Bushveld Minerals Limited Lemur Q2 Operational Update

Bushveld Minerals Limited (LON:BMN), the AIM listed, integrated primary vanadium producer, with ownership of high grade vanadium assets, has today provided a Q2 operational update in respect of Lemur Holdings Limited (ASX:LMR), the Company’s coal and energy subsidiary that is developing an integrated thermal coal mining and independent 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, executed a 30-year concession agreement 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 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

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.