Final Results for the Year Ended 31 December 2019

RNS Number : 7756Q

Bushveld Minerals Limited

23 June 2020

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement

23 June 2020

Bushveld Minerals Limited

("Bushveld" or the "Company")

Full Year Results for the Period Ended 31 December 2019 & 2020 Guidance Update

Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated primary vanadium producer and energy storage provider, with ownership of high-grade assets in South Africa, is pleased to announce its full year results for the year ended 31 December 2019.

FY2019 Operational and Financial Highlights

· A sound safety record with no fatalities and a 19 per cent year-on-year improvement in its Total Injury Frequency Rate at our operations.

· Acquisition of the Vanchem processing plant (100 per cent interest) completed in November 2019 for a fair value consideration of US$55.8 million.

· Group vanadium production was up 15 per cent year on year, to 2,931 mtV (on a 100 per cent basis) (2018: 2,559 mtV) as a result of an 11 per cent increase at Vametco and incorporation of Vanchem's two months of production.

· Revenue of US$116.5 million (2018: US$192.1 million) a decline of 39 per cent relative to the prior year, largely due to a 34 per cent reduction in the average realised vanadium price.

· Vametco's production cash cost was down five per cent year on year, to US$18.11/kgV (2018: US$19.0/kgV)

· Group EBITDA of US$32.6 million (2018: US$101.2 million). A 68 per cent decrease relative to the prior year due to a decline in the vanadium price, partly offset by a reduction in cost of sales.

· Gain recognised on bargain purchase of US$60.6 million for the Vanchem acquisition, completed at fair value consideration of US$55.8 million.

· Profit after tax of US$69.2 million (2018: US$49.0 million).

· Basic Earnings per share of 5.51c (2018: 2.90c).

· Underlying earnings per share excluding gain on bargain purchase of 0.12c (2018: 2.90c).

· Cash and cash equivalents of US$34.0 million as at 31 December 2019 (2018: US$42.0 million) with bank debt of US$18.6 million (31 December 2018: nil) after drawdown of the term loan.

o Secured ZAR375 million in debt facilities from Nedbank, in the form of a ZAR250 million term loan and a ZAR125 million revolving credit facility, which have been fully drawn post year end to provide financial flexibility.

o unaudited gross cash and cash equivalent balance as at 31 March 2020 of US$34.4 million including the entire ZAR375 million debt facilities.

· Significant progress at Bushveld Energy, having launched the Vanadium Redox Flow Battery ("VRFB") Investment Platform (VIP) in line with strategy for partnering with VRFB companies, including two successful minority investments and the installation of our first VRFB in South Africa.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

"I am pleased to report on another strong financial year for Bushveld Minerals as we continue steadfastly executing on a strategy, we outlined in 2014, to build one of the world's largest low-cost and vertically-integrated primary vanadium platforms.

"Following the completion of the acquisition of a 74% interest of Vametco, over a two year 2017-2018 period, I am pleased to see this flagship asset continue to shine. Production grew and costs came in below our guidance estimates. Despite notably lower vanadium prices compared with a year earlier, we were able to report a solid Group EBITDA of US$32.6 million. After tax profits of US$69.2 million were helped by a one-off gain on the acquisition of our second processing facility, Vanchem, which closed near the end of the year, after it was valued higher than our eventual purchase price.

"The acquisition of Vanchem is another significant milestone for the Company, adding another brownfield primary processing plant to complement Vametco. With a 3-kiln configuration, and a product suite of vanadium pentoxide, vanadium chemicals, vanadium trioxide and ferrovanadium, the Vanchem acquisition has positioned Bushveld to own one of the broadest vanadium product portfolios in the world. Located conveniently with access to rail infrastructure passing close to the Vametco operations on the Western Limb and the Mokopane deposit on the Northern Limb of the Bushveld Complex, the Vanchem plant fits seamlessly with the Bushveld's assets and provides the Company with a flexible and scalable vanadium production platform. Already producing at a rate of approximately 1,000mtV per annum, which is set to grow to more than 4,200mtV per annum following a refurbishment programme, Vanchem will play a key role alongside Vametco and Mokopane in establishing Bushveld Minerals as one of the most significant low cost primary vanadium producers globally.

"With the completion of the acquisition of two of the three primary vanadium producing operations in South Africa and of the four operating primary vanadium processing plants in the world, the Company is now focused on realising the low cost and scalable production potential of these assets as it grows its production base to more than 8,400 mtV per annum. A successful operations transformation programme aimed at unlocking operational efficiencies at Vametco saw the operation achieve record production from magnetite ore, a record we hope to improve on in the 2020 year.

"I am also pleased to report on significant progress in implementing our vertical integration strategy, where our energy storage focused subsidiary, Bushveld Energy, achieved key milestones across all the three key pillars: electrolyte production, supporting Vanadium Redox Flow Batteries ("VRFB") manufacturing and VRFB energy deployments. These milestones include: approvals by the Industrial Development Corporation ("IDC") and Bushveld Minerals for the investment into the electrolyte manufacturing plant in East London, progress towards in respect of the solar PV plus VRFB mini-grid at Vametco and successful investments into VRFB manufacturing which has been vindicated with stellar performance of its US$5 million investment into the Avalon - RedT merger (now AIM-listed Invinity Energy Systems).

"With so much already having happened in 2020, much of what we achieved last year may feel like the distant past. However, it is important to reflect on the strong base we were able to form in that time, one which allowed us to enter this unprecedented period of a once-in-a generation global Covid-19 pandemic not only to survive the storm but still be well positioned to take advantage of the opportunities that await on the other side of this crisis. Vanadium, remains well positioned in a post-Covid-19 world that will still see a rise infrastructure spending, hence increased consumption of vanadium l and will likely continue on a decarbonisation energy transition path that will see energy storage (and with it VRFBs) grow in prominence. Bushveld Minerals' growth strategy will benefit South Africa by ensuring the country's natural strengths help it to become a global leader in our industry.

"Notwithstanding the short-term capital deferments in the interests of cash preservation that have been necessitated by the COVID-19 pandemic, the Company remains committed to its five-year growth strategy that will ultimately lead to a platform producing in excess of 8,400 mtVp.a. and see Bushveld Energy become a leading energy storage player.

"While internally generated cash flow would always be the priority source of funding for this growth programme, the Company will, over the five-year period, investigate a variety of forms of funding, and prioritise spend depending on market conditions, ensuring an optimal capital structure and the best returns for shareholders in the long-term."

Covid-19 Response

As we reported in May 2020 the Company rapidly developed and implemented a detailed programme in response to the Covid-19 pandemic. The programme prioritises the protection of its employees and host communities through rapid implementation of health and hygiene controls in the workplace, protocols for dealing with suspected cases of infection and business continuity measures to minimise the effects of disruption caused by the pandemic on the business. Our protocols have functioned effectively, and we will continue to monitor the situation and update our measures in line with the guidelines from the South African health authorities and Government.

2020 Guidance and Market Outlook

· While Vametco and Vanchem's production were disrupted by the 35-day nationwide lockdown due to the Covid-19 pandemic, the Company retains the previously announced guidance. However, this is dependent on no further Covid-19 related stoppages:

- Vametco is expected to produce between 3,000 mtV and 3,200 mtV at a production cash cost of between ZAR257/kgV and ZAR265/kgV (US$17.20/kgV and US$17.70/kgV); and

- Vanchem is expected to produce between 960 mtV and 1,100 mtV at a production cash cost of between ZAR245/kgV and ZAR260/kgV (US$16.30/kgV and US$17.30/kgV).

· Total capital expenditure expected for 2020 of ZAR135 million (circa US$8 million), with most of the cost being Rand-denominated:

- Vametco: approximately ZAR50 million (circa US$3 million), including:

§ A total of ZAR11 million (circa US$660,000) of sustaining capital;

§ Approximately ZAR35 million (circa US$2 million) for the completion of the kiln off-gas project in order to comply with environmental regulations and further increase kiln feed throughput; and

§ ZAR4 million (circa US$240,000) required for the Vametco Phase 3 prefeasibility study ("PFS") to achieve a steady state production of 4,200 mtVp.a.

- Vanchem: approximately ZAR85 million (circa US$5 million) has been identified as critical capital expenditure required for 2020 to enable Vanchem to continue to operate sustainably, the majority of which will be incurred during the second half of 2020.

Q1 2020 operational performance

· Group production for Q1 2020 was 871 mtV (on a 100 per cent basis) an increase of 34 per cent relative to Q1 2019 (649 mtV)

- Vametco production for Q1 2020 was 652 mtV (on a 100 per cent basis) in the form of Nitrovan, marginally ahead of Q1 2019 (649 mtV) despite being impacted by the Covid-19 nationwide lockdown as well as higher than usual rainfall during the quarter.

- Vametco early completion of the annual maintenance programme, which was initially planned for Q2 2020 for a period of 10 days. No further maintenance shutdowns are planned for the remainder of 2020.

- Vanchem production of 219 mtV despite being impacted by 10 days of power rationing as well as the Covid-19 lockdown during the quarter.

· Group sales for Q1 were 1,080 mtV (on a 100 per cent basis) an increase of more than double the sales in Q1 2019 (508 mtV)

- Vametco sales of 898 mtV (on a 100 per cent basis) achieved in Q1 2020, 77 per cent higher than Q1 2019 (508 mtV) as a result of additional production volumes in Q4 2019 and increased customer demand.

- Vanchem achieved sales of 182 mtV during the quarter.

· Vametco production cost of US$18.90/kgV, an eight per cent decrease relative to Q1 2019 (US$20.50/kgV), supported by a weaker ZAR:USD rate.

· Vanchem production cost for the quarter was US$18.50/kgV.

Analyst conference call

Bushveld Minerals Chief Executive Officer, Fortune Mojapelo and Finance Director, Tanya Chikanza will host a conference call at 9:00 am BST (10:00 am SAST) today to discuss the 2019 full year results with analysts. Participants may join the call by dialling:

Tel: United Kingdom: +44 330 336 9411; South Africa: +27 11 844 6118

Pin: 2990770

Alternatively, the presentation can be accessed as a webcast here:

https://webcasting.brrmedia.co.uk/broadcast/5eea233d5e278421d0698edb

Annual Report

The Annual Report for the year ended 31 December 2019 will be available on the Company's website today at the following link: http://www.bushveldminerals.com/financial-reports/ .

The Annual General Meeting will be held at 18-20 Le Pollet, St Peter Port, Guernsey GY1 1WH at 11 a.m. on 5 August 2020.

For further information contact:

Bushveld Minerals Limited		+27 (0) 11 268 6555
Fortune Mojapelo, Chief Executive Officer
Chika Edeh, Head of Investor Relations
Enquiries: info@bushveldminerals.com

SP Angel Corporate Finance LLP	Nominated Adviser & Broker	+44 (0) 20 3470 0470
Richard Morrison / Soltan Tagiev
Abigail Wayne / Richard Parlons

BMO Capital Markets Limited	Joint Broker	+44 (0) 20 7236 1010
Tom Rider / Michael Rechsteiner /
Neil Elliot

Peel Hunt Limited	Joint Broker	+44 (0) 20 7418 8900
Ross Allister / Alexander Allen

Tavistock	Financial PR
Charles Vivian / Gareth Tredway / Edward Lee		+44 (0) 207 920 3150

Brunswick	Financial PR (South Africa)
Miyelani Shikwambana		+27 (0) 11 502 7300

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a low-cost, integrated, primary vanadium producer, with ownership of high-grade vanadium assets.

The Company's flagship vanadium platform includes a 74 per cent controlling interest in Bushveld Vametco Alloys (Pty) Ltd, a primary vanadium mining and processing company; 100 per cent of Bushveld Vanchem, a primary vanadium processing facility with a beneficiation plant; the Mokopane Vanadium Project and the Brits Vanadium Project.

Bushveld's vision is to become a significant, low-cost, integrated primary vanadium producer through owning high grade assets. Whilst the demand for vanadium remains largely anchored in the steel industry, Bushveld Minerals believes there is strong potential for an imminent and significant global vanadium demand surge from the fast-growing energy storage market, particularly through the use and adoption of Vanadium Redox Flow Batteries. Bushveld Energy, the Company's energy storage solutions provider, plays a leading role in the development and promotion of the role of vanadium in this market.

The Company's approach to project development recognises that, whilst attractive project economics are imperative, they may be insufficient to secure capital to bring them to account. A clear path to production within a visible timeframe, low capital expenditure requirements and scalability are important factors in ensuring a positive return on investment. This philosophy is core to the Company's strategy in developing projects.

Detailed information on the Company and progress to date can be accessed on the website www.bushveldminerals.com .

About Vametco

Vametco is located near Brits on the Western Limb of the Bushveld Complex. The integrated operation comprises a vanadium ore mine and a processing plant that produces mostly Nitrovan^TM , a trademark product sold in major steel markets across the world. The mine lies adjacent to the Brits Vanadium Project, which will in future serve as an alternative source of near surface run of mine ("ROM") ore feed to the Vametco plant.

The Vametco mining operation uses open pit bench mining methods to mine a well-defined orebody. The deposit is continuous with limited faulting and dips in a northerly direction at approximately 19 degrees.

ROM ore is fed into a primary, secondary and tertiary crushing circuit, followed by milling and magnetic separation to produce magnetite concentrates. The magnetite concentrates are fed into the extraction process which includes the kiln for roasting followed by leaching and precipitation. Thereafter the precipitated vanadium as ammonium metavanadate is converted to modified vanadium oxide ("MVO") in rotary calciners. MVO is fed into the mix plant and finally into the shaft furnaces to produce Nitrovan^TM.

About Vanchem

Vanchem is situated at Ferrobank Industrial Park in Emalahleni Local Municipality, Mpumalanga Province in the Republic of South Africa. Vanchem is a primary vanadium producing facility with a beneficiation plant capable of producing various vanadium oxides, ferrovanadium and vanadium chemicals. Vanchem uses the salt roast beneficiation process, similar to the one used at Vametco. The plant comprises: a core salt-roast processing plant, including 3 roasting kilns, an electric smelting ferrovanadium converter, an alumino-thermic smelting facility, also located at Highveld, a vanadium chemical plant; and a rail siding linking the plant with Bushveld deposits and additional potential supply sources through the national rail network.

About Bushveld Energy Limited

Bushveld Energy is a leading energy storage solutions provider, focusing on the African market. Bushveld Energy recognises that electricity in Africa intersects paramount potential for social transformation with an immense commercial opportunity.

Bushveld Energy is focused on developing and promoting the role of vanadium in the growing global energy storage market through application in vanadium redox flow batteries. Its near term strategy is to deploy several VRFB systems as part of its longer term vision to become a significant electricity storage provider in Africa, meeting the demand for utility scale energy storage in Africa by leveraging South Africa-mined and beneficiated vanadium.

http://www.bushveldenergy.com

Chairman's Statement

Dear Stakeholders,

It is my great pleasure to report on the 2019 financial year, which was another year of positive developments and growth for Bushveld Minerals.

2019 was a transformational year, in which the Company significantly progressed the business development activities across our upstream and downstream platforms. It saw the completion of a landmark transaction, the successful acquisition of the Vanchem processing facility, which was a testament to the strength of our management team.

Having successfully acquired Vametco and Vanchem, Bushveld Minerals now owns two of the three primary vanadium processing facilities in South Africa and two of the four operating primary processing facilities in the world, setting the Company well on its way to achieve its target of being one of the most significant, low-cost primary vanadium producers.

Although the backdrop to our operations over the past year was in many ways challenging, with continued slow growth in the South African economy and uncertainty over the sustainability of Eskom, the country's power utility, Bushveld was able to advance many of its long-term ambitions. As a truly South African corporate citizen, we believe our strategy - to utilise and beneficiate the country's natural resources, grow our operations, create jobs and assist with alternative energy solutions - contributes towards addressing our country's complex problems.

Bushveld Minerals plans to develop its downstream operations beyond production of end-use vanadium products, to become a key player across the energy storage value chain. As we have repeatedly stated, the energy storage market presents a sizeable commercial opportunity for our Company. Our integrated strategy means we will not only benefit from the uptick in demand arising from this opportunity, but it will also allow us to participate meaningfully in the downstream sector.

The VRFB Investment Platform that we announced during the year is another sign of our ambitions in energy, allowing us to partner with VRFB Original Equipment Manufacturers ("OEMs"). Through this platform, we have acquired interests in VRFB OEM Invinity Energy Systems plc, and, as part of a consortium, in Enerox GmbH.

We were also encouraged by the intentions expressed by Minister of Minerals and Energy, Gwede Mantashe, at the February 2020 Investing in Africa Mining Indaba, and by President Cyril Ramaphosa in his State of the Nation Address, to stimulate self-generation by industry and municipalities. This is good news for us as a mining and processing company, positive for our business as an energy company, and promising for the country at large.

Often a review of the financial year-end such as this one does not coincide with finality of certain events in a company's lifecycle. Bushveld's achievements in not only initiating, but also closing, a number of growth opportunities in 2019 (most notably the acquisition of Vanchem) across its platforms put us on a very strong footing from which to tackle 2020.

The safety and wellbeing of our employees and host communities is a priority for the Group. We are pleased to announce another fatality-free year and an improvement in Vametco's Total Reportable Injury Frequency rate. The sudden outbreak of the Covid-19 pandemic in 2020 has temporarily delayed our progress, along with worldwide economic activity and trade. Bushveld was required to put its operations on care and maintenance for a period of time in order to support the South African government's containment measures. In response to the onset of the Covid-19 virus, we took a number of measures to mitigate the risk of spreading infection and have followed the advice from health authorities in South Africa. Further details on the measures implemented by the Company in response to the Covid-19 pandemic can be found in the Principal Risk section of the report.

As the near-term impact of Covid-19 and operating conditions remains uncertain, the Group has implemented cash preservation measures, as well as reviewed and prioritised its capital investment across the portfolio. We are pleased that both Vametco and Vanchem have now resumed operating at pre-Covid-19 levels. Despite the Covid-19 outbreak we remain confident that the fundamentals of the vanadium market remain robust.

During the year, we were able to attract several managers throughout the business. Bertina Symonds joined as General Manager of Vametco and Tanya Chikanza was appointed as Finance Director of Bushveld Minerals. They have already proved to be valuable additions to the team. I would also like to thank the outgoing Finance Director, Geoff Sproule, for his contribution over the years. We wish him all the best for the future.

After year-end, we were able to strengthen our Board's capability to govern and manage risk within Bushveld Minerals by appointing Dolly Mokgatle as an Independent Non-Executive Director. Dolly is an established business leader who has held various significant leadership positions within several of South Africa's state-owned enterprises, as well as within the private sector. With her leadership experience in state-owned enterprises, she has accumulated extensive commercial and policy-making understanding in the energy sector.

Looking ahead to the remainder of 2020, it is difficult to predict the full impact of Covid-19, whose first epicentre was China before spreading across the world, upending lives, disrupting economies and creating substantial market volatility.

We will continue to monitor the situation carefully and adjust our plans appropriately. We will work closely with the government and all our stakeholders to manage the Covid-19 crisis and ensure business continuity while complying with applicable regulations and ensuring the safety of our staff and communities in which we operate.

The Company remains committed to the capital allocation policy which was developed in 2018 and has created discipline in how we deploy capital, while creating long-term shareholder value. The Board approved a dividend policy based on a free cash flow pay-out ratio, reflecting Bushveld Minerals' commitment to return cash to shareholders in a sustainable manner while prioritising its stated growth strategy. The Board is not recommending a dividend for the year ended 31 December 2019.

After another year of sustainable growth at both an operational and corporate level, I would like to thank Fortune and the entire Bushveld team for their efforts. They have achieved continued operational strength at Vametco while identifying and seizing on opportunities thrown up by prevailing market conditions.

We thank all our stakeholders for their continued support.

Ian Watson

Independent Non-Executive Chairman

Chief Executive Officer's Review

The 2019 financial year was a year in which we were able to maintain a safe working environment for our employees, while continuing our focus on control of costs allowed us to continue to generating profits, despite a significant softening of the vanadium price.

Once again, we achieved a year with no fatalities. We had a single lost-time injury at Vametco, which also recorded an improvement of 19 per cent year-on-year in its Total Injury Frequency Rate. This metric will continue to be a key focus for management as we pursue our goal of zero harm across all our operations.

There were no new cases of occupational health diseases at Vametco in 2019. Since we assumed control of Vanchem in November 2019, there were no fatalities, lost-time injuries or new occupational health diseases reported.

We have instilled a work culture based on behavioural management that views safety and health as of paramount importance. This was achieved through various safety campaigns implemented in 2019 and this ethos has shaped our response as we deal with the challenges presented by Covid-19 in 2020, which are discussed in more detail below.

After safety, another key focus area for the management team is keeping costs at the operating level as low as possible on a sustainable basis. Achieving this goal ensures the Company's ability to generate profits through the commodity cycle, something particularly important for a commodity with the volatility of vanadium. It also ensures that the best possible returns are generated for stakeholders during periods of higher prices, that supply to customers is guaranteed throughout the cycle and the team can seize opportunities in different price environments.

We continue to achieve this primary goal at our flagship Vametco operation, a tier-one vanadium mining asset. Vametco remains among one of the lowest-cost mines in the vanadium sector, providing a world-class asset at the core of our business and giving us unique advantages. In the 2020 financial year we will continue to investigate every opportunity to lower our cost base even further.

During the course of the year, the Group secured ZAR375 million in debt facilities from Nedbank Limited, comprised of a ZAR125 million in revolving credit facility ("RCF") and a ZAR250 million term loan, through its subsidiary Bushveld Vametco Proprietary Limited. This is testament to the Group's financial strength. The facilities have subsequently been fully drawn down to provide balance sheet flexibility to Vametco and the wider Group. We had a Group unaudited gross cash and cash equivalent position at 31 March 2020 of US$34.4 million, which includes the ZAR375 million in debt facilities.

Our strong industry position and improved liquidity positioned us well to take advantage of several investment opportunities during 2019 as we continued on our strategic path to grow into a significant, low-cost, vertically-integrated vanadium business.

In 2019, we strengthened our current and future production capacity with the acquisition of Vanchem and accelerated our growth in the energy storage space with several strategic investments in Vanadium Redox Flow Battery ("VRFB") companies that have well-established intellectual capital and an existing platform of installed capacity.

The acquisition of Vanchem, a brownfield primary vanadium processing plant with a broad range of vanadium products, gives the Company the platform to grow its production base by almost three-fold over the next five years, to become one of the largest primary vanadium producers in the world. The acquisition has many advantages in addition to the significant greater processing capacity for the Group, including flexibility to scale up based on market demand, a diversified product range and the opportunity to unlock our Mokopane resource much sooner and at a fraction of the capital cost envisaged in the 2016 pre-feasibility study ("PFS").

For the energy part of the business, we announced our plans to partner and invest in VRFB Original Equipment Manufacturers ("OEMs") through a VRFB Investment Platform ("VIP"). This is a key part of Bushveld's strategy for two key reasons. Firstly, it will help to accelerate VRFB use, which will increase demand for vanadium. Secondly, it has the potential to provide a natural hedge for the Company against vanadium price volatility. Our downstream and upstream targets will grow the business and generate value for shareholders.

The investments in our upstream and downstream parts of the business were made by adhering to our capital allocation framework while remaining conscious of the volatile commodity price environment. This framework supports better decision-making and growing long-term shareholder value.

Detailed review of operations

Bushveld Vanadium

Vametco

Vametco improved its operating performance during the course of 2019 as we implemented the initiatives identified as part of the Transformation Programme diagnostic review, conducted in 2018. The Transformation Programme was designed to ensure that we maximise production throughput and minimise costs on the back of the improvements implemented by our motivated and engaged workforce. Since Vametco is the Group's primary earnings generator and thus engine for growth, it is imperative that it operates to its full potential.

For the full year 2019, Vametco achieved record annual production of 2,833 mtV (100 per cent basis) in the form of Nitrovan from magnetite feed only, meeting 2019 guidance of 2,800 to 2,900 mtV. This is an 11 per cent increase over 2018's output of 2,560 mtV.

Vametco beat 2019 production cash cost guidance of US$18.90/kgV to US$19.50/kgV, achieving a 2019 production cash cost of US$18.11/kgV. This is a five per cent reduction compared with 2018, when costs were US$19.11/kgV. The performance was achieved through higher production volumes, our cost reduction programme and a weaker ZAR: USD relative to 2018, which was offset by higher inflation.

During the fourth quarter of 2019, when Eskom implemented industrial power rationing, Vametco did not experience any periods of total power loss. Instead Eskom implemented load curtailment, which required maintaining total daily power consumption to 10-12 MW between the hours of 8am and 6pm. As a result, Vametco's operations were not affected by these periods of load curtailment and there was no impact on plant performance.

Vametco's management places a high priority on maintaining strong relationships with Eskom's regional management and customer relations, which has helped us to take proactive steps to reduce any impact of curtailed power supply. The Company has also been looking at ways to de-risk its power requirements through its Bushveld Energy subsidiary, which commenced a procurement process to install a solar plus energy storage 'mini-grid'. This project will use a VRFB and has the capacity to be expanded in the future to reduce dependency on the electrical power grid.

Owing to its strong production numbers, Vametco generated an EBITDA of US$42.8 million for 2019, despite a 34 per cent reduction in the average vanadium price received.

In 2020, we will commence the PFS for Phase 3 of the expansion for Vametco to achieve a steady state production run-rate of 4,200 mtVp.a. by 2025. The preliminary capital expenditure for Phase 3 is estimated at approximately ZAR430 million (circa US$26 million), with most of the cost being Rand-denominated. The capital expenditure and production profile will be finalised after prefeasibility and feasibility studies are concluded. These estimates are subject to ongoing review in the context of the Covid-19 pandemic implications. The Company will, over the period, prioritise spend depending on market conditions.

Vanchem

In November 2019, we were pleased to announce the closing of the transformative acquisition of Vanchem at a fair value consideration of US$55.8 million¹, down from the initially proposed sum of US$68 million. Vanchem is a primary vanadium producing facility with a beneficiation plant producing vanadium pentoxide, ferrovanadium, vanadium chemicals and it is capable of producing vanadium trioxide. The plant uses the salt roast beneficiation process, which is similar to the production process used at Vametco.

¹ : Refer to note 8 for details on the fair value purchase price

This highly strategic transaction combines our existing portfolio of high-grade, primary vanadium resources, including the Mokopane greenfield deposit, with an established production facility.

Vanchem not only brings immediate scalable processing capacity, but on completion of the refurbishment programme, its three-kiln configuration will add important flexibility to the Company's production throughputs without compromising its cost efficiencies. The vanadium chemicals and high purity oxide capabilities will be particularly key as the Company grows its exposure to the emerging stationary energy storage industry through VRFBs.

Post year-end, the Company completed a preliminary desktop scoping study for a three-phase refurbishment programme to achieve a production run-rate in excess of 4,200 mtVp.a. by 2025 through the three-kiln configuration at Vanchem. The total capital expenditure for the refurbishment programme is estimated at approximately ZAR750 million (circa US$45 million), with the majority of the amount being Rand-denominated. The first phase focuses on critical refurbishment and regulatory capital expenditure and it is expected to require a capital expenditure of ZAR234 million (circa US$14 million). This phase will be carried out in 2020 and 2021 and production is estimated at approximately 1,100 mtVp.a. The second phase will increase production to 3,100 mtVp.a. after ramp-up, and it is expected to require capital expenditure of ZAR355 million (circa US$21 million). It will be conducted in 2021 and 2022. The third phase will raise production to more than 4,200 mtVp.a. after ramp-up. It is expected to require a capital expenditure of ZAR171 million (circa US$10 million) and be carried out in 2023 and 2024. The capital expenditure and production plan are dependent on more definitive feasibility study work. These estimates are dependent upon the ongoing review in the context of the impact of Covid-19 on our business. The Company will, prioritise spend depending on market conditions.

As part of the first phase, the Group has allocated a total of approximately ZAR85 million (circa US$5 million) as critical capital spend in 2020 to enable Vanchem to continue to operate sustainably at current production levels of approximately 1,000 mtV. Most of the spending will be incurred during the second half of 2020.

With the acquisition of Vanchem, Bushveld Minerals is on a clear path to enhance its competitive position in the vanadium market over the coming years.

Mokopane

Mokopane is a key part of Bushveld's vanadium strategy. The project comprises one of the world's largest primary vanadium resources, with high in-whole rock grades of vanadium oxide. On 29 January 2020, the Department of Mineral Resources and Energy executed a 30-year mining right, giving the Company legal permission to proceed with physical mining activities.

The granting of a mining right was a significant milestone in the development of the project. It will support Bushveld's plans for Mokopane to become a primary supplier to Vanchem. The total capital expenditure for the Mokopane mine, including mine development and the beneficiation plant (crushing, screening and dry magnetic separation) and associated surface infrastructure, is estimated at ZAR370 million (circa US$22 million).

A definitive feasibility study ("DFS") to mine the Main Magnetite Layer, to provide a resources and reserves assessment with a focus on Mokopane as a primary feedstock supplier to Vanchem has been deferred by a year as part of the Group's cash preservation measures to manage near-term liquidity. When restarted, we estimate the study will take between nine to12 months to complete.

The Company retains the option of developing Mokopane into a standalone integrated mine and processing plant, producing 5,300 mtVp.a. of greater than 99 per cent purity V₂O₅ product.

Brits

Post year-end, we published a Maiden Resource Statement and JORC-compliant Competent Person's Report for our Brits project, showing an aggregate Inferred and Indicated Mineral Resource distributed across the three seams (the Lower, Intermediate, and Upper Seams) of 66.8 Mt at an average grade of 1.6 per cent V₂O₅ in-magnetite, which is among the highest grades in the world.

Brits provides the optionality for additional ore feed for the Vametco plant and, if required, concentrate feed for the Vanchem plant.

Bushveld Energy

In 2019, Bushveld Energy made significant progress across all its key areas of focus. We advanced the development of our electrolyte production facility, deployed our electrolyte rental model, advanced toward energy storage mandates and launched the VIP as part of our strategy of developing partnerships with VRFB companies.

During the year, the Company unveiled its strategy for partnering with Original Equipment Manufacturers ("OEMs") of VRFB technology to supply vanadium electrolyte. Furthermore, through the VIP, minority investments will be made into VRFB OEMs with attractive upside potential. We have already announced two transactions. The first was to fund a US$5 million convertible loan, which supported the merger of Canada-based Avalon Battery Corporation ("Avalon") with UK-based and AIM-listed redT energy plc ("redT") in April 2020. The enlarged group subsequently changed its name to Invinity Energy Systems plc ("Invinity"), in which our Company now holds an 8.71 per cent interest. The second transaction was the proposed purchase, as part of an investment consortium, of Enerox GmbH ("Enerox") from CellCube Energy Storage Systems Inc.

In all VIP ventures, Bushveld Energy will hold a minority interest without direct operational involvement beyond the supply of vanadium and electrolyte.

Importantly, under separate agreements between Bushveld and Avalon and redT respectively, Bushveld has acquired the right of first refusal to supply vanadium products to its invested companies on the same material terms as any other supplier. This provides a future hedge for Bushveld against volatility in the vanadium price, as the VRFB market continues to develop.

Bushveld entered into a Joint Venture agreement with redT on 9 March 2020 to form a Vanadium Financing Partnership to supply vanadium electrolyte to be used in third-party owned VRFB projects developed by redT in Europe over the next two years. The Joint Venture agreement was transferred to Invinity. The partnership will be a special-purpose vehicle structured to hold physical vanadium. The projects will help demonstrate proof of concept for this financial model on a larger scale and build on the smaller contract executed in 2019 in the US with Avalon.

The rental model Bushveld is pioneering will reduce upfront purchase costs, taking advantage of the re-usability and significant residual value of vanadium electrolyte. The agreement could be expanded to include other VRFB companies or vanadium suppliers in the future.

Post year-end we approved the construction of the vanadium electrolyte plant in East London South Africa, in partnership with the Industrial Development Corporation ("IDC"). The approved investment commitment from Bushveld is up to ZAR68 million (circa US$4 million) through to 2022, and includes capital expenditure, working capital and ramp-up support. The IDC also approved the investment for its share of equity and all the debt funding for the project.

Furthermore, the Company is working with energy policymakers on initiatives to reverse the downward trajectory of South Africa's power system. At the same time, the Company is reinforcing its own resilience, in case the power system continues to deteriorate. This includes completing grid connections and geotechnical studies and launching a procurement process for a solar-plus-energy-storage mini-grid at the Vametco mine. The project, which will use a VRFB to provide long duration energy storage, can be expanded in the future to reduce the mine's dependence on the electric power grid.

Corporate Social Responsibility

Our commitment to corporate social responsibility is a component of our strategy that stems from our deep conviction that our responsibility to our employees, communities and the environment extends far more broadly than the creation of jobs or payment of dividends. We recently embarked on this journey and our work is only starting. We acknowledge that achieving sustainability is a long-term goal.

Our starting point is that we intend to generate value in a safe and sustainable way for all stakeholders throughout the vanadium value chain. Oversight of the implementation of the sustainability pillars across the Group rests with the executive and operations leadership teams, supported by the Board and its subcommittees.

Our commitment to sustainability is evident not only in the way we manage our operations, but in our belief that our product, vanadium, contributes positively towards creating a greener and more sustainable economy.

Capital allocation

Bushveld Minerals continues to implement the capital allocation policy that the Board of Directors and management established last year. The capital allocation framework imposes consistent discipline, while enabling us to fund capital expenditure items through changing market conditions and price volatility.

In order of priority, the Group's capital will be allocated towards:

· Ensuring maintenance of stable production across all our operations and prioritisation of critical and regulatory capital;

· Supporting a strong balance sheet that is resilient through the vanadium price cycle;

· Investing in the Group's growth projects, either through organic growth or brownfield acquisitions, to achieve a production rate of more than 8,400 mtVp.a and downstream integration in the medium-term; and

· Returning cash to shareholders.

With the acquisition of Vanchem we now have the processing facility to achieve our medium-term production target of more than 8,400 mtVp.a. Increased production from Vametco and Vanchem underscores our growth trajectory. However, we will ensure that we continue to be conservative in how we invest capital and ensure that any production increase is profitable, especially in the current price environment. We will continue to appropriately prioritise capital expenditure to maintain safe and stable operations.

Johannesburg Stock Exchange listing

The Company continues to monitor market conditions and engage with South African institutional investors. Timing of the Johannesburg Stock Exchange listing has been impacted by the Covid-19 pandemic. Bushveld Minerals' growth strategy will benefit South Africa by using the country's natural strengths to become a leader in our industry.

The rationale for our proposed listing on the JSE is based on the following considerations:

§ our resources are located on the world-renowned Bushveld Complex in South Africa, the world's largest primary vanadium resource base;

§ our vertical integration aligns with the country's push for increased local beneficiation of its mineral resources;

§ our downstream energy storage proposition aligns with the government's stated goals of downstream mineral beneficiation and adopting stationary energy storage; and

§ a listing will allow us to access a significant pool of local investors who have an affinity with our story.

Growth targets

The Company continues to adhere to its capital allocation policy which imposes capital discipline, while prioritising maintenance, critical and regulatory capital funding requirements. Despite the announced capital deferments that have been necessitated by the Covid-19 pandemic, the Company remains committed to its five-year growth strategy that will ultimately lead to a production platform with capacity in excess of 8,400 mtVp.a. and see Bushveld Energy become a leading energy storage player. Internally generated cash flow will always be the priority source of funding. Over the five-year period, the Company will explore a variety of forms of funding, and prioritise spend, depending on market conditions, ensuring an optimal capital structure and the best returns for shareholders in the long-term.

Vametco

· In 2020, the Company expects to spend around ZAR4 million (circa US$240,000) as it carries out the PFS for Phase 3 of the expansion for Vametco. On its completion, the planned Phase 3 expansion will enable Vametco to achieve steady state production run rate of 4,200 mtVp.a, which is estimated to be attained by 2025. The preliminary total capital expenditure for Phase 3 is estimated at approximately ZAR430 million (circa US$26 million), with most of the cost being Rand-denominated. The capital expenditure and ramp-up profile will be finalised after feasibility studies are completed and are subject to ongoing review in the context of the Covid-19 implications. The Company will, over the period, prioritise spend on this expansion depending on market conditions.

Vanchem

· Following the acquisition of Vanchem, the Company completed a preliminary desktop scoping study on the refurbishment programme for the entire plant to achieve a steady state production rate in excess of 4,200 mtVp.a. by 2025.

· The total preliminary refurbishment capital expenditure is estimated at approximately ZAR760 million (circa US$45 million) with the majority of the capital being Rand-denominated. The refurbishment programme will be conducted in three phases, namely:

- Phase 1: critical refurbishment and regulatory capital expenditure. This phase is expected to require a capital expenditure of ZAR234 million (circa US$14 million) and be carried out in 2020 and 2021. Phase 1 will allow Vanchem to sustainably produce at approximately 1,100 mtV p.a.

§ The 2020 critical refurbishment of ZAR85 million (circa US$5 million) will focus on extending the calcine dump and commence the upgrade of the electrical reticulation system and the storm water treatment.

- Phase 2: includes the refurbishment of the first idle kiln and the construction of a new ammonium metavanadate plant. This phase will result in the plant achieving a production of 3,100 mtVp.a. after ramp-up. This phase is expected to require a capital expenditure of ZAR355 million (circa US$21 million) and to be carried out in 2021 and 2022; and

- Phase 3: includes the refurbishment of the second idle, the vanadium trioxide plant, the vanadium pentoxide plant and other associated infrastructure. This phase will increase production to more than 4,200 mtVp.a. after ramp-up. This phase is expected to require a capital expenditure of ZAR171 million (circa US$10 million) and be carried out in 2023 and 2024.

· The capital expenditure, ramp-up profile, and timing to achieve a production in excess of 4,200 mtVp.a. will be finalised after prefeasibility and feasibility studies are concluded. These estimates are subject to ongoing review in the context of the Covid-19 implications. The Company will, over the period, prioritise spend depending on market conditions.

Mokopane

· Mokopane is intended to be a primary source of feedstock for Vanchem from its large mineral reserve, and Vanchem will expedite the development of this project. The preliminary capital expenditure requirements associated with developing Mokopane including mine development, and the development of beneficiation plant (crushing, screening and dry magnetic separation) and associated surface infrastructure, is estimated at ZAR370 million (circa US$22 million).

· A definitive feasibility study ("DFS") to mine the Main Magnetite Layer, to provide a resources and reserves assessment with a focus on Mokopane as a primary feedstock supplier to Vanchem has been deferred by a year as part of the Group's cash preservation measures to manage near-term liquidity. When restarted, we estimate the study will take between nine to12 months to complete.

Bushveld Energy

· Post year-end, an investment decision was made by both the Industrial Development Corporation ("IDC") and Bushveld on the vanadium electrolyte plant. The investment commitment from Bushveld is up to ZAR68 million (circa US$4 million) through to 2022, which includes capital expenditure, working capital and ramp-up support.

Johannesburg Stock Exchange listing

The rationale for our proposed listing on the JSE is based on the following considerations:

§ our resources are located on the world-renowned Bushveld Complex in South Africa, the world's largest primary vanadium resource base;

§ our vertical integration aligns with the country's push for increased local beneficiation of its mineral resources;

§ our downstream energy storage proposition aligns with the government's stated goals of downstream mineral beneficiation and adopting stationary energy storage; and

§ a listing will allow us to access a significant pool of local investors who have an affinity with our story.

2020 Capital Expenditure

As the near-term impact of Covid-19 on operating conditions remains uncertain, we have taken cash preservation measures to manage near-term liquidity, while preserving the long-term sustainability of the assets and still positioning the Company to increase its share of the vanadium market. These include reviewing operational expenditure, prioritisation of critical and regulatory capital, as well as deferring some growth-associated (non-critical) capital expenditure across the mining, processing and energy businesses. Furthermore, to enhance our liquidity position and financial flexibility, we drew down on the remaining RCF of ZAR125 million at the end of March 2020.

For 2020 we expect annual capital expenditure to be approximately ZAR135 million (circa US$8 million). The funds will be allocated as follows: ZAR85 million (circa US$5 million) for the Vanchem critical refurbishment programme to sustain current production levels of approximately 1,000 mtV, ZAR11 million (circa US$660,000) million for sustaining capital expenditure at Vametco, ZAR35 million (circa US$2 million) for the completion of the kiln off-gas project at Vametco and ZAR4 million (circa US$240,000) for the Vametco Phase 3 PFS. We will continue to monitor global macroeconomic developments and inform the market of any adjustments to these capital expenditure plans.

Our capital allocation discipline drives competition for capital across our projects. Only those that offer the highest return options while balancing risk and reward are considered for development. As a result, each project in the mining and energy business will work towards minimising costs, while maximising production and productivity, so as to offer the best return.

Outlook

While the 35-day nationwide lockdown has resulted in a not-insignificant loss of production, the Company has taken the view that there is scope to still meet guidance. It has decided to keep guidance at Vametco and Vanchem unchanged, however this is subject to no further Covid-19 related stoppages. Production will be weighted towards the second half of 2020, given the days lost during the lockdown in the first half. On a site-specific basis, Vametco is expected to produce between 3,000 mtV and 3,200 mtV, at a production cash cost of between ZAR257/kgV and ZAR265/kgV (US$17.20/kgV and US$17.70/kgV). Vanchem is expected to produce between 960 mtV and 1,100 mtV, at a production cash cost of between ZAR245/kgV and ZAR260/kgV (US$16.30/kgV and US$17.30/kgV).

We are closely monitoring the evolving impacts of the Covid-19 outbreak, which in recent weeks has affected a number of other mining operations in the country that had newly restarted. We have implemented all measures necessary to minimise any impact on our employees and the business, while adhering to the directives provided by the South African government. The protocols we have developed are robust and are designed to ensure that in the event of a positive case we will be able to manage it with minimal disruption to our operations.

Despite the 2020 global outbreak of Covid-19, we retain a positive outlook on the vanadium market, characterised by a growing intensity of use of vanadium in steel supported by enforcement of rebar regulations in China, with the country continuing to be a net vanadium importer. We expect countries across the world to increase infrastructure spending in order to revive and support economies following the impact of the Covid-19 pandemic, as well as continuation of the energy transition, which will see more renewable and energy storage deployments in which VRFBs are expected to capture a significant market share. We retain the view that supply remains constrained and concentrated. All these factors benefit primary vanadium producers such as Bushveld Minerals.

We will continue to ensure that Vametco and Vanchem maintain their competitive edge by optimising and improving operating margins, increasing production through debottlenecking activities and prudently investing for the future. We anticipate synergies will accrue from both Vanchem and Vametco as we bring the businesses together, which will allow us to build a business with a diversified product range that continues to be resilient throughout the commodity cycle and ready to capture the benefits of a price recovery.

By doing so, we aim to increase our share of the vanadium market while moving further down the vanadium production cost curve. This will allow us to withstand short-term price weakness, make decisions with the longer term in mind, and provide a stable environment for the development of new downstream demand sources, such as energy storage.

At Bushveld Energy we have earmarked a few priorities as we continue to make progress. These priorities are to advance the vanadium electrolyte plant; implement additional, large electrolyte rental contracts; complete the acquisition of Enerox as part of a consortium; progress the VIP; prove the business case for VRFB deployments, including delivery of the Vametco mini-grid as a funded independent power producer; and submit bids for battery energy storage system opportunities as part of South Africa's Integrated Resource Plan.

Notwithstanding the short-term capital deferments that have been necessitated by the Covid-19 pandemic, the Company remains committed to its five-year growth strategy that will ultimately lead to a production platform in excess of 8,400 mtVp.a. and see Bushveld Energy become a leading energy storage player. While internally generated cash flow would always be the priority source of funding for this growth programme, the Company will, over the five-year period, investigate a variety of forms of funding, and prioritise spend depending on market conditions, ensuring an optimal capital structure and the best returns for shareholders in the long-term.

Although 2020 is expected to be another transitional year in our efforts to create a leading vertically-integrated primary vanadium business, the Covid-19 global pandemic requires that we adapt to an extremely fluid situation.

I would like to take this opportunity to thank everyone that has played a crucial role during another transformative year for Bushveld Minerals.

Fortune Mojapelo

Chief Executive Officer

Finance Director's statement

The 2019 financial year delivered solid operational and financial performance for the business. A major feature of the Group's performance was the 15 per cent year on year increase in production, primarily from Vametco, to 2,833 mtV, building on the operational foundation established in 2018. We achieved sales of 2,392 mtV resulting in a carry-over of stock which will unwind in 2020.

From a market perspective, the year can be considered in two halves. In the first half, the business continued to benefit from high vanadium prices (average London Metal Bulletin ("LMB") price H1 2019: US$56/kgV). The second half of the year, however, saw a significant decline in prices (average LMB price H2 2019: US$27/kgV). Pleasingly, cost of sales was generally well contained during the year and decreased by 20 percent. The Group generated Earnings Before, Tax, Depreciation and Amortization ("EBITDA") of US$32.6 million (2018: US$101.2 million) representing a decrease of 68 percent from the prior year, primarily due to the decline in the vanadium price. Net cash from operating activities also decreased by 50 percent to US$22.3 million due to the decline in price. Earnings per share was 5.51c (2018: 2.9c), due to the impact of the bargain purchase gain recognised in the year. The full details are outlined in note 12 of the financial statements.

Bushveld Minerals completed the acquisition of Vanchem on 7 November 2019 and assumed control of the business from this date. The results of Vanchem have been fully consolidated in the Bushveld Minerals financial statements for two months in the 2019 financial year. The accounting treatment of this acquisition is discussed below.

During the year, Bushveld Minerals secured ZAR375 million in debt facilities, through its subsidiary Bushveld Vametco Alloys Proprietary Limited, with Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division), a South African based financial institution, providing liquidity for the Group. Measures were taken during the year to install more financial discipline, reduce costs and follow a clear framework for allocating capital. We will continue to prioritize these measures.

Vanchem acquisition

On 7 November 2019, Bushveld Minerals acquired 100 per cent of the Vanchem Plant from Vanchem Vanadium Products (Pty) Limited and South African Japan Vanadium Proprietary Limited, and 100 per cent of the issued shares in Ivanti Resources (Pty) Limited for a fair value consideration of US$55.8 million funded through a cash payment of US$30.7 million, a convertible loan of US$23.0 million and an additional US$2.0 million deferred consideration. The US$2.0 million deferred consideration represents the present value of US$500,000 payable as part of the original agreement and a top-up for stock and working capital. The full details are outlined in note 8 of the financial statements.

The acquisition is consistent with the Group's long-term strategy of acquiring existing, low-cost, scalable brownfield operating assets to expedite the development of its significant and high-grade resource base. The acquisition expands and diversifies Bushveld Minerals' business with the addition of another operating, low-cost, expandable production processing facility, while providing product diversification.

In accounting for the acquisition of Vanchem as a business combination, we assessed whether Vanchem met the IFRS 3 definition of "a business". IFRS 3 states that "a business consists of inputs and processes applied to those inputs that have the ability to create outputs" and we have concluded that, at the date of acquisition, Vanchem had inputs (inventories and plant and equipment with installed capacity), processes (methodology, manufacturing ability, intellectual property and a skilled workforce) and the ability to produce outputs in the form of vanadium products.

IFRS 3 requires an acquirer to measure the cost of the acquisition at the fair value of the consideration paid, and measure acquired identifiable assets and liabilities at their fair values, with any excess of acquired assets and liabilities over the consideration paid (a 'bargain purchase') recognised in profit or loss immediately. As detailed in note 8, we engaged an independent valuation expert to value the assets acquired using the cost approach, which we consider to be the most appropriate fair value measurement technique given the nature of the assets acquired and the circumstances of the acquisition.

Where a business combination results in a bargain purchase, IFRS 3 requires the acquiror to reassess whether it has correctly identified all of the assets and liabilities acquired and to review the procedures used to measure the fair values recognised at the acquisition date. We have completed this assessment and concluded that the recognition of a bargain purchase is appropriate. In coming to this conclusion we have considered the circumstances of the sale as Vanchem was in business rescue and therefore not an open market transaction, and the advantages of Vanchem which fit into the Group's diversity and growth strategy, the advantages of which are disclosed in note 8.

As guided by IFRS 3, the table below summarises the financial treatment of the acquisition:

Vanchem Acquisition	US$
Property, plant and equipment	114,668,826
Land and buildings	6,137,787
Inventories	7,480,482
Trade and other receivables	900,154
Cash and cash equivalents	10,492
Environmental rehabilitation liability	(10,382,628)
Trade and other payables	(906,727)
Provisions	(13,899)
Total identifiable net assets acquired at Fair Value	117,894,487
Fair Value of Consideration	(55,787,885)
Acquisition related costs	(1,519,969)
Gain on Bargain Purchase	60,586,633

For further detail, refer to Note 8 of the financial statements.

Analysis of Results

Income statement summary as adjusted from "statutory" primary statement presentation

	US$ 2019	US$ 2018
Revenue	116 514 112	192 089 845
Cost of sales	(47 828 763)	(59 555 190)
Other operating and administration costs	(36 043 392)	(31 320 238)
EBITDA	32 641 956	101 214 417
Depreciation	(10 388 145)	(6 039 339)
Operating profit	22 253 811	95 175 078
Gain on Bargain purchase - Vanchem	60 586 633	-
Net financing expense	1 923 687	753 927
Other non-operating costs	(1 510 572)	(9 323 939)
Profit before tax	83 253 558	86 605 066
Income tax charge	(14 005 965)	(37 604 907)
Profit after tax	69 247 593	49 000 159

The operating profit for 2019 was U$$22.3 million compared with the prior year profit of US$95.2 million, the reduction was mainly due to the decrease in the commodity price during the year. EBITDA for 2019 were US$32.6 million, a decrease of US$68.6 million on 2018, mainly driven by weaker commodity prices and inflationary increases on the relevant cost items. There were also once-off costs incurred for transformational agents at Vametco as well as the acquisition expenses which could not be capitalised. Profit before tax was US$83.2 million (2018: US$86.6 million), as a result of the gain on bargain purchase (US$60.6 million) on the Vanchem acquisition which was completed at a lower price than the recognised fair value.

Revenue

Revenue for the Group amounted to US$116.5 million (2018:US$192.1 million). The Vametco sales volume in 2019 was 2,392mtV at an average price of US$49/kgV with an average exchange rate of ZAR14.4 to the United States dollar (2018: 2,573mtV, average price US$74/kgV, average exchange rate ZAR13.2/USD). Vametco sold 50 per cent of its product to the United States, 20 per cent to Europe, 10 per cent to China and 20 per cent to the rest of the World. Vametco average delivery period to the final customer is eight to 12 weeks. The timing of deliveries that occur on or around half-year and year-end impacts the timing and quantum of revenue recognised for commodity sales in each financial period.

Other revenue was generated from Vanchem: US$89,000 (2018: nil) and Bushveld Energy: US$71,000 (2018: nil). As Vanchem was only acquired in November 2019, with a start-up of the plant mid-November, sales were minimal with additional material held in stock.

Cost of sales

Cost of sales for the period amounted to US$56.2 million (2018: US$65.3 million). The reduction is primarily attributable to the reduction in sales volumes at Vametco for the year to 2,392mtV (2018: 2,573 mtV).

A planned maintenance programme of 22 days in 2019 was completed as part of Vametco's improvements in equipment efficiency, reduced downtime, and operational stability. This has allowed the business to reduce the down-time planned for 2020.

Operations at Vanchem were started mid-November as production had temporarily stopped prior to our acquisition on 7 November 2019. A total of 98 mtV, in the form of ferrovanadium and vanadium chemicals, was produced during the first period under Bushveld Minerals' control.

Operations were affected by the power rationing at the municipal level during fourth quarter of 2019 at Vanchem, however, it did not materially impact production. The Vametco operations were not affected by the power rationing as the operation have a direct line from the grid and are not connected through the municipal line. The Group is working on securing a dedicated power line for the Vanchem operation.

The Group continues to refine its plans for Vanchem, as operations are stabilised and the synergies between the various intercompany resources are unpacked.

Other operating and administration costs

Other mine operating costs included community, social and labour plan costs at Vametco. Idle plant costs mainly reflected the 22-day planned maintenance shutdown implemented in the third quarter of 2019. Administrative expenses included staff salaries of US$9.6 million (2018:US$7.1 million) for head office, Bushveld Energy and Lemur and professional fees of US$7.6 million (2018: US$1.9 million) mainly attributable to transformational agent costs which amounted to US$3.5 million, Johannesburg Stock Exchange listing preparation costs US$1 million, and other regulatory and governance fees of US$1 million. Other costs incurred related to security, travel and accommodation, rental, conference marketing cost as well as provision for historical debtors of US$3 million with the key amount attributable to the take-on debtors on the acquisition of Strategic Mineral Resources ("SMC") of US$1.9 million.

The below EBITDA reconciliation illustrates the impact of the decline in the vanadium price from the prior year. The operating costs also declined with the mineral royalty payable relative to sales. The royalties are paid by Vametco on the Unrefined Rate of 0.5 + { EBIT / (Gross sales x 9) } x100 with a maximum Royalty percentage payable for Unrefined minerals at 7%

	US$
2018 EBITDA	101 214 417
Revenue changes	(75 575 733)
Operating cost changes excluding foreign exchange impact	(8 594 176)
Inventory movement excluding foreign exchange impact	8 912 861
Change in realised foreign exchange and other working capital	6 684 587
2019 EBITDA	32 641 956

Taxation amounted to US$14.0 million for 2019 (2018: US$37.6 million), mainly driven by the decline in taxable income at Vametco as a result of the decline in the commodity price. The tax was offset by the tax refund of US$5.0 million received as a result of the conversion of SMC to a limited liability company. This also meant that the deferred tax asset at SMC had to be reversed. The gain on bargain purchase is treated as a permanent difference for tax purposes and will not attract corporate income tax.

Balance sheet

Assets

Non-current assets increased during the year in line with the growth strategy of the business. The most significant increase came from the Vanchem acquisition, as noted above. There was also an increase in the investments in other businesses, namely Avalon Battery Corporation ("Avalon") and Enerox GmbH ("Enerox") as the Group matures its footprint in the energy storage market.

Current assets decreased due to the decline in commodity price and its effect on the quantum of accounts receivable. The cash and cash equivalents decreased due to the cash payment of the Vanchem acquisition, offset by the drawdown of the debt raised in the year. Stock levels also increased because sales volumes were lower than production both at Vametco and Vanchem.

Equity and liabilities

On 30 October 2019, the Group secured ZAR375 million in debt facilities from Nedbank, comprised of a ZAR125 million revolving credit facility ("RCF") and a ZAR250 million term loan which was drawn down at the time. The Group drew down the remaining RCF of ZAR125 million at the end of March 2020 to enhance liquidity and provide financial flexibility at the onset of the Covid-19 nationwide lockdown. Overall, Bushveld's gross cash and cash equivalent position as at 31 December 2019 was US$34.0 million. The full details are outlined in note 23 of the financial statements.

With the acquisition of Vanchem, there was an increase in the environmental liability. The liabilities further increased by the convertible loan instrument payable as mentioned in the acquisition note above. Other liabilities included the adoption of IFRS 16 relating to the initial recognition and measurement of the lease liability.

Cash flows

Net cash flows from operating activities for the year were US$28.5 million, a decrease of US$16.5 million compared with 2018, driven by reduced profitability. Capital expenditure and investing activities for the year were US$49.7 million, an increase of US$21.5 million over 2018, mainly due to the acquisition of Vanchem as well as investments in Avalon and Enerox.

Subsequent to the year end, at the end March 2020, Bushveld drew down on its RCF of ZAR125 million to enhance liquidity and provide financial flexibility during the uncertainty arising from the Covid-19 pandemic and the South African 35-day nationwide lockdown. Bushveld Minerals' unaudited gross cash and cash equivalent position at 31 March 2020 was US$34.4 million, which includes the ZAR375 million facilities.

Cash Generation

The table below summarises the main components of the cash flow during the year.

	2019	2018
	US$	US$
Operating profit	22 253 811	95 175 078
Depreciation and amortisation	10 388 145	6 039 339
Changes in working capital and provisions	4 586 737	(25 350 569)
Taxes paid	(8 767 312)	(30 923 733)
Cash flow from operations	28 461 381	44 940 115
Sustaining capital¹	(3 652 977)	(11 205 702)
Free cashflow	24 808 404	33 734 413
Cash from other investing activities	(46 077 866)	(17 065 886)
Financing activities	13 287 374	16 238 967
Cash inflow / (outflow)	(7 982 088)	32 907 494
Opening net cash	42 019 123	9 739 632
Foreign exchange movements	(25 478)	(628 003)
Closing net cash	34 011 557	42 019 123

1. Sustaining capital is defined as the capital expenditure required for maintaining and sustaining existing production assets. This includes the replacement of plant and machinery and capital expenditure related to safety, health, and the environment.

Operating activities:

The majority of the cash generated from operating activities was from Vametco, offset by head office activities, as disclosed in the income statement section of the report. Other working capital changes included an increase in the finished goods and work in progress items, offset by a reduction in accounts receivable, mainly driven by the reduction in sales prices due to the lower commodity price. This is evident in accounts payable, which have also reduced, mainly due to the lower amount payable for commissions because of the price reduction. Taxes paid are net of a refund of US$5 million on the conversion of SMC into a limited liability company.

Investing activities:

Investing activities included US$30.7 million cash paid for the Vanchem purchase, US$4.4 million investments in Avalon and Enerox as well as the cash repayment of US$3.6 million for the deferred consideration payable to Yellow Dragon Holdings. This was offset by interest generated on bank deposits amounting to US$3.6 million.

Financing activities:

Dividends paid as a result of upstreaming cash from Vametco to the holding company resulted in a leakage of US$4.5 million which was paid to the 26 per cent minorities of Vametco.

Financial risk management

The main financial risks faced by the Group relate to the availability of funds to meet business needs (liquidity risk), the risk of default by counterparties to financial transactions (credit risk), fluctuations in interest and foreign exchange rates and commodity prices. These factors are more fully outlined in the notes to the accounts. They are important aspects to consider when addressing the going concern status, particularly in the context of the Covid-19 pandemic. We are proactively managing the risks within our control. There are, however, factors which are outside the control of management, specifically volatility in the ZAR:USD exchange rate as well as the vanadium price, which we do not currently hedge and which can have a significant impact on the business.

Going concern

The Group manages liquidity risk by ensuring that it has sufficient funds to facilitate all ongoing operations. The Group's philosophy is to maintain a low level of financial gearing given its exposure to the vanadium price and exchange rate fluctuations.

As part of the annual budgeting and long-term planning process, the Group's budget and cashflow forecasting is reviewed and approved by the Board. The cashflow forecast is amended in line with any material changes identified during the year. Equally, where funding requirements are identified from the cashflow forecast, appropriate measures are taken to ensure these requirements can be satisfied. In particular, a capital allocation framework is applied which prioritises maintenance, critical and regulatory capital funding requirements. During the year, the Group secured ZAR375 million in debt facilities, comprised of a term loan of ZAR250 million and an RCF of ZAR125 million which was subsequently drawn down in March 2020 to enhance liquidity and provide financial flexibility in light of the uncertainty arising from the Covid-19 pandemic and lockdown. At 31 December 2019, the Group held substantial cash balances of circa US$34.0 million, placing it in a strong position.

The Group also closely monitors its liquidity risk. It regularly produces cash forecasts and analyses sensitivities for different scenarios, including, but not limited to, changes in commodity prices and different production profiles from the Group's producing assets. The impact of Covid-19 has been assessed by the Group and, although the operations are producing again following the 35-day lockdown period, near-term operating conditions remain uncertain. Management has run various scenarios and sensitivities to provide the Board with various possible outcomes to direct strategy in the best interests of the business and its shareholders. Consequently, the Group will continue to take a prudent and proactive approach towards managing liquidity and taking cash preservation measures necessary to navigate this uncertain and unprecedented period. Based on the current status of the Group's finances, having considered cashflow forecasts and all reasonable possible investments and downside scenarios, as well as the Group's debt facilities and terms, the Group's forecasts indicate it will have sufficient liquidity headroom to meet its obligations in the ordinary course of business for the 12 months following the date of approval of the financial statements.

2020 outlook and Covid-19 impact

The Group will continue to prioritise operational performance, cost efficiencies and synergies across Vametco and Vanchem, and will maintain a disciplined approach towards managing capital expenditure and optimising operating margins. Our operations began to ramp-up to pre-lockdown levels in early May 2020. Vametco restarted operations in mid-April 2020 when it was grated a permit to ramp-up to 50 per cent capacity, in line with the Amended Disaster Regulations announced by the South African Government on 16 April 2020. Vanchem restarted operations in early May when the country transitioned to Level 4, in accordance with the Government's risk-adjusted strategy for economic activity. We have for now, maintained the 2020 production guidance for both Vametco and Vanchem. We will however continue to monitor the situation in light of the Covid-19 virus driven risks and their potential resultant impact on our operations.

As a precaution we have taken cash preservation measures to manage near-term liquidity while preserving the long-term sustainability of the assets. Steps to conserve cash resources include limiting operational expenditure where necessary. We are applying a capital prioritisation framework which involves reducing as well as deferring growth associated (non-critical) near term capital expenditure whilst prioritising regulatory capital across the business. In line with the Group's capital and cash preservation measures we anticipate ZAR11 million (circa US$660,000) of sustaining capital at Vametco, ZAR120 million (circa US$7.2 million) of critical refurbishment and regulatory capital expenditure at Vametco and Vanchem and ZAR4 million (circa US$240,000) as growth for the Vametco Phase 3 pre-feasibility study.

From a supply chain perspective, the Group has ensured security of supply and put in place sufficient contingency plans. Bushveld continues to work with its customers to fulfil orders and meet their requirements while still complying with Government directives. The supply chain is open and customer orders remain robust. The Company has not had to declare force majeure. Management will continue to focus on taking the necessary steps to protect its staff and communities, and the financial stability of the business to secure its longer-term sustainability.

Full details of Bushveld's response to this pandemic can be found in the Principal Risks section of the report.

Tanya Chikanza

Finance Director

Consolidated Statement of Profit or Loss and Other Comprehensive Income

	Notes	2019 US$	2018 US$
Continuing operations
Revenue	5	116,514,112	192,089,845
Cost of sales		(56,198,919)	(65,273,543)
Gross profit		60,315,193	126,816,302
Other operating income		922,385	7,420,109
Selling and distribution costs		(7,556,687)	(10,661,706)
Other mine operating costs		(3,865,303)	(2,508,971)
Idle plant costs		(2,893,286)	(2,688,422)
Administration expenses	6	(24,668,491)	(23,202,234)
Operating profit		22,253,811	95,175,078
Finance income	9	3,593,142	1,987,333
Finance costs	10	(1,669,456)	(1,233,406)
Share based payment economic empowerment transaction	34	-	(3,232,425)
Gain on bargain purchase	8	60,586,633	-
Movement in earnout estimate	30	(1,510,572)	(6,091,514)
Profit before taxation		83,253,558	86,605,066
Taxation	11	(14,005,965)	(37,604,907)
Profit for the year		69,247,593	49,000,159
Consolidated other comprehensive income:
Items that may not be reclassified to profit or loss:
Changes in the fair value of financial assets at fair value through other comprehensive income	22	(359,045)	659,007
Other fair value movements		110,175	21,796
Total items that may not be reclassified to profit or loss		(248,870)	680,803
Items that may be reclassified to profit or loss:
Currency translation differences		6,413,737	(13,715,270)
Total comprehensive income for the year		75,412,460	35,965,692
Profit attributable to:
Owners of the parent		61,968,301	30,215,509
Non-controlling interest		7,279,292	18,784,650
		69,247,593	49,000,159
Total comprehensive income attributable to:
Owners of the parent		67,136,957	17,181,042
Non-controlling interest		8,275,503	18,784,650
		75,412,460	35,965,692
Earnings per share
Profit per ordinary share
Basic earnings per share (in cents)	12	5.51	2.90
Diluted earnings per share (in cents)	12	5.45	-

Consolidated Statement of Financial Position
	Note	2019 US$	2018 US$
Assets
Non-Current Assets
Intangible assets - exploration and evaluation	13	59,408,821	57,150,425
Property, plant and equipment	14	185,269,063	47,881,162
Investment properties	16	2,905,449	2,816,007
Deferred tax	18	173,892	3,004,141
Financial assets - investments	17	4,420,891	-
Total Non-Current Assets		252,178,116	110,851,735
Current Assets
Inventories	19	35,082,342	17,193,018
Trade and other receivables	20	4,427,793	32,586,185
Restricted investment	21	6,605,465	5,388,953
Current tax receivable		493,178	251,382
Financial assets at fair value	22	1,952,227	2,311,272
Cash and cash equivalents	23	34,011,557	42,019,123
Total Current Assets		82,572,562	99,749,933
Total Assets		334,750,678	210,601,668
Equity and Liabilities
Share capital	28	15,357,271	14,921,079
Share premium	28	111,067,064	101,003,256
Retained income	28	83,415,438	21,447,137
Foreign currency translation reserve	28	(1,655,861)	(7,073,387)
Fair value reserve	28	(620,349)	(371,479)
Equity attributable to owners of the parent		207,563,563	129,926,606
Non-controlling interest		33,527,723	29,712,446
Total Equity		241,091,286	159,639,052
Liabilities
Non-Current Liabilities
Post-retirement medical liability	26	2,331,325	2,377,737
Environmental rehabilitation liability	27	17,844,066	6,632,607
Deferred consideration	30	7,108,819	17,427,512
Borrowings	24	41,756,152	-
Lease liabilities	15	4,677,338	-
Total Non-Current Liabilities		73,717,700	26,437,856
Current Liabilities
Trade and other payables	25	15,721,502	20,203,795
Provisions	29	3,432,619	4,320,965
Lease liabilities	15	787,571	-
Total Current Liabilities		19,941,692	24,524,760
Total Liabilities		93,659,392	50,962,616
Total Equity and Liabilities		334,750,678	210,601,668

Consolidated Statement of Changes in Equity

	Share capital	Share	Foreign	Warrant	Fair	Retained	Total	Non-	Total equity
	US$	premium US$	exchange translation reserve US$	reserve US$	value reserve US$	income US$	attributable to equityholders of the group / company US$	controlling interest US$	US$
Balance at 1 January 2018	11,817,573	69,222,661	1,881,579	2,113,866	(1,052,282)	(13,121,418)	70,861,979	36,371,168	107,233,147
Profit for the year	-	-	-	-	-	30,215,509	30,215,509	18,784,650	49,000,159
Other comprehensive income, net of tax: Currency translation differences	-	-	(8,954,966)	-	-	-	(8,954,966)	(4,760,304)	(13,715,270)
Fair value movement on investments	-	-	-	-	659,007	-	659,007	-	659,007
Other fair value movements	-	-	-	-	21,796	-	21,796	-	21,796
Total comprehensive income for the year	-	-	(8,954,966)	-	680,803	30,215,509	21,941,346	14,024,346	35,965,692
Transaction with owners: Issue of shares	2,556,053	27,548,150	-	-	-	-	30,104,203	-	30,104,203
Exercise of warrants	547,453	4,232,445	-	-	-	-	4,779,898	-	4,779,898
Reserve transfer	-	-	-	(2,113,866)	-	2,113,866	-	-	-
Change in non-controlling interest	-	-	-	-	-	2,239,180	2,239,180	(19,739,180)	(17,500,000)
Dividends paid to non-controlling interest	-	-	-	-	-	-	-	(943,888)	(943,888)
Balance at 1 January 2019	14,921,079	101,003,256	(7,073,387)	-	(371,479)	21,447,137	129,926,606	29,712,446	159,639,052
Profit for the year	-	-	-	-	-	61,968,301	61,968,301	7,279,292	69,247,593
Other comprehensive income, net of tax: Currency translation differences	-	-	5,417,526	-	-	-	5,417,526	996,211	6,413,737
Fair value movement on investments	-	-	-	-	(359,045)	-	(359,045)	-	(359,045)
Other fair value movements	-	-	-	-	110,175	-	110,175	-	110,175
Total comprehensive income for the year	-	-	5,417,526	-	(248,870)	61,968,301	67,136,957	8,275,503	75,412,460
Transaction with owners: Issue of shares	436,192	10,063,808	-	-	-	-	10,500,000	-	10,500,000
Dividends paid to non-controlling interest	-	-	-	-	-	-	-	(4,460,226)	(4,460,226)
Balance at 31 December 2019	15,357,271	111,067,064	(1,655,861)	-	(620,349)	83,415,438	207,563,563	33,527,723	241,091,286
Note	28	28

Consolidated Statement of Cash Flows
	Note	2019 US$	2018 US$
Cash flows from operating activities
Profit before taxation		83,253,558	86,605,066
Adjustments for: Depreciation property, plant and equipment	14	10,388,145	6,039,339
Fair value economic empowerment transaction	34	-	3,232,425
Gain on bargain purchase	8	(60,586,633)	-
Movement in earnout estimate	30	1,510,572	6,091,514
Finance income	9	(3,593,142)	(1,987,333)
Finance costs	10	1,669,456	1,233,406
Changes in working capital		4,586,737	(25,350,569)
Income taxes paid		(8,767,312)	(30,923,733)

Net cash from operating activities		28,461,381	44,940,115
Cash flows from investing activities
Finance income	9	3,593,142	1,987,333
Acquisition of business	8	(30,713,500)	-
Purchase of property, plant and equipment	14	(13,320,897)	(11,205,702)
Payment of deferred consideration	30	(3,600,000)	(17,500,000)
Purchase of investments	17	(4,420,891)	-
Purchase of exploration and evaluation assets	13	(1,268,697)	(1,553,219)
Net cash from investing activities		(49,730,843)	(28,271,588)
Cash flows from financing activities
Finance costs		(108,596)	-
Net proceeds from issue of shares and warrants	28	-	4,139,825
Net proceeds from capital raised	24	-	19,006,177
Net proceeds / (repayment) of borrowings	24	18,582,864	(6,907,035)
Lease payments		(726,668)	-
Dividends paid		(4,460,226)	-
Net cash from financing activities		13,287,374	16,238,967
Total cash movement for the year		(7,982,088)	32,907,494
Cash at the beginning of the year		42,019,123	9,739,632
Effect of translation of foreign rate		(25,478)	(628,003)
Total cash at end of the year	23	34,011,557	42,019,123

1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES

Bushveld Minerals Limited ("Bushveld") was incorporated and domiciled in Guernsey on 5 January 2012 and admitted to the AIM market in London on 26 March 2012.

The address of the Company's registered office is 18-20 Le Pollet, St Peter Port, Guernsey. The consolidated financial statements of the Company as at and for the year ended 31 December comprise of the Company and its subsidiaries (The "Group") and the Group's interest in equity accounted investments.

Bushveld Resources Limited ("BRL") is an investment holding company formed to invest in resource-based vanadium mining and exploration companies in South Africa. The South African subsidiaries of BRL are Bushveld Vanchem (Proprietary) Limited ("Vanchem"), Pamish Investments No. 39 (Proprietary) Limited ("Pamish 39"), Amaraka Investments No. 85 (Proprietary) Limited ("Amaraka 85"), Bushveld Minerals SA (Proprietary) Limited, Great 1 Line Investment (Proprietary) Limited, Gemsbok Magnetite (Proprietary) Limited, Caber Trade and Invest 1 (Proprietary), Bushveld Vametco Alloys (Proprietary) Limited, Bushveld Vametco Holdings (Proprietary) Limited, Bushveld Vametco Properties (Proprietary) Limited, Bushveld Vanadium 1 (Proprietary) Limited and Bushveld Vanadium 2 (Proprietary) Limited.

The Lemur subsidiaries are integrated coal and power project development companies. The Lemur subsidiaries are the holder of 11 concession blocks in South West Madagascar covering the Imaloto Coal Basin.

As at 31 December 2019, the Bushveld Group comprised of:

Company	Note	Equity holding and voting rights	Country of incorporation	Nature of activities
Bushveld Minerals Limited		N/A	Guernsey	Ultimate holding company
Bushveld Resources Limited	1	100%	Guernsey	Holding company
Ivanti Resources Proprietary Limited	2	100%	South Africa	Mining and manufacturing company
Pamish Investments 39 (Pty) Limited	2	64.00%	South Africa	Mining and manufacturing company
Amaraka Investments 85 (Pty) Limited	2	68.50%	South Africa	Vanadium and iron ore exploration
Bushveld Minerals SA (Pty) Limited	2	100%	South Africa	Group support services
Bushveld Vanchem (Pty) Limited	13	100%	South Africa	Processing company
Great 1 Line Invest (Pty) Limited	2	62.5%	South Africa	Vanadium and iron ore exploration
Gemsbok Magnetite (Pty) Limited	2	74%	South Africa	Vanadium and iron ore exploration
Caber Trade and Invest 1 (Pty) Limited	2	51%	South Africa	Vanadium and iron ore exploration
Bushveld Vanadium 2 (Pty) Limited	2	100%	South Africa	Mining and manufacturing company
Bushveld Energy Limited	1	84.00%	Mauritius	Holding company
Bushveld Energy Company (Pty) Limited	4	100%	South Africa	Energy development
Bushveld Vametco Hybrid Mini Grid Company (RF) (Pty)	12	100%	South Africa	Energy development
Bushveld Vametco Limited	2	100%	Guernsey	Holding company
Strategic Minerals Connecticut LLC	7	100%	United States	Holding company
Bushveld Vanadium 1 (Pty) Limited	8	100%	South Africa	Holding company
Bushveld Vametco Holdings (Pty) Limited	11	74%	South Africa	Holding company
Bushveld Vametco Alloys (Pty) Limited	9	100%	South Africa	Mining and manufacturing company
Bushveld Vametco Properties (Pty) Limited	10	100%	South Africa	Property owning company
Lemur Holdings Limited	1	100%	Mauritius	Holding company
Coal Mining Madagascar SARL	5	99%	Madagascar	Coal exploration
Imaloto Power Project Limited	3	100%	Mauritius	Holding company
Imaloto Power Project Company SARL	6	99.00%	Madagascar	Power generation company
Lemur Investments Limited	3	100%	Mauritius	Holding company

Enerox Holdings Limited 4 50% Guernsey Holding company

1 Held directly by Bushveld Minerals Limited 2 Held by Bushveld Resources Limited

3 Held by Lemur Holdings Limited 4 Held by Bushveld Energy Limited

5 Held by Lemur Investments Limited 6 Held by Imaloto Power Limited

7 Held by Bushveld Vametco Limited

8 Held by Strategic Minerals Connecticut LLC

9 Held by Bushveld Vametco Holdings (Pty) Limited 10 Held by Vametco Alloys (Pty) Limited

11 Held by Bushveld Vanadium 1 (Pty) Limited

12 Held by Bushveld Energy Company (Pty) Limited 13 Held By Bushveld Vanadium 2( Pty) Limited

2. ADOPTION OF NEW AND REVISED STANDARDS ACCOUNTING STANDARDS AND INTEPRETATIONS APPLIED

IFRS 16 Leases

The new standard recognises a right of use asset and a lease liability for almost all leases and requires them to be accounted for in a consistent manner. This introduces a single lessee accounting model and eliminates the previous distinction between an operating lease and a finance lease.

ACCOUNTING STANDARDS AND INTERPRETATIONS NOT APPLIED

Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group:

IFRS 17 Insurance Contracts

The new standard requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts.

IFRS 9 Prepayment Features with Negative Compensation - (Amendments to IFRS 9)

Under IFRS 9, a debit instrument can be measured at amortised cost or at fair value through other comprehensive income, provided that the contractual cash flows are 'solely payments of principal and interest on the principal amount outstanding' (the SPPI) criterion) and the instrument is held within the appropriate business model for that classification. The amendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract.

IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - (Amendments to IFRS 10 and IAS 28)

The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture.

IFRS 3, Definition of a Business - (Amendments to IFRS 3)

The IASB issued amendments to the definition of a business in IFRS 3 Business Combinations to help entities determine whether an acquired set of activities and assets is a business or not. They clarify the minimum requirements for a business, remove the assessment of whether market participants are capable of replacing any missing elements, add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test. New illustrative examples were provided along with the amendments.

IAS 1 and IAS 8 - Definition of Material - (Amendments to IAS 1 and IAS 8)

In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of 'material' across the standards and to clarify certain aspects of the definition. The new definition states that, 'Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting

entity'.

AIP IFRS 11 Joint Arrangements: Previously held interests in a joint operation

The amendment clarifies that if a party participates in, but does not have joint control of, a joint operation and subsequently obtains joint control of the joint operation (which constitutes a business as defined in IFRS 3) that, in such cases, previously held interests in the joint operation are not remeasured.

AIP IAS 12 Income Taxes: Income tax consequenses of payments on financial instruments classified as equity

The amendment specifies that the income tax consequences on dividends are recognised in profit or loss, other comprehensive income or equity according to where the entity originally recognised the events or transactions which generated the distributable reserves.

AIP IAS 23 Borrowing Costs: The amendment specifies that when determining the weighted average borrowing rate for purposes of Borrowing costs eligible for capitalisation

The amendment specifies that when determining the weighted average borrowing rate for purposes of capitalising borrowing costs, the calculation excludes borrowings which have been made specifically for the purposes of obtaining a qualifying asset, but only until substantially all the activities necessary to prepare the asset for its intended use or sale are complete.

The Directors anticipate that the adoption of these Standards and Interpretations, which become effective for annual periods beginning on or after 1 January 2020, in future periods will have no material impact on the financial statements of the Group.

3. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation

In accordance with Section 244 of The Companies (Guernsey) Law 2008, the Group confirms that the financial information for the year ended 31 December 2019 is derived from the Group's audited financial statements and that this preliminary announcement does not include the statutory accounts and, as such, does not contain all information required to be disclosed in the financial statements prepared in accordance with International Financial Reporting Standards ("IFRS").

The statutory accounts for the year ended 31 December 2019 have been audited and approved, but have not yet been filed. The Group's audited financial statements for the year ended 31 December 2019 received an unqualified audit opinion and the auditor's report contained no statement under section 263(2) or 263(3) of The Companies (Guernsey) Law 2008. The financial information contained within this preliminary statement was approved and authorised for issue by the Board on 22 June 2020.

The financial year covers the 12 months to 31 December 2019. The comparative period covered the 12 month period to 31 December 2018.

The consolidated financial statements have been prepared under the historical cost basis, except for the revaluation of certain financial instruments and investment properties to fair value. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies are set out below.

Going concern

The group closely monitors and manages its liquidity risk, cash forecasts are regularly produced and sensitivities run for different scenarios including, but not limited to, changes in commodity prices and different production profiles from the group's producing assets. The Group will continue to prioritise operational performance, cost efficiencies and synergies across Vametco and Vanchem, and will maintain a disciplined approach towards managing capital expenditure and optimising operating margins. Our operations resumed in early May following a 35-day national Covid-19 lockdown, in South Africa during which Vanchem was non operational and Vametco was classified as essential services and had limited production. Based on the current status of the group's finances, having considered going concern forecasts and reasonably possible investments, downside and Covid-19 scenarios, the group's forecasts demonstrate it will have sufficient liquidity headroom to meet its obligations in the ordinary course of business for the next 12 months from the date of approval of the financial statements.

Accordingly the directors are satisfied that the group continues to adopt the going concern basis of accounting in preparation of the 31 December 2019 financial statements.

The reporting segments are identified by the directors of the group (who are considered to be the chief operating decision makers) by the way that group's operations are organised. As at 31 December 2019 the group operated within four operating segments, mineral exploration activities for iron ore and vanadium, vanadium mining and production, coal exploration and energy. Activities take place in South Africa (iron ore, vanadium and energy) and Madagascar (coal).

4. SEGMENT REVENUE AND RESULTS

The following is an analysis of the group's revenue and results by reportable segment.

	Vanadium and iron ore	Vanadium
Year ended 31 December 2019	exploration US$	mining and production	Energy	Total
Results		US$	US$	US$
Segment revenue	-	116,442,585	71,527	116,514,112
Segment costs	-	(83,752,365)	(530,041)	(84,282,406)
Segmental (loss)/profit	-	32,690,220	(458,514)	32,231,706
	Vanadium and iron ore	Vanadium
Year ended 31 December 2018	exploration US$	mining and production	Energy	Total
Results		US$	US$	US$
Segment revenue	-	192,089,845	-	192,089,845
Segment costs	(2,721,652)	(84,051,698)	(231,540)	(87,004,890)
Segmental (loss)/profit	(2,721,652)	108,038,147	(231,540)	105,084,955

During the year there were no costs incurred for the exploration of vanadium and iron ore as well as the coal segment. Costs attributable to both segment were of a capital nature.

The reconciliation of segmental profit to the group's profit before tax is as follows:

	Year ended 31December	Year ended 31December
	2019 US$	2018 US$
Segmental profit	32,231,706	105,084,955
Unallocated costs	(9,977,896)	(13,142,302)
Gain on bargain purchase	60,586,633	-
Movement in earnout estimate	(1,510,572)	(6,091,514)
Finance income	3,593,142	1,987,333
Finance costs	(1,669,455)	(1,233,406)
Profit before tax	83,253,558	86,605,066

Unallocated costs relate primarily to corporate costs and parent company overheads not attributable to a specific segment.

Other segmental information
	Vanadium and	Vanadium
	iron ore exploration	mining and production	Coal exploration	Bushveld Energy	Total
31 December 2019	US$	US$	US$	US$	US$
Intangible assets - exploration and evaluation	56,827,085	-	2,581,736	-	59,408,821
Total reportable segmental net assets	56,827,085	201,456,855	2,581,736	6,760,468	267,626,144
Unallocated net liabilities					(26,534,858)
Total consolidated net assets					241,091,286
	Vanadium and	Vanadium
	iron ore exploration	mining and production	Coal exploration	Bushveld Energy	Total
31 December 2018	US$	US$	US$	US$	US$
Intangible assets - exploration and evaluation	55,639,067	-	1,511,358	-	57,150,425
Total reportable segmental net assets	55,639,067	132,200,627	1,511,358	(420,254)	188,930,798
Unallocated net liabilities					(29,291,746)
Total consolidated net assets					159,639,052

Unallocated assets and liabilities relate to corporate and parent company assets and liabilities not attributable to a specific segment.

5. REVENUE

2019 US$		2018 US$
Revenue from contracts with customers Sale of goods	116,442,585	191,344,909
Rendering of services	-	744,936
Bushveld Energy services rendered	71,527	-
	116,514,112	192,089,845
Disaggregation of revenue from contracts with customers
The company disaggregates revenue from customers as follows:
Sale of goods Local sales of vanadium - NV12	4,118,063	16,931,800
Local sales of vanadium - NV16	87,076	101,232
Local sales of vanadium - MVO	2,406	243,651
Export sales of vanadium - NV12	17,083,662	18,183,896
Export sales of vanadium - NV16	95,011,546	155,884,330
Export sales of vanadium - AMV	139,832	-
	116,442,585	191,344,909
Rendering of services Bushveld Energy services rendered	71,527	-
Export tolling - MVO	-	744,936
	71,527	744,936
Total revenue from contracts with customers	116,514,112	192,089,845

Revenue with contract customers is generated from sale of goods and is recognised upon delivery of the goods to the customer, at a point in time and comprises the invoiced amount of goods to customers, net of value added tax.

6. ADMINISTRATIVE EXPENSES BY NATURE

The profit for the year has been arrived at after charging:

	2019 US$	2018 US$
Shares issued to directors and senior employees	-	8,333,360
Staff costs	9,616,139	7,166,859
Depreciation of property, plant and equipment	232,131	182,159
Professional fees	7,619,272	1,886,507
Bad debts	3,016,120	-
Foreign exchange loss	-	91,082
Other	4,184,829	5,542,267
Total administrative expenses	24,668,491	23,202,234

7. STAFF COSTS

Details of directors' remuneration are included in note 35 (related party transactions) and the Remuneration Report.

8. ACQUISITIONS

8.1 Acquisition of Bushveld Vanchem Business

On 7 November 2019, the Bushveld group completed the acquisition of 100% of the Vanchem Plant as well as 100 per cent of Ivanti Propriety Limited from Duferco Investments ("Duferco").

A viable business case for Vanchem Vanadium Products "VVP" was formulated with key focus on ore feedstock from within the Group (Mokopane) and a refurbishment programme, and presented to the Board of Directors ("BoD") in June 2018. The BoD approved that Bushveld reopened negotiations with Duferco, including revised commercial terms and an extended exclusivity period. An approach to Duferco was made and an initial agreement was reached with Duferco which resulted in the execution of the term sheet on 5 December 2018. The agreement was for a Transaction consideration of US$68 million. The US$68million was made up of deposit of US$6.8 million payable when the definitive agreements had been executed (01 May 2019) with the balance of US$61.2million payable on then-envisaged Transaction closing dates of 30 June 2019 or 30 September 2019 (long stop date). The final executed purchase price of US$53.5million plus a working capital adjustment for the acquisition was renegotiated in September 2019, the fair value of the consideration price is reflected in section C below.

Acquisition rationale remained clear:

Ÿ Would significantly contribute toward Bushveld's Vanadium production growth strategy of 8 400 tVpa in the next five years;

Ÿ Brownfields expansion (total acquisition and refurbishment capex was estimated to be around US$140 million for circa 4 200 tVpa capacity including Mokopane mine development, this compared favourably against the then estimated US$350 million capital requirement to develop and build 5 400tV facility at Mokopane);

Ÿ Would facilitate the expeditious development of Mokopane, preserving the tenure of the project and ensuring the option for an end-to-end production facility would be crystalised;

Ÿ Would provide geographic diversification with Bushveld production now in two geographic locations;

Ÿ Would provide production diversification - moving from a one kiln company to a four-kiln group;

Ÿ Would provide product diversification - moving from a single product offering to a wider range of products comprised of Nitrovan, FeV, V2O5 and specialized chemical products;

Ÿ Significant NPV at long-term FeV price estimates at a conservative long-term FeV price;

Ÿ Increased footprint reduces Group overhead cost structure;

Ÿ Improved IP and market presence adds value with long-term off-take agreements;

Ÿ Assist and expedites the development of Bushveld's own marketing channel; and

Ÿ In a benign vanadium price environment of 2018, Vanchem's 6 months annual financial statements to 31 March 2019 presented net profit amount in excess of R200million operating at less than 20% of capacity.

This acquisition of Vanchem demonstrates the value in the Company's growth strategy of targeting brownfields processing infrastructure which can be acquired at a lower price compared to the cost of building a greenfield operation, providing a lower risk and a quicker path to production. This has been reflected in Bushveld agreeing and paying an amount far less than the fair value of the assets and liabilities assumed. The Mokopane resource will also enable Bushveld to create a fully integrated vanadium production facility within the Group.

A. Consideration transferred The following table summarises the acquisition date fair value of each major class of consideration transferred. Fair value consideration	US$
Cash	30,713,500
Deferred Consideration (i)	409,323
Working Capital Adjustment (ii)	1,665,063
Convertible Loan (iii)	23,000,000
Total fair value of consideration	55,787,886
I. Deferred Consideration

The group has agreed to pay the selling shareholder a deferred payment of US$0.5 million, payable in cash 2 years post completion of the acquisition.

II. Working Capital Adjustment

The working capital adjustment was the difference between the original working capital included in the agreement versus the final balances transferred to Bushveld. The amount is payable in cash after 2 years post completion of the acquisition and disclosed as deferred consideration.

III. Convertible loan

A payment of US$23.0 million satisfied through the issue of Bushveld Minerals unsecured convertible loan notes ("Loan Notes") with the following repayment, redemption and conversion terms (in addition to customary covenants, warranties and acceleration provisions):

Ÿ Interest at a coupon of 5% per annum payable annually in arrears or on conversion or redemption;

Ÿ Repayable in cash after the second anniversary of Transaction Closure, plus any accrued interest;

Ÿ Convertible at the holder's option in two tranches of up to US$11.5 million each, after the first and second anniversary of Transaction Closure respectively, at a 5% discount to the prevailing 10-day volume weighted average Bushveld Minerals share price leading up to conversion;

Ÿ Early redemption of the Loan Notes at the election of Bushveld Minerals, subject to the condition that the holder will have an option of converting up to 50% of the early redemption amounts into Bushveld Minerals shares on the same terms set out above;

Ÿ Scope for acceleration of redemption of up to US$5 million of the Loan Notes 12 months after Transaction Closure if an average ferrovanadium price of US$40/kgV is realised during any nine-month period during the12 month period after Transaction Closure;

Ÿ Obligation to repay an amount equal to 40% of any cash received on a new share issue which raises more than US$30m, provided no more than 50% of the Loan Notes have already been paid, redeemed or converted;

Ÿ Obligation to repay an amount equal to 50% of any debt raised over US$15 million, provided no more than 50% of the Loan Notes have been repaid, redeemed or converted;

Ÿ Obligation to repay on a substantial sale of assets or change of control;

Ÿ The holder will not be able to divest any Bushveld Minerals shares received for six months following conversion and be subject to an orderly market arrangement for the following six months.

5. Acquisition related costs

The group incurred acquisition-related costs of US$1,519,969. These costs have been included in the calculation of the bargain purchase below.

6. B. Identifiable assets and liabilities acquired

The following table summarises the recognised amounts of assets acquired, and liabilities assumed at the date of acquisition:

Assets and liabilities acquired Property, plant and equipment	US$ 114,668,826
Land and buildings	6,137,787
Inventories	7,480,482
Trade and other receivables	900,154
Cash and cash equivalents	10,492
Environmental rehabilitation liability	(10,382,628)
Trade and other payables	(906,727)
Provisions	(13,899)
Total identifiable net assets acquired at Fair Value Measurement of fair values	117,894,487

An independent valuer was appointed to determine the fair value of the property plant and equipment. The fair values of other assets and liabilities were estimated by the directors.

Property, plant and equipment

Marsh (Propriety) Limited was appointed for the valuation.

Marsh has been in the industry in South Africa since 1984. Marsh's global experience coupled with professionals, who maintain the highest certifications and advanced professional accreditations, enable them to deliver accurate and timely valuations.

Marsh adheres to the International Valuation Standards, strict ethical code of conduct and best practice prescribed by the South African Council for the Property Valuers Profession, South African Institute of Valuers, American Society of Appraisers and the Royal Institution of Chartered Surveyors.

The determination of Fair Market Value (FMV) was based on the estimate cost of acquiring and installing a new or similar equivalent to the current asset at hand. Marsh then determined the remaining life of the asset and therefore calculated the difference obtained from the new replacement value similar or to the next model in the market determining the effective age or life span and minus the remaining life. This determines the economic life of the asset which in turn is the condition rating percentage.

The cost of erecting the building, together with the cost of ancillary site works, was estimated. This cost included relevant professional fees and other associated expenses directly related to the construction of the building and ancillary site works but excluded any finance charges. The cost is then depreciated according to physical, functional and economic conditions to give the Depreciated Replacement Cost of the buildings.

The Market Value of the land, as if vacant, has been determined by the comparison of recent sales of similar properties in the area and similar areas. The sum of these values reflect the Depreciated Replacement Value of the property.

Key procedures conducted:

7. Plant, Machinery & Equipment (Movable Assets)

Ÿ A Fair Market valuation was performed.

Ÿ A physical on-site survey was performed to inspect and value all the assets on a per asset basis.

Ÿ Production asset per location was assessed for Useful lifes, Remaining Lives and Condition rating.

Ÿ Assets were recorded per location and department.

Ÿ Sufficient detail and specifications was collected in order to value the assets according to the Fair Market

8. Buildings (Fixed Assets)

Ÿ A Fair Market valuation was performed

Ÿ Each building was individually assessed for Useful lifes, Remaining Lives and Condition rating.

Ÿ Building costs in the area was used to establish a Rate/m2

Ÿ Professional fees, escalations, demolition, and debris removal costs were included.

Ÿ Land Values for the plant and waste site were included.

9. Valuation Process

The valuation process took place over four core components. These components are designed to ensure the highest degree of valuation accuracy while ensuring limited interruption to the operations of our clients.

An overview of the four main components is as follows:

10. Initial Project Research and Preparation

This phase of the valuation program involved research, information gathering and preparation by Marsh Valuation Services to ensure a preliminary understanding of Bushveld Minerals SA (PTY) LTD operations, locations and accounting principles.

This is a crucial stage in the valuation process ensuring reduced time spent at each location as part of the physical inspection.

11. Physical Inspection and Information Gathering

The aim of this step of the process was information gathering and data collection while ensuring minimal impact on the operations. The valuation process, whilst on site, was generally undertaken via the following process:

12. Research, Analysis and Reporting

This phase of the valuation process involves utilising the information gained during the inspection process, our internal databases of information, external sources of data, recent and planned capital expenditure details, information from suppliers and international research to undertake the valuation calculations. The analysis and calculations were then extrapolated and input into a detailed valuation report.

13. Delivery and Findings

After the valuation research and reporting was completed, a valuation report was provided including the list of assets identified as well as the fair market values of those assets with remaining useful lives.

C. Accounting for the acquisition
The acquisition has been accounted for as follows:
Vanchem Acquisition	US$
Property, plant and equipment	114,668,826
Residential properties	6,137,787
Inventories	7,480,482
Trade and other receivables	900,154
Cash and cash equivalents	10,492
Environmental rehabilitation liability	(10,382,628)
Trade and other payables	(906,727)
Provisions	(13,899)
Total identifiable net assets acquired at Fair Value	117,894,487
Fair Value of Consideration	(55,787,885)
Acquisition related costs	(1,519,969)
Gain on Bargain Purchase	60,586,633

IFRS 3 requires an acquirer to measure the cost of the acquisition at the fair value of the consideration paid, and measure acquired identifiable assets and liabilities at their fair values, with any excess of acquired assets and liabilities over the consideration paid (a 'bargain purchase') recognised in profit or loss immediately. The group engaged an independent valuation expert to value the assets acquired using the cost approach, which we consider to be the most appropriate fair value measurement technique given the nature of the assets acquired and the circumstances of the acquisition.

We have completed this assessment and concluded that the recognition of a bargain purchase is appropriate. In coming to this conclusion we have considered the circumstances of the sale as Vanchem was in business rescue and therefore not an open market transaction, and the advantages of Vanchem which fit into the Group's diversity and growth strategy, advantages of which are disclosed above.

8.2 ACQUISITION OF SOJITZ INTEREST IN STRATEGIC MINERALS CORPORATION

On 13 September 2018, the group completed the acquisition of a 21.22 per cent interest in Strategic Minerals Corporation, an intermediate holding company of Vametco Alloys Proprietary Limited, from Sojitz Noble Alloys Corporation for a total cash consideration of US$17,500,000 ("the transaction"). On completion of the transaction, the Bushveld group increased its indirect beneficial interest in Vametco Alloys Proprietary Limited from 59.1 per cent to 75 per cent.

TRANSACTION SUMMARY

The group acquired all of Sojitz Noble Alloys Corporation's shareholding interest and accompanying rights in Strategic Minerals Corporation, the 75 per cent owner of Vametco Alloys Proprietary Limited, for a total consideration of US$20,000,000 (twenty million US dollars)

The US$20,000,000 consideration payable comprised:

· US$17,500,000 in cash (seventeen million five hundred thousand US dollars) for the sale shares

· US$2,500,000 in cash (two million five hundred thousand US dollars) in full and final settlement of accrued but unpaid dividends on the sale shares

The Sojitz Noble Alloys Corporation shareholding in Strategic Minerals Corporation was acquired free from all claims, liens, equities, charges, encumbrances and adverse rights of any description, and together with all rights attaching thereto, accrued or contingent.

Following completion of the transaction Bushveld, through wholly owned Bushveld Vametco Limited, owned 100 per cent of Strategic Minerals Corporation and therefore had an indirect beneficial interest of 75 per cent in Vametco Alloys Proprietary Limited (subsequently reduced to 74 per cent).

The group used existing cash resources to complete the transaction.

9. FINANCE INCOME

	2019 US$	2018 US$
Bank interest	3,593,142	1,987,333
10. FINANCE COSTS
Interest on convertible bonds	-	522,079
Interest on unsecured convertible loan notes	173,288	-
Other finance costs	1,032,655	711,327
Interest on lease liabilities	463,513	-
	1,669,456	1,233,406
11. TAXATION
The tax expense represents the sum of the tax currently payable and the deferred tax adjustment for the year.
Profit before tax Loss before taxation multiplied by Guernsey corporation tax rate of 0%	83,253,558 -	86,605,066 -
South African tax - current tax	13,033,205	32,218,043
South African tax - deferred tax	267,538	386,864
USA - deferred tax	2,665,603	-
USA - current tax	(1,960,381)	5,000,000
Taxation expense for the year	14,005,965	37,604,907

Management believe that any unrecognised deferred tax assets relating to the accumulated losses in the subsidiary undertakings of the group, would be immaterial to these financial statements.

USA - current tax charge comprises irrecoverable withholding tax of US$3,039,619 on dividends received and the reversal of a tax liability pertaining to the conversion of a subsidiary from a corporation into a limited liability company in the USA, which resulted in an upfront prepayment of US$5,000,000 being payable to Internal Revenue Service (IRS) in 2018. In 2019 this amount was subsequently refunded once the final tax calculation was completed. Due to the conversion all tax credits including deferred tax assets recognised previously would be neutralised.

12. EARNINGS PER SHARE FROM CONTINUING OPERATIONS Basic earnings per share

The calculation of a basic earnings per share of 5.51 cents (December 2018: 2.9 cents), is calculated using the total profit

for the year attributable to the owners of the company of US$61,968,301 (December 2018: Profit of US$30,215,509) and 1,125,562,148 shares (2018:1,043,907,922) being the weighted average number of share in issue during the year.

Diluted earnings per share

The calculation of diluted earnings per share of 5.45 cents (December 2018: 2.9 cents), is based on diluted earnings of

US$62,141,589 (2018:US$30,215,509) and 1,139,216,582 shares (2018:1,043,907,922) being the diluted weighted average number of share in issue during the year.

13. INTANGIBLE ASSETS - EXPLORATION AND EVALUATION

		2019		2018
	Cost US$	Accumulated CarryingValue impairment US$ US$	Cost US$	Accumulated Carrying value impairment US$ US$
Vanadium and Iron ore	56,827,085	- 56,827,085	55,639,067	- 55,639,067
Coal	2,581,736	- 2,581,736	1,511,358	- 1,511,358
Total	59,408,821	- 59,408,821	57,150,425	- 57,150,425

Reconciliation of intangible assets - exploration and evaluation - 2019

	Opening balance	Additions	Exchange differences	Total
	US$	US$	US$	US$
Vanadium and Iron ore	55,639,067	198,319	989,699	56,827,085
Coal	1,511,358	1,070,378	-	2,581,736
	57,150,425	1,268,697	989,699	59,408,821

Reconciliation of intangible assets - exploration and evaluation - 2018

	Opening balance	Additions	Exchange differences	Total
	US$	US$	US$	US$
Vanadium and Iron ore	60,862,691	41,861	(5,265,485)	55,639,067
Coal	-	1,511,358	-	1,511,358
	60,862,691	1,553,219	(5,265,485)	57,150,425

Vanadium and Iron Ore

The Company's subsidiary, Bushveld Resources Limited has a 64% interest in Pamish Investment No 39 (Proprietary) Limited ("Pamish") which holds an interest in Prospecting right 95 ("Pamish 39"). Bushveld Resources Limited also has a 68.5% interest in Amaraka Investment No 85 (Proprietary) Limited ("Amaraka") which holds an interest in Prospecting right 438 ("Amaraka 85").

The Department of Mineral Resources and Energy ("DMRE") granted a mining right to Pamish Investments No. 39 (Pty) Ltd ("Pamish"), in respect of the five farms Vliegekraal 783 LR, Vogelstruisfontein 765 LR, Vriesland 781 LR, Schoonoord 786 LR and Bellevue 808 LR situated in the District of Mogalakwena, Limpopo, which make up the Mokopane Project.

Mokopane is one of the world's largest primary vanadium resources, with a 298 Mt JORC compliant resource and a weighted average V2 O5 grade of 1.75 per cent in magnetite (1.41 per cent in-situ). The Mokopane deposit is a layered orebody along a 5.5 km north-south strike at a dip of between 18 degrees and 22 degrees west. The project comprises three adjacent and parallel magnetite layers namely the Main Magnetite Layer ("MML"), the MML Hanging Wall ("MML- HW") layer and the AB Zone. 298 Mt (JORC) resources and reserves run across three parallel overlying magnetite layers with grades ranging from 1.6 per cent to over 2 per cent V2O5 as follows:

- MML: 52 Mt @ 1.48 per cent V2O5 (1.75 per cent V2O5 in magnetite);

- MML-HW & Parting: 233 Mt @ 0.8 per cent V2O5 (1.5-1.6 per cent V2O5 in magnetite); and

- AB Zone: 12 Mt @ 0.7 per cent V2O5 (greater than 2 per cent V2O5 in magnetite).

The mining right allows for the extraction of several other minerals over the entire Mokopane project resource area, including, titanium, phosphate, platinum group metals, gold, cobalt, copper, nickel and chrome.

Brits Vanadium Project

Bushveld Minerals Limited has been granted Section 11 of the Mineral and Petroleum Resources Development Act (MPRDA) for acquiring control of Sable Platinum Mining Pty Ltd for NW 30/5/1/1/2/11124 PR, held through Great Line 1 Invest (Pty) Ltd. The company has also applied for Section 102 of the Mineral and Petroleum Resources Development Act (MPRDA) and waiting for approval to incorporate NW 30/5/1/1/2/11069 PR into NW 30/5/1/1/2/11124 PR.

Bushveld Minerals Limited has applied for prospecting which has been accepted and environmental authorisation has been granted under GP 30/5/1/1/2/10576 PR held by Gemsbok Magnetite (Pty) Ltd

Coal

Coal Exploration licences have been issued to Coal Mining Madagascar SARL a 99% subsidiary of Lemur Investments Limited.

The exploration is in South West Madagascar covering 11 concession blocks in the Imaloto Coal basin known as the Imaloto Coal Project and Extension.

Notes to the Consolidated Financial Statements

14. PROPERTY, PLANT AND EQUIPMENT	Buildings and	Plant and	Motor	Decommiss-	Right of use	Waste	Assets under	Total
	other improvements US$	machinery US$	vehicles furniture and equipment US$	ioning assets US$	asset US$	stripping asset US$	construction US$	US$
Cost At 1 January 2018	610,789	42,147,393	28,670	1,507,013	-	-	934,379	45,228,244
Additions	-	-	-	271,518	-	-	10,934,184	11,205,702
Disposals	-	(1,180,001)	(30,017)	-	-	-	-	(1,210,018)
Assets under construction capitalised	730,388	3,310,376	246,498	-	-	-	(4,287,262)	-
Foreign exchange differences	(82,128)	(1,398,908)	(3,856)	(202,636)	-	-	(125,639)	(1,813,167)
At 31 December 2018	1,259,049	42,878,860	241,295	1,575,895	-	-	7,455,662	53,410,761
Additions	6,714,835	113,453,458	1,371,514	942,121	5,727,902	3,920,684	11,883,121	144,013,635
Disposals	(414,250)	(2,134,666)	(239,102)	-	-	-	-	(2,788,018)
Assets under construction capitalised	268,304	8,992,207	48,833	-	-	-	(9,309,344)	-
Foreign exchange differences	368,583	3,179,724	51,571	79,271	7,988	-	639,339	4,326,476
At 31 December 2019	8,196,521	166,369,583	1,474,110	2,597,288	5,735,890	3,920,684	10,668,778	198,962,854
Depreciation At 1 January 2018	-	(809,055)	-	-	-	-	-	(809,055)
Depreciation charge for the year	(237,758)	(5,508,585)	(209,890)	(83,106)	-	-	-	(6,039,339)
Disposals	-	1,180,001	30,017	-	-	-	-	1,210,018
Foreign exchange differences	-	108,787	-	-	-	-	-	108,787
At 31 December 2018	(237,758)	(5,028,852)	(179,873)	(83,106)	-	-	-	(5,529,589)
Depreciation charge for the year	(1,177,756)	(5,947,944)	(617,794)	(848,939)	(627,475)	(1,168,237)	-	(10,388,145)
Disposals	414,251	1,804,752	234,711	-	-	-	-	2,453,714
Foreign exchange differences	(21,021)	(211,965)	27,246	(22,543)	(1,488)	-	-	(229,771)
At 31 December 2019	(1,022,284)	(9,384,009)	(535,710)	(954,588)	(628,963)	(1,168,237)	-	(13,693,791)
Net Book Value
At 31 December 2018	1,021,291	37,850,008	61,411	1,492,790	-	-	7,455,662	47,881,162
At 31 December 2019	7,174,237	156,985,574	938,400	1,642,700	5,106,927	2,752,447	10,668,778	185,269,063

15. LEASE LIABILITIES

The Group has applied IFRS 16 for the first time in the period. IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. This note explains the impact of the adoption of IFRS 16 'Leases' on the Group's consolidated year end report and discloses the new accounting policies that have been applied from 1 January 2019. The Group has adopted IFRS 16 using the modified retrospective approach from 1 January 2019 and has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019.

Applying IFRS 16, for all leases (except as noted below), the Group:

a) recognises right-of-use assets and lease liabilities in the Statement of Financial Position, initially measured at the present value of future lease payments;

b) recognises depreciation of right-of-use assets and interest on lease liabilities in the Income Statement; and

c) separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the Statement of Cash Flows.

Lease incentives (e.g. free rent period) are recognised as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive liability, amortised as a reduction of rental expense on a straight-line basis. Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces the previous requirement to recognise a provision for onerous lease contracts. For short- term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and office furniture), the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented within net operating expenses in the Income Statement.

The Group assesses whether a contract is or contains a lease, at inception of a contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. The discount rate used ranges between 10% - 11% depending on the nature of the underlying asset.

Lease payments included in the measurement of the lease liability comprise:

• fixed lease payments (including in-substance fixed payments), less any lease incentives;

• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

• the amount expected to be payable by the lessee under residual value guarantees;

• the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and

• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

The lease liability is presented as a separate line in the Statement of Financial Position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

• the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

• the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

The Group did not make any such adjustments during the periods presented.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs.

They are subsequently measured at cost less accumulated depreciation and impairment losses.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. The costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the Statement of Financial Position. The Group applies IAS 36 Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss.

A reconciliation of total operating lease commitments to the IFRS 16 lease liability at 31 December 2019 is as follows:

Operating lease commitments disclosed at 31 December 2018	US$ 10,709,178
Less: short-term leases recognised on a straight-line basis as expense	(726,668)
Less: discount effect using incremental borrowing rate	(4,517,601)
Lease liability recognised at 1 January 2019	5,464,909
Of which: Non-current lease liabilities	4,677,338
Current lease liabilities	787,571
	5,464,909

In addition to the recognition of right-of-use assets, lease liabilities and adjustments to net operating expenses for operating lease costs and depreciation coupled with adjustments to finance expenses and have been remeasured under the new standard.

16. INVESTMENT PROPERTIES

		2019			2018

	Opening balance	Fair value movements	Closing balance	Opening balance	Fair value movements	Closing balance
	US$	US$	US$	US$	US$	US$
Investment properties	2,816,007	89,442	2,905,449	3,303,501	(487,494)	2,816,007

Land and buildings comprise residential housing in Brits and Elandsrand, North West Province.

Investment properties are stated at fair value, which has been determined based on valuations performed by Mr WJ van Aardt, an accredited independent valuer, as at 31 December 2019 and 2018. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following valuation techniques and key inputs were used in the valuation of the investment properties:

i. Physical inspection of each property;

ii. Consultation with estate agencies to discuss current sales market trends; and

iii. Comparative sales reports for locations where properties are situated were obtained from South Africa.

17. FINANCIAL ASSETS - INVESTMENTS
Name of company	2019 US$	2018 US$
Enerox	420,891	-
Avalon	4,000,000	-
	4,420,891	-
Avalon

The Company has agreed to support the merger of Avalon Battery Corporation ("Avalon") and redT energy plc ("'redT") (the "Merger") with interim funding of US$5 million which will give Bushveld the opportunity to acquire a strategic interest in the merged energy storage company.

In July 2019, AIM-quoted energy storage provider redT and Avalon, a North American-based vanadium redox flow battery ("VRFB") manufacturer, announced their plans to merge. The resulting business will be a leading player in the growing energy storage market. Traded on AIM in London, the merged entity will have a global sales footprint, a robust near-term project pipeline, operations in North America, Europe and Asia, market-leading technology, and a strong management team.

Bushveld has agreed to provide a convertible loan of up to US$5 million to Avalon (the "Interim Funding"), half of which will be loaned by Avalon to redT, to support the companies through the due diligence process, finalisation of the Merger negotiation and completion of the Fundraising. These funds also allow both companies to continue delivering on their current project pipelines.

The investment is in line with the Company's strategy of building a leading downstream vanadium-based energy storage platform, by:

Ÿ Increasing Bushveld's exposure to the massive potential of the stationary energy storage market, for the first time directly with a manufacturer of the VRFB technology;

Ÿ Partnering with selective VRFB companies with attractive upside potential, including the establishment of a VRFB Investment Platform; and

Ÿ Demonstrating upstream support from the vanadium industry for the development of the VRFB sector and encouraging additional investment into the combined company.

Refer to events after the reporting period note 36 for details of the conversion . Enerox

The investment in Enerox is in line with Bushveld Minerals' strategy of partnering with Vanadium Redox Flow Battery

("VRFB") companies and part of the VRFB Investment Platform ("VIP") Consortium.

The Consortium, which currently includes Bushveld Minerals, has signed an initial sale and purchase agreement ("ISPA"). In terms of the ISPA, the members of the Consortium have acquired, in equal proportions, 24.9 per cent of the issued share capital of Enerox for €150,000 from CellCube Energy Storage Systems Inc (the "Seller"). In addition to this amount, to date, the Consortium has invested €600,000 in Enerox to fund ongoing working capital. The investment of US$420 891 represents Bushveld's share of the investment.

The Consortium has been granted exclusivity to complete due diligence. Bushveld Minerals anticipates contributing not more than 50 per cent of the funds to be invested by the Consortium and is considering additional investors to participate as part of the Consortium. The Enerox investment is part of Bushveld Minerals' strategy of partnering with VRFB Original Equipment Manufacturers ("OEMs") that incudes supply of vanadium and electrolyte, deployments and investment. The investment strategy is implemented through the VIP, which seeks to make significant minority investments into high potential VRFB OEMs. The VIP allows for the flow of investment into VRFB OEMs and provides investors with access to the rapidly growing energy storage market.

18. DEFERRED TAX

	2019 US$	2018 US$
Deferred tax assets	173,892	3,004,141
As at 31 December 2019	173,892	3,004,141

19. INVENTORIES	2019 US$	2018 US$

Finished goods	17,062,028	6,094,274
Work in progress	4,544,303	4,489,189
Raw materials	1,702,062	2,157,296
Consumable stores	11,773,949	4,452,259
Inventories	35,082,342	17,193,018
The amount of write-down of inventories due to net realisable value provision requirement is nil (2018: nil).
20. TRADE AND OTHER RECEIVABLES
Trade receivables	2,762,448	27,454,540
Other receivables	1,665,345	5,131,645
Total trade and other receivables	4,427,793	32,586,185

Trade receivables are non-interest bearing and are generally on 15-90 day terms. There were no indicators of impairment at the year end. At 31 December 2019 the group had one customer which accounted for approximately 90% of trade receivables (2018: approximately 90%).

The directors consider that the carrying amount of trade and other receivables approximates to their fair value due to their short-term nature. As at the year end, no receivables are past their due date, hence no allowance for doubtful receivables is provided on the basis that expected credit losses are nil.

The total trade and other receivables denominated in South African Rand amount to US$2,814,561 (December 2018:

US$1,602,806).

2019 US$	2018 US$
21. RESTRICTED INVESTMENTS
Rehabilitation trust fund andinsurancefund 6,605,465	5,388,953
The group is required by statutory law in South Africa to hold these restricted investments in order to meet decommissioning liabilities on the statement of financial position (see note 27 for further details).
22. FINANCIAL ASSETS AT FAIR VALUE
2019	2018
US$	US$
As at 1 January 2,311,272	1,652,265
Fairvalue movement (359,045)	659,007
As at 31 December 1,952,227	2,311,272

The Group measures the fair value of the investment in AfriTin Mining Limited using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

23. CASH AND CASH EQUIVALENTS

2019 2018

US$ US$

Cash at hand and in bank 34,011,557 42,019,123

Cash and cash equivalents (which are presented as a single class of assets on the face of the Statement of Financial Position) comprise cash at bank and other short-term highly liquid investments with an original maturity of three months or less. The directors consider that the carrying amount of cash and cash equivalents approximates their fair value.

The total cash and cash equivalents denominated in South African Rand amount to US$17 469 385 (2018: US$38,304,481).

24. BORROWINGS
	2019 US$	2018 US$
Development Bank of Southern Africa	511,522	-
NedBank Term Loan	18,071,342	-
Convertable Loan Notes	23,173,288	-
	41,756,152	-
Development Bank of Southern Africa - Facility Agreement

Lemur Holdings Limited, a subsidiary undertaking, entered into a US$1,000,000 facility agreement with the Development Bank of Southern Africa Limited in March 2019. The purpose of the facility is to assist with the costs associated with delivering the key milestones to the power project. The repayment is subject to the successful bankable feasibility study of the project at which point the repayment would be the facility value plus an amount equal to an IRR of 40% capped at 2.5 times which ever is lower. As at 31 December 2019, only US$511 523 was drawn down.

Nedbank

Bushveld Minerals Limited secured R375 million (approximately US$25 million) in debt facilities through its subsidiary Bushveld Vametco Alloys Proprietary Limited ("the Borrower") with Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division), a South African based financial institution, in the form of a R250 million loan and a R125 million revolving credit facility.

Key highlights of the R250 million loan which was drawn in November 2019:

Ÿ Five-year amortising loan;

Ÿ Interest rate calculated using the three year or six months JIBAR1 as selected by the Company plus a 3.4% margin;

Ÿ Interest payments are due semi-annually with first payment due in six months from financial close;

Ÿ Principal repayments will be made semi-annually in arrears over four years in eight equal instalments, with first payment due 18 months after financial close.

Key highlights of the R125 million revolving credit facility, which was undrawn for the financial year 2019:

Ÿ Three-year term;

Ÿ Interest rate calculated using the three year or six months JIBAR1 as selected by the Company plus a 3.6% margin;

Ÿ Interest payments are due semi-annually with first payment due in six months from financial close.

The security provided is customary for a secured financing of this nature, including cession of shares in the Borrower, security over the assets of the Borrower, and a parent guarantee.

Financial Covenants undertaken

The Borrower shall ensure that for so long as any amount is outstanding under a Finance Document or any Commitment is in force, in respect of each Measurement Period:

Ÿ the Cumulative DSCR exceeds 1.4 times;

Ÿ the Interest Cover Ratio exceeds 4 times; and

Ÿ the Net Debt to EBITDA Ratio at a Borrower level shall not exceed 2 times.

Convertible Loan

As part of the consideration related to the Bushveld Vanchem acquisition, a payment of US$23.0 million is to be satisfied through the issue of Bushveld Minerals unsecured convertible loan notes ("Loan Notes") with the following repayment, redemption and conversion terms (in addition to customary covenants, warranties and acceleration provisions):

Ÿ Interest at a coupon of 5% per annum payable annually in arrears or on conversion or redemption;

Ÿ Repayable in cash after the second anniversary of Transaction Closure, plus any accrued interest;

Ÿ Obligation to repay an amount equal to 50% of any debt raised over US$15 million, provided no more than 50% of the Loan Notes have been repaid, redeemed or converted;

Ÿ Obligation to repay on a substantial sale of assets or change of control;

The holder will not be able to divest any Bushveld Minerals shares received for six months following conversion and be subject to an orderly market arrangement for the following six months.

	2019 US$	2018 US$
25. TRADE AND OTHER PAYABLES
Financial instruments: Trade payables	12,651,751	12,140,085
Accruals and other payables	3,069,751	8,063,710
	15,721,502	20,203,795

Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for trade purchases is 30 days.

The group has financial risk management policies in place to ensure that all payables are paid within the pre-arranged credit terms. No interest has been charged by any suppliers as a result of late payment of invoices during the year.

The directors consider that the carrying amount of trade and other payables approximates to their fair value.

The total trade and other payables denominated in South African Rand amount to US$12,027,091 (2018: US$15,793,322).

26. POST-RETIREMENT MEDICAL LIABILITY Benefit liability

2019 US$		2018 US$
As at 1 January	2,377,737	2,783,456
Actuarial changes arising from changes in financial assumption	(46,412)	(405,719)
Balance at 31 December	2,331,325	2,377,737

The benefit comprises medical aid subsidies provided to qualifying retired employees. Actuarial valuations are made annually, and the most recent valuation was made on 31 December 2019.

The main assumptions in the valuation are:

Discount rate 9.80%

Health care cost inflation 7.30%

Average retirement age 76.9 years

A one percentage point change in the assumed rate of healthcare costs would have the following effect on the present value of the unfunded obligation: Plus 1%: US$2.5 million; Less 1%: US$2.2 million.

A one percentage point change in the assumed interest rate would have the following effect on the present value of the unfunded obligation; Plus 1%: US$0.24 million; Less 1%: US$0.20 million.

27. ENVIRONMENTAL REHABILITATION LIABILITY

2019 2018

US$ US$

Provision for future environmental rehabilitation costs 17,844,066 6,632,607

Provision for future environmental rehabilitation costs are made on a progressive basis. Estimates are based on costs that are regularly reviewed and adjusted as appropriate for new circumstances.

The rehabilitation provision represents the present value of rehabilitation costs relating to the mining and processing operations, which are expected to be incurred up until end of life of mine or plant, which is when the producing mine properties and plant are expected to cease operations. The provisions are based on management's estimates and assumptions based on the current economic environment. Actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works and timing of when the mine ceases operation. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically viable rates. This, in turn, will depend upon future vanadium prices, which are inherently uncertain.

The discount rate used in the calculation of the provision as at 31 December 2019 was 10.07% (2018: 9.73%).

28. SHARE CAPITAL AND SHARE PREMIUM				Total share
	Shares Number	Share capital	Share premium	capital& premium
		US$	US$	US$
At 1 January 2018	875,894,905	11,817,573	69,222,661	81,040,234
Conversion of convertible bonds	32,499,147	413,649	2,991,090	3,404,739
Warrants exercised	33,737,419	429,409	3,710,416	4,139,825
Shares issued	152,749,172	1,944,191	18,080,981	20,025,172
Shares issued to directors and staff	24,847,310	316,257	8,017,103	8,333,360
Share issue expenses	-	-	(1,018,995)	(1,018,995)
At 1 January 2019	1,119,727,953	14,921,079	101,003,256	115,924,335
Shares issued - Yellow Dragon Holdings	33,914,729	436,192	10,063,808	10,500,000
At 31 December 2019	1,153,642,682	15,357,271	111,067,064	126,424,335

The Board may, subject to Guernsey Law, issue shares or grant rights to subscribe for or convert securities into shares. It may issue different classes of shares ranking equally with existing shares. It may convert all or any classes of shares into redeemable shares. The Company may also hold treasury shares in accordance with the law. Dividends may be paid in proportion to the amount paid up on each class of shares.

As at the 31 December 2019 the Company owns 670,000 (2018: 670,000) treasury shares with a nominal value of 1 pence.

Shares issued Yellow Dragon

As part of the Vametco acquisition terms announced on 30 November 2017, Bushveld Minerals agreed to make further deferred payments to Yellow Dragon as follows:

Ÿ Two deferred payments of US$0.6 million each, payable following publication of the accounts for Vametco Holdings Limited for respectively the years ending 31 December 2018 and 31 December 2019; and

Ÿ A final payment to be made on publication of the Vametco Holdings Limited accounts for the year ended 31 December 2020 to be calculated by reference to Vametco Holdings Limited's EBITDA for the 2020 financial year. The payment being calculated on the following basis 4.5 x EBITDA (as shown in the 2020 Accounts) x 5.91 per cent.

The Company paid the first of the two US$0.6 million payments, following which the two parties agreed on an early settlement for the balance of amounts payable to be settled as follows:

Ÿ Full and final settlement of the earn out of US$13,500,000, being an all-in total payment comprising:

- A cash component payment totalling US$3,000,000; and

- A total of US$10,500,000 payable in 33,914,729 Bushveld Minerals Limited ordinary shares of 1.0 penny each to be issued at a price of £0.24 (which favourably compared to the 10 day volume weighted average price of £0.235 and the 20 day volume weighted average price of £0.226, as at 22 October 2019).

The shares issued to Yellow Dragon are subject to a 6 month lock-in arrangement and a further 6 month orderly market arrangement which are subject to certain exceptions and may otherwise only be waived with the consent of the Company's brokers.

Equity Placing

On 26 March 2018, the Company raised approximately US$20.0 million (before expenses) by way of an oversubscribed placing of 152,749,172 new ordinary shares of 1 penny each at a price of 10.3 pence per share with leading institutional and mining investors. The price was calculated as the 5 day volume weighted average price (as published by Bloomberg) at close of trading Monday 19 March 2018. The Placing shares represented approximately 14.4% of the Company's issued share capital on admission.

The planned use of the net proceeds of the Placing was to:

- Redeem the outstanding Atlas Capital Convertible Bond US$6.9 million;

- Simplify Bushveld's organisational and corporate structure to improve Bushveld's exposure to the underlying cash flows of its assets US$9.0 million; and

- Support Bushveld's vanadium expansion programme: Expansion of the vanadium reserves and resources at the Vametco mine and Brits Project for future production and support Vametco's expansion plans to increase production to more than 5,000 mtV and beyond US$5.6 million.

Shares issued to directors and staff

During the course of 2018 a benchmarking exercise was conducted in order to address a pay gap matter which resulted in a one-off retrospective compensation by way of shares being issued to employees, directors and advisors. Further to the approval by Shareholders of the Retrospective Compensation Scheme, the Compensation Shares were issued as follows:

Name of recipient	Role	Number of Compensation shares
Fortune Mojapelo	Chief Executive Officer	7,000,000
Anthony Viljoen	Non-Executive Director	7,000,000
Ian Watson	Non-Executive Chairman	3,015,000
Jeremy Friedlander	Non-Executive Director	1,050,000
Bill Chipane	Director of Bushveld Vametco Limited	2,500,000
Senior Employees and Advisor		4,282,310
Total shares		24,847,310

Nature and purpose of other reserves

Share premium

The share premium reserve represents the amount subscribed for share capital in excess of nominal value. Warrant reserve

The warrant reserve represents proceeds on issue of warrants relating to the equity component (i.e. option to convert the debt into share capital).

Foreign exchange translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of financial statements of foreign operations.

Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of financial assets at fair value through other comprehensive income until the assets are derecognised or impaired.

Accumulated profit/loss

The accumulated profit/loss reserve represents other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere

29. PROVISIONS
Reconciliation of provisions - 2019
	Opening balance US$	Additions US$	Utilised duringthe year US$	Foreign exchange US$	Total US$
Leave pay	836,455	387,945	-	(30,770)	1,193,630
Performance bonus	809,085	2,640,764	(1,327,699)	(23,585)	2,098,565
Surface lease	622,616	(622,616)	-	-	-
Other	2,052,809	147,869	(2,057,581)	(2,673)	140,424
	4,320,965	2,553,962	(3,385,280)	(57,028)	3,432,619
Reconciliation of provisions - 2018
	Opening balance US$	Additions US$	Utilised duringthe year US$	Foreign exchange US$	Total US$
Leave pay	929,525	73,314	-	(166,384)	836,455
Performance bonus	1,293,417	1,841,460	(2,175,591)	(150,201)	809,085
Surface lease	1,148,922	(86,905)	(315,116)	(124,285)	622,616
Other	100,018	2,158,839	(192,524)	(13,524)	2,052,809
	3,471,882	3,986,708	(2,683,231)	(454,394)	4,320,965
Leave pay and bonus

Leave pay represents employee leave days due multiplied by their cost to the company employment package. The bonus represents the estimated amount due to employees based on their approved bonus scheme.

Performance bonus

The performance bonus represents an incentive bonus due to senior employees, calculated in terms of an approved scheme based on the company's operating results.

Surface lease

The provision is based on management's best estimate of the expenditure required to settle the obligation for surface lease rentals to Co-Owners, subsequent to finalisation of the surface lease agreements. As at year end an agreement was reached with Co-Owners which was settled post year end. The settlement amount has been recorded under trade payable as at year end.

Other

The other provisions represents estimates for group tax, legal and consulting fees to be charged.

30. DEFERRED CONSIDERATION

2019 2018

US$ US$

Opening balance	17,427,512	11,019,447
Cash payment	(3,600,000)	-
Shares settlement (see note 28)	(10,500,000)	-
Unwinding of discount	34,434	316,551
Movement in earnout estimate	1,510,572	6,091,514
Consideration for Vanchem acquisition (see note 8)	2,074,385	-
Foreign exchange	161,916	-
	7,108,819	17,427,512

At the year-end management have updated their estimate of the earnout payable to Evraz on the acquisition of the Vametco Group, which is based on the expected EBITDA for the year ended 31 December 2020, to a maximum of

US$5million. The remaining balance relates to the consideration attributable to the acquisition of Vanchem.

31. FINANCIAL INSTRUMENTS

The group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and processes of the group for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

Capital risk management

The group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising returns to shareholders. In order to maintain or adjust the capital structure, the group may issue new shares or arrange debt financing. At the reporting date, the group had borrowings of US$41 756 152 (2018: US$nil).

The capital structure of the group consists of cash and cash equivalents, equity and borrowings. Equity comprises of issued capital and retained profits.

The group is not subject to any externally imposed capital requirements.

Significant accounting policies

Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement and the bases for recognition of income and expenses for each class of financial asset, financial liability and equity instrument are disclosed in note 3.

Principal financial instruments

The principal financial instruments used by the group, from which financial instrument risk arises, are as follows:

- Trade and other receivables

- Cash at bank

- Trade and other payables

- Borrowings

- Investments

	2019 US$	2018 US$
The group holds the following financial assets:
Loans and receivables Trade and other receivables	4,427,793	32,586,186
Restricted investment Financial assets - Investments	6,605,465 4,420,891	5,388,953 -
Cash and cash equivalents	34,011,557	42,019,123
Financial assets at fair value	1,952,227	2,311,272
Total financial assets	51,417,933	82,305,534

	2019 US$	2018 US$
The group holds the following financial liabilities:
Other financial liabilities Trade and other payables	15,721,502	20,203,795
Lease liabilities Deferred consideration	5,464,909 7,108,819	- 17,427,512
Borrowings	41,756,152	-
Total financial liabilities	70,051,382	37,631,307
General objectives, policies and processes

The Board has overall responsibility for the determination of the group's risk management objectives and policies. The Board receives reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting the group's competitiveness and flexibility. Further details regarding these policies are set out below:

Price risk

The Group's exposure to commodity price risk is dependent on the fluctuating price of the various commodities that it mines, processes and sells.

The average market price of each of the following commodities was:
	2019 US$/kgV	2018 US$/kgV
NV	48.87	67.36
MVO AMV	19.09	110.12

If the average price of each of these commodities increased/decreased by 10% the total sales related to each of these commodities would have increased/decreased as follows:

	Effect on 2019 revenue US$	Effect on 2019 net income US$
NV	11,692,487	8,418,591
AMV	14,391	10,361
	11,706,878	8,428,952
Credit risk

Credit risk arises principally from the group's cash balances with further risk arising due to its other receivables and available-for-sale investments. Credit risk is the risk that the counterparty fails to repay its obligation to the group in respect of the amounts owed. The group gives careful consideration to which organisations it uses for its banking services in order to minimise credit risk.

It is the group's policy that all suppliers who wish to trade on credit terms are subject to credit verification procedures. Credit risk arises from credit exposure to customers, including outstanding receivables and committed transactions.

Trade account receivables comprise a limited customer base. Ongoing credit evaluation of the financial position of customers is performed and granting of credit is approved by directors.

The group's credit risk is considered by counterparty, geography and by currency. The group has a significant concentration of cash held on deposit with large banks in South Africa, Mauritius and the United Kingdom and America with A ratings and above (Standard and Poors).

	2019 US$	2018 US$
The concentration of credit risk by currency was as follows:
Currency Sterling	169,071	1,548,907
South African Rand	17,469,394	10,322,765
United States Dollar	16,373,092	30,147,451
	34,011,557	42,019,123

At 31 December 2019, the group held no collateral as security against any financial asset. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the group's maximum exposure to credit risk without taking account of the value of any collateral obtained. At 31 December 2019, no financial assets were past their due date. As a result, there has been no impairment of financial assets during the year. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. Management considers the above measures to be sufficient to control the credit risk exposure.

Liquidity risk

Liquidity risk is the risk that the group will encounter difficulty in meeting its financial obligations as they fall due. Ultimate responsibility for liquidity risk management rests with the Board of directors. The Board manages liquidity risk by regularly reviewing the group's gearing levels, cash-flow projections and associated headroom and ensuring that excess banking facilities are available for future use.

The group maintains good relationships with its banks, which have high credit ratings and its cash requirements are anticipated via the budgetary process. At 31 December 2019, the group had US$34,011,557 (2018: US$42,019,123) of cash reserves and borrowings of US$41,756,152 (2018: nill). The Group wil maintain its ability to service its borrowings over the next 12 months.

Market risk

The group's activities expose it primarily to the financial risk of changes in foreign currency exchange rates and interest rates.

Interest rate risk

With the exception of cash and cash equivalents, the group's only interest-bearing assets or liabilities were the borrowings of term debt as well as convertible loan (see note 24), which carry a variable rate based on JIBAR and fixed rate of interest respectively. As the debt was only executed in November 2019, no sensitivity has been performed as the effect would be immaterial for the year.

Foreign exchange risk

As highlighted earlier in these financial statements, the functional currency of the group is US Dollars. The group also has foreign currency denominated assets and liabilities. Exposure to exchange rate fluctuations therefore arise. The carrying amount of the group's foreign currency denominated monetary assets and liabilities, all in US Dollars, are shown below:

2019 US$		2018 US$
Cash and cash equivalents	17,638,465	11,871,672
Other receivables	2,170,847	5,383,027
Trade and other payables	(11,563,170)	(9,161,039)
	8,246,142	8,093,660

The group is exposed to a level of foreign currency risk. Due to the minimal level of foreign transactions; the directors currently believe that foreign currency risk is at an acceptable level.

The group does not enter into any derivative financial instruments to manage its exposure to foreign currency risk.

32. CONTINGENT LIABILITIES

Bank guarantee

As required by the Minerals and Petroleum Resources Act (South Africa), a guarantee amounting to US$6,461,513 before tax and US$4,652,290 after tax was issued in favour of the Department of Mineral Resources for the unscheduled closure of the Bushveld Vametco Alloys mine. This guarantee was issued on condition that a portion be deposited in cash with Guard Risk Insurance Company Ltd with restricted use by the Group, as per the below.

Restricted cash

The restricted cash disclosed as a current asset consists of US$3,051,487(2018: US$2,702,089) paid to Investec Bank Limited and US$3,553,978 (2018:US$2,686,864) paid to Guardrisk Insurance Company Ltd, to enable Guard Risk Insurance Company Ltd to issue a guarantee to the Department of Mineral Resources for the mine's environmental rehabilitation obligation. The insurance company deposited this balance in a Money Market account and interest at a rate of 5.5% is earned on the net credit balance. The guarantee is valid for three years, commencing on 1 April 2018 and the funds are only available if the agreement is terminated with a three months' notice period. The contract was renewed on 1 April 2018, it will expire on 31 March 2021.

Suretyship

On 22 May 2019, the Company announced that it had agreed to provide a short-term standby working capital support facility to AfriTin for the amount of ZAR 30,000,000 (approximately US$2.1 million on 22 May 2019). AfriTin has subsequently secured a working capital facility for the amount of NAD 35,000,000 from Nedbank Namibia (the "Nedbank Facility"), with the support of Bushveld Minerals providing to stand surety for the Nedbank Facility to the value of NAD 30,000,000 (approximately US$2.0 million).

In the unlikely event of default, Nedbank will first call on the suretyship of the parent company of the AfriTin Group (i.e. AfriTin Mining Limited). In the event that AfriTin Mining Limited cannot meets its obligations under the facility, Nedbank will call upon the Bushveld Minerals suretyship.

The above is less onerous on Bushveld Minerals as it is not a cash collateralised guarantee. In addition, the terms agreed for the Working Capital Facility announced on the 22 May 2019 remain unchanged with respect to Bushveld Minerals. The Company is comfortable with the progress that AfriTin has made towards production at its Namibian flagship project and with the security it retains from AfriTin for the suretyship in the form of a notarial bond over the AfriTin processing plant.

33. CAPITAL COMMITMENTS
	2019 US$	2018 US$
Authorised and contracted for	2,449,568	7,599,075
Authorised but not contracted for	608,778	2,258,667
	3,058,346	9,857,742
34. BROAD BASED BLACK ECONOMIC EMPOWERMENT OWNERSHIP IN THE GROUP

On 27 September 2018, the group completed the sale of a 1.0% equity interest in Bushveld Vametco Holdings (Proprietary) Limited equally to its two Broad Based Black Economic Empowerment Shareholders, Business Ventures Investments No. 1833 (Proprietary) Limited and Business Ventures Investments No. 973 (Proprietary) Limited ("BBBEE Shareholders") for a total cash consideration of R1,780,000.

The commitment to conclude the transaction at the agreed consideration was made by the previous Strategic Minerals Corporation owners, prior to Bushveld Minerals Limited's acquisition of Strategic Minerals Corporation, with a view to meeting the Black Economic Empowerment equity requirements as set out in the recently promulgated Mining Charter III. Accordingly, the sale increased Bushveld Vametco Holdings (Proprietary) Limited's Broad Based Black Economic Empowerment shareholding from 25.0% to 26.0%, ensuring Bushveld Vametco Holdings (Proprietary) Limited is fully compliant with the minimum Black Economic Empowerment ownership requirements of the Mining Charter. Bushveld Minerals Limited's shareholding in Bushveld Vametco Holdings (Proprietary) Limited, through its wholly owned subsidiary Strategic Minerals Corporation, accordingly, reduces to 74%.

Transaction summary

- Total 1.0% interest acquired to increase total Broad Based Black Economic Empowerment shareholders interest to 26.0% for a total cash consideration of R1,780,000;

- The R1,780,000 consideration was vendor financed provided to Broad Based Black Economic Empowerment shareholders by Bushveld Minerals which has since been repaid; and

- The share based payment charge recognised in the 2018 income statement of US$3,232,425 represented the difference between the grant date fair value and the 1% interest and the amount receivable for the shares. A charge was recognised in the income statement to recognise the services (BEE credentials) received by the group.

The fair value of the shares were determined by using the estimated fair value of the subsidiary company. The fair value of the subsidiary company was determined using the following assumptions:

- Future estimated vanadium prices

- Future estimated exchange rates

- Future estimated production volumes

- Discount rate of 12.8%

- New order mining rights will expire in 2037

35. RELATED PARTIES

Relationships

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

VM Investments Limited is a related party due to two of the Executive Directors (Fortune Mojapelo and Anthony Viljoen) of Bushveld Minerals Limited being majority shareholders of VM Investments. VM Investments owns the offices rented by Bushveld Minerals Limited. The rent paid in 2019 financial period is US$176,474 (2018: US$0).

Services rendered by Ondra LLP for the amount of US$376,800 is classified as a related party transaction due to a non executive director (Michael Kirkwood) being a partner at the firm.

The remuneration of key management personnel, being the directors and other executive committee members, is set out below. Further information about the remuneration of individual directors is provided in the Directors' remuneration report.

	2019 US$	2018 US$
Salaries and fees	1,772,702	196,557
Short-term incentives	881,934	595,670
Long-term incentives Share based payments	346,157 -	- 6,058,690
	3,000,793	6,850,917
36. EVENTS AFTER THE REPORTING PERIOD
Financial Assets - investment conversion post year end

On 1 November 2019, Bushveld announced it had agreed to invest in Avalon with funding of US$5 million through a convertible. In accordance with the terms of the convertible loan, on successful completion of the merger in March 2020, the loan was converted into shares in Invinity. The previously provided US$5 million loan (together with the accrued interest and commitment fee) has been converted into 302,978,063 Ordinary Shares at a price of 1.65 pence in Invinity, representing up to 8.71 per cent of Invinity. The shares issued to Bushveld are not subject to a lock-in arrangement. In addition to the funding from Bushveld, Invinity has raised £7.9 million through an equity placing at 1.65 pence per share.

Under the agreement, following the completion of the Merger, Bushveld has a right to nominate a director to the Board of Invinity, subject to Bushveld retaining at least 5 per cent of the issued share capital of Invinity. The nomination of a director will be done in due course. Bushveld will retain that right after one year provided it beneficially owns at least 10 per cent of Invinity. In addition, for so long as Bushveld beneficially owns at least 20 per cent of Invinity, it shall have a right to nominate two members of the board of Invinity. The investment is in line with Bushveld's strategy of partnering with VRFB companies and part of the VRFB Investment Platform ("VIP"), as announced on 1 November 2019.

Covid-19

On 31 December 2019, the World Health Organization (WHO) reported a cluster of pneumonia cases in Wuhan City, China. 'Severe Acute Respiratory Syndrome Coronavirus 2' (SARS-CoV-2) was confirmed as the causative agent of what we now know as 'Coronavirus Disease 2019' (Covid-19). Since then, the virus has spread to more than 100 countries, including South Africa with a countrywide lockdown implemented on the 24 March 2020.

As a Company we recognised the gravity of the Covid-19 pandemic early and moved quickly to take all necessary measures to create awareness, minimise transmission risks and establish intervention protocols for potential cases. We established a cross- functional Covid-19 Task Team, including operations, health and safety, human resources, finance, community and government relations and other support functions to ensure that the Company is best prepared to navigate this period. To minimise the potential for Covid-19 to spread at our operations, we implemented various preventative measures, including supplying sanitisers, temperature testing, adapting workplaces to foster social distancing, introducing strict procedures at our operations and enabling remote work, where it was practicable to do so. This is being coupled with awareness campaigns to inform and educate employees and the wider community.

As the near-term impact of Covid-19 on operating conditions remains uncertain, we have taken cash preservation measures to manage near-term liquidity, while preserving the long-term sustainability of the assets and still positioning the Company to increase its share of the vanadium market. These include: reviewing operational expenditure, prioritisation of critical and regulatory capital, as well as deferring some growth-associated (non-critical) capital expenditure across the mining, processing and energy businesses. Furthermore, to enhance our liquidity position and financial flexibility, we drew down on the remaining revolving credit facility of ZAR125 million at the end of March 2020. Refer to the CEO's statement for a more detailed response to the pandemic.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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