Bushveld Minerals Limited Positive Lemur Q1 Operational Update

Bushveld Minerals Limited (LON: BMN), the AIM listed, integrated primary vanadium producer, with ownership of high grade vanadium assets in South Africa, has 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, for the quarter ended 31 March 2019.

Key Highlights

• Lemur has signed a Project Preparation Finance (“PPF”) facility agreement with the Development Bank of Southern Africa (“DBSA”) for an amount of US$1 million.
• The facility will assist in funding the completion of the project development activities and advisory services for the Imaloto Project, thereby enabling Lemur to reach financial close1.
• Review and sign-off of the power bankable feasibility study (“BFS”) has been completed by Sinohydro.
• Review of opencast mine BFS completed. Optimisation exercise underway to consider the inclusion of underground mining within the development plan.
• Engineering, Procurement and Construction (“EPC”) contract negotiations for the power plant are progressing.
• Social and Environmental Impact Assessment (“SEIA”) fieldwork ongoing and on track to be completed in Q2 CY2019.
• Negotiations with potential lenders are progressing.1. Financial close refers to the date on which Lemur secures funding to implement the Imaloto Project pursuant to all finance documents being entered into and all the conditions precedent being fulfilled to the satisfaction of the funders.

Prince Nyati, CEO of Lemur Holdings Limited, commented:

“We are pleased that the Imaloto Project is progressing according to plan. We are particularly delighted to receive support from the DBSA. We believe that the funding will help us finalise our objective of achieving financial close and providing reliable base load power to southern Madagascar. DBSA participation in the development of the Imaloto Project highlights the economic potential of our project as well as the developmental benefits it offers to southwestern Madagascar.”

Details of DBSA Project Preparation Financing

According to the DBSA, the PPF has been created and is earmarked for projects which the DBSA’s financing divisions can include in their pipeline. The funds are intended to be used for the following:

· Creating an environment for implementation of infrastructure projects in Southern Africa;

· Conducting pre-feasibility studies;

· Conducting bankable feasibility studies; and

· Assisting with costs to reach financial close.

The funds are provided with the view that projects financed through this stream will be funded through DBSA’s lending divisions.

Context for Lemur Holdings:

In December 2018, the DBSA board of directors approved the funding of US$1 million in the PPF for Lemur.

The PPF is important to Lemur for the following primary reasons:

• Provides “at-risk” funding for Lemur so it can develop its Imaloto Project, complete feasibility and reach financial close.
• Participating in a PPF with a lender accelerates the due-diligence and approval process for the eventual project finance.

Subsequent to the approval of the DBSA board of directors, the parties signed the facility agreement on 12 March 2019 at the DBSA offices in South Africa. The following are the key points in the US$1 million Facility Agreement:
All amounts advanced under the facility shall be applied only to cover eligible costs as part of project preparation, such as the costs to be incurred by Lemur during the project preparation phase in relation to the project development;
More specifically, the facility agreement specifically covers funding for the following project development activities:

• Completion of the Social and Environmental Impact Assessment (“SEIA”), including various specialist studies;
• Technical support and advisory services; and
• Legal, financial / transactional and other advisory services;
• Operating costs, purchase of equipment and land are not eligible;
• A joint project steering committee between DBSA and Lemur has been appointed;
• The project steering committee will be responsible for the review and disbursement of payments for eligible project costs. The committee will be made up of at least three representatives from DBSA and two representatives from Lemur and will meet on a regular basis.

Lemur will be able to draw down on the facility once South African Reserve Bank approval has been received.

Mohale Ragkate, Group Executive of the Project Preparation Division at DBSA, commented:

“Energy is central to any country’s development, and the Imaloto Project is well positioned to play an important role in providing electricity to Madagascar. A reliable power supply would have transformational developmental benefits for the country’s southwest region, which currently does not have any baseload or transmission infrastructure. We believe that the conclusion of the project preparation financing paves the way for advanced discussions between DBSA and Lemur on project finance for the construction phase of the project.”

Other developments

• Sinohydro has completed the review of Lemur’s power BFS and signed-off on the final report.
• Review of the opencast mine BFS has been completed. Lemur has begun to focus on optimising the mix of opencast and underground mine output and an independent consultant, Bara Consulting, has been appointed to conduct the underground mine BFS.
• Negotiations on an EPC contract have reached an advanced stage. Lemur expects a contract to be signed by the end of Q2 2019.
• Fieldwork for the SEIA is ongoing and is on track to be completed by the end of Q2 2019, despite the excessive rains encountered in March 2019. Submission to the Ministry of Energy is to follow.
• Negotiations have progressed with various lenders to secure construction funding on a project finance basis.

2019 Project Objectives