THE VERTICALLY INTEGRATED PRIMARY VANADIUM PRODUCER - February 2019 Corporate Presentation - Bushveld Minerals
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THE VERTICALLY INTEGRATED PRIMARY VANADIUM PRODUCER February 2019 Corporate Presentation
Disclaimer
These presentation slides and any other material provided with these slides (the “Presentation Materials”) do not comprise an admission document, listing particulars or a prospectus relating to
Bushveld Minerals Limited (the “Company”) or any subsidiary of the Company, do not constitute an offer or invitation to purchase or subscribe for any securities of the Company and should not be
relied on in connection with a decision to purchase or subscribe for any such securities. The Presentation does not constitute a recommendation regarding any decision to sell or purchase securities in
the Company.
No reliance may be placed for any purpose whatsoever on the information contained in the Presentation Materials or the completeness or accuracy of such information. No representation or warranty,
express or implied, is given by or on behalf of the Company or its respective shareholders, directors, officers or employees or any other person as to the accuracy or completeness of the information or
opinions contained in the Presentation Materials, and no liability is accepted for any such information or opinions (including in the case of negligence, but excluding any liability for fraud).
The Presentation Materials contain forward-looking statements, which relate, inter alia, to the Company’s proposed strategy, plans and objectives. Such forward-looking statements involve known and
unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from
such forward-looking statements. Accordingly, you should not rely on any forward-looking statements and the Company accepts no obligation to disseminate any updates or revisions to such forward-
looking statements.
The Presentation Materials should not be distributed, published, reproduced or otherwise made available in whole or in part by recipients to any other person and, in particular, should not be
distributed to persons with an address in the Republic of South Africa, the Republic of Ireland, Australia or Japan or in any other country outside the United Kingdom where such distribution may lead
to a breach of any legal or regulatory requirement. No securities commission or similar authority in Canada has in any way passed on the merits of the securities offered hereunder and any
representation to the contrary is an offence. No document in relation to the Company’s securities has been, or will be, lodged with, or registered by, The Australian Securities and Investments
Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance in relation to the Company’s securities. Accordingly, subject to certain exceptions, the
Company’s securities may not, directly or indirectly, be offered or sold within Australia, Japan, South Africa or the Republic of Ireland or offered or sold to a resident of Australia, Japan, South Africa or
the Republic of Ireland.
Neither this presentation nor any copy of it may be taken or released or distributed or published, directly or indirectly, in the United States of America (the “United States”). The material set out in the
presentation materials is for information purposes only and is not intended, and shall not be construed, as an offer for securities for sale in the United States or any other jurisdiction. The Company’s
securities (the “Securities”) have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or with any securities regulatory authority of
any state or other jurisdiction of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, any US Person as that term is defined in Regulation
under the US Securities Act except pursuant to an exemption from or in a transaction not subject to the registration requirements of the applicable securities legislation. The Company has not been
registered and will not register under the United States Investment Company Act of 1940, as amended.
The technical information contained within this presentation has been reviewed and approved by Dr Luke Longridge, consulting geologist. Dr Longridge has a PhD in Geology (2012) and over 6 years'
experience working on vanadiferous magnetite deposits in the Bushveld Complex. He is a member of the Geological Society of South Africa and is a registered Professional Natural Scientist (Pr Sci.Nat.)
in South Africa. Dr Longridge has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined under the JORC Code (2012). Dr Longridge consents to the inclusion in this presentation of the matters based on his information in the form and context in which it
appears.
2
Company Overview
A growing, low cost, vertically integrated primary An energy storage project developer and component manufacturer
vanadium producer
• High grade ore for primary • Large, low cost vanadium • Electrolyte • Vanadium Redox Flow • MW scale energy storage
vanadium mining & processing processing manufacturing Battery (VRFB) project development
• Largest primary Vanadium • Focus on expansion and • Co-location in Vametco Assembly & • Deployment models include
resource base in the world enhancement of process => significantly manufacturing PPAs, leasing models
brownfield operation lowering costs
The Group is targeting a 10,000 mtV production in the medium term Targeting initial 200MWh of Targeting 1,000 MWh opportunities by 2020
electrolyte p.a.
1. The Company holds a 10.04% shareholding in AIM-listing AfriTin Mining Limited and a 100% Holding in Lemur Holdings
Source: Bushveld Minerals 3
Market Metrics
BMN Share Price (31 January 2019) 37.25p L12M Share Price Performance (indexed) AIM:BMN
Basic Ordinary Shares 1,119,057,953
600%
52-Week Hi-Lo 48.50 - 8.20p
Market Capitalisation £416,849,087
500%
Source: Bloomberg, 31 January 2019
400%
Bushveld Minerals Top Shareholders # shares % ownership
1 Hargreaves Lansdown Asset Mgt 187,606,809 16.75
300%
2 Halifax Share Dealing 109,869,383 9.81
3 Interactive Investor 101,006,940 9.02
4 Acacia Resources Limited 70,598,644 6.30
200%
5 Yellow Dragon Holding Limited 67,832,778 6.06
Bushveld Minerals Top Institutional 100%
# shares % ownership
Shareholders
1 Invesco Perpetual Asset Mgt 21,418,938 1.91
2 Amati Global Investors 8,376,933 0.75 0%
Jan - 18 Mar - 18 May - 18 Jul - 18 Sep - 18 Nov - 18 Jan - 19
3 Canaccord Genuity Wealth Mgt 8,216,150 0.73
Bushveld Minerals FTSE AIM All shares
FTSE AIM All shares - Basic Resources Ferro-vanadium basis 78% min, US$/kg V
Source: Link Asset Services, as at 31 December 2018 Source: Bloomberg, 31 January 2019 4
H1 2018 Financial Highlights
H1 2018 H1 2017
Revenue1 $ 85.4 million $ 0.0
EBITDA1 $ 43.6 million $ 1.3 million 3
Profit After Tax1,4 $ 29.0 million $ 1.4 million
Free Cash Flow1,5 $ 14.0 million - $ 1.8 million
Cash Balance2 $ 34.6 million $ 93.1k
Gross Debt2 $ 0.0 $ 0.0
Earnings Per Share1 1.57c 0.33c Vametco Mine
1. Exchange rate: 2018 GBP/USD 1.4 (2017: GBP/USD 1.3)
2. Exchange rate: 30 June 2018 GBP/USD 1.3 (30 June 2017: GBP/USD 1.3)
3. EBITDA - H1 2017: Includes share of associates
4. Profit After Tax includes minority interest
5. Free cash flow: comprises net operating cash flows less net investing cash flows
5
440 Mt Quality Resource In The Bushveld Complex
1. Vametco
KEY
Vanadium-bearing titaniferous
• Low cost primary vanadium producer magnetite
• CY19e production >2,560mtV, guidance to be provided in Main Road
Railway
• 440 Mt high grade open
Q1 2019 cast primary vanadium
3
• 26 Mt reserve average in-magnetite grade of 1.96% V2O5 resource base
• 142.4 Mt Resource with average in-magnetite grades of • Including ~55Mt
1.96% V2O5
1 combined reserves
• High grade of 1.5-2.0%
2. Brits Vanadium V2O5 among the highest
in the world
• Outcropping, strike extension of the Vametco mine • Low cost primary
• Drilling confirms V grades similar to Vametco (1.5 – 2.0% vanadium processing
V2O5 in magnetite)
capacity supplying ~3%
• Mineral resource estimate expected Q1 2019 of global Vanadium
market
• Scalable processing
3. Mokopane Vanadium 2 platform with scope for
• 298 Mt JORC, outcropping reserve and resource additional brownfield
capacity expansions
• Vanadium in-magnetite grades of 1.75% V2O5 1
• Positive PFS completed January 2016: 25% IRR, US$300m • Targeting 10,000 mtV of
capex, V price $33/kgV for 5,500mtV per annum vanadium production in
production the medium term
• Expect to be granted a New Order Mining Right
Source: Bushveld Minerals 6
Bushveld Vametco Operational Update
• Production capacity Bushveld Vametco
CY18 CY17 CY16 CY15
results2 (100%)
CY19e production >2,560mtV (2018), guidance to be provided in Q1
2019 Vanadium produced (mtV) 2,560 2,649 2,856 2,419
Vanadium sold (mtV) 2,573 2,721 2 ,810 2 ,340
Expansion project to grow Vametco’s share of global market in the
near term FeV LMB price US$/Kg V 81.2 32.6 18.5 18.6
➢ The Company commenced an Operational Transformation USD/ZAR exchange $=ZAR 13.2 13.3 14.7 12.8
programme to enhance Vametco’s production efficiency
Revenue US$'m 192.2 79.1 51.7 49.2
• Vanadium Price EBITDA US$'m 107.5 23.9 3.3 1.3
Strong price performance trading at ~US$76kgV YTD1 Production costs3 US$/kgV 19.7 16.6 12.9 14.6
➢ Vametco’s realized price is based on the prior month’s average
price
Bushveld Vametco’s Global Customer Base (CY18 Sales)
America
4% 3%
Europe
7%
10%
Asia
1. Year to date (YTD) as at 31 January 2019
2. Following the completion of the acquisition of the remaining 55% share in Oceania
16%
Vametco in December 2017, Bushveld’s net attributable interest was 59.1%, this 60%
subsequently increased to 74% in September 2018, through a series of Africa
transactions
3. Excludes depreciation, royalties, selling, general and administrative expenses, Middle East
and impact from production stoppages
Source: Bloomberg, Company records 7
Brits Vanadium Project Update
• Outcropping, strike extension of the Vametco mine
• Second phase of the exploration programme completed. The aim is to delineate a maiden Mineral Resource Estimate
• Positive results from a soil geochemical sampling programme and ground magnetic survey has led to several drilling targets being delineated
• Q2CY18 results indicated vanadium grades in magnetite of 1.54-2.09% V2O5
Ore body extends West to East and dips in northerly direction at Brits Vanadium Project's Strike Confirmed by Ground Magnetics & Drilling
20 degrees Results
8
Mokopane Vanadium Project Update
Measured and indicated resources size (bubble size = contained V205)
Item Unit Value
1,80%
Production
1,60%
Mineral Resource Mt 2981 Mokopane
Ore Reserve Mt 28.5 1,40%
Grade (in-situ) % 1.4% 1,20%
Project Project
Grade (in-magnetite) % 1.7%
Resource grade (%V205)
1,00%
Project
Assumed vanadium Price US$/kg FeV 33 0,80%
Project
Primary producer
Initial Capital Costs US$ m 298 Project Project
Project Project
Co-producer
0,60%
NPV @ 9% real US$ m 418
0,40% Vametco
IRR real % 25% Project
Project
0,20% Project
Development strategy options: 0,00%
• Secure mining right 0 50 100 150 200 250 300 350 400
• Supply ore to China Resource size (Mt)
Cost curve of vanadium pentoxide, by cost item US$/lb2
• Supply ore to other brownfield plants
• Develop greenfield integrated mine & processing plant producing 5.3 ktV tpa
of a >99% purity V2O5 product
1. The Mokopane Vanadium Project PFS, completed by MSA Group was based on
the MML only which is 63Mt even though the overall project resource is 298 Mt
2. Vametco after two stage expansion from 3Mtpa to 5Mtpa. Mokopane costs
based on operating costs and capital expenditure as estimated in pre-feasibility
study. Mokopane project shown for illustration purposes only and does not
imply judgement on Roskill’s behalf of the likelihood of Mokopane being
commissioned, nor does it imply a judgement of Mokopane’s economics as
compared to other brownfield and greenfield expansion projects not included
in this cost curve
Source: Bushveld Minerals analysis, Roskill. The measured and indicated resources chart and the cost curve chart are based on Roskill’s 2017 Vanadium report 9
Bushveld Energy Overview
• Bushveld Minerals’ ambition is to Bushveld Energy recognises that electricity in Africa
grow into one of the world’s most intersects paramount potential for social transformation
significant, lowest cost and vertically with an immense commercial opportunity
integrated vanadium companies
• This allows Bushveld to leverage its Bushveld Energy’s focus
large low cost production base and The Company is focused on developing and promoting the
be a catalyst in the emerging energy role of vanadium in the growing global energy storage
market through application in VRFBs
storage industry
Its strategy is to install several VRFB systems as part of its
longer term vision to become a significant electricity storage
provider in Africa by 2020, meeting the demand for utility
• Electrolyte • VRFB • MW scale
scale energy storage in Africa by leveraging South Africa-
• Large high • Large, low cost manufacturing assembly & energy mined and beneficiated vanadium
grade ore for vanadium • Scope to co- manufacturing storage
primary processing project
locate in Bushveld Energy is commissioning a VRFB with a peak power
vanadium development
• Focus on Vametco of 120kW and peak energy of 450 kWh into Eskom’s
mining process => • Deployment Research Testing & Development (“RT&D”) facility
expansion and
significantly models
• Significant enhancement
lowering costs include PPAs,
resource base of brownfield
leasing Bushveld Energy, together with the Industrial Development
in the best operation
models Corporation (“IDC”) of South Africa, is currently establishing
areas of the
the manufacturing of vanadium electrolyte in South Africa
Bushveld
complex
Source: Bushveld Minerals 10Bushveld Energy Structure
Business lines 1. Vanadium chemicals 2. VRFB manufacturing 3. Battery deployment
Electrolyte production VRFB production Direct VRFB sales
Business Testing / laboratory / R&D Monitoring of produced Project investment and
activities systems development
Sales Post sales support1 Analytics2
• Joint effort with IDC • Operating model features • 1st project with Eskom
• Development of 200MWh partnership or investment installed
Progress to date electrolyte facility in East with VRFB firms and local • Significant success to date in
London, SA partners creating the market,
• Design of process to convert • Medium term focus, once especially in South Africa
vanadium feedstock from local market for storage is • Own energy storage project
Vametco established pipeline in Africa
1. Includes installation and maintenance / warrantee provision
2. Includes energy and financial modelling of project economics and VRFB use cases
11Bushveld Energy Business Plan
I. Manufacture • Building and operating an chemicals plant to convert vanadium feedstock into a liquid electrolyte
electrolyte • Selling electrolyte to VRFB companies or direct users / buyers of energy storage systems
II. Sell and install • Re-selling VRFBs as a local, value-adding partner in African markets to VRFB manufacturers
VRFB systems • Developing a local logistics chain
• Identifies sites and defines the economic business case for VRFB installations
III. Develop and
• Designs the technical and commercial structure of projects that use VRFBs
invest in projects
• Makes direct investments into such projects
• Offers a new product that retains ownership of electrolyte and rents out vanadium to the VRFB
IV. Rent vanadium end user
electrolyte • Provides a product essential to cover vanadium price peaks and produces a pricing strategy to
compete with lithium ion cost reductions
• Invests in the construction of an assembly plant for a VRFB product (that will be operated by
another party)
V. VRFB assembly • This longer term opportunity could involve direct investment into a VRFB company that would
own the facility
Source: Bushveld Minerals 12producers
Customer type
Power utilities
Remote locations
Behind the meter (BTM)
Renewable energy power
Energy arbitrage \ time
shifting
Spinning reserve
Frequency regulations
Bushveld Energy Business Plan
Voltage support
Use case for battery energy storage
Black start
Load shifting
Transmission congestion
Transmission deferral
Distribution deferral
Grid resilience
Curtailment avoidance
Time of use account
management
Demand charge reduction
Increased solar PV self-
consumption
Back-up
Multiple use cases
13Bushveld Minerals Growth Strategy
Horizontal Growth Vertical Growth
Organic growth • Portfolio diversification through the supply of electrolyte for
Horizontal growth strategy Vertical
vanadium redox flows growth
batteries strategy
(VRFBs) for energy storage
• Leverage high quality vanadium resources
• Bushveld Energy established to promote use of vanadium in
• Existing global vanadium market share of c. 3%, expected to
energy storage by:
increase in the near term
o Exclusively focusing on VRFB technology
o Marketing and developing utility scale projects using VRFB
Targeted brownfield opportunities based energy solutions across Africa
• Continued focus on enhancing value through targeting o Partnering with UniEnergy Technologies (UET), a US-based
brownfield opportunities leading VRFB manufacturer
• Diversify product portfolio o Commissioning a VRFB with a peak power of 120kW and
peak energy of 450 kWh into Eskom’s RT&D facility in Q4
2018
Targeting a production platform of 10,000 mtV in the medium term o Working with the IDC to build a vanadium electrolyte
production plant in East London, South Africa, with a
minimum capital expenditure requirement
o Developing novel business models, such as electrolyte
rental, to accelerate VRFB deployments and create new
revenue streams
14Bushveld Minerals Future Plans
• Outline a capital allocation framework and dividend policy in
Q1 2019
• List on the Johannesburg Stock Exchange in the near term
• Develop organisational capacity to align with the Company’s
growth
• Enhance Vametco’s operational performance
• Targeting a production platform of 10,000 mtV in the medium term
• Mokopane Vanadium Project - Secure a New Order Mining Right
• Completed second phase of exploration programme at Brits, results
will be provided by Q1 2019
• Delivered the first VRFB project with Eskom in CY18
• Grow the VRFB project pipeline across Africa
• Supply electrolytes to downstream stakeholders in the vanadium
battery supply chain
• Develop an electrolyte manufacturing plant, with minimum capital
expenditure
• Design and implement a vanadium electrolyte rental product
15Bushveld Minerals Investment Proposition
1 2 3
Positive price outlook as a result of Brownfield infrastructure
Large, open cast deposits 439.6Mt combined resource
sustained structural deficit on the The company’s deposits exist in
(including ~55 Mt combined reserves)
back of growing demand amidst close proximity to brownfield
~2% in-magnetite V2O5 amongst the highest in the world infrastructure creating scope for
constrained and concentrated
supply 1st quartile cost curve position low capex and quick scale-up of
production capacity
4 5 7
Management team
Vertical integration anchored in high combines more than 100 Shareholder Return
quality, low cost production base allows us years’ experience Committed to delivering
to be a key player in the multibillion-dollar attractive returns to
energy storage industry through the shareholders
application of vanadium redox flow 6
batteries, in addition to providing a Concentrated global supply with South Africa
natural hedge as the largest host of high-grade primary
vanadium resources
16Vanadium Fundamentals
Vanadium Market
FeV historical mid-price US$/kgV
Robust and growing demand from
140 steel sector with significant upside
130 from energy storage application uses
120
110
100
90
+
80
Constrained supply, with short term
70
reductions and limited new supply
60
prospects
50
40
30
20
10 A sustained structural market deficit,
0 with significant price upside
Jan'01
Jan'02
Jan'03
Jan'04
Jan'05
Jan'06
Jan'07
Jan'08
Jan'09
Jan'10
Jan'11
Jan'12
Jan'13
Jan'14
Jan'15
Jan'16
July'16
Jan'17
Jan'19
Jul'01
Jul'02
Jul'03
Jul'04
Jul'05
Jul'06
Jul'07
Jul'08
Jul'09
Jul'10
Jul'11
Jul'12
Jul'13
Jul'14
Jul'15
Jul'17
Jul'18
Jan'18
Source: Metal Bulletin; 31 January 2019 18Vanadium Characteristics And Uses
Characteristics Steel
• Vanadium (V) is a
transition metal, in The steel
pure form is a grey, industry
accounts for
soft, ductile ~90% of total
element that does vanadium
• Fabricability consumption
not occur in native
• High strength-to-
form but as a
weight ratio Construction steel - rebar Alloys for aerospace industry
component of
• Corrosion resistance
minerals and as an
• Weldability
impurity amongst Chemicals
• Ability to exist in 4
hydrocarbons and different oxidation Electrolyte
bauxites states accounted for
• It readily forms • Water-soluble ~2% of 2017
global vanadium
several stable • Resistant to attack by
consumption, but
oxidation states (II, alkalis, hydrochloric could grow up to
III, IV, and V) acid, sulphuric acid, 44% by 2027 as
and salt water VRFB’s gain
Long duration utility scale batteries momentum
Source: Bushveld Minerals analysis, Roskill 19Robust Demand for Vanadium
Steel sector Energy storage
• Circa 90% of vanadium demand is underwritten by the steel • Vanadium’s unique characteristics positions it well for large
industry where it is used as an additive scale, long duration energy storage using VRFBs
• China is the largest market for vanadium • VRFB technology is already in commercial production with
• The country’s vanadium consumption is anticipated to grow large (MW) scale deployments globally
at a CAGR of 2.3% up to 2027 due to a revision of the • China’s new National Development Plan’s (Document
tensile strength of steel rebar products, announced in 2017 #1701) focus “includes 100MW-grade, vanadium redox
• China’s new standard is designed to limit and eliminate the flow battery energy storage stations”
use of inferior steels in construction (Grade 2 rebar): • Impact on vanadium demand significant as vanadium
➢ Grade 3 (400MPa), Grade 4 (500MPa), and Grade 5 comprises 30-60% of cost of VRFB systems
(600MPa), will require 0.03% V, 0.06% V, and more • Commercialisation of Energy in Europe, EC report: there
than 0.1% V respectively will be economic potential for very large amounts (about
➢ The above may lead to an increase in Chinese 400 GW) of storage in the EU
vanadium demand of over 30% or 10,000 tpa in 2019 • The amount of vanadium used for energy storage has
doubled in the past 12 to 18 months, according to Vanitec
20Vanadium Demand Is Underwritten By The Steel Sector
Steel Production & World apparent vanadium consumption - High Steel Forecast
• Vanadium consumption and steel
160 000 2 500 000 production are strongly correlated
• China’s new high-strength rebar
World steel production (kt)
140 000
2 000 000 standard effective November
V consumption (mtV)
120 000
2018 estimated to increase global
100 000
1 500 000 Vanadium demand by 10-15%
80 000
• Regulatory prescriptions make it
1 000 000
60 000 possible to estimate with relative
certainty demand outlook for
40 000
500 000 vanadium in the steel sector
20 000
- 0
Year
In a nascent energy storage
Vanadium consumption in steel forecast (mtv) (LHS) World Apparent Vanadium consumption (mtv) (LHS) industry, the steel anchor is
World Steel Production (kt) (RHS) Linear (World Apparent Vanadium consumption (mtv) (LHS))
important for vanadium supply
development
Linear (World Steel Production (kt) (RHS))
Source: Bushveld Minerals analysis, Roskill, World Steel Association 21Vanadium Demand - Steel Sector Demand Drivers Are Robust
2010 Code for Design of Concrete Structures 2011 Update of Code for Construction 2015-2017 Quenching and tempering techniques 2018 China’s new high-strength
(GB50010-2010) Quality Acceptance of Concrete Structures used by rebar producers to minimise use of rebar standard introduced in January
issued in August 2010 and took effect from 1 (GB 50204 – 2002) – issued in December alloying elements, thus blunting impact of codes 2018, effective November 2018
July 2011 2010 and took effect from 1 August 2011 on vanadium demand
China Crude Steel and Vanadium
2010 - 2014 2014 - 2017 China Rebar Product Structure
0.45%
1 000 000 60000 CAGR CAGR
900 000 100% 19.36
50000
800 000 5.2% 0.8% 90% %
% of China Rebar Structure
700 000 80%
40000
Vanadium (tV)
600 000 1.5% 70%
Steel (kt)
3.9%
500 000 30000 60% 67.31
Quenching & tempering %
400 000 9.8% -3.1% 50%
techniques among steel 20000
300 000 40%
plants leads to lower V
200 000 30% 6.49
consumption 10000 %
100 000 20%
0 0 10% 3.77
0% %
China crude steel production (LHS) (kt) China crude steel consumption (LHS) (kt)
Gr.1 - 235MPa Gr.2 - 335MPa Gr.3 - 400MPa
China vanadium consumption (RHS) (tV) Gr.4 - 500MPa Gr.5 - 600MPa
Source: Bushveld Minerals analysis, TTP Squared 22Energy Storage Matters For Vanadium Demand
Annual Installed Stationary Energy Storage Capacity and Deployment Revenue by
• Stationary energy storage
Market Segment
demand is growing rapidly at
Utility-Scale Commercial & Industrial Residential Total Revenue
a rate of 58% p.a. and will
120 000 60 exceed 100GWh by 2027
100 000 50
• Multiple technologies will be
successful due to unique
80 000 40 technical and cost advantages
US billion
• Flow batteries expected to
MWh
60 000 30
capture 18% of the market,
40 000 20 according to Navigant
20 000 10
• This equates to 20GWh of
demand and nearly $10
0 0 billion in revenue by 2027
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
• Stationary energy storage demand is growing rapidly and will exceed 468GWh by 2027 on a cumulative, installed basis
• Most projects point to 20-40GWh of storage deployed by 2025
• Annual additions are forecast to reach 80GWh by 2025
• Growth may appear excessive, but it is similar to solar PV growth over the past 10 years
Note: Utility segment includes thermal storage technology
Source: Navigant Research 23Vanadium Demand - Vanadium Redox Flow Batteries
• The flow battery, unlike conventional batteries, uses a liquid vanadium electrolyte to store energy in
separated storage tanks, not in the power cell of the battery
Vanadium Redox Flow • During operation these electrolytes are pumped through a stack of power cells, or membrane, where an
Battery electrochemical reaction takes place and electricity is produced
• VRFB is the simplest and most developed flow battery in mass commercial operations
The unique features of VRFBs make them ideal for utility scale, stationary energy storage applications
Applications of VRFBs “Vanadium has soared more than 130% in the past, outperforming
better-known battery components like cobalt, lithium and nickel.
1. Driving grid efficiency – operational and capital expenditure
• Peak shaving or peaking capacity Analysts are expecting a shift in uses of vanadium. The metal can
• Regulating load frequency and providing other ancillary services be used in industrial-scale batteries, which help to even out daily
• Balancing PV and wind intermittency peaks and troughs from renewables…”
• Reducing and deferring capex for transmission and distribution lines
Bloomberg, January 2018
2. Driving grid independence
Large VRFB systems currently in deployment globally
Year Announced Company Location Size
• Storing electricity from solar PV for use at night
Rongke
• Lowering system costs for micro grids and islands 2016 Dalina, China 800 MWh
Power
2017 VRB Energy Hubei, China 400 MWh
VRFBs are ideally suited for large scale, long duration storage 2018 RedT Austria, Germany 70 MWh
applications
24VRFB Technology Offers Significant Advantages
• Long lifespan cycles: Ability to repeatedly charge / discharge over 35,000 times for a
lifespan of over 20 years
• 100% depth of discharge: Without performance degradation is unique to VRFBs
• Lowest cost per kWh when fully used at least once daily makes VRFBs today cheaper
than Li-ion batteries
• Safe, with no fire risk from thermal runaway
• 100% of vanadium is re-usable upon decommissioning of the system
• Scalable capacity to store large quantities of energy
• Flexibility: Allows capture of the multi-stacked value of energy storage in grid
applications
• Very fast response time of less than 70ms
• No cross-contamination: Only one battery element, unique among flow batteries
Source: IRENA 25All VRFB Forecasts Expect Major Growth In The Medium To Long Term
Scenario Assumption VRFB demand in 2027, Vanadium use in VRFBs in 2027,
MWh mtV
• Major driver for
• VRFB forecast scenario from Bushveld
Minerals May “Vanadium 101” increased VRFB demand
Vanadium 101 - presentation 9 250 50 875 is a larger energy storage
• Scenario used 25% market share and market forecast from
scenario
Bloomberg New Energy ESS forecast Navigant than the BNEF
• 5.5 kg of vanadium per kWh forecast used in
Vanadium 101
presentation
assumptions
• Flow battery forecast from Navigant, • BNEF has since more
Baseline – assuming 18% market share than doubled its forecast
• VRFBs are the successful flow battery 18 700 82 280
Navigant for energy storage
forecast technology
• 4.4 kg of vanadium per kWh
• VRFB manufacturers are
researching ways to use
more of the electrolyte
to reduce costs and
improve energy density.
• VRFB forecast from Benchmark Minerals
Upside – BMI Bushveld’s scenarios
(BMI)
assume these
forecast • Assumes 25% market share of Navigant’s 27 500 96 250
overall energy storage forecast improvements are
• 3.5 kg of vanadium per kWh achieved to support
market penetration
Source: BMI, BNEF, Bushveld Minerals “Vanadium 101”, Navigant Research 26The Upside For Vanadium Use In Energy Storage May Exceed Our
Expectations
• While the market share
of VRFBs compared to
2017 vanadium production of 92,392 mtV other energy storage
100 000 96 250 CAGR 41.9%
technologies is a key
90 000 assumption, the ultimate
82 280 CAGR 39.9%
size and growth rate of
80 000 the stationary energy
storage market has even
70 000 greater impact
60 000 • Recent trends to revise
50 875 CAGR 33.9% energy storage forecasts
mtV
50 000 upward imply that
vanadium demand from
40 000 VRFBs may be greater
than expected even
30 000 under “aggressive
forecasts”
20 000
• Within 10 years demand
10 000 8 000 CAGR 13.2% for vanadium by energy
2 826
storage could equate to
-- 50-100% of today’s
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
global market
Baseline (Roskill) Vanadium 101 scenario Navigant assumptions BMI assumptions
Source: Bloomberg New Energy Finance (BNEF), BMI, Bushveld Energy analysis, Bushveld Minerals analysis, Navigant, Roskill, TTP Squared 27VRFB Adoption Hurdles
Global challenge Bushveld Minerals opportunity
• Extensive vanadium resource in South Africa of ~
440 Mt
• 1,000 MWh of VRFB-based energy storage • High grade of vanadium resources in Bushveld
Security of requires ~6% of global vanadium supply complex allow for low cost, primary vanadium
supply • VRFBs could contribute ~44% of vanadium production
consumption by 2027 • Existing low cost cash generating and scalable
production platform
• Bushveld vanadium projects are well positioned
• Vanadium input costs contribute ~40% of with a lower first-quartile cash cost to mitigate
Stability of the cost of the VRFB systems security of cost risk
vanadium • Bushveld’s new electrolyte rental product will
input cost
• Vanadium prices have risen ~400% in the
past 3 years reduce upfront costs and allocate them over long
life-span of VRFB and reduce vanadium price risk
28Understanding Vanadium Supply
STEEL PLANT CO-PRODUCTION FLOWSHEET (74% of Global Vanadium Feedstock Production)
Hot metal Hot metal
(Fe, V) (Fe) Steel
DRI + EAF/ V recovery - Ladle
BOF + Steel Casters
Blast furnace furnace
Smelting
Salt Roast Processing
TiO2 slag Vanadium slag
Magnetite
Ore concentrate
SALT ROAST FLOWSHEET (14% of Global Vanadium Feedstock Production)
V2O5 / MVO
There are several greenfield vanadium
Salt Roasting Leaching & purification FeV/NV production
projects exploring hydrometallurgical
processing methods to produce iron, Salt roasting of Leaching, filtration, Vanadium
vanadium and titanium. None of these concentrate with sodium desilication, precipitation pentoxide/modified
are yet in commercial production salts at ~1200oC to form followed by reaction to vanadium oxide is
water soluble sodium form vanadium pentoxide converted into FeV or NV
vanadate material
Calcine tailings
(Fe, Ti)
Source: Bushveld Minerals analysis 29Constrained Vanadium Supply
• Low Fe gradeAppendix
Bushveld Minerals Experienced Leadership Team
• Co-founder and Chief Executive Officer (CEO) of Bushveld Minerals
• Co-founder and director of VM Investment (Pty) Ltd, a principal investments and advisory company focusing on developing mining projects in Africa
Fortune Mojapelo
• Founding CEO of Bushveld Minerals Limited where he has played a lead role developing and executing the company’s vanadium strategy
Chief Executive Officer
• Played a leading role in the origination, establishment and project development of several junior mining companies
• His corporate career started at McKinsey & Company as a strategy consultant
Geoff Sproule • Chartered accountant with experience spanning over 40 years in numerous financial management roles
Financial Director • Prior to joining Bushveld Minerals Geoff was a partner at Deloitte and Touche
• Co-founder and Chief Executive Officer of Bushveld Energy, an energy storage solutions company, part of AIM-listed Bushveld Minerals, an integrated
Mikhail Nikomarov vanadium company
Chief Executive Officer • Chairman of the South Africa Energy Storage Association (SAESA)
of Bushveld Energy • Chair of the Energy Storage Committee of Vanitec, the global non-profit organisation of vanadium producers
• Previously worked for McKinsey & Company in Russia and across Africa, focusing on the power sector and economic development
• Previously Vametco General Manager until promotion to COO role in 2015
Lyndon Williams • Has held a range of roles with Highveld Steel & Vanadium including Metallurgist, Superintendent Vantra, Assistant Manager Steel Plant, Manager
Vametco Chief Vanchem Manager Steelmaking, Manager Ironmaking, Works Manager Steel and Vanadium, and global Vanadium sales and marketing
Operations Officer • Is a qualified Metallurgical Engineer
• Over 35 years’ experience in the extraction of vanadium as well as vanadium slag production and processing
• Over 15 years’ experience in energy and mining with a particular focus on project development and mergers and acquisitions
Prince Nyati • Worked in several countries including Zambia, South Africa, India, Singapore and the USA under Shell, Total Petrochemicals, Eskom, Tata Power and
Chief Executive Officer Oreport. As group head of Tata Power, he has evaluated over 100 coal assets and over 50 power opportunities
of Lemur Holdings • Led the development of numerous infrastructure projects in sub-Saharan Africa and facilitated transactions worth approximately $1.5 billion in
Zambia and South Africa
32Bushveld Minerals Board of Directors
Ian Watson Fortune Mojapelo Geoff Sproule
Non Executive Chairman Chief Executive Officer Financial Director
Jeremy Anthony Viljoen Michael Kirkwood
Friedlander Non Executive Director Non Executive Director
Non Executive
Director
33Bushveld Vametco Processing Steps
34Bushveld Vametco Processing Steps
1 Mining • The processing plant at Vametco is fed ore from the co-located Vametco mine. The Vametco mine is an open pit mine along a 3.5km strike
running west to east and dipping at about 20 degrees in a northerly direction. Vametco employs the standard salt roast and leach process to
produce a trademark vanadium carbon nitride (VCN) product called NitrovanTM
2 Concentration • The ore is passed through a three-stage crushing and milling circuit to produce a product sizing suitable to liberate the gangue materials in the
ore, typically 20% passing 75 microns and passed through a low intensity magnetic separation circuit to produce a magnetite concentrate
product
3 Salt Roasting • The concentrate is roasted with sodium carbonate and sodium sulphate in a rotary kiln at temperatures of up to 1,150oC to form water-
soluble sodium vanadates. Solids exiting the rotary kiln are discharged directly into a rotary cooler that cools the solids sufficient for
conveying to the leaching circuit
4 Leach Milling & • The cooled calcine is fed to a wet ball mill which grinds the agglomerated material for improved leaching and also acts as the first stage of
Purification leaching. The mill discharge slurry is pumped to belt filters to separate the vanadium rich solution and calcine tailings. The vanadium rich
solution is pumped to thickeners where desilication and concentration of the vanadium-bearing leach liquor takes place. Calcine tailings are
conveyed to the tailings disposal facility
5 AMV precipitation
• Ammonium sulphate is added to the vanadium-bearing leach liquor which allows for the precipitation of vanadium in the form of ammonium
metavanadate (AMV)
6
Modified Vanadium
Oxide Production • The AMV filter cake is dried in a rotary dryer and thereafter transferred to the MVO Rotary Calciners to produce Modified Vanadium Oxide
(MVO)
7
NitrovanTM shaft • NitrovanTM production – the MVO is mixed with carbon and a binder which is briquetted and fed into an induction shaft furnace under a
furnace nitrogen atmosphere to produce NitrovanTM
35Stationary Energy Storage Offers Many Benefits To Power System On Top Of
Its Ability To Support Renewable Energy
Stationary energy storage usage Types of power sector applications of stationary energy storage
parallels that of transmission
lines, which move electricity from
Transmission Distribution Customer Off-grid
one location to another. Bulk energy Ancillary energy
services services infrastructure infrastructure
Similarly, energy storage moves services services management
electricity from one time to services
another Electric energy Transmission Distribution
Frequency Solar home
time-shift upgrade upgrade Power quality
regulation systems
Different types of storage and (arbitrage) deferral deferral
storage technologies are relevant
Spinning, non Mini-grids:
for different applications, often Transmission
Electric supply spinning and Voltage Power System
congestion
determined by the amount of capacity supplemental
relief
support reliability stability
time stored energy that is reserves services
required Mini grids:
Retail electric
Voltage Facilitating
energy time-
Support high share of
While storage is needed to shift
VRE
stabilise and make variable
Demand
generation from solar and wind Black start charge
dispatchable (or “base load”), the management
value of storage goes far beyond
Increased self-
supporting renewable energy consumption
of Solar PV
Boxes in grey: Storage services directly supporting the integration of renewable energy
Source: International Renewable Energy Agency (IRENA)
36Bushveld Energy’s Electrolyte Rental Model
• Pays interest on the credit facility
• Settles the outstanding loan at contract termination
Financial Institution
• Converts vanadium into electrolyte
• Supplies vanadium under rental contract
Advances a credit
facility to
• Recovers vanadium at contract expiration
Intermediary Intermediary VRFB customer
Special Purpose (Off-Taker)
Delivers required
vanadium units to Lease Co. • Pays nominal upfront deposit for electrolyte
the Intermediary • Pays annual rental fee for the electrolyte (covering
interest payments and a price risk premium)
Miner
Pays cash for the supplied vanadium units
Vametco
at market rates
Benefits of the product to VRFB customers or manufacturers include:
• Significantly lower and predictable CAPEX for the electrolyte components of the battery
• A manageable annual fee that is added to the battery’s maintenance costs
• Overall lower total cost of ownership / levelized cost for a VRFB than if an outright purchase
Source: Bushveld Energy
37The VRFB Is The Simplest And Most Developed Flow Battery In Mass
Commercial Operations
• The flow battery was first developed by NASA in the
1970s and unlike conventional batteries, the liquid
electrolytes are stored in separated storage tanks, not in
the power cell of the battery
• During operation these electrolytes are pumped
through a stack of power cells, or membrane, where a
reversable oxidation (“redox”) electrochemical reaction V4+/V5+ V2+/V3+
takes place, charging or discharging the battery
• Vanadium can exist in four different states, allowing for
a single element to be used to store energy. Vanadium
was first used in flow batteries in the mid-1980’s
• In addition to vanadium, the electrolyte consists
primarily of water and chemical additive acids such as
sulphuric acid or hydrochloric acid
Source: IEEE Spectrum: “It’s Big and Long-Lived, and It Won’t Catch Fire: The Vanadium Redox-Flow Battery”, 26 October 2017 38How Do VRFBs Compare To Lithium-ion
Four key categories Lithium-ion
VRFBs
to consider
1. Technical • Excellent for energy applications (4+hrs) • Excellent for power applications
• Lower roundtrip efficiency but longer life and no • Degradation accelerates with frequent use, temperature
performance
degradation and deep discharges
• No risk of thermal runaway • Thermal runaway creates risk of fire and smoke that
2. Safety • Electrolyte spillage is main risk must be managed
• Have yet to experience scale economies • Significant cost decreases in recent years due to R&D
3. Cost • High contribution of vanadium is both a risk and an and capacity growth
opportunity • Cost reductions expected to slow
• More nascent technology • Growing acceptance from deployment in frequency
4. Market acceptance • Challenge from fragmented supply market control markets
dominated by start-up companies • Credibility of large, consolidated cell manufacturers
helps
In summary, there is no clear superiority, with use cases and site requirements often determining the optimal
solution
Source: Bushveld Energy 39There Are Clear Performance Benefits To VRFBs And Lithium-ion
Metric VRFB Lithium-ion
Sub-chemistries H2SO4-based, HCl-based LFP, LMO, NCA, NMC, LTO
Energy Density 20-40 Wh / kg 80-200 Wh/kg
Discharge Time 3-10 hours 0.5-5 hours
DC Efficiency 75-90% 92%-99%
Cycle Life 20,000-30,000 cycles 600-12,000 cycles
Calendar Life 20-25 years 3-10 years
Depth of Discharge 100% 80-95%
Ambient temperature -20 - 50o C 0-30o C
Self-discharge (24h) 2.5% 5%
Safety Notes Corrosive electrolyte Susceptible to thermal runaway
Applications Suited for energy applications Suited for power and energy applications
Source: Bushveld Energy, Navigant 40Lazard Uses The Levelized Cost Of Energy Storage To Compare Technologies,
But The Method Has Limitations
Investment bank Lazard analysis shows that VRFBs have the potential to achieve the lowest costs Limitations to Lazard’s
in the industry approach
• All analyses assume not
USD / kWh, 2018, levelised costs more than one 100%
Lithium-Ion discharge cycle per day.
0,3 0,29 VRFB For a VRFB, achieving two
0,26 VRFB 1.5 cycles cycles per day would cut
0,26
the LCOES by 50%
0,25
0,20 • A single battery, well-
0,20
0,2 placed within a power
0,17 system can be used for
0,15 multiple uses, decreasing
0,13
its LCOES further
0,11
0,1 • Lack of public information
on costs and performance
0,05 creates a wide range of
pricing in the analysis of
0 both technologies, which
Wholesale T&D PV+storage will fall over time
1. VRFB 1,5 cycles LCOS takes Lazard’s VRFB LCOS and adjusts for 1.5 full daily cycles, rather than the 1 cycle assumed
2. T&D stands for Transmission and Distribution use case
Source: Lazard’s Levelised Cost of Energy Storage Analysis – Version 4.0 (November 2018); Bushveld Energy analysis
41Vanadium Demand Remains Anchored To Steel, although VRFBs provide
significant demand upside
• Vanadium demand has for decades been Vanadium demand forecast by application and
underwritten by the steel market, which accounts for scenario
over 90% of vanadium consumption 250
• Steel market set to continue supporting robust Implied 10 year vanadium 8.4%
x% demand CAGR
vanadium demand, growing by 2.2% CAGR from 2017
200 7.7%
to 2027 through. With expected increase of vanadium
intensity of steel, vanadium demand CAGR from steel 5.9%
is expect to be 2.5% through 2027 150
2.9%
• Significant demand upside from growing applications
2.5%
mtV
of vanadium in energy storage industry via VRFBs
100
2.5%
➢ Stationary energy storage is forecast to grow at
CAGR of 58% over the next 10 years, becoming a
$50 billion industry by 2027 50
➢ While forecasts for VRFBs vary, they could add
between 8,000 and 96,000 tons of vanadium 0
demand by 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
➢ This energy storage “upside” may increase Steel Non-ferrous & chemicals VRFB - Baseline (Roskill)
vanadium demand CAGR from 2.5% up to 8.4% for
VRFB - Vanadium 101 scenario VRFB - Navigant assumptions VRFB - BMI assumptions
the next 10 years
Source: Bloomberg New Energy Finance, Bushveld Minerals analysis, Roskill
42Bushveld Minerals Limited (Vanadium Platform) Corporate Structure
65%
Great 1 Line Invest
Bushveld Minerals Limited (Pty) Ltd
Guernsey Brits Project
74%
100% Gemsbok Magnetite The 74% underlying
(Pty) Ltd interest in Vametco
Bushveld Resources Alloys (Pty) Ltd was
Guernsey
100% Caber Trade & Invest achieved with a total
100% (Pty) Ltd cash outlay of
approximately US$48
Bushveld Vametco Limited million, which is the
68.5%
Guernsey Amaraka Investments
Mokopane No. 85 (Pty) Ltd equivalent of ~1x H1
100% Project 2018 EBITDA
64%
Strategic Minerals Corporation Local Partners Pamish Investments
US ZA No. 39 (Pty) Ltd
26%
74%
Vametco Holdings (Pty) Ltd
ZA
100%
Vametco Alloys (Pty) Ltd
ZA
43Corporate Information
Nominated Adviser & Broker Broker Joint Broker Financial PR
Registered Office SP Angel Alternative Resource Capital BMO Capital Markets Limited Tavistock
18 - 20 Le Pollet Prince Frederick House, 8-10 Hill Street, 95 Queen Victoria St, 1 Cornhill,
St Peter Port 35-39 Maddox Street, London, W1J 5NQ London EC4V 4HG London EC3V 3ND
Guernsey London W1S 2PP
Principal Operating Address
2nd Floor, Building 2
Illovo Edge Office Park
9 Harries Road, Illovo
Johannesburg, 2116
Legal Counsel - UK Independent Auditor Financial PR
South Africa
4 More London Riverside RSM UK Audit LLP 32 Fricker Road, Illovo Boulevard,
London, SE1 2AU 25 Farringdon Street Sandton 2196
Tel: +27 11 268 6555
London, EC4A 4AB
BMO Capital Markets Limited
Financial PR
32 Fricker Road, Illovo Boulevard,
Sandton 2196
44Bushveld Minerals Corporate Video: https://www.brrmedia.co.uk/broadcasts/5a5626af9ed50c2f9b04679c/bushveld-minerals-an-emerging-
integrated-vanadium-producer
Vanadium 101 Webinar: https://edge.media-server.com/m6/p/i2wo6bk9
Vanadium 101 Slides: http://www.bushveldminerals.com/wp-content/uploads/2018/05/Bushveld-Minerals-Vanadium-101_Final.pdf
Energy Storage 101 Webinar: http://webcasting.brrmedia.co.uk/broadcast/5bd2eae5b01efb6b20c2f9eb/5bd348eba21632633b00003d
Energy Storage 101 Slides: http://www.bushveldminerals.com/wp-content/uploads/2018/11/Energy-Storage-Vanadium-Redox-Flow-
Batteries-101.pdf
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