Bushveld Minerals Limited Key milestone achieved completion and review of the Bankable Feasibility Study Imaloto Project

Bushveld Minerals Limited (LON: BMN), the AIM listed, integrated primary vanadium producer, with ownership of high grade vanadium assets in South Africa, today provided an operational update in respect of Lemur Holdings Limited, the Company’s coal and energy subsidiary that is developing an integrated thermal coal mining and independent power project in Madagascar.

Key Highlights

· Review completed of the Bankable Feasibility Study  for the power aspect of the Imaloto Project.

· Review process initiated for the final draft of the BFS for the coal mine portion of the Project.

· Issued a Request for Proposals for Legal Advisory Services to draft and negotiate EPC (Engineering, Procurement and Construction) Contract(s) for the power project.

· Continued progress on the Social and Environmental Impact Assessment Study (“SEIA”) fieldwork.

· Concluded the due diligence for the project preparation finance with one lender and continued engagement with all lenders on project financing.

· Advanced discussions with export credit insurance provider for credit and political risk insurance cover.

Prince Nyati, CEO of Lemur Holdings Limited, commented:

“The completion and review of the Bankable Feasibility Study for the power component of the Imaloto Project represents a key milestone achieved as we press ahead in ensuring Lemur delivers on the potential of the Imaloto Project. The Project’s bankable feasibility study shows that the Imaloto Project is feasible and can deliver significant economic returns. More importantly, the Imaloto power project is the most advanced Independent Power Project  baseload project in Madagascar. It will have transformational developmental benefits for the country’s southwest region, where the government has already implemented significant road infrastructure expansion. The coal reserve and transmission line is capable to support the generation capacity in excess of 60MW in the medium to long term as suppressed demand is unlocked in the region.

Furthermore, the peaceful democratic elections in Madagascar held in December 2018 are a welcome development and positive indication for projects in the country. With our development partner, Sinohydro,and advanced funding discussions with financial institutions, the Imaloto project remains on track to supply electricity to south western Madagascar.”

Details of Operational Update

1. Power BFS:

In Q4 2018, Lemur and its technical advisors completed the review of the power BFS that was prepared by Sinohydro. The BFS was prepared on the basis of the agreement signed between Lemur and Sinohydro in March 2017. The Study contains the technical specifications for the generation and transmission aspects of the project:

The main findings from the BFS are summarized as follows:

· Plant site: This project is located in the Owner’s mining area of Imaloto area, which is near the town of Benenitra in Toliara Province, Madagascar. Water and coal source assessment determines that identified sources on site from the Imaloto mine and the Imaloto-Onilahy rivers confluence meet project requirements.

· Installed capacity: Phase-1 installed capacity will be 30MW. The site expansion is reserved in the design for additional 30MW in Phase-2, to bring the total capacity to 60MW as prescribed by the concession agreement with the government of Madagascar.

· The plant will utilize Circulating Fluidized Bed Combustion (“CFB”) technology and Electrostatic Precipitators (“ESP”) will be equipped for emission control.

· New transmission lines will interconnect the Imaloto power station, Ilakaka, Toliara and Ambalavao. The initial distance of the transmission line will be 250km. Post Phase-2, the Imaloto project transmission network will cover an addressable market stretching approximately 500km – and will connect Toliara in the west to Fainaranstoa in the east for the first time.

· The selected transmission voltage level is 138 kV, which matches the voltage level currently adopted by JIRAMA.

· Supporting projects include 3 fully automatic controlled substations at Toliara substation, Ambalavao substation and Ilakaka as well as an access road between Ilakaka and the Imaloto power plant site.

· The BFS also includes a Staffing plan as well as buildings and other structure design.

· Design codes and standards: The BFS is performed based on international standard practices; IFC Environmental, Health, and Safety General Guidelines; and the relevant provisions of the law in Madagascar.

Overall, Sinohydro’s conclusion of the BFS is that with the analysis of the project from the aspect of construction condition, technical scheme, environmental protection, economic benefits and technical and economic risks, the project is feasible. Therefore, it is recommended that Lemur progressively develops the Imaloto Power Plant along with a transmission network project.

2. The final draft of the BFS for the opencast mine has been completed and is currently undergoing an independent final review.

3. Fieldwork under the SEIA study has advanced with the final output expected in Q2 2019, to allow for the completion of the wet season studies which are expected to commence at the end of March 2019.

4. With the BFS for the power aspect completed and signed-off, the company is focussing on progressing the EPC discussions for both the power station and the transmission line. In order to achieve this, Lemur issued an RFP for legal advisory services in December 2018 to enable the engagement of EPC partners for the generation and transmission. It is likely that the engagement of the EPC partners may be tendered to the market.

5. Since early 2018, Lemur has been in discussions with a number of financial institutions regarding project financing for the Imaloto project, with one of these parties completing its due-diligence in Q4 2018. Once all the parties have concluded their due-diligence, they will progress to finalise a term sheet on a syndicated project financing basis.

6. In October 2018, Lemur was granted an extension on an expression of interest for credit and political risk cover for the Imaloto project. This was followed by a due-diligence process that is currently ongoing. The institution involved has shared key terms with Lemur, however, this aspect of the project will be carried out together with lender discussions. Therefore, the timelines for the conclusion of the risk cover terms will be aligned with lender agreements.

Table  1: Project Objectives: 2019