TIDMBMN
RNS Number : 5037T
Bushveld Minerals Limited
04 July 2018
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
4(th) July 2018
Bushveld Minerals Limited
("Bushveld" or the "Company")
Lemur Q2 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM listed, integrated
primary vanadium producer, with ownership of high grade vanadium
assets, is pleased to provide a Q2 operational update in respect of
Lemur Holdings Limited ("Lemur"), the Company's coal and energy
subsidiary that is developing an integrated thermal coal mining and
independent power project ("Imaloto Power Project") in
Madagascar.
Q2 Highlights:
-- A 30-year Project Concession Agreement signed with the Government of Madagascar;
-- Inception site visit for Social and Environmental Impact Assessment ("SEIA") completed;
-- Power Purchase Agreement ("PPA") with state owned utility,
Jiro sy Rano Malagasy ("JIRAMA") amended to allow the utility up to
25MW offtake;
-- Draft Bankable Feasibility Study ("BFS") submitted in June
2018 by technical development partner, Sinohydro and currently
being reviewed by the Company; and
-- Ongoing engagement with lenders for construction phase of the
project. Notably, received Expressions of Interest ("EOIs") for
finance and political risk insurance from two financial
institutions.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"Notwithstanding Bushveld Minerals' focus on its flagship
vanadium platform, the Company is committed to deliver on the value
of the Imaloto Power Project by completing the milestones that were
set out for this year in order to supply affordable, high quality
baseload energy in southwest Madagascar. The granting of the
Concession Agreement during the quarter is a critical milestone for
the project, aligning its development with the national
government's broader plans.
"We are also pleased that the draft of the bankable feasibility
study was submitted by our technical partner, Sinohydro and is
currently under review. Once finalised, the study will provide a
more precise picture of the project's cost and timeline for our
ongoing discussion with lenders."
Details of Operational Update
On 12 May 2018, Lemur, through its Madagascar subsidiary Imaloto
Power Project SARL ("IPP"), executed a 30-year concession agreement
("Concession") with the Government of Madagascar for the Imaloto
Power Project. The Concession gives IPP the right to build, own,
operate and supply an initial 60 MW in Imaloto, located in the
Toliara Province.
In addition, the Concession, gives Lemur the right to build an
Evacuation Line of up to 138kV for the transport of the electricity
to the connection points.
As one of the primary offtakers, JIRAMA would be able to resell
the electricity to residential and large-scale electricity
consumers during the specified period, based on the existing PPA
which has been increased from 10MW to 25MW.
Furthermore, the Concession enables granting of the right of way
and any land use authorisation for the required infrastructure from
the coal-fired power plant to the connection points.
The Concession also contains provisions for lenders' standard
terms and conditions to ensure the bankability of the project. In
this regard, Lemur continues to engage with potential lenders for
the Imaloto Power Project, and has to date received EOIs from two
major financial institutions in respect of project finance and
political risk insurance. These financial institutions are
currently conducting their initial due diligence on the
project.
In June 2018, Lemur's technical development partner, Sinohydro,
submitted the BFS for the project which is a critical consideration
for the funding phase. The BFS is currently being reviewed by an
independent consultant. Once the review is completed and the BFS is
finalised, it will provide a more accurate view of project
construction costs and associated time lines, which will tie back
to the funding discussions with lenders. The BFS will also assist
Lemur to progress the Engineering Procurement Construction ("EPC")
discussions. Funding discussions and the negotiation of the EPC
contract will be among the key focus areas for the project in the
second half of 2018.
In addition to the above, another important milestone achieved
during the quarter was the completion of the inception site visit
to the Imaloto Power Project area which Lemur and its team of
environmental consultants undertook as part of the SEIA. The
inception visit was completed in June 2018 and is the first in the
series of the SEIA field-based activities that Lemur needs to
complete on both the project site and impacted areas. Overall, the
SEIA work for Imaloto remains on track and is expected to be
completed by Q4 2018.
Prince Nyati, CEO of Lemur Holdings Limited, commented:
"We are pleased that majority of the key elements required to
progress the project to the next development phase are in place, in
order to supply energy to residential as well as existing and
near-term, large power intensive consumers that have not been able
to expand or commence operations.
"In addition to progressing the SEIA study and finalising the
BFS with Sinohydro, our efforts for the second half of 2018 will
focus on advancing project funding and EPC discussions. As part of
the SEIA process we continue to engage with the local community.
Overall the project will support the regional economy, by creating
1650 direct jobs, some of which have already been filled. However,
the majority of jobs will start during the construction phase,
which will occur in the next 1 to 2 years.
"Power from the Imaloto Power Project is a viable alternative to
existing expensive diesel generation in the region as it will be
based on locally produced low-cost exportable coal, combined with
clean coal technology that will in turn create demand for abundant
unexploited reserves of limestone from the Toliara region. The
baseload energy generated by Imaloto is expected to significantly
change the economics of mining projects, in the southwest of
Madagascar, that were previously deemed as unfeasible."
Summary of 2018 Project Objectives:
Table 1: Status of 2018 Project Objectives
Objective Current Status (Q2)
Obtain Project
Concession * 30-year Concession Agreement with government executed
-------------------------------------------------------------
Complete BFS with
Sinohydro during * Draft BFS completed by Sinohydro
H2 CY18
* Lemur currently reviewing BFS
* Final BFS dependent upon completion of technical and
economic review by independent consultants
-------------------------------------------------------------
Conclude the SEIA
Study by Q4 2018 * Initial desktop work completed
* Site inception visit completed
-------------------------------------------------------------
Secure additional
offtakes above * Discussions with private industrial offtakers ongoing
the current demand
from JIRAMA
* PPA with JIRAMA amended to increase up to 25MW
-------------------------------------------------------------
Pursue funding
and credit enhancement * Multiple discussions with various lenders at
options for the different stages
Project
* Received EOIs from 2 major financial institutions - a
regional financial institution and a South African
government-backed credit insurance agency
* Both are conducting their due diligence
-------------------------------------------------------------
Other Objectives for 2018:
-- Seek to conclude coal offtakes with third parties - coal mine
is viable with only supplying coal to the power project.
Notwithstanding, supplying coal to third parties provides early
cashflows prior to commissioning of the power plant
-- Further explore strategic partnerships for the project (technical, commercial and financial
-- The expected power project commissioning date is 2021
Overall, the Imaloto project is on track to deliver electricity
to south western Madagascar by 2021.
Enquiries: info@bushveldminerals.com
Bushveld Minerals Limited +27 (0) 11 268 6555
Fortune Mojapelo, Chief Executive
Officer
Chika Edeh, Head of Investor
Relations
Lemur Holdings Limited
Prince Nyati,
Chief Executive Officer, Lemur
Holdings Limited +27 (0) 11 268 6555
SP Angel Corporate Finance LLP +44 (0) 20 3470 0470
Nominated Adviser & Broker
Ewan Leggat
Richard Morrison
Alternative Resource Capital +44 (0) 20 7186 9004
Joint Broker
Alex Wood
Tavistock
Financial PR
Charles Vivian / Gareth Tredway +44 (0) 20 7920 3150
Lifa Communications
Financial PR
Gabriella von Ille +27 (0) 711 121 907
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low cost, integrated, primary vanadium
producer, with ownership of high grade vanadium assets.
The Company's flagship vanadium platform includes a 59.1 per
cent controlling interest in Bushveld Vametco Alloys (Pty) Ltd, a
primary vanadium mining and processing company; the Mokopane
Vanadium Project and the Brits Vanadium Project.
Bushveld's vision is to become a significant, low cost,
integrated primary vanadium producer through owned high grade
assets. This incorporates development and promotion of the role of
vanadium in the growing global energy storage market through
Bushveld Energy, the Company's energy storage solutions provider.
Whilst the demand for vanadium remains largely anchored in the
steel industry, Bushveld Minerals believes there is strong
potential for an imminent and significant global vanadium demand
surge from the fast-growing energy storage market, particularly
through the use and adoption of Vanadium Redox Flow Batteries.
While the Company's focus is on the vanadium operations and the
development and promotion of VRFBs it has additional investments in
coal, power and tin.
The coal platform comprises the wholly-owned Imaloto Power
Project, which is being developed as one of Madagascar's leading
independent power producers. The Company's tin interests are held
through its shareholding in AIM listed AfriTin Mining Limited.
The Company's approach to project development recognises that,
whilst attractive project economics are imperative, they are
insufficient to secure capital to bring them to account. A clear
path to production within a visible timeframe, low capital
expenditure requirements and scalability are important factors in
ensuring a positive return on investment. This philosophy is core
to the Company's strategy in developing projects.
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com.
About Lemur Holdings
Lemur Holdings is a wholly owned subsidiary of Bushveld Minerals
and is the company's coal and power platform. The Imaloto Power
Project is located in the southwest of Madagascar and consists of a
136 million tonne coal resource (90 per cent of which is of JORC
compliant Measured and Indicated). The Project also includes a
30-year Concession for an initial 60MW mine mouth coal power plant
as well as over 250km of new transmission lines, developed in
parallel as one of Madagascar's leading independent power
producers. Imaloto also has a secured 30-year electricity off-take
with JIRAMA, the State Utility.
The initial phase of the Imaloto Power Project will potentially
increase Madagascar's baseload capacity by approximately 15 per
cent and almost double the transmission lines in the country. This
is particularly important as the southwest region is mostly rural
and about 95 per cent of the population does not have access to
electricity. In terms of the in economic impact on southwest
Madagascar, the Imaloto Power Project is set to inject close to
US$200 million in foreign direct investment into Madagascar and
will create about 1,650 direct jobs and approximately US$1 billion
dollars in revenue for the government of Madagascar over its useful
life.
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END
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