Bushveld Minerals – 101

Alfacomp

31 May 2017

Bushveld Minerals (BMN) was first floated on AIM as an Iron focussed Junior Miner in 2012, when the Iron ore price was over 140 USD/tonne.  Between 2014 and 2016 the price of Iron fell by more than 70% forcing BMN to reassess its exploration assets for other exploitation angles. A fuller story is given here but the end result was that BMN determined that it also had excellent (world-class) Vanadium resources at one of the Mokopane sites it had previously targeted for Iron, and in 2014 switched the main company focus from Iron to Vanadium.

The reassessment of other sites near Mokopane, greatly assisted by Bushveld’s longterm technical advisors, Professors Richard and Morris Viljoen (world leading experts on South African geology) also identified a nearby brownfield tin resource that would yield approximately 20,000 tonnes of Tin – this is the Mokopane Tin project, which became BMN’s secondary platform. To this was added another 18,000 tonnes of contained Tin by the subsequent acquisition of 50% of the Marble Hall Tin Project some 100km to the south east of Mokopane.

Bushveld Minerals Tin sites in the Bushveld Igneous Complex

In 2013 it had first become apparent that Bushveld Minerals also had a majority stakeholding in an Australian listed explorer called Lemur Resources, which had been founded by Bushveld’s CEO, Fortune Mojapelo and Director, Anthony Vlijoen – Lemur had as its flagship project the Imalato thermal coal project in Madagascar, but in the commodity downturn at that time was valued at less than the cash it had on hand. Subsequently in May 2015 Bushveld announced a takeover offer for Lemur.

Vanadium, Tin and now Coal spread across multiple locations – at the time many on the LSE board could not work out what BMN was doing and thought that it was spreading itself too thinly and without focus. It later turned out that the BoD was rather a long way ahead of the market – the Lemur purchase was concluded in September 2015 and Bushveld picked up the Imalato coal project (more than 100 Million tonnes of coal, market price 40 USD/t) for zero cost.

Lemur also entered the picture again when in November 2015 it was announced that they had bought the exploration rights for a Vanadium project at Brits on the western limb of the Bushveld Igneous Complex (Mokopane is in the northern limb). This project turned out to be immediately next to the Vametco Vanadium mine and processing plant, an extension of the same strike that was being commercially mined there. This was no idle purchase, as Vametco was then owned by Evraz (Roman Abramowich) who were in trouble with their south african Highveld Steel plant, because … iron and steel prices, as mentioned before, had tanked.

Evraz had tried to sell Vametco before, but failed, so when Bushveld Minerals offered to buy it from them in 2016 they had little choice but to accept an offer of some USD 17M, approximately 10% of what it cost to build the mine in the first place. An incredible deal for Bushveld Minerals which in a single stride took them from Junior Explorer to a producer with a patented Vanadium end-product – Nitrovan (used as an alternative to FerroVanadium when strengthening steel.)

Normally such an AIM minnow buying a much larger and already operating entity would have been classified as a reverse takeover, which would have required suspension of BMN shares and subsequent reapplication to the market on the basis of a completely new prospectus. BMN managed to structure the deal subtley by partnering with a group of independent investors (Yellow Dragon) to avoid such a delay in their progress – a deal which some analysts have described as ‘the best deal that they have ever seen‘.

Vametco Processing Plant

At the same time as BMN have been delivering on their promise to create this Vanadium platform they have also been augmenting the Mokopane tin project, with additional tin resources at Uis in Namibia – a mine containing some 95,000 tonnes of contained Tin, that had been producing until 1990 and which is planned to be refurbished ahead of pilot scale production. With more than 130,000 tonnes of contained tin (currently selling at USD 20,000/tonne) across their three sites the Bushveld BoD now believe that they have reached the critical size of resource base that would permit the Tin projects to potentially be separately floated on AIM under the Bushveld subsidiary Greenhills Resources.

Development of the Imalato coal project has also recently been spurred on by the signing of a MoU with SinoHydro to take the Imalato coal project forward as a combined mine and 60MW power plant – at present there is no electricity grid in the south of the island so this project would have the very strong support of the Madagascan authorities as well as the potential to generate free cashflow in excess of 10M USD for BMN.

At the same time as securing a producing Vanadium mine and processing plant Bushveld have also been very active in forming strategic partnerships with leaders in the Vanadium Redox Flow Battery sector – utility scale energy storage systems described here. Bushveld Minerals have joined forces with Mikhail Nikomarov (author of  the McKinsey report ‘Brighter Africa’), with whom they have formed Bushveld Energy. Bushveld Energy in turn has teamed up with UniEnergy Technologies  – a US based VRFB manufacturer who are working very closely with PNNL, inventors of the mixed-acid VRFB electrolyte formulation.

The 4MWh VRFB battery system installed in Schweitzer Engineering Laboratories, on Northeast Hopkins Court, Pullman, WA, USA

Bushveld Minerals and Energy have also joint projects with South Africa’s Industrial Development Corporation (IDC) – whose remit is to ‘support and nurture emerging industry value chains’  – of which Energy storage is the number one target. Bushveld Minerals and Bushveld Energy are clearly positioning themselves to create the “most vertically integrated Vanadium play in the world“.

The Bushveld Minerals story is expansive. It is still probably too expansive for most AIM investors to take in. Of course, this is exactly why it is still undervalued, and why it is still a great investment.

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