
–
–
–
(102,782)
(10,695)
–
–
297
(10,398)
(7,171)
26
(808)
(12,565)
(20,518)
(1,694)
(340)
(405)
–
(2,439)
Operating
loss
US$ '000
(15,485)
(314)
(1,213)
(12,268)
(29,280)
(1) Include depreciation of US$19.00 million.
(2) Other costs include other operating income, other mine operating costs, selling and distribution costs and idle plant costs.
(3) Include depreciation of US$0.13 million for Vanadium mining and production and US$0.26 for Corporate.
Other segmental information
Vanadium mining and production
Exploration
Energy
Corporate
Total
92
31 December 2022
31 December 2021
Total assets
US$ '000
Total liabilities
US$ '000
Total assets
US$ '000
Total liabilities
US$ '000
186,460
53,679
17,432
10,017
267,588
104,351
38
10,836
46,732
161,957
221,704
59,340
8,448
11,190
300,682
70,927
54
5,839
72,000
148,820
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
5. REVENUE
Revenue from contracts with customers
Sale of goods
Other
Disaggregation of revenue from contracts with customers
The Group 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 - AMV
Other
2022
US$’000
148,446
2
148,448
5,503
2,650
4
34,939
99,672
5,678
148,446
2
148,448
2021
US$’000
106,857
–
106,857
5,090
1,606
(140)*
21,721
71,713
6,867
106,857
–
106,857
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.
*
The negative sales amount is due to the return of MVO sold during the 2020 financial year.
6. STAFF COSTS
Production staff
Administrative staff
Key management personnel
2022
US$’000
25,799
7,259
2,068
35,126
2021
US$’000
24,613
8,601
2,145
35,359
Details of directors’ remuneration are included in note 35 (related party transactions) and the Remuneration Report on page 58.
7. ADMINISTRATIVE EXPENSES BY NATURE
Key management personnel
Staff costs
Depreciation of property, plant and equipment
Professional fees
Share-based payments
Other
2022
US$’000
2021
US$’000
2,068
7,259
439
6,007
315
4,240
2,145
8,601
393
5,861
(375)
3,893
20,328
20,518
Annual Report and Financial Results 2022
93
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
8. FINANCE INCOME
Bank interest
Interest on restricted investment
Other finance income
9. FINANCE COSTS*
Interest on borrowings
Unwinding of discount
Interest on lease liabilities
Other finance costs
* Refer to note 36 for details of restatement.
10. OTHER LOSSES
Movement in earnout estimate
Loss on financial instrument
Remeasurement of financial liabilities
11. TAXATION
Current income taxes
Current income tax on profits for the year
Current income tax recognised for prior years
Deferred income taxes
Deferred income tax movement for current year
Prior year adjustment
Income tax recovery
Notes
28
26
29
Notes
27
28
The income tax expense represents the sum of the tax currently payable and the deferred tax adjustment for the year.
Loss before tax
Tax at the applicable tax rate of 28% (2021: 28%)
Tax effect on non-deductible items
Origination and reversal of temporary differences
Deferred tax asset (recognised)/not recognised
Recognised deferred tax assets - initial recognition
Tax rate change
Foreign jurisdictions subject to a different tax rate
Taxation recovery for the year
12. LOSS PER SHARE
94
2022
US$’000
2021
US$’000
206
127
161
494
2022
US$’000
11,189
1,726
974
259
14,148
2022
US$’000
693
125
–
818
827
106
2
935
2021
US$’000
10,687
1,915
459
247
13,308
2021
US$’000
–
–
1,902
1,902
2022
US$’000
2021
US$’000
3,294
–
3,294
(4,659)
20
(4,639)
(1,345)
2022
US$’000
(36,784)
(10,300)
1,423
(2,045)
7,916
(17)
(210)
1,888
(1,345)
370
(13)
357
(5,111)
83
(5,028)
(4,671)
2021
US$’000
(38,896)
(10,891)
606
1,477
8,841
(5,028)
–
324
(4,671)
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
Basic loss per share*
Basic loss per share is calculated by dividing the net loss attributable to equity holders of the Company by the weighted average number of
ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares.
Numerator
Net loss attributable to equity holders
Denominator (in thousands)
Weighted average number of common shares
Basic loss per share attributable to equity holders (cents)
* Refer to note 36 for details of restatement.
2022
US$’000
2021
US$’000
(38,968)
(32,892)
1,270,637
1,201,683
(3.07)
(2.74)
Diluted loss per share
Due to the Group being loss making for the year, instruments are not considered dilutive and therefore the diluted loss per share is the same as
basic loss per share for both financial years.
13. INTANGIBLE ASSETS
Balance, 1 January 2021
Capitalised expenditures
Impairment loss
Exchange differences
Balance, 31 December 2021
Capitalised expenditures
Impairment loss
Exchange differences
Balance, 31 December 2022
Vanadium
and Iron Ore
US$ '000
54,950
163
(541)
(716)
53,856
174
–
(561)
53,469
Coal
US$ '000
4,054
766
–
578
5,398
343
(5,137)
(604)
–
Total
US$ '000
59,004
929
(541)
(138)
59,254
517
(5,137)
(1,165)
53,469
Mokopane Vanadium and Iron Ore Project
The Group has a 64 per cent interest in Pamish Investment No 39 Proprietary Limited (“Pamish”) which holds an interest in Prospecting right 95.
The Department of Mineral Resources and Energy (“DMRE”) executed a 30-year mining right on 29 January 2020 in favour of Pamish, over five
farms: Vogelstruisfontein 765 LR; Vriesland 781 LR; Vliegekraal 783 LR; Schoonoord 786 LR; and Bellevue 808 LR (the “Mining Right”) situated
in the District of Mogalakwena, Limpopo, which make up the Mokopane Project. The Mining Right allows for the extraction of several other
minerals over the entire Mokopane Project resource area, including, titanium, phosphate, platinum Group metals, gold, cobalt, copper, nickel
and chrome.
The Mining Right required Pamish to commence mining activities, including in-situ activities associated with the Definitive Feasibility Study
(“DFS”) by end of January 2021. The COVID-19 pandemic resulted in a significant delay in the commencement of the DFS and the necessary
engagement with local communities required to finalise land use arrangements and, consequently, this deadline was not met. Application to the
DMRE for an extension to commence mining activities has been submitted and Pamish is waiting on a response. Engagement has begun with
communities to reach agreement for access to the project areas and secure a land use arrangement.
Brits Vanadium Project
The Group has been granted Section 11 of the Mineral and Petroleum Resources Development Act (“MPRDA”) for acquiring control of Sable
Platinum Mining (Pty) Ltd for NW 30/5/1/1/2/11124 PR, held through Great Line 1 Invest (Pty) Ltd and was executed in May 2021. The Group
has also applied for Section 102 of the MPRDA and waiting for approval to incorporate NW 30/5/1/1/2/11069 PR into NW 30/5/1/1/2/11124 PR.
The Group has applied for a prospecting right which has been accepted and environmental authorisation has been granted under GP
30/5/1/1/2/10576 PR held by Gemsbok Magnetite (Pty) Ltd.
A renewal application for Prospecting Right NW 30/5/1/1/2/11124 PR was granted for Great 1 Line on Farm Uitvalgrond 431 JQ Portion 3.
13. INTANGIBLE ASSETS (CONTINUED)
Annual Report and Financial Results 2022
95
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
Coal
Coal Exploration licences have been issued to Coal Mining Madagascar SARL a 99 per cent subsidiary of Lemur Investments Limited. The
exploration is in South West Madagascar covering 11 concession blocks in the Imaloto Coal basin known as the Imaloto Coal Project and
Extension. The Imaloto Coal Project was impaired during the year as no further expenditures were budgeted.
14. PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 January 2021
Additions
Disposals
Impairment of obsolete assets
Transfers within PPE
Changes in environmental rehabilitation liabilities
Exchange differences
At 31 December 2021
Additions
Changes in environmental rehabilitation liabilities
Transfers within PPE
Exchange differences
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Depreciation charge for the year
Disposals
Exchange differences
At 31 December 2021
Depreciation charge for the year
Impairment
Exchange differences
At 31 December 2022
Net Book Value
At 31 December 2021
At 31 December 2022
*
Include decommissioning assets.
Buildings
and other
improvements
US$ '000
Plant and
machinery* US$
'000
Motor
vehicles,
furniture and
equipment
US$ '000
Right of use
asset
US$ '000
Waste
stripping
asset
US$ '000
Assets under
construction
US$ '000
7,559
–
–
–
–
–
(602)
6,957
–
–
63
(445)
180,623
240
(3,912)
(475)
5,374
(199)
(12,167)
169,484
691
(1,705)
19,376
(9,298)
1,466
25
(55)
–
57
–
(119)
1,374
138
–
34
(92)
6,575
178,548
1,454
(1,032)
(355)
–
107
(1,280)
(330)
(898)
122
(2,386)
(31,828)
(18,146)
2,239
2,417
(45,318)
(17,233)
(17,920)
2,776
(77,695)
(615)
(277)
53
80
(759)
(219)
(10)
56
(930)
5,504
–
–
–
–
–
(438)
5,066
2,989
–
–
(435)
7,620
(1,214)
(618)
–
272
(1,560)
(297)
–
117
(1,741)
Total
US$ '000
206,033
19,715
(7,690)
(475)
–
(199)
(15,356)
3,764
–
(3,723)
–
–
–
(41)
7,117
19,450
–
–
(5,431)
–
(1,989)
–
19,147
202,028
1,850
–
–
(68)
15,988
–
(19,473)
(1,097)
21,656
(1,705)
–
(11,435)
1,782
14,564
210,543
(3,764)
–
3,723
41
–
(396)
–
14
(382)
–
–
–
–
–
–
–
–
–
(38,453)
(19,396)
6,015
2,917
(48,917)
(18,475)
(18,828)
3,085
(83,134)
5,677
5,038
124,168
100,008
617
523
3,505
5,873
–
19,146
153,113
1,401
14,566
127,409
The right of use asset of US$5.87 million relates to land and buildings of US$5.77 million and plant and machinery of US$0.1 million.
Impairment disclosure
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 exist, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any).
Vanchem Cash generating unit (CGU)
The newly refurbished Kiln-3 at Vanchem was commissioned in June 2022 however due to various issues including loadshedding and ore feed
supply, the production ramp up was slower than expected and had not reached its targeted run rate by the end of 2022. The lower than expected
performance was considered by the Group to be an indicator of impairment for the Vanchem CGU, which consists of Bushveld Vanchem (Pty)
Limited and Ivanti Resources (Pty) Limited. The Vanchem CGU forms part of the vanadium mining and production reportable segment.
The recoverable amount of the CGU was determined by calculating the fair value less cost of disposal ("FVLCD"). The FVLCD was determined
by calculating the net present value of the estimated future cash flows. The determination of FVLCD is considered to be Level 3 fair value
96
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
measurement as the FVLCD is derived from valuation techniques that include inputs that are not based on observable market data. The Group
considered the inputs and the valuation approach to be consistent with the approach taken by market participants.
Estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are sourced from the planning
process, including the LOM plans, two-year budgets and CGU-specific studies.
The determination of FVLCD is most sensitive to the following key assumptions:
– Production volumes
– Commodity prices
– Discount rates
– Exchange rates
Production volumes: In calculating the FVLCD, the production volumes incorporated into the cash flow model was 1,500 mtVpa for 2023, 2,300 mtVpa
for 2024 and increasing to 2,500 mtVpa thereafter. Estimated production volumes are based on detailed life-of-mine plans and take into account
development plans for the mines agreed by management as part of the long-term planning process. Production volumes are dependent on a number of
variables, such as: the recoverable quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves;
the production costs; and the selling price of the commodities extracted. The cash flows are computed using appropriate individual economic models and
key assumptions established by management. These are then assessed to ensure they are consistent with what a market participant would estimate.
Commodity prices: Forecast commodity prices are based on management’s estimates and are derived from forward price curves and long-term
views of global supply and demand, building on past experience of the industry and consistent with external sources. These prices were adjusted
to arrive at appropriate consistent price assumptions for the different qualities and type of commodities, or, where appropriate, contracted prices
were applied.
Estimated long–term FeV price for the current year and the comparative year that have been used to estimate future revenues, are as follows:
Assumptions
Fev US$ per KgV
Assumptions
Fev US$ per KgV
2022
2023
36.10
2024
36.05
2025
36.00
2026
37.00
2022
41.35
2027
38.00
2021
2023
35.15
Long term
(2028+)
40.00
Long term
(2024+)
40.00
Discount rates: In calculating the FVLCD, a real post-tax discount rate of 9.70 percent (2021: 7.70 percent) was applied to the post-tax
cash flows expressed in real terms. This discount rate is derived from the Group’s post-tax weighted average cost of capital ("WACC"), with
appropriate adjustments made to reflect the risks specific to the CGU. Segment-specific risk is incorporated by applying individual beta factors.
The beta factors are evaluated annually based on publicly available market data. The WACC also includes an appropriate small capital premium.
Exchange rates: Foreign exchange rates are estimated with reference to external market forecasts. The rates applied for the first five years of
the valuation are based on observable market data including spot and forward values, thereafter the estimate is interpolated to the long term
assumption, which involves market analysis including equity analyst estimates. The assumed long-term US dollar/Rand is estimated to be
15.75 (2021:15.00).
The impairment test determined that the recoverable amount of US$66.32 million, representing the CGU’s FVLCD, was below the carrying
amount. This resulted in an impairment charge of US$17.27 million being recognised in the consolidated statement of profit and loss within
impairment losses and in the consolidated statement of financial position as a reduction to property, plant and equipment.
Any change in the key assumptions above may result in a further impairment write down or partial reversal of the recognised impairment charge.
Other
The Group also recognised an impairment charge of US$1.56 million in the consolidated statement of profit or loss related to items of property,
plant and equipment that were identified as being no longer in use.
15. INVESTMENT PROPERTIES
Annual Report and Financial Results 2022
97
GovernanceFinancial statementsSupplementary informationBusiness overview Notes to the Consolidated Financial Statements continued
Balance, beginning of the year
Fair value movement
Exchange differences
Balance, end of the year
2022
US$ '000
2021
US$ '000
2,595
(17)
(166)
2,412
2,811
(216)
–
2,595
Investment properties comprise residential housing in Brits and Elandsrand, North West Province.
Investment properties are stated at fair value (level 3 of the fair value hierarchy), which has been determined based on valuations performed by
Domus Estate Management, an accredited independent valuer, as at 31 December 2022. 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.
16. DEFERRED TAX LIABILITIES
Deferred tax liability
Investment properties
Property, plant and equipment
Prepayments
Expected credit losses
Total deferred tax liability
Deferred tax asset
Provisions
Environmental rehabilitation liabilities
Lease liabilities
Non-deductible expenses
Post-retirement medical liability
Deferred tax balance from temporary differences other than unused tax losses
Unused tax losses
Total deferred tax asset
Deferred tax liability
Deferred tax assets
Total net deferred tax liability
2022
US$ '000
(517)
(17,925)
(15)
(18)
(18,475)
(642)
4,549
1,521
1,029
460
6,917
10,367
17,284
(18,475)
17,284
(1,191)
2021
US$ '000
(577)
(25,722)
(24)
–
(26,323)
711
5,049
195
–
534
6,489
13,820
20,309
(26,323)
20,309
(6,014)
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 and the existence of corresponding deferred tax liabilities against which
the losses can be utilised.
98
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
2022
Deferred tax liability
Investment properties
Property, plant and equipment
Prepayments
Expected credit losses
Deferred tax asset
Provisions
Non-deductible expenses
Environmental rehabilitation liabilities
Lease liabilities
Post-retirement medical liability
Unused tax losses
2021
Deferred tax liability
Investment properties
Property, plant and equipment
Prepayments
Deferred tax asset
Provisions
Inventories
Environmental rehabilitation liabilities
Lease liabilities
Post-retirement medical liability
Unused tax losses
17. FINANCIAL ASSETS
Balance, beginning of the year
Additions
Disposals(1)
Fair value movement
Finance income
Transfer to investments in joint ventures(2)
Exchange differences
Balance, end of the year
Beginning
balance
US$ '000
Statement of
profit or loss
US$ '000
Other
comprehensive
income
US$ '000
Exchange
differences
US$ '000
(577)
(25,722)
(24)
–
711
–
5,049
195
534
13,820
(6,014)
24
6,374
8
(19)
(1,358)
1,068
(181)
1,389
–
(2,666)
4,639
–
–
–
–
–
–
–
–
(34)
–
(34)
36
1,423
1
1
5
(39)
(318)
(63)
(41)
(787)
218
Beginning
balance
US$ '000
Statement of
profit or loss
US$ '000
Other
comprehensive
income
US$ '000
Exchange
differences
US$ '000
(625)
(29,268)
(144)
856
356
5,040
219
581
11,435
(11,550)
(2)
1,306
117
(82)
(352)
441
(7)
–
3,607
5,028
–
–
–
–
–
–
–
(1)
–
(1)
50
2,240
3
(63)
(4)
(432)
(17)
(46)
(1,222)
509
2022
US$ '000
–
2,923
–
–
159
–
(7)
3,075
Ending
balance
US$ '000
(517)
(17,925)
(15)
(18)
(642)
1,029
4,550
1,521
459
10,367
(1,191)
Ending
balance
US$ '000
(577)
(25,722)
(24)
711
–
5,049
195
534
13,820
(6,014)
2021
US$ '000
22,453
9,988
(16,147)
(3,771)
–
(12,292)
(231)
–
(1) The Group disposed of its investment in AfriTin during 2021.
(2) The Group's investment in VRFB Holdings Limited ("VRFB") became an investment in joint venture in April 2021. Refer to note 18.
The Group subscribed for two convertible loan notes issued by Mustang Energy Plc (“Mustang”) with a principle amount of US$2.93 million
bearing 10 percent interest per annum in exchange for a convertible loan note issued to Primorius and share capital issued to Lind Partners.
See note 23 and 28.
Annual Report and Financial Results 2022
99
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
18. INVESTMENTS IN JOINT VENTURES
Balance, 1 January 2021
Transfer from financial assets
Share of loss
Exchange differences
Balance, 31 December 2021
Acquisition of investment in joint ventures
Share of loss
Exchange differences
Balance, 31 December 2022
VRFB
US$ '000
–
12,292
(4,351)
(86)
7,855
–
(5,112)
(751)
1,992
Mini–Grid
US$ '000
–
–
–
–
–
1,211
–
(52)
1,159
Total
US$' 000
–
12,292
(4,351)
(86)
7,855
1,211
(5,112)
(803)
3,151
VRFB Holdings Limited ("VRFB")
The Group acquired a 50.5 percent interest in VRFB in April 2021, which is the holding company for the Group’s investment in Enerox GmbH
("Cellcube"). The investment in VRFB is in line with the Group’s strategy of partnering with Vanadium Redox Flow Battery (“VRFB”) companies.
The Group accounts for its 50.5 percent shareholding in VRFB as an investment in joint venture as it does not meet the requirements of control.
Summarised financial information in respect of VRFB is set out below:
Revenue
Net loss
Other comprehensive income
Comprehensive loss
2022
US$ '000
11,183
(20,389)
275
(8,931)
2021
US$ '000
1,008
(8,484)
(1,941)
(9,417)
The Group entered into a conditional agreement on 25 November 2022 to sell its entire 50.5 percent interest in VRFB to Mustang. The
transaction remains subject to the fulfilment of a number of conditions precedent, including Mustang completing a reserve takeover and
obtaining the relevant approvals from its shareholders, the FCA and the Takeover Panel.
Hybrid Mini-Grid Company Proprietary Limited (“Mini-Grid”)
The Group entered into a shareholders’ agreement with NESA Investment Holdings, whereby it holds a 40 percent interest in Mini-Grid.
The Group accounts for its 40 percent shareholding as an investment in joint venture as the relevant decisions require unanimous consent.
19. INVENTORIES
Finished goods
Work in progress
Raw materials
Consumable stores
Total inventories
2022
US$ '000
23,511
14,740
4,435
12,304
54,990
2021
US$ '000
18,058
9,323
3,160
11,105
41,646
The cost of inventories recognised as an expense during the year was US$88.60 million (2021: US$82.49 million).
The Group recognised a net realisable value write down of finished goods amounting to US$0.33 million (31 December 2021: US$0.48 million)
and work in progress amounting to US$0.19 million (31 December 2021: US$nil).
100
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
20. TRADE AND OTHER RECEIVABLES
Financial instruments:
Trade receivables
Other receivables
Expected credit losses
Non-financial instruments:
Value-added taxes
Deposits
Prepaid expenses
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
2022
US$ '000
2021
US$ '000
3,134
2,856
(78)
3,163
19
404
9,498
6,129
5,034
(77)
5,728
–
828
17,642
2022
US$ '000
2021
US$ '000
5,912
3,586
9,498
11,086
6,556
17,642
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally
due for settlement within 15-90 days and therefore are all classified as current.
The fair value of trade and other receivables approximate the carrying value due to the short maturity.
Impairment and risk exposure
Information about the impairment of trade receivables and the Group’s exposure to credit risk, interest rate risk and foreign currency risk can be
found in note 33.
21. RESTRICTED INVESTMENT
Rehabilitation insurance fund
Split between non-current and current portions
Current assets
Non-current assets
2022
US$ '000
2,710
2021
US$ '000
2,869
–
2,710
2,710
2,869
–
2,869
The Group is required by statutory law in South Africa to hold this restricted investment in order to meet environmental rehabilitation liabilities on
the statement of financial position (refer to note 26 and 34 for further details).
22. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
22. CASH AND CASH EQUIVALENTS (CONTINUED)
Annual Report and Financial Results 2022
2022
US$ '000
8,347
2,527
10,874
2021
US$ '000
7,336
8,097
15,433
101
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
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 total cash and cash equivalents denominated in South African Rand amount to US$6.72 million (2021: US$14.88 million).
The fair value of cash and cash equivalents approximates the carrying value due to the short maturity.
23. SHARE CAPITAL, SHARE PREMIUM AND RESERVES
Balance, 1 January 2021
Shares issued - Directors and staff
Shares issued - Duferco
Balance, 31 December 2021
Shares issued - Directors and staff
Shares issued - Primorus Convertible
Shares issued - Lind
Balance, 31 December 2022
Number of
shares
Share capital
US$ '000
Share premium
US$ '000
1,190,757,892
2,808,928
66,892,037
1,260,458,857
2,324,842
4,157,645
20,876,937
1,287,818,281
15,858
36
903
16,797
29
54
242
17,122
117,066
388
8,097
125,551
494
476
1,181
127,702
Total share
capital and
premium
US$ '000
132,924
424
9,000
142,348
523
530
1,423
144,824
The Board may, subject to Guernsey Law, issue shares or grant rights to subscribe for or convert securities into shares. It may issue different
classes of shares ranking equally with existing shares. It may convert all or any classes of shares into redeemable shares. The Company may
also hold treasury shares in accordance with the law. Dividends may be paid in proportion to the amount paid up on each class of shares.
As at the 31 December 2022 the Company owns 670,000 (31 December 2021: 670,000) treasury shares with a nominal value of 1 pence.
Shares issued
Directors and staff
The Company issued 2,324,842 new ordinary shares of 1 pence each in the Company in respect of the short-term incentive plans (2021:
2,808,928 ordinary shares).
Duferco Participations Holdings S.A. (“Duferco”)
The Group settled the unsecured convertible notes held by Duferco on 8 November 2021. US$2.50 million of the amount due, as well as the
accrued interest of US$0.51 million, was satisfied in cash and the balance of US$9.0 million was satisfied with the issue of 66,892,037 new
ordinary shares of 1 pence, using a conversion price of 9.97 pence, which was a 5 percent discount to the prevailing 10-day volume weighted
average share price leading up to conversion. There was no lock in or orderly marketing period for the shares issued.
Primorus Investments Plc (“Primorus”)
The Company issued a convertible loan note to Primorus. The Company issued a total of 4,157,645 new ordinary shares of 1 pence each in
accordance with the conversion provisions.
Lind Global Macro Fund, LP ("Lind")
The Company issued 20,876,937 new ordinary shares of 1 pence each to Lind in accordance with the Investment Agreement between the
Company and Mustang.
Nature and purpose of other reserves
Share premium
The share premium reserve represents the amount subscribed for share capital in excess of nominal value.
Share-based payment reserve
The share-based payment reserve represents the cumulative fair value of share options granted to employees.
Foreign exchange translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of financial statements of foreign operations.
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of financial assets at fair value through other comprehensive income
until the assets are derecognised or impaired.
102
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
Retained income reserve
The retained income reserve represents other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
24. SHARE-BASED PAYMENTS
Short-Term Incentive ("STI")
Deferred share awards
Balance, beginning of the year
Granted
Vested
Forfeited
Balance, end of the year
Number of shares
2022
2021
1,212,360
–
(1,099,404)
(112,956)
–
5,226,020
(4,013,660)
–
–
1,212,360
The Group awarded 2,424,720 deferred share awards to certain employees on 5 August 2021 under its short-term incentive plan. The deferred
share awards vested in equal tranches after twelve months (31 December 2021) and 18 months (30 June 2022). The vesting of the deferred
share awards is dependent on the employees still being employed on the respective vesting dates. The deferred share awards are settled directly
by the Company, in its own shares. The fair value of the deferred share awards was US$0.42 million which is the market price of the Company’s
share at grant date (£0.13) and the exchange rate on that date.
The Group awarded 2,801,300 deferred share awards to certain employees on 5 August 2021 in lieu of a cash bonus. These deferred share
awards vested on 31 December 2021. The vesting of the deferred share awards is dependent on the employees still being employed on the
vesting date. The deferred share awards are settled directly by the Company, in its own shares. The fair value of the deferred share awards was
US$0.50 million which is the market price of the Company’s share at grant date (£0.13) and the exchange rate on that date.
The Company issued 2,324,842 new ordinary shares of 1 pence each in respect to the STI (note 23) and 2,788,222 shares are still to be issued
to certain employees being in a closed period.
Long-Term Incentive ("LTI")
Performance awards
Balance, beginning of the year
Granted
Vested
Lapsed
Balance, end of the year
Number of shares
2022
2021
2,458,443
–
–
(2,458,443)
2,458,443
–
–
–
–
2,458,443
The Group awarded performance awards to certain employees on 28 November 2019 under its long-term incentive plan. The performance
awards vest over a period of three years and is subject to both employment and performance conditions. The performance conditions contain
both a market condition and a non-market condition.
The market condition states that 60 percent of the number of performance shares awarded would vest based on the performance of the
Company’s total shareholder return (“TSR”), per annum, over the performance period. The non-market condition states that 40percent of the
number of performance shares awarded will vest based on the performance of the Group’s free cash flow margin (“FCF”), per annum, over the
performance period.
As at 31 December 2021, it was assumed that 0 percent of the performance shares awarded to participants during 2019 will vest. This was
based on the Group’s performance on both TSR and FCF being below the threshold. At vesting date, 28 November 2022, it was determined that
0 percent of the performance shares awarded vested as the thresholds on both TSR and FCF not being achieved.
The remuneration committee approved performance awards in 2022, which were awarded in 2023. The performance awards vest over a period
of three years and is subject to both employment and performance conditions. The performance conditions contain both a market condition and
a non-market condition.
25. POST-RETIREMENT MEDICAL LIABILITY
The benefit comprises medical aid subsidies provided to qualifying retired employees. Actuarial valuations are made annually with the most
recent valuation on 31 December 2022. The present value of the post-retirement medical liability were measured using the projected unit
credit method.
Annual Report and Financial Results 2022
103
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
The following table summarises the components of the net benefit expense recognized in the consolidated statement of profit or loss and the
consolidated statement of comprehensive income or loss and the amounts recognised in the consolidated statement of financial position.
Balance, beginning of the year
Net expense recognised in profit or loss
Actuarial changes recognized in other comprehensive income or loss
Exchange differences
Balance, end of the year
The principal assumptions used for the purposes of the actuarial valuation was as follows:
Actual age
Discount rates
Health care cost inflation
Duration of liability
2022
US$ '000
2021
US$ '000
1,906
13
(126)
(118)
1,675
2,076
5
(10)
(165)
1,906
2022
2021
77.3 years
11.60%
7.80%
8.8 years
77.3 years
10.90%
7.90%
9.3 years
A 1 percent change in the assumed rate of healthcare costs inflation would have the following effect on the present value of the unfunded
obligation: Plus 1 percent – US$0.13 million (2021: US$0.16 million); Less 1 percent – US$0.12 million (2021:US$0.14 million).
A 1 percent change in the assumed interest rate would have the following effect on the current service cost and interest cost;
Plus 1 percent – US$0.20 million (2021: US$0.21 million); Less 1 percent – US$0.17 million (2021: US$0.18 million).
26. ENVIRONMENTAL REHABILITATION LIABILITIES
Balance, beginning of the year
Unwinding of discount
Change in estimates charged to profit or loss
Change in estimates capitalized to property, plant and equipment
Exchange differences
Balance, end of the year
Notes
9
14
2022
US$ '000
18,031
1,726
(291)
(1,705)
(1,151)
16,610
2021
US$ '000
17,998
1,915
(140)
(199)
(1,543)
18,031
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 2052, 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.
104
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
The provision is calculated using the following key assumptions:
Inflation rate
Discount rate
2022
2021
10.41 %
11.41 %
9.76 %
10.76 %
A 1 percent change in the assumed discount rate would have the following effect on the present value of the provision:
Plus 1 percent – decrease of US$3.91 million; Less 1 percent – increase of US$5.16 million.
A 1 percent change in the assumed inflation rate would have the following effect on the present value of the provision:
Plus 1 percent – increase of US$5.16 million; Less 1 percent – decrease of US$3.97 million.
27. DEFERRED CONSIDERATION
Balance, beginning of the year
Payment
Finance costs
Movement in earnout estimate
Exchange differences
Split between non-current and current portions
Current deferred consideration
Non-current deferred consideration
Notes
2022
US$ '000
2021
US$ '000
10
1,684
–
51
693
–
2,428
901
1,527
2,428
5,623
(3,724)
91
–
(306)
1,684
–
1,684
1,684
The Group is required to pay an earnout amount to EVRAZ on the acquisition of the Vametco Group which is based on the annual percentage
of additional revenue ascribed to Bushveld Vametco Alloys as a result of the prevailing price being above the trigger price in respect of each
financial year commencing on 1 January 2018 and ending on 31 December 2025, up to a maximum amount of US$5.54 million.
Management updated their estimated earnout payment to reflect actual production and price for the year ended 31 December 2022 and
estimated production and price for future years which resulted in an increase of US$0.69 million in the estimated earnout payment.
28. BORROWINGS*
Production financing agreement
Orion convertible loan notes
Nedbank revolving credit facility
Industrial Development Corporation shareholder loan
Industrial Development Corporation property, plant and equipment loan
Development Bank of South Africa
Other
Split between non-current and current portions
Non-current
Current
* Refer to note 36 for details of restatement.
Annual Report and Financial Results 2022
2022
US$ '000
2021
US$ '000
35,146
39,742
–
1,999
3,481
1,000
1,762
83,130
35,272
47,858
83,130
33,512
36,282
5,821
3,282
–
1,000
–
79,897
69,686
10,211
79,897
105
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
28. BORROWINGS* (CONTINUED)
Balance, beginning of the year
Cash changes:
Proceeds from borrowings
Repayments of principle and interest
Non-cash changes:
Convertible loan note in exchange for
financial assets
Conversion of convertible loan notes
Finance costs(1)
Fair value gain on derivative liability
Adjustment to reflect market value of loan
Exchange differences
Product
financing
agreement
US$ '000
33,512
–
(2,906)
–
–
4,420
–
–
120
Orion
convertible
loan notes
US$ '000
36,282
–
–
–
–
6,394
(2,934)
–
–
35,146
39,742
Nedbank
revolving
credit
facility
US$ '000
5,821
–
(5,885)
–
–
232
–
–
(168)
–
Industrial
Development
Corporation
loans
US$ '000
3,282
3,416
–
–
–
470
–
(1,789)
101
5,480
Other
US$ '000
1,000
806
(49)
1,636
(530)
143
–
–
(244)
2,762
Total
US$ '000
79,897
4,222
(8,840)
1,636
(530)
11,659
(2,934)
(1,789)
(191)
83,130
(1) Finance costs include capitalised finance costs of US$0.47 million to property,plant and equipment.
* Refer to note 36 for details of restatement.
Orion Mine Finance Production Financing Agreement
The Group signed a long-term production financing agreement (“PFA”) of US$30 million with Orion Mine Finance (“Orion) in December 2020,
primarily to finance its expansion plans at Bushveld Vametco Alloys Proprietary Limited and debt repayment. Exchange control authorization
from the South Africa Reserve Bank Financial Surveillance Department was granted in October 2020.
PFA Details
The Group will repay the principal amount and pay interest via quarterly payments determined initially as the sum of:
– a gross revenue rate (set at 1.175 per cent for 2020 and 2021 and 1.45 per cent from 2022 onwards, subject to adjustment based on
applicable quarterly vanadium prices) multiplied by the gross revenue for the quarter; and
– a unit rate of US$0.443/kgV multiplied by the aggregate amount of vanadium sold for the quarter.
Once the Group reaches vanadium sales of approximately 132,020 mtV during the term of the facility, the gross revenue rate and unit rate will
reduce by 75 per cent (i.e. to 25 per cent of the applicable rates).
On each of the first three loan anniversaries, the Group has the option to repay up to 50 per cent of both constituent loan parts (each may only
be repaid once). If the Group utilises the loan repayment option, the gross revenue rate and/or the unit rate will reduce accordingly.
The PFA capital will provide funding to continue to grow production at Vametco to more than 4,200 mtV per annual production level and debt
repayment. Part of the proceeds were used by the Group to prepay in full the Nedbank ZAR250 million term loan.
First Amendment
The Group entered into a first amendment to the agreement on 6 August 2021. In terms of the amendment, US$17.8 million of the funds
ringfenced for the Vametco Phase 3 Expansion was reallocated to Vanchem mainly for capital expenditure on Kiln-3.
The original PFA had a cap of 1,075 mtV per quarter. This amounted to 4,300 mtV per annum expected from 2024 onwards following the
completion of the Vametco Phase 3 expansion project. The amended agreement, with the addition of the Vanchem production volumes from
1 July 2021 resulted in the initial cap of 4,300 mtV being brought forward, from 1 July 2022 instead of from 2024.
Accounting impact of amendment
IFRS 9 requires the amortised cost of the liability to be recalculated by discounting the modified contractual cash flows (excluding costs and
fees) using the original effective interest rate. Any change to the amortised cost of the financial liability is required to be recognised within profit
or loss at the date of the modification. The carrying amount of the liability is then further revised for any costs or fees incurred. The effective
interest rate is also revised accordingly, so the costs are amortised over the remaining term of the modified liability.
As a result of the increased production volumes from Vanchem and the cap of 4,300mtV being brought forward, this resulted in a non-substantial
106
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
modification to the contractual terms. The amortised cost was recalculated and loss on remeasurement of financial liabilities of US$1.90 million
was recognised in the consolidated statement of profit or loss for the year ended 31 December 2021.
Orion Mine Finance Convertible Loan Notes Instrument
The Company subscribed to a US$35 million convertible loan notes instrument in December 2020 (the “Instrument”) with Orion Mine Finance
(“Orion”). The Instrument's proceeds were used towards the first phase of Vanchem's critical refurbishment programme and debt repayment.
The terms of the Instrument are:
– A fixed 10 per cent per annum coupon with a three year maturity date from the drawdown date.
– All interest will accrue and be capitalised on a quarterly basis in arrears but compounded annually.
– Accumulated capitalised and accrued interest is convertible into Bushveld ordinary shares. All interest and principal, to the extent not
converted into ordinary shares, is due and payable at maturity date.
– Conversion price set at 17 pence.
The conversion features are:
Between drawdown and the Instrument's maturity date Orion may, at their option, convert an amount of the outstanding debt, including
capitalised and accrued interest, into Bushveld's ordinary shares as follows:
– First six months: Up to one third of the outstanding amount;
– Second six months: Up to two thirds of the outstanding amount (less any amount previously converted);
– From the anniversary of drawdown until the maturity date: the outstanding amount under the Instrument may be converted;
– The Company also has the option to convert all, but not some, of the amount outstanding under the Instrument, if its volume weighted
average share price is more than 200 per cent of the conversion price over a continuous 15 trading day period, a trading day being a day on
which the AIM market is open for the trading of securities.
At any time until the convertible maturity date, Orion may convert the debt as above mentioned into an amount of ordinary shares equal to the
total amount available for conversion under the Instrument divided by the conversion price of 17 pence.
Refer to note 36 for the restatement associated with the change in accounting treatment.
Balance, 1 January 2021
Finance costs and fair value gain
Balance, 31 December 2021
Finance costs and fair value gain
Balance, 31 December 2022
Loan
US$ '000
27,952
5,364
33,316
6,394
39,710
Derivative
liability
US$ '000
11,976
(9,010)
2,966
(2,934)
32
Total
US$ '000
39,928
(3,646)
36,282
3,460
39,742
The Orion and Nedbank borrowings are secured against certain group companies and associated assets.
Nedbank Term Loan and Revolving Credit Facility
The Group secured R375 million (approximately US$25 million) in debt facilities through its subsidiary Bushveld Vametco Alloys Proprietary
Limited (the “Borrower”) in November 2019 with Nedbank Limited in the form of a R250 million term loan and a R125 million revolving
credit facility.
The Nedbank term loan was repaid in December 2020.
The Group had drawn the R125 million revolving credit facility in March 2020 which have the following key terms:
– Three-year term – Repayment due in November 2022;
– Interest rate calculated using the three year or six months JIBAR as selected by the Company plus a 3.85 percent margin; and
– Interest payments are due semi-annually.
The security provided is customary for a secured financing of this nature, including cession of shares in the Borrower, security over the assets of
the Borrower, and a parent guarantee.
Annual Report and Financial Results 2022
107
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
28. BORROWINGS* (CONTINUED)
The following financial covenants are in place for the Borrower for so long as any amount is outstanding, in respect of each reporting period:
– the Net Interest Cover Ratio; and
– the Net Debt to EBITDA Ratio at a Borrower level shall not exceed 4.0 times.
The Nedbank revolving credit facility was repaid in November 2022, except for R1.
Industrial Development Corporation Shareholder Loan
Bushveld Electrolyte Company (“BELCO”) is 55 percent owned by Bushveld Energy Company (“BEC”) and 45 percent by the Industrial
Development Corporation (“IDC”). The loan represents the IDC’s contribution to BELCO and consists of the initial capitalized cost of
R4.38 million (US$0.26 million; 31 December 2021: R4.38 million (US$0.26 million)) and the subsequent subscription amount of
R55.31 million (US$3.26 million; 31 December 2021: R55.31 million (US$3.82 million)).
The loan is interest free, unsecured, subordinated in favour of BELCO’s creditors and has no fixed term of repayment and shall only be repaid
from free cash flow when available. BELCO has the unconditional right to defer settlement until it has sufficient free cash flow to settle the
outstanding amount, which is estimated at the end of 2028. The loan has been classified as non-current.
The shareholder loan is measured at the present value of the future cash payments discounted using an interest rate of 8.5 percent, which is
the estimated prevailing market rate. The difference between the fair value and the nominal amount of US$1.79 million was recognised as
non-controlling interest.
A general notarial bond for a minimum amount of R140 million plus an additional sum of 30 percent for ancillary costs and expenses was
registered over all the movable assets owned by BELCO.
Industrial Development Corporation Property, Plant and Equipment Loan
The IDC provided a property, plant and equipment loan to BELCO as part of the funding for the construction of the electrolyte plant. The loan
bears interest at the South African prime rate plus 2.5 percent margin and is repayable in 84 equal monthly instalments starting in July 2023.
Development Bank of Southern Africa – Facility Agreement
Lemur Holdings Limited entered into a US$1.0 million facility agreement with the Development Bank of Southern Africa Limited in March 2019.
The purpose of the facility is to assist with the costs associated with delivering the key milestones to the power project. The repayment is subject
to the successful bankable feasibility study of the project at which point the repayment would be the facility value plus an amount equal to an
IRR of 40 percent capped at 2.5 times, which ever is lower. As at 31 December 2022, US$1.0 million (31 December 2020: US$1.0 million)
was drawn down.
Primorius
The Company issued a convertible loan note to Primorius for the nominal amount of £1,20 million bearing interest at 10 percent per annum. The
convertible loan note may be converted into Bushveld ordinary shares at any time within the conversion period (the six conversion periods being:
28 February 2022 to 14 April 2022; 15 April 2022 to 14 July 2022; 15 July 2022 to 14 October 2022; 15 October 2022 to 16 January 2023;
17 January 2023 to 14 April 2023;15 April 2023 to 14 July 2023) at a conversion price of £0.098987. Primorius converted £0.41 million of the
principal amount and was issued a total of 4,157,645 Bushveld ordinary shares.
Nesa Investment Holdings (“Nesa”)
The Group entered into a loan agreement with Nesa to fund US$0.81 million (R12.08 million) bearing interest at South African prime rate plus
3.5 percent margin and is repayable on 30 October 2023.
108
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS 29. LEASE LIABILITIES
Balance, beginning of the year
Additions
Finance cost
Payments
Exchange differences
Balance, end of the year
Non-current lease liabilities
Current lease liabilities
Notes
9
2022
US$ '000
2021
US$ '000
4,485
2,989
974
(728)
(438)
7,282
6,721
561
7,282
5,002
128
459
(705)
(399)
4,485
3,921
564
4,485
Leases are entered into and exist to meet specific business requirements, considering the appropriate term and nature of the leases asset.
The Group leases relate to land leases, office leases and equipment lease.
Extension options
Some property leases contain extension options exercisable by the Group. The Group assesses at the lease commencement date whether it is
reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise its options if there is a
significant event or significant changes within its control.
30. TRADE AND OTHER PAYABLES
Financial instruments:
Trade payables
Trade payables - related parties
Accruals and other payables
Non-financial instruments:
Value-added taxes
Financial instrument and non-financial instrument components of trade and other payables
At amortised cost
Non-financial instruments
2022
US$ '000
2021
US$ '000
40,573
61
5,257
28,330
107
4,644
5
–
45,896
33,081
45,891
5
45,896
33,081
–
33,081
Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for
trade purchases is 90 days.
The Group has financial risk management policies in place to ensure that all payables are paid within the pre-arranged credit terms. 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$29.78 million (2021: US$20.62 million).
Annual Report and Financial Results 2022
109
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
31. PROVISIONS
Reconciliation of provisions – 2022
Leave pay
Performance bonus
Other
Reconciliation of provisions – 2021
Leave pay
Performance bonus
Other
Opening
balance
US$ '000
1,629
1,923
170
3,722
Opening
balance
US$ '000
1,655
1,375
267
3,297
Additions
US$ '000
80
–
–
80
Additions
US$ '000
51
882
157
1,090
Utilised
during the
year
US$ '000
(40)
(1,923)
(13)
(1,976)
Utilised
during the
year
US$ '000
–
(334)
(254)
(588)
Foreign
exchange
US$ '000
(81)
–
(31)
(112)
Foreign
exchange
US$ '000
(77)
–
–
(77)
Total
US$ '000
1,588
–
126
1,714
Total
US$ '000
1,629
1,923
170
3,722
Leave pay
Leave pay represents employee leave days due multiplied by their cost to the company employment package.
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.
32. NON-CONTROLLING INTEREST
Selected summarized financial information of subsidiaries that have material non-controlling interest are provided below:
Bushveld Vametco Holdings
Percentage of voting rights held by non-controlling interest
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Revenues
Net earnings/(loss) for the year
Net earnings/(loss) attributable to non-controlling interest
Net cash generated from/(used in) operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
2022
US$ '000
2021
US$ '000
26 %
85,598
80,228
(25,517)
(45,311)
94,998
117,226
21,401
5,564
14,270
(10,649)
(6,020)
(2,398)
26 %
66,820
77,916
(22,944)
(42,376)
79,416
83,114
(2,451)
(637)
(917)
(15,097)
(2,364)
(18,378)
110
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
33. 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 consolidated financial statements.
33.1. Categories of financial instruments
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 and cash equivalents
– Restricted investments
– Trade and other payables
– Borrowings
– Financial assets
– Lease liabilities
– Deferred consideration
The Group holds the following financial assets and financial liabilities:
Financial assets at amortised cost
Trade and other receivables
Restricted investment
Cash and cash equivalents
Financial assets at fair value
Financial assets at fair value through profit or loss
Total financial assets
Financial liabilities at amortised cost
Trade and other payables
Borrowings - loan
Lease liabilities
Financial liabilities at fair value
Borrowings - derivative liability
Deferred consideration
Total financial liabilities
2022
US$ '000
2021
US$ '000
5,912
2,710
10,874
19,496
3,075
22,571
45,891
83,098
7,282
11,086
2,869
15,433
29,388
–
29,388
33,081
76,931
4,485
136,271
114,497
32
2,428
2,460
2,966
1,684
4,650
138,731
119,147
33.2. 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:
Annual Report and Financial Results 2022
111
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
33. FINANCIAL INSTRUMENTS (CONTINUED)
33.3. 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 31 December
2022, the Group had borrowings of US$83.13 million (2021: US$79.90 million).
The financial covenants for the Nedbank revolving credit facility are continuously monitored by management and the Group is compliant.
The capital structure of the Group consists of cash and cash equivalents, equity and borrowings. Equity comprises of issued capital and
retained income.
Cash and cash equivalents
Borrowings
Equity
2022
US$ '000
10,874
83,130
105,677
199,681
2021
US$ '000
15,433
79,897
142,169
237,499
The Group is not subject to any externally imposed capital requirements.
33.4. 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
Ferro Vanadium (FEV)
Nitrovan (NV)
Ammonium Metavanadate (AMV)
Modified Vanadium Oxide (MVO)
Vanchem
Vanadium Pentoxide Flake (FVP)
Vanadium Pentoxide Chemical (VCM)
Sodium Ammonium Vanadate (SAV)
Ammonium Metavanadate (AMV)
Ferro Vanadium (FEV)
Vanadyl Oxalate Solution (VOX)
Potassium Metavanadate
Nitrovan
2022
US$/kgV
50.17
44.45
30.05
–
2022
US$/kgV
31.82
35.85
55.07
52.80
35.73
197.79
42.41
–
2021
US$/kgV
–
34.10
–
17.18
2021
US$/kgV
25.04
32.73
51.22
35.19
31.53
195.41
35.31
30.60
If the average price of each of these commodities increased/decreased by 10 per cent the total sales related to each of these commodities would
have increased/decreased as follows: 10 percent is the sensitivity used when reporting commodity prices internally to management.
Vametco
Ferro Vanadium (FEV)
Nitrovan (NV)
Ammonium Metavanadate (AMV)
Effect on
2022
revenue
US$ '000
358
11,568
81
12,007
Effect on
2022
net loss
US$ '000
258
8,329
58
8,645
Effect on
2021
revenue
US$ '000
–
8,431
(14)
8,417
Effect on
2021
net loss
US$ '000
–
6,071
(10)
6,061
112
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
Vanchem
Vanadium Pentoxide Flake (FVP)
Vanadium Pentoxide Chemical (VCM)
Sodium Ammonium Vanadate (SAV)
Ammonium Metavanadate (AMV)
Ferro Vanadium (FEV)
Vanadyl Oxalate Solution (VOX)
Potassium Metavanadate
Nitrovan (NV)
Effect on
2022 revenue
US$ '000
Effect on
2022 net loss
US$ '000
Effect on
2021 revenue
US$ '000
Effect on
2021 net loss
US$ '000
494
329
182
34
2,391
63
157
–
3,650
356
237
131
25
1,721
45
113
–
2,628
611
298
72
27
1,637
138
47
484
3,314
440
215
52
20
1,179
99
34
348
2,387
33.5. 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. 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 2022, the Group had US$10.9 million (2021: US$15.4 million) of cash and cash equivalents. At 31 December 2022, the Group
had borrowings of US$83.13 million (2021: US$79.90 million), lease liabilities of US$7.28 million (2021: US$4.49 million) and trade and other
payables of US$45.90 million (2021: US$33.08 million).
2022
*Production financing agreement
Orion convertible loan notes
Industrial Development Corporation
shareholder loan
Industrial Development Corporation
property, plant and equipment loan
Development Bank of South Africa
Other
Lease liabilities
Trade and other payables
2021
*Production financing agreement
Orion convertible loan notes
Nedbank revolving credit facility
Industrial Development Corporation
shareholder loan
Development Bank of South Africa
Lease liabilities
Trade and other payables
Carrying
amount
US$ '000
35,146
39,742
1,999
Contractual
cash flows
US$ '000
139,795
46,585
3,515
<1 year
US$ '000
4,181
46,585
–
3,481
5,725
477
1,000
1,762
7,283
45,891
Carrying
amount
US$ '000
33,512
36,282
5,821
3,281
1,000
4,485
33,081
1,000
1,794
22,577
45,891
Contractual
cash flows
US$ '000
145,435
46,585
5,885
3,515
1,000
9,771
33,081
1 - 2 years
US$ '000
3 - 4 years
US$ '000
8,626
–
–
1,636
1,000
–
901
–
8,833
–
–
1,636
–
–
1,348
–
–
1,794
704
45,891
<1 year
US$ '000
1 - 2 years
US$ '000
3 - 4 years
US$ '000
4,123
–
5,885
–
–
614
33,081
8,868
46,585
–
–
1,000
501
–
9,012
–
–
–
–
902
–
>4 years
US$ '000
118,155
–
3,515
1,976
–
–
19,624
–
>4 years
US$ '000
123,432
–
–
3,515
–
7,754
–
*
The contractual cash flows are based on estimated principal and interest payments calculated as the sum of the gross revenue rate multiplied by the gross revenue for the quarter and the
unit rate multiplied by the aggregate amount of vanadium sold for the quarter.
Annual Report and Financial Results 2022
113
GovernanceFinancial statementsSupplementary informationBusiness overview Notes to the Consolidated Financial Statements continued
33. FINANCIAL INSTRUMENTS (CONTINUED)
33.6. Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
The maximum amount of credit risk is equal to the balance of cash and cash equivalents, restricted investments, trade and other receivables
and financial assets.
Credit risk is managed on a Group basis. Credit verification procedures are undertaken for all customers with whom we trade on credit.
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.
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 investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for
credit deterioration.
The Group holds cash and cash equivalents and restricted investments in creditworthy financial institutions that comply with the Company's
credit risk parameters. The Group has a significant concentration of cash held on deposit with large banks in South Africa, Mauritius, United
States of America and the United Kingdom with A ratings and above (Standards and Poors).
The concentration of credit risk by currency was as follows:
Pound Sterling
South African Rand
United States Dollar
2022
US$ '000
20
6,702
4,152
10,874
2021
US$ '000
10
14,943
480
15,433
Impairment of financial assets
The Group's only financial assets that are subject to the expected credit loss model are third party trade receivables.
The Group applies the IFRS 9 simplified approach to measure 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 2022 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.
114
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
On that basis, the loss allowance as at 31 December 2022 and 31 December 2021 was determined as follows for trade receivables:
Subsidiary - 2022
Bushveld Vametco Alloys (Pty) Ltd
Bushveld Vanchem (Pty) Ltd
Ivanti Resources (Pty) Ltd
Bushveld Energy Company (Pty) Ltd
Subsidiary - 2021
Bushveld Vametco Alloys (Pty) Ltd
Bushveld Vametco Limited
Bushveld Vanchem (Pty) Ltd
Ivanti Resources (Pty) Ltd
Bushveld Minerals SA (Pty) Ltd
Bushveld Energy Company (Pty) Ltd
Expected credit
loss rate
Gross carrying
amount
US$ '000
Loss allowance
US$ '000
0.15 %
0.27 %
7.74 %
100.00 %
1,135
1,487
121
63
2,806
2
4
9
63
78
Expected credit
loss rate
Gross carrying
amount
US$ '000
Loss allowance
US$ '000
0.11 %
0.13 %
0.13 %
0.43 %
0.19 %
100.00 %
87
4,198
1,275
609
8
67
6,244
–
5
2
3
–
67
77
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 2022 and 2021
financial year.
33.7. Interest rate risk
Interest rate risk is the risk that the fair values and future cash flows of the Group’s financial instruments will fluctuate because of changes
in market interest rates. The Group has interest bearing financial assets and borrowings. As part of the process of management 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.
As at 31 December 2022, the majority of the Groups’ borrowings was at fixed rates. A 1 percent increase or decrease in the interest rates would
result in a nominal increase or decrease in the Group’s earnings in respect of borrowings held at variable rates. There was no significant change
in the Group’s exposure to interest rate risk during the year ended 31 December 2022.
Annual Report and Financial Results 2022
115
GovernanceFinancial statementsSupplementary informationBusiness overview
Notes to the Consolidated Financial Statements continued
33. FINANCIAL INSTRUMENTS (CONTINUED)
33.8. Foreign exchange risk
The presentation currency of the Group is United States Dollar and the functional currency of its major subsidiaries are South African Rand.
The Group has foreign currency denominated assets and liabilities. Exposure to exchange rate fluctuations therefore arise. The Group has
transactional foreign exchange exposures, which arise from sales or purchases by the subsidiaries in currencies other than their functional
currency. The vanadium market is predominately priced in US$ which exposes the Group to the risk of fluctuations in the ZAR/US$ exchange
rate. The carrying amount of the Groups foreign currency denominated monetary assets and liabilities, all in US$, are shown below:
Cash and cash equivalents
Other receivables
Trade and other payables
2022
US$ '000
6,723
11,226
(32,652)
(14,703)
2021
US$ '000
15,135
12,696
(20,753)
7,078
The Group does not enter into any derivative financial instruments to manage its exposure to foreign currency risk.
33.9. Fair value
The fair value hierarchy categorizes into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to
unobservable inputs (Level 3 inputs).
– Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities which the entity can access at the
measurement date.
– Level 2 inputs are inputs other than quoted prices included within Level 1 which are observable for the asset or liability, either directly or
indirectly such as those derived from prices.
– Level 3 inputs are unobservable inputs for the asset or liability.
There have been no changes in the classification of the financial instruments in the fair value hierarchy since 31 December 2021.
(a) Financial assets and liabilities measured at fair value on a recurring basis
2022
Assets
Financial assets
Liabilities
Derivative liability – conversion option on Orion CLN
Deferred consideration
2021
Assets
Financial assets
Liabilities
Derivative liability – conversion option on
Orion CLN
Deferred consideration
Carrying
amount
US$ '000
3,075
32
2,428
Carrying
amount
US$ '000
–
2,966
1,684
Level 1
US$ '000
Level 2
US$ '000
Level 3
US$ '000
–
–
–
–
32
–
3,075
–
2,428
Level 1
US$ '000
Level 2
US$ '000
Level 3
US$ '000
–
–
–
–
2,966
–
–
–
1,684
Total
fair value
US$ '000
3,075
32
2,428
Total
fair value
US$ '000
–
2,966
1,684
116
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
(b) Financial assets and liabilities measured at amortised costs
Financial assets
Trade and other receivables
Restricted investments
Cash and cash equivalents
Financial liabilities
Trade and other payables
2022
2021
Book value
US$ '000
5,912
2,710
10,874
Fair value
US$ '000
5,912
2,710
10,874
Book value
US$ '000
11,086
2,869
15,433
Fair value
US$ '000
11,086
2,869
15,433
2022
2021
Book value
US$ '000
45,891
Fair value
US$ '000
45,891
Book value
US$ '000
33,081
Fair value
US$ '000
33,081
The directors are of the opinion that the book value of financial instruments measured at amortised costs approximates fair value due to the
short-term maturities of these instruments. The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values.
The directors consider that sufficient information to understand the borrowings of the Group is disclosed in note 28.
34. CONTINGENT LIABILITIES
Bank guarantee
As required by the Minerals and Petroleum Resources Act (South Africa), a guarantee amounting to US$11.94 million (2021: US$12.76
million) before tax and US$8.60 million (2021: US$9.19 million) 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
Centriq Insurance Company Ltd with restricted use by the Group. The restricted cash consists of US$2.71 million (2021: US$2.87 million)
held by Centriq Insurance Company.
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 Investment Company (Pty) Ltd ("VM Investments") is a related party due to the Director, Fortune Mojapelo being majority shareholder of
VM Investments. VM Investments owns the offices rented by Bushveld Minerals Limited. The rent paid in 2022 financial period was US$206,209
(2021: US$162,897).
Services rendered by Ondra LLP for the amount of US$61,900 (2021: US$200,000) is classified as a related party transaction due to a non
executive director, Michael Kirkwood being a partner at the firm.
The company paid on behalf of Mr Fortune Mojapelo, tax on historic shares to the value of US$439 094. The tax arises from historic shares
issued to Mr Mojapelo. The company had an obligation to settle the tax on behalf of Mr Fortune Mojapelo. The amount is reflected as a debtor.
The remuneration of key management personnel, being the directors and other executive committee members, is set out below. Further
information about the remuneration of individual directors is provided in the Directors’ remuneration report.
Salaries and fees
Short-term incentives
Long-term incentives
2022
US$ '000
2021
US$ '000
1,866
95
107
2,068
1,979
166
–
2,145
Annual Report and Financial Results 2022
117
GovernanceFinancial statementsSupplementary informationBusiness overview Notes to the Consolidated Financial Statements continued
36. RESTATEMENTS
The Company subscribed to a US$35 million convertible loan notes instrument in December 2020 with a fixed 10 percent per annum coupon,
a three year maturity date and a conversion price of 17 pence (the “Instrument”) (refer to note 28).
At inception the Instrument was accounted for as a compound instrument and was partly presented as a loan (US$34.95 million) and partly
as equity (US$0.05 million). The equity component was not subsequently remeasured. The loan component was subsequently measured at
amortized cost.
During the preparation of the annual consolidated financial statements for the year ended 31 December 2022, it was determined that the
Instrument should have been accounted for at inception as a loan and a derivative liability as the conversion will result in a variable amount
of shares. Subsequently the derivative liability is remeasured to fair value at each reporting date with fair value movements recorded in the
consolidated statement of profit or loss. The amount allocated to the loan continues to be measured at amortized cost.
The information in the following tables show the effect of the restatement on each affected financial statement line item:
Consolidated Statement of Financial Position
Convertible loan note reserve
Retained earnings
Total equity
Borrowings – non-current portion
Borrowings – current portion
Total liabilities
Previously
reported at
31 December
2021
US$ '000
55
(1,265)
150,831
70,717
10,211
149,849
Adjustment
US$ '000
(55)
1,086
1,031
(1,031)
–
(1,031)
Restated at
31 December
2021
US$ '000
–
(179)
151,862
69,686
10,211
148,818
No impact on total cashflows as reported for the year ended 31 December 2021 were noted as these adjustments were non- cash. The add backs
for finance costs and fair value gain on derivative liability were adjusted.
Consolidated Statement of Profit or Loss
Finance costs
Fair value gain on derivative liability
Loss before taxation
Loss for the year
Basic loss per share
Consolidated Statement of Financial Position
Convertible loan note reserve
Retained earnings
Total equity
Borrowings – non-current portion
Borrowings – current portion
Total liabilities
Previously
reported at
31 December
2021
US$ '000
12,184
–
46,782
42,113
(3.39)
Previously
reported at
31 December
2020
US$ '000
55
28,367
197,364
72,507
13,337
153,457
Adjustment
US$ '000
1,124
(9,010)
(7,886)
(7,886)
0.65
Adjustment
US$ '000
(55)
(6,800)
(6,855)
6,855
–
6,855
Restated at
31 December
2021
US$ '000
13,308
(9,010)
38,896
34,227
(2.74)
Restated at
31 December
2020
US$ '000
–
21,567
190,509
79,362
13,337
160,312
118
Annual Report and Financial Results 2022
FINANCIAL STATEMENTS
37. EVENTS AFTER THE REPORTING PERIOD
The Company entered into a non-binding term sheet with Orion Mine Finance (“Orion”) on 5 May 2023. The term sheet, which were approved
by the Orion Investment Committee, envisages that the Orion convertible loan notes which are due in November 2023 will be refinanced into
the following components:
– A three-year secured term loan (“Term Loan”) totaling approximately US$27 million, bearing interest at 6 percent plus the greater of (i)
3-month secured overnight financing rate and (ii) 3.0 percent per annum, payable quarterly in cash in arrears. 25 percent of the facility is
repayable in June 2024, 30 percent repayable in June 2025 and 45 percent repayable in June 2026.
– A new convertible loan note of approximately US$13.5 million, bearing interest at 12 percent per annum, conversion price of 8 pence and
a maturity date of June 2028. The Company shall have a one-time right to redeem 50 percent (in whole and not in part) of the New CLN in
June 2026, subject to the right of Orion to elect for conversion of the same for a 30-day period.
– Conversion of approximately US$4.5 million of existing convertible loan notes into shares at 6 pence per share.
– Supplemental production financing agreement ("PFA") on the same terms as the existing PFA during the tenure of the Term Loan, except
for the PFA rate being 0.22 percent with a realized kgV price of less than US$47/kgV or the PFA rate being 0.18 percent with a realized
kgV price of more than US$47/kgV. Once the Term Loan has matured in June 2027, the top-up PFA rate will reduce by a further 80 percent
for the life of mine.
The transaction is conditional on several items, including due diligence, shareholder approval at a general meeting and definitive documentation.
Annual Report and Financial Results 2022
119
GovernanceFinancial statementsSupplementary informationBusiness overview 120
Annual Report and Financial Results 2022
Supplementary
Information
CONTENTS
122 Mineral Resources and Reserves
129 Acronyms
130 Glossary
132 Notice of Annual General Meeting
136 Company Information
Annual Report and Financial Results 2022
121
GovernanceFinancial statementsSupplementary informationBusiness overview SUPPLEMENTARY INFORMATION
Mineral Resources and Reserves
DEFINITION
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.
Measured/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.
Ore Reserves are declared for open pits inside the life-of-mine pit design (the optimised pit shell in this instance), which include the
dilution of 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, and 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). It 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 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 occurring near the basal contact of the
Upper Zone of the Bushveld Igneous Complex. The mine has been in operation since 1967.
Mineral Resources & Ore Reserves
The Mineral Resources and Ore 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 2022.
Key highlights
– Ore Reserves have been depleted from a revised pit design completed in September 2022 which has resulted in a net 1 percent increase in
Ore Reserves from the previous Ore Reserve estimate as at 31 December 2021. The Ore Reserves are reported as at the 31 December 2022
at 264,600 tonnes V₂O₅ in magnetite at a grade of 1.99 percent V₂O₅ (in magnetite).
– The combined Inferred and Indicated Mineral Resource comprises three seams (the Lower, Intermediate and Upper seams) and is reported
as at 31 December 2022 at 181.5 Mt at an average grade of 1.98 percent V₂O₅ (in magnetite), with an average magnetite content of 35 per
cent (in whole rock) for 699,000 tonnes of contained vanadium. The previously reported combined Inferred and Indicated Mineral Resource,
as at 31 December 2021, was 182.7 Mt at an average grade of 1.98 percent V₂O₅ (in magnetite), with an average magnetite content of 35
percent (in whole rock) for 703,900 tonnes of contained vanadium.
– Within this, the Ore Reserve in the Probable Category comprises three Seams (The Lower, Intermediate and Upper Seams) and is reported
as 46.4 Mt at an average grade of 1.99 percent V₂O₅ (in magnetite), with an average magnetite content of 28.7 percent (in whole rock) for
148,200 tonnes of vanadium.
– The Lower Seam is the main ore seam and the thickest, ranging from 13.8 to 52 metres in thickness, comprising a Probable Reserve of 36.2
Mt at an average grade of 2.03 percent V₂O₅ (in magnetite), with an average magnetite content of 28.1 percent (in whole rock) for 115,700
tonnes of vanadium.
– The decrease in the total 2022 Mineral Resource, by 0.67 percent less tonnes compared with the 31 December 2021 estimate, is attributed
to mining of the seams over the last 12 months. No Mineral Resource exploration was carried out over the period.
– The increase in the total 2022 Ore Reserves from 45.3 Mt to 46.4 Mt as at 31 December 2022 is mainly due to the impact of the revised
Vametco pit design (September 2022) which incorporated additional Upper and Intermediate Seam tonnage. The additional tonnage was
offset by the Ore Reserve depletion which was calculated to be 1.2 Mt for the combined seams, mined over the 12-month period.
– An adjustment was made to the modifying factors to reflect more accurate Ore Reserve grades for the individual seams. The Ore Reserve
modifying factors (mining loss and dilution) were adjusted based on pit to plant reconciliation production data supplied by Bushveld Vametco
Alloys (Pty) Ltd. The impact of the revised pit design and adjustment to modifying factors is an additional 2.3 Mt.
122
Annual Report and Financial Results 2022
Table 1: Vametco Mineral Resource at a cut-off grade of 20 percent magnetite, as at 31 December 2022 – 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)
5.4
27.6
105.9
139.0
10.2
7.0
25.4
42.6
15.5
34.7
131.3
181.5
1.44
0.67
0.72
0.74
1.46
0.67
0.74
0.90
1.45
0.67
0.72
0.77
65.9
32.9
32.4
33.8
63.6
32.1
31.3
39.1
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
62.7
173.1
697.2
933.0
113.3
43.4
158.4
315.2
176.0
216.5
855.6
1,248.2
35.1
97.0
390.4
522.5
63.5
24.3
88.7
176.5
98.6
121.3
479.2
699.0
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 the January 2023 pit survey.
7. Reported on a Gross Basis. Bushveld Minerals shareholding in Bushveld Vametco Alloys is 74 percent.
Table 2: Vametco Mineral Resource at a cut-off grade of 20 percent magnetite, as at 31 December 2022 – Attributable basis
Class
Indicated
Inferred
Indicated and Inferred
Seam name
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Upper
Intermediate
Lower
Total
Tonnes
(millions)
4.0
20.5
78.4
102.8
7.5
5.2
18.8
31.5
11.5
25.7
97.8
135.2
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
0.74
1.46
0.67
0.74
0.90
1.45
0.67
0.72
0.78
65.9
32.9
32.4
33.8
63.6
32.1
31.3
39.1
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
46.4
128.1
515.9
690.4
83.9
32.1
117.2
233.2
130.3
160.2
633.2
923.7
26.0
71.8
288.9
386.6
47.0
18.0
65.7
130.6
73.0
89.7
354.6
517.3
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 the January 2023 pit survey.
7. Reported on an attributable basis. Bushveld Minerals shareholding in Bushveld Vametco Alloys is 74 percent.
Annual Report and Financial Results 2022
123
GovernanceFinancial statementsSupplementary informationBusiness overview SUPPLEMENTARY INFORMATION CONTINUED
Mineral Resources and Reserves continued
Table 3: Vametco Ore Reserves, 31 December 2022 – Gross basis
Class
Probable
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)
1.9
8.3
36.2
46.4
1.07
0.57
0.62
0.63
50.2
26.7
28.1
28.7
1.77
1.87
2.03
1.99
16.7
41.3
206.7
264.6
9.3
23.1
115.7
148.2
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 run of mine (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 2022 using 31 December 2022 pit survey.
5. Ore Reserve estimate was based on a revised pit design completed in September 2022.
6. Ore Reserve modifying factors adjusted by seam based on analysis of pit to plant production information.
7. Ore Reserve estimate depleted using Datamine Studio 5DP Open Pit software and latest topography supplied by Vametco as at 31 December 2022.
8. Reported on a gross basis. Bushveld Minerals shareholding in Bushveld Vametco Alloys is 74 percent.
Table 4: Vametco Ore Reserves, 31 December 2022 – Attributable Basis
Class
Probable
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)
1.4
6.1
26.8
34.3
1.07
0.57
0.62
0.63
50.2
26.7
28.1
28.7
1.77
1.87
2.03
1.99
12.4
30.5
152.9
195.8
6.9
17.1
85.6
109.7
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 run of mine (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 2022 using 31 December 2022 pit survey.
5. Ore Reserve estimate was based on a revised pit design completed in September 2022
6. Ore Reserve modifying factors adjusted by seam based on analysis of pit to plant production information.
7. Ore Reserve estimate depleted using Datamine Studio 5DP Open Pit software and latest topography supplied by Vametco as at 31 December 2022.
8. Reported on a attributable basis. Bushveld Minerals shareholding in Bushveld Vametco Alloys is 74 percent.
BRITS PROJECT
This project is located directly east of Bushveld’s Vametco Mine in the Bojanala Platinum District within the North- West Province 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.
Minerals Resource
A JORC- compliant maiden Mineral Resource was declared in June 2019 on Portion Three of the farm Uitvalgrond 431 JQ on which the project
is situated, 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.
124
Annual Report and Financial Results 2022
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 percent V₂O₅ in-magnetite, at a cut-off grade of 20 percent magnetite in- whole rock for
175,400 tonnes of contained vanadium.
– The Indicated Mineral Resource tonnages account for 67 percent of the total combined Mineral Resource and stand at 44.9 Mt with an
average grade of 1.59 percent 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 percent V₂O₅ in-magnetite for 137,000 tonnes of contained vanadium. This represents approximately
83 percent 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 percent V₂O₅ in-magnetite,
although the tonnages are low at the current cut-off grade of 20 percent 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 m below surface and is based on the drilling on the western and central blocks of
the farm Uitvalgrond Portion Three which extends over a strike length of approximately 1.65 km 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 1km.
Table 5: Brits Mineral Resource (Uitvalgrond 431 JQ Portion Three) at a cut-off grade of 20 percent magnetite, 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
of magnetite
concentrate
(%)
Tonnes V2O5
in magnetite
concentrate
(thousands)
Tonnes V in
magnetite
concentrate
(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 Mineral Reserves, have no demonstrated economic viability.
3. Magnetite content (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 percent of the Mineral Resource for the property (Bushveld has a 62.5 percent ownership of the property (Uitvalgrond 431 JQ Portion Three).
6. Bushveld Minerals, through its subsidiary Bushveld is the operator of Brits Project.
Annual Report and Financial Results 2022
125
GovernanceFinancial statementsSupplementary informationBusiness overview SUPPLEMENTARY INFORMATION CONTINUED
Mineral Resources and Reserves continued
Table 6: Brits Mineral Resource (Uitvalgrond 431 JQ Portion Three) at a cut-off grade of 20 percent magnetite, 18 June 2019 –
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
of magnetite
concentrate
(%)
Tonnes V2O5
in magnetite
concentrate
(thousands)
Tonnes V in
magnetite
concentrate
(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 Mineral Reserves have no demonstrated economic viability.
3. Magnetite content (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 on a net attributable basis (Bushveld has a 62.5 percent ownership of the property (Uitvalgrond 431 JQ Portion Three).
6. Bushveld Minerals, through its subsidiary Bushveld is the operator of Brits Project.
Table 7: MML and MML- HW Mineral Resources at a 0.30 percent V₂O₅ cut-off, ≤120 m depth, as at 15 October 2017
Width
(m)
Tonnes
(Mt1)
Density
(t/m3)
V2O5
(%)
Fe
(%)
Fe2O3
(%)
TiO2
(%)
SiO2*
(%)
Al2O3*
(%)
P2O5*
(%)
S*
(%)
V2O5
(Kt)
Fe
(Mt)
Layer name
UG-C
UG-A
UMG1
UMG2
MAG1- HW GAB**
MAG1
MAG2
MML- HW
Total
MAG3
PART
MAG4
Total
Mineral
resource
category
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
4.04
1.64
3.24
2.03
17.53
1.31
1.10
5.89
31.8
12.7
25.5
15.7
72.3
12.0
9.2
42.3
3.48
3.31
3.30
3.40
3.02
3.96
3.57
3.01
0.64
0.59
0.59
0.69
0.31
1.07
0.83
0.32
25.7
23.2
22.9
25.9
13.1
40.0
30.2
13.4
36.7
33.1
32.7
37.0
18.8
57.1
43.1
19.2
Inferred
36.77 221.5
3.21
0.50
19.8
28.3
Indicated
Indicated
Indicated
4.09
2.16
3.59
27.5
11.4
24.3
4.08
3.16
4.00
1.50
0.58
1.46
45.5
20.9
43.9
65.1
29.9
62.7
Indicated
9.84
63.2
3.85
1.32
40.4
57.8
Total Mineral Resources1
46.61 284.8
3.33
0.68
24.4
34.8
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
15.4
17.5
17.6
16.7
21.9
10.8
15.1
21.6
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.02
0.12
0.01
0.01
0.01
0.12
0.06
0.06
0.11
202.8
75.6
150.4
107.7
223.3
128.7
76.3
136.0
8.2
3.0
5.8
4.1
9.5
4.8
2.8
5.7
35.7
18.9
0.01
0.08 1,100.8
43.8
10.6
34.5
11.8
7.8
19.0
8.9
0.01
0.01
0.01
0.12
0.17
0.24
412.5
66.3
354.9
12.5
2.4
10.7
15.4
10.2
0.01
0.18
833.7
25.6
31.2
17.0
0.01
0.10 1,934.5
69.4
Notes:
1. Rounding may cause computational errors; no geological losses applied.
*
** A 0.30 percent V2O5 cut-off has been applied laterally across this layer, so only material greater than 0.30 percent V2O5 is included in the tonnage listed in this table.
Included for information purposes only, no value will be derived from these materials.
126
Annual Report and Financial Results 2022
Table 8: Probable Ore Reserves for Mokopane Project
Orebody
MML Upper (MAG3)
MML Lower (MAG4)
Total/Average*
Notes:
Mineral Resource is reported at a 40 percent Fe2O3 cut-off; no geological losses applied.
Included for informative purposes only, no value will be derived from these materials.
*
True thickness
(m)
Specific gravity
(t/m³)
4.09
3.59
7.68
4.08
4.00
4.04*
Tonnes
(millions)
15,342
13,154
28,496
V₂O₅
(%)
1.43
1.39
1.41*
Table 9: AB Zone Mineral Resource at 0.3 percent V₂O₅ cut-off, ≤120 m vertical depth, as at 15 October 2017
Layer name
AB Upper
AB Parting
AB Lower
Total1
Mineral
Resource
category
Inferred
Inferred
Inferred
Tonnes
(Mt1)
Thickness
(m)
Density
(t/m3)
2.7
3.7
6.0
1.93
2.86
4.51
9.30
3.29
3.07
3.21
3.18
V2O5
(%)
0.89
0.48
0.75
0.70
Fe2O3
(%)
34.7
20.9
29.1
27.9
TiO2
(%)
5.4
3.0
4.3
4.2
P2O5*
(%)
0.01
0.01
0.01
0.01
SiO2*
(%)
Al2O3*
(%)
30.3
40.0
34.6
35.3
17.1
19.7
18.6
18.6
S*
(%)
0.06
0.01
0.01
0.02
V2O5
(%)
24.3
17.9
45.1
87.3
Inferred
12.5
Notes:
1. Rounding may cause computational errors; No geological losses applied.
*
Included for informative purposes only, no value will be derived from these materials.
The Mineral Resources and Ore 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 m depth, as at 8 March 2013
Layer name
Q3
Q2
Q1
PMAG
PFWDISS*
OMAG*
NMAG
Total
Tonnes
(millions)
138.63
81.17
26.36
34.44
67.28
2.63
4.58
355.09
Specific
gravity
(g/cm3)
3.61
4.01
3.59
3.62
3.38
4.00
4.41
3.67
Fe
(%)
31.7
41.9
32.5
32.4
26.9
37.2
48.7
Fe2O3
(%)
Fe metal
(Mt)
45.4
59.9
46.6
46.3
38.5
53.2
69.6
43.99
34.00
8.58
11.15
18.13
0.98
2.23
TiO2
(%)
10.2
15.2
10.5
10.1
7.1
11.1
16.0
33.51
47.65
119.06
10.85
V2O5
(%)
0.13
0.28
0.28
0.29
0.22
0.49
0.56
0.22
SiO2
(%)
25.2
12.6
22.3
21.3
30.1
18.5
6.9
22.37
*
Layer reported at a 35 per cent Fe₂O₃ cut-off; no geological losses applied.
Table 11: N-Q Zone (unweathered) Inferred Mineral Resource, 200 m to 400 m depth, as at 8 March 2013
Layer Name
Q3
Q2
Q1
PMAG
PFWDISS*
OMAG*
NMAG
Total
Tonnes
(millions)
Density
(t/m3)
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
Fe
(%)
30.2
40.2
32.7
30.6
26.8
32.4
46.3
Fe2O3
(%)
Fe metal
(Mt)
43.3
57.5
46.8
43.7
38.3
46.3
66.2
42.05
37.27
7.66
11.70
20.49
0.61
3.34
TiO2
(%)
8.8
14.1
10.8
9.8
6.9
9.5
15.6
32.47
46.47
123.12
10.07
V2O5
(%)
0.09
0.23
0.27
0.26
0.21
0.40
0.49
0.19
*
Layer reported at a 35 percent Fe2O3 cut-off; no geological losses applied.
Annual Report and Financial Results 2022
SiO2
(%)
28.3
15.3
22.2
23.5
30.2
23.1
8.3
Al2O3
(%)
9.9
6.5
9.9
10.5
12.8
7.9
5.3
9.66
Al2O3
(%)
10.3
7.6
10.6
11.5
12.8
10.4
5.8
P2O5
(%)
0.06
0.02
0.02
0.03
0.03
0.01
0.03
0.05
P2O5
(%)
0.13
0.02
0.02
0.04
0.03
0.02
0.02
0.06
S
(%)
0.40
0.27
0.27
0.80
0.33
0.12
0.11
0.38
S
(%)
0.61
0.55
0.36
0.74
0.43
0.10
0.14
0.55
127
24.24
10.20
GovernanceFinancial statementsSupplementary informationBusiness overview SUPPLEMENTARY INFORMATION CONTINUED
Mineral Resources and Reserves continued
Table 12: P-Q Zone Inferred Mineral Resource, surface to 300 m vertical depth at a 35 percent Fe₂O₃ cut-off for the farms Schoonoord 786LR
and Bellevue 808LR, as at 15 October 2017
Layer Name
Q3
Q2
Q1
PMAG
PFWDISS*
Total
Tonnes
(millions)
Density
(t/m3)
75.3
85.5
13.1
19.7
27.3
220.8
3.77
4.14
3.82
3.52
3.45
3.85
Fe
(%)
34.3
42.6
36.4
27.6
27.8
36.2
Fe2O3
(%)
Fe metal
(Mt)
49.1
60.9
52.1
39.5
39.8
51.9
25.82
36.40
4.76
5.45
7.60
80.03
TiO2
(%)
10.5
14.9
12.2
8.3
8.0
11.8
V2O5
(%)
0.10
0.26
0.30
0.23
0.22
0.20
SiO2
(%)
23.0
13.1
19.1
29.1
28.3
20.1
Al2O3
(%)
9.4
6.9
9.8
12.4
12.9
9.2
P2O5
(%)
0.28
0.03
0.03
0.06
0.06
0.12
S
(%)
0.55
0.50
0.46
1.00
0.55
0.57
*
Layer reported at a 35 percent 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 percent 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 percent 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: Inferred Mineral Resource of Phosphate Zone at a Three percent P₂O₅ cut-off, as at 15 October 2017
Farm
Vliegekraal
Malokong
Schoonoord
Bellevue
Total1
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
0.41
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
(t/m³)
3.30
3.27
3.37
3.36
3.32
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 at 26 April 2023.
Table 14: Resource for the Imaloto coal project
Gross
Mineable (SAMREC 2016)
Net attributable (99%)
Operator
Category
Coal Resource per asset
Measured
Indicated
Inferred
Tonnes
(millions)
90.448
41.206
8.733
Indicated and Inferred
49.939
Total
140.387
Raw coal quality
(ADB)
Ash
(%)
CV
(MJ/Kg)
33.5
37.0
36.6
36.9
34.7
19.26
17.66
18.42
17.79
18.74
Raw coal quality
(ADB)
Raw coal quality
(ADB)
MTIS
(Mt)
Ash (%)
76.500
33.274
6.637
39.911
116.411
33.5
37.0
36.6
36.9
34.7
CV
(MJ/kg)
19.26
17.66
18.42
17.79
18.75
Tonnes
(millions)
75.735
32.941
6.571
39.512
115.247
Ash (%)
33.5
37.0
36.6
36.9
34.7
CV
(MJ/kg)
19.26
17.66
18.42
17.79
18.75
Lemur
Holdings
Limited
128
Annual Report and Financial Results 2022
Vanadium pentoxide
Vanadium trioxide
Vanadium Redox Flow Battery
VRFB Holdings Limited
V₂O₅
V₂O₃
VRFB
VRFB-H
Vanchem Vanchem vanadium plant
WACC
WML
WUL
Weighted average cost of capital
Waste management licence
Water use licence
Acronyms
AEL
AMV
AGM
BELCO
Brits
CAGR
CLN
CSP
DFS
DFFE
DMRE
DWS
EBITDA
Air emission licence
Ammonium Metavanadate
Annual General Meeting
Bushveld Electrolyte Company
Brits Project
Compound Annual Growth Rate
Convertible Loan Note
Conditional share plan
Definitive Feasibility Study
Department of Forestry, Fisheries and the Environment
Department of Mineral Resources and Energy
Department of Water and Sanitation
Earning Earnings Before Interest, Taxes, Depreciation, and
Amortisation
Enerox Holdings Limited
Enerox GmbH
Environmental Impact Assessment
Environmental Management System
Environment, social and governance
Enterprise Risk Management
Ferrovanadium
Geological Society of South Africa
Gigawatt
Gigawatt hour
Industrial Development Corporation
International Finance Corporation
Independent power producer
Johannesburg Stock Exchange
Joint Ore Reserves Committee
Key performance indicator
Thousands of tonnes
Long-term incentive
Lost Time Injury Frequency Rate
London Stock Exchange
Minimum emissions standard
Main Magnetite Layer
EHL
Enerox
EIA
EMS
ESG
ERM
FeV
GSSA
GW
GWh
IDC
IFC
IPP
JSE
JORC
KPI
Kt
LTI
LTIFR
LSE
MES
MML
MML-HW Main Magnetite Layer Hanging Wall
Metric ton of vanadium
mtV
mtVp.a. Metric ton of vanadium per annum
MW
MWh
Mt
MVO
OEM
PFA
P₂O₅
QMS
QCA Code Quoted Companies Alliance Corporate Governance Code
Return on Net Assets
RONA
Social and Labour Plan
SLP
Short-term incentive
STI
Titanium dioxide
TiO₂
Total Injury Frequency Rate
TIFR
Total guaranteed pay
TGP
TSR
Total shareholder return
Vametco Vametco Mine & processing plant
Megawatt
Megawatt hour
Millions of tonnes
Modified vanadium oxide
Original equipment manufacturer
Production Finance Agreement
Phosphate
Quality Management System
Annual Report and Financial Results 2022
129
GovernanceFinancial statementsSupplementary informationBusiness overview SUPPLEMENTARY INFORMATION CONTINUED
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 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. 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 (MML)
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.
130
Annual Report and Financial Results 2022
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 DFS 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.
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 nitro vanadium 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.
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.
Annual Report and Financial Results 2022
131
GovernanceFinancial statementsSupplementary informationBusiness overview SUPPLEMENTARY INFORMATION CONTINUED
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 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.
23 June 2023
Notice is hereby given of an Annual General Meeting of Bushveld Minerals Limited to be held at 12 noon on 2 August 2023 at Oak House, Hirzel
Street, St Peter Port, Guernsey, GY1 3RH.
PLEASE READ CAREFULLY – ARRANGEMENTS FOR THE ANNUAL GENERAL MEETING
The Board recognises that travel to Guernsey may not be feasible for the majority of shareholders and so would like to draw the attention of
shareholders to the following:
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.
4. The arrangements for the Meeting proposed by the Board are subject to constant review and, should they be subject to change, 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 2022.
2. To approve the Directors’ fees as reflected in the 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.
5. That Michael Kirkwood shall be re-elected as a Director, having retired by rotation and offered himself for re-election.
6. That Kevin Alcock shall be re-elected as a Director, having retired by rotation and offered herself for re-election.
7. That Craig Coltman shall be re-elected as a Director in accordance with Article 140 of the Articles, having been appointed by the Directors
in July 2023.
132
Annual Report and Financial Results 2022
8. 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 128,781,828 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 percent of the average closing
price of such shares for the five business days of AIM prior to the date of purchase; and
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).
(iv)
9. 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 to 429,272,760 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 RESOLUTIONS
10. If Resolution 9 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 9 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 128,781,828 shares, being approximately 10.0
percent 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
23 June 2023
Annual Report and Financial Results 2022
133
GovernanceFinancial statementsSupplementary informationBusiness overview SUPPLEMENTARY INFORMATION CONTINUED
Notice of Annual General Meeting continued
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 31 July 2023. 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.
2. 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 measures 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.
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).
3.
4. 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.
5. You can vote either:
• by logging on to https://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 https://www.signalshares.com by 12 noon
on 31 July 2023;
• by requesting a hard copy form of proxy directly from the Registrars, Link Group by phone – UK – 0371 664 0300. (Calls are charged at the
standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines
are open between 9:00am - 5:30pm, 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 PXS1, Central Square, 29 Wellington Street, Leeds,
LS1 4DL by 12 noon on 31 July 2023; or
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.
•
6.
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.
7. 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
https://www.signalshares.com, will not prevent a shareholder from attending the Meeting and voting in person if he/she wishes to do so.
8. Shareholders holding their shares through CREST who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
9.
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). 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.
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 & International 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 12 noon on 31 July 2023. 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.
134
Annual Report and Financial Results 2022
10. Shareholders holding their shares through CREST and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK & International 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.
11. 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.
12. As at 22 June 2023 (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 1,287,818,281 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as
at 22 June 2023 are 1,287,818,281.
13. 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.
14. A copy of this Notice can be found on the Company’s website at www.bushveldminerals.com/investors.
Annual Report and Financial Results 2022
135
GovernanceFinancial statementsSupplementary informationBusiness 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
RBC EUROPE LIMITED
Joint Broker
100 Bishopsgate
London EC2N 4AA
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
136
Annual Report and Financial Results 2022
Printed on material from well-managed, FSC® certified forests and
other controlled sources. This publication was printed by an FSC®
certified printer that holds an ISO 14001 certification.
100% of the inks used are HP Indigo ElectroInk which complies
with RoHS legislation and meets the chemical requirements of
the Nordic Ecolabel (Nordic Swan) for printing companies, 95%
of press chemicals are recycled for further use and, on average
99% of any waste associated with this production will be recycled
and the remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an
international conservation charity, who offset carbon emissions
through the purchase and preservation of high conservation
value land. Through protecting standing forests, under threat of
clearance, carbon is locked-in, that would otherwise be released.
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.
B
U
S
H
V
E
L
D
M
I
N
E
R
A
L
S
D
e
c
e
m
b
e
r
2
0
2
2
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
F
i
n
a
n
c
i
a
l
R
e
s
u
l
t
s
BUSHVELD MINERALS
Registered Office
Oak House, Hirzel Street
St Peter Port
Guernsey, GY1 3RH
www.bushveldminerals.com