Interim results for period ended 31 August 2016

Bushveld Minerals Limited

29 November 2016

29 November 2016

Bushveld Minerals Limited

("Bushveld" or "the Company")

Unaudited interim results performance report for the period ended 31 August 2016

Bushveld Minerals Limited (AIM: BMN), a diversified mineral development company with projects in South Africa and Madagascar, is pleased to report on the operational performance of the Company for the six months ended 31 August 2016. Our portfolio of projects is organised into three platforms, Bushveld Resources Limited (vanadium, titanium and phosphate), Greenhills Resources Limited (tin) and Lemur Resources Limited (coal). These commodity platforms are structured to ensure clarity of focus and purpose to deliver maximum shareholder value.

HIGHLIGHTS:

· Bushveld is making significant progress to becoming one of the largest, low cost integrated primary vanadium producer in Africa.

Bushveld Resources Limited ("Bushveld Resources")

· Strategic Minerals Corporation ("SMC") acquisition targeted to transform the Company into a high quality, low cost vanadium producer with a global customer base;

· Memorandum of understanding ("MoU") signed with prominent USA based vanadium-redox flow batteries ("VRFBs") manufacturer, UniEnergy Technologies ("UET") to partner in identifying and securing energy storage opportunities in Africa;

· Cooperation Agreement with the Industrial Development Cooperation ("IDC") for the joint development of both the market opportunity for VRFBs in Africa and the potential for creating manufacturing capacity for VRFBs in South Africa;

· Finalisation of tenders for studies related to VRFB's in partnership with the IDC provides impetus to fully understanding the energy storage market and value chain in South Africa;

· Integrated environmental authorisation for Mokopane Vanadium project, an important milestone to attaining the mining licence. Development of the project will further enhance synergies identified in the Vametco acquisition and increase the Company's global vanadium supply footprint.

Lemur Resources Limited ("Lemur Resources")

· Settlement of mining licence 4578 re-affirms Lemur's ownership rights of the Imaloto coal concession in Madagascar. 

Greenhills Resources Limited ("Greenhills Resources")

On 22 November 2016 Greenhills Resources announced that it had signed an MoU with VBKom (Proprietary) Limited ("VBKom") for the joint development of the Mokopane Tin Project.

Corporate:

· Settlement of all outstanding financial obligations arising from the £2,600,000 Darwin Strategic facility.

Commenting on the results, CEO Fortune Mojapelo, said,

"I am pleased to report on an interim period that has recorded strong progress towards our goal of being a renowned global integrated vanadium producer. The six months period was defined by the conclusion of fundamental partnership deals in the vanadium production and energy storage sectors.

"A major milestone in the period under review, was the execution of the share purchase agreement with Evraz Group SA for the acquisition of SMC, the holding company for Vametco primary vanadium mine and processing plant. Since then, we have been focused on fulfilling the conditions precedent for the transaction which include securing all requisite regulatory approvals and funding. To date we have made significant progress towards raising capital for the transaction which we anticipate will be structured as a combination of debt and equity with the objective to minimise the dilution impact on our shareholders.

"I am equally pleased with the progress in developing the energy platform, Bushveld Energy. The MoU signed with UET provides us with access to advanced technologies and a deep knowledge base in the manufacture of VFRBs. Furthermore, our finalisation of the tenders for studies into the VFRB market in partnership with the IDC will enable us to effectively enter the market by targeting the most lucrative opportunities.

"The settlement of the dispute over the Imaloto coal concession mining right in the reporting period is greatly welcome and will enable us to pursue the identified power generation opportunities in Madagascar.

"As with all exploration groups at this stage of the resource development cycle, Bushveld's working capital funding is derived principally through equity financing. Therefore I am pleased to confirm that in August and October our shareholders continued to support us through two successful capital raises that grossed £1,330,000 in total. I would therefore like to take this opportunity to thank our shareholders for their confidence in the strategy and management's ability to bring the projects to account. The guidance of the Chairman and the board has helped the Bushveld team to successfully pursue the strategic objectives thereby achieving the milestones highlighted in this report. Finally, I would like to thank all the Bushveld employees for their continued commitment to achieve the Company vision."

OPERATIONAL REVIEW

Bushveld Resources

The Company made significant progress during the interim period to develop its vanadium platform into a globally significant low cost integrated vanadium entity and advancing participation in the growing energy storage market through VRFBs. Highlights of our major strides achieved are discussed below.

Bushveld Vametco Limited: Acquisition of Evraz Group S.A's ("Evraz") 78.8% interest in Strategic Minerals Corporation.

In May 2016, BMN's 45% owned subsidiary, Bushveld Vametco Limited ("BVL") announced the signing of a share purchase agreement ("SPA") with Evraz for the conditional purchase of SMC which owns the Vametco vanadium mine and plant in South Africa ("Vametco Alloys"). Vametco Alloys is a high quality, low cost producer with a patented vanadium product and global customer base. The US$16,466,000 acquisition will also provide potential capacity for planned electrolyte manufacturing in South Africa which is the subject of current studies being undertaken by Bushveld Energy Limited ("Bushveld Energy") and the IDC under the pair's Cooperation Agreement signed in June 2016.

The consideration payable is substantially less than the cost of a greenfield mine and plant of the same capacity. This proposed transformational acquisition is a major step towards achieving Bushveld's stated objective to develop a significant, vertically integrated vanadium platform and accelerates the Company's path to production by several years.

The Company has to-date made payments totalling US$1,646,000 (£1,244,922) towards the consideration for SMC and is making good progress in securing the financing for the completion of the acquisition. Such financing is envisaged to include a combination of debt and equity with a preference for debt. Furthermore, progress is being made in the fulfilment of conditions precedent to the transaction, including securing regulatory approvals for the transaction.

Bushveld Energy Limited : UniEnergy Technologies MoU

In April 2016, BMN's 84% subsidiary Bushveld Energy signed a MoU with UET, a United States of America based manufacturer of turn-key, large and medium-scale energy storage systems for utility, micro-grid, commercial and industrial applications. The core of the UET system is an advanced VRFB that includes breakthrough electrolyte and optimised power electronics. This MoU provides a framework of cooperation between the two companies in the development of market opportunities for VRFBs and has two broad objectives:

· To identify and develop immediate business opportunities in Africa for large and medium sized VRFB installations;

· To create a vanadium value chain in South Africa that includes vanadium electrolyte manufacturing, VRFB manufacturing and local component sourcing.

Bushveld Energy Limited: Cooperation agreement with the Industrial Development Corporation

In June 2016, Bushveld Minerals' subsidiary Bushveld Energy Limited signed a cooperation agreement with the IDC to determine the economic viability of VRFBs for use and manufacture in South Africa. The IDC is South Africa's national development finance institution, wholly-owned by the South African government. It aims to be the primary source of commercially sustainable industrial development and innovation to benefit both South Africa and the rest of Africa by promoting entrepreneurship through the building of competitive industries and enterprises based on sound business principles. In 2015, the IDC approved R 11.5 billion (approximately USD 1 billion) in funding to companies across various sectors.

Further to the UET MoU and IDC cooperation agreement, the Company announced the signing of an addendum to its cooperation agreement with the IDC to involve UET in its steering committee. This is designed to enhance the cooperation between all parties in the common objective of developing the African market and local manufacturing capacity for VRFBs.

Bushveld Energy Limited: Finalisation of tenders for studies related to VRFB's in partnership with the Industrial Development Corporation

In October 2016, progress was achieved in respect of the cooperation agreement with IDC through the finalisation of the tenders for the VRFB market and techno-economic studies. The market study is essential to enhancing the Company's knowledge of attainable market opportunities for VRFB, whilst the techno-economic study will identify the optimal vanadium electrolyte production processes for South African vanadium feedstocks. Bushveld Energy has determined that the opportunities for commercial scale energy storage are numerous globally and the Company is well positioned to deal with the two common hurdles of VRFB adoption of the availability of vanadium supply and vanadium input costs.

Bushveld Resources Limited: Integrated environmental authorisation granted for Mokopane Vanadium project

On 21 September 2016, Bushveld confirmed the granting of an Integrated Environmental Authorisation by the South African Mineral Resources Department in terms of Section 24 L of the National Environmental Management Act (Act 107 of 1998) for the Mokopane Vanadium Project. The Environmental Impact Assessment was compiled as part of the Mining Right Application ("MRA") submitted on 12 March 2015. The next step in the MRA process is the receipt of the approval of the Company's mine works programme and social and labour plan. The Mokopane Vanadium Project remains a key part in the Company's vanadium strategy and offers meaningful synergies with the Vametco Alloys opportunity being pursued.

Greenhills Resources

Greenhills Resources, Bushveld's tin platform, was established to develop a pan-African portfolio of tin assets with a near term production profile. The company continues to advance its stated strategy to build a critical mass of tin resources with a near term production profile and to advance the projects towards production.

On 28 November 2016, the Company announced that it had signed a MoU with VBKom for the joint development of the Mokopane Tin project. Under the terms of the MoU, VBKom commits to conduct due diligence on the Mokopane Tin Project, following which, if a successful outcome, VBKom intends to enter binding agreements to provide capital investment and technical support for the development of the Groenfontein and Zaaiplaats deposits to mine commissioning in return for equity participation in the project, not exceeding 50%. The MoU provides for VBKom to conduct due diligence on the Mokopane Tin Project for a period to 31 January 2017.

The joint development effort is expected to build on the 2014 Mokopane Tin Project Scoping Study (the "Study") based on the two deposits, Groenfontein and Zaaiplaaats. The Study envisaged an initial 691,000 tons per annum Run-of-Mine operation to produce 700 tons per annum of 99.5% Sn purity metal. The positive results of the Study included a pre-tax IRR of 34.6%, all-in cash cost of US$14,276/ton Sn for a US$16 million capex and using a long-term tin price of $22 928/ton.

Lemur Resources

Lemur Resources is the coal and power platform mainly focussed on assets in Madagascar. In the interim period a settlement agreement was reached with Madam Rahajasoamampionona Ramiaramanana in respect of the mining licence 4578 dispute within the Imaloto power project coal concession in Madagascar. This settlement terminates the long running legal case and reaffirms Lemur Resources' ownership rights. The Company continues to be committed to securing the power purchase agreement with the state owned utility entity, Jirama, in order to further the project's economic realisation.

EVENTS AFTER THE REPORTING DATE

The Company released the £2,600,000 previously held in escrow to Darwin Strategic in accordance with the agreed terms of the facility and subsequently terminated the arrangement. A total amount of £514,800 being the accumulated interest plus penalty for late settlement was paid to Darwin Strategic on 8 November 2016. This serves as the full and final settlement of our obligations under the facility.

The Company successfully raised funding through equity for working capital and to fulfil progress payments on the Vametco transaction:

· Shares were issued in September following a placing on 1 September 2016 of 38,666,668 new ordinary shares of 1.0 pence each in the Company at a price of 1.5 pence each raising gross proceeds of £580,000;

· Another placing was completed on 27 October 2016 of 53,571,430 new ordinary shares of 1.0 pence each in the Company at a price of 1.4 pence each raising gross proceeds of £750,000.

On 22 November 2016 Greenhills Resources signed an MoU with VBKom for the joint development of the Mokopane Tin Project.

OUTLOOK  

The Company remains on track to achieving its objectives in respect of all three of its platforms:

· To complete the SMC acquisition by securing acquisition finance for the transaction

· To secure a mining right for its Mokopane Vanadium project in Mokopane;

· To complete the studies for VRFBs in Africa, electrolyte manufacturing in South Africa, and to secure a test site for a sizable VRFB installation in the country.

· To build a critical mass of tin resource inventory and to advance the tin projects towards production;

· To secure a power purchase agreement for the development of a coal-fired power station using the Imaloto coal resource in Madagasacar.

Enquiries: [email protected]

Bushveld Minerals

Fortune Mojapelo +27 (0) 11 268 6555

Beaufort Securities

Jon Bellis +44 (0) 20 7382 8300

Strand Hanson

Andrew Emmott +44 (0) 20 7409 3494

Blytheweigh

Tim Blythe / Camila Horsfall +44 (0) 20 7138 3204

Gabriella von llle +27 (0) 711 121 907

ABOUT BUSHVELD MINERALS LIMITED

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

Bushveld Minerals' approach to project development recognises that whilst attractive project economics are an imperative, they are insufficient to secure capital to bring them to account. A clear path to production with a visible timeframe, low capex requirements and scalability are important factors in retaining an attractive exit option. 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

Unaudited Consolidated Income Statement

For the six months ended 31 August 2016

The notes on pages 14 to 22 form part of these interim financial statements.

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 31 August 2016

unaudited Consolidated Statement of Financial Position

As at 31 August 2016

The notes form part of these interim financial statements.

The financial statements were authorised and approved for issue by the Board of Directors and authorised for issue on 28 November 2016.

G N SPROULE

Director

unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 August 2016

unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 August 2016

unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 August 2016

unaudited Consolidated Statement of Cash Flows

For the six months ended 31 August 2016

The notes on form part of these financial statements

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

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 Bushveld Group comprises Bushveld Minerals Limited and its wholly owned subsidiaries headed by Bushveld Resources Limited ("BRL"), Greenhills Resources Limited ("GRL"), companies registered and domiciled in Guernsey together with their South African subsidiaries and Lemur Resources Limited ("Lemur") and its subsidiaries.

The wholly owned Guernsey subsidiaries BRL and GRL were acquired by Bushveld under the terms of a Share Exchange Agreement entered into on 15 March 2012.

BRL is an investment holding company formed to invest in resource-based iron ore exploration companies in South Africa. The South African subsidiaries are Pamish Investments No. 39 (Proprietary) Limited ("Pamish 39") in which BRL holds a 64% equity interest, Amaraka Investments No. 85 (Proprietary) Limited ("Amaraka 85") in which BRL holds 68.5% equity interest and Frontier Platinum Resources (Proprietary) Limited in which BRL holds 100% equity interest. The minority shareholder in Pamish 39 is Izingwe Capital (Proprietary) Limited and the minority shareholder in Amaraka 85 is Afro Multi Minerals (Proprietary) Limited.

GRL is an investment holding company formed to invest in resource-based tin exploration companies in South Africa. The South African subsidiaries are Mokopane Tin Company (Proprietary) Limited in which GRL holds 100% equity interest and Renetype (Proprietary) Limited ("Renetype") in which GRL holds a 74% equity interest. The minority shareholders in Renetype are African Women Enterprises Investments (Proprietary) Limited and Cannosia Trading 62 CC who own 10% and 16% respectively.

Lemur Resources Limited ("Lemur") is a coal project development company previously listed on the ASX. Through its wholly owned subsidiaries as detailed below, the Group is the holder of 11 concession blocks in South West Madagascar covering the Imaloto Coal Basin, known as the Imaloto Coal Project and Extension. In addition, the Group is in the final stages of acquiring two further blocks contiguous to the existing holdings subject to ministerial approval of the transfer. This project is known as the Imaloto Project Extension. Lemur owns two additional projects known as the Ianapera Coal Project and Sakaraha Coal Project.

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

1. Corporate information and principal activities (continued)

As at 31 August 2016, the Bushveld Group comprised:

1 Held directly by Bushveld Minerals Limited

2 Held by BRL

3 Held by GRL

4 Held by Mokopane

5 Held by Lemur Resources Limited

6.Held by Bushveld Energy Limited

These financial statements are presented in Pound Sterling (£) because that is the currency the Group has raised funding on the AIM market in the United Kingdom.

2. Basis of preparation

The results presented in this report are unaudited and they have been prepared in accordance with the recognition and measurement principles of International financial Reporting Standards ('IFRS") as adopted by the EU that are expected to be applicable to the financial statements for the year ended 29 February 2017 and on the basis of the accounting policies to be used in those financial statements.

The interim financial information does not include all of the information required for full annual financial statements and accordingly, whilst the interim financial information has been prepared in accordance with the recognition and measurement principles of IFRS, it cannot be construed as being in full compliance with IFRS. The financial information contained in this announcement does not constitute statutory accounts as defined by the Companies (Guernsey) Law 2008.

The audited financial information for the year ended 29 February 2016 is based on the statutory accounts for the financial year ended 29 February 2016. The auditors reported on those accounts: their report was (i) unqualified, (ii) included an emphasis of matter relating to the uncertainties in respect to the Group's ability to continue as a going concern and (iii) did not contain statements where the auditor is required to report by exception.

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

3. Use of estimates and judgements

In the application of the Group's accounting policies the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of revision and in future periods if the revision affects both current and future periods.

Management's critical estimates and judgements in determining the value of assets, liabilities and equity within the financial statements relate to the carrying value of intangible exploration assets of £57.7 million and the going concern assumptions.

The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future iron ore and tin prices, future capital expenditures and environmental and regulatory restrictions.

Going concern

In preparing the financial statements, the directors have considered the current financial position of the Group and the likely future cash flows for the forthcoming 12 months from the date of this report. As with all exploration groups at this stage of the resource development cycle and with no cash-flow from production, funding is derived through equity financing. Since posting of the 2016 Annual Financial Statements on 30 August 2016 the Company has raised funding through the following means in order to support its going concern status:

1. Issue of shares in September following a placing completed on 25 August 2016 of 38,666,668 new ordinary shares of 1.0 pence each in the Company at a price of 1.5 pence each raising gross proceeds of £580,000;

2. A placing completed on 21 October 2016 of 53,571,430 new ordinary shares of 1.0 pence each in the Company at a price of 1.4 pence each raising gross proceeds of £750,000.

Thus, the directors continue to adopt the going concern basis in preparing the Groups financial statements.

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

4. Loss per share

From continuing operations

The basic loss per share is calculated using the total loss for the period attributable to the owners of the Company and the weighted average number of shares in issue during the period. There are no potentially dilutive shares in issue.

5. Intangible assets

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").

Under the agreements to acquire the licenses within Bushveld Resources, the group is required to fully fund the exploration activities up to the issue of the corresponding mining licenses. As the non-controlling interest party retains their equity interest, the funding of their interest is accounted as deemed purchased consideration and is included in the additions in the period to exploration activities. A corresponding increase is credited to non-controlling interest.

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

The Company's other directly owned subsidiary, Greenhills Resources Limited, has a 74% interest in Renetype (Proprietary) Limited ("Renetype") which holds an interest in Prospecting right 2205 ("Renetype 2205").

Through Lemur Resources Limited's wholly owned subsidiary Coal Mining Madagascar Limited, Lemur is the holder of 11 concession blocks in South West Madagascar covering the Imaloto Coal Basin, known as the Imaloto Coal Project and Extension. In addition, the company is in the final stages of acquiring two further blocks contiguous to the existing holdings subject to ministerial approval of the transfer. This project is known as the Imaloto Project Extension. Lemur holds two further projects known as the Ianapera Coal Project and Sakaraha Coal Project.

During the period, Lemur Resources Limited signed a binding term sheet to acquire the Brits Vanadium project, as announced 14 August 2015, with the acquisition completing post period end. The Brits Project comprises new order prospecting rights on the properties Portion 3 of Uitvalgrond 431 JQ and the remaining extent of Doornpoort 295 JR, and a contested mining right application on the farms Syferfontein 430 JQ and Portion 2 of Uitvalgrond 431 JQ. Collectively, the mineral rights are for vanadium, iron ore and rutile.

6. Property, plant and equipment

The depreciation charge for the period has been capitalised as exploration activities in the period.

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

7. Trade and other receivables

8. Financial liabilities

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

9. Share capital and share premium

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

10. Warrants

The following warrants were granted during the year ended 29 February 2016 and the six months to 31 August 2016

The warrants issued during the year are as follows:

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 August 2016

11. Darwin Strategic Limited

Bushveld Minerals entered into a £2,600,000 facility agreement with Darwin Strategic Limited on 28 May 2015.

Darwin agreed to make available to Bushveld, a Sterling loan of £400,000 for general working capital purposes and further loans in aggregate, up to £2,200,000 to fund Bushveld Minerals reasonable and proper acquisition costs of shares of Lemur not already owned by Bushveld.

The funding is in the form of a senior unsecured loan facility which attracts interest at 1.5% per month and was repayable by the maturity date of 29 November 2015 unless Darwin Strategic elected to convert a portion of the facility into Bushveld shares. The working capital loan was drawn down on 29 May 2015 and the loan to fund the reasonable acquisition costs of shares of Lemur was drawn down on 31 July 2015.

The Company has negotiated and agreed with Darwin to amend the agreement to allow Bushveld and Darwin to explore and consider acquisition opportunities. Under the revised terms, the maturity date of the facility was extended to 29 February 2016. Bushveld placed an amount equal to the principal of the facility being a total of £2,600,000 in an escrow account. Interest continued to be payable at a rate of 1.5% per month. Interest accrued at 29 February 2016 amounted to £351,000.

The principal sum of £2.6 million was repaid to Darwin on 6 May 2016 having been released from escrow. A further amount of £78,000 of interest was incurred. The total interest due to Darwin at the repayment date amounted to £429,000.

Bushveld Minerals were unable to repay the interest due to Darwin thereby incurring a penalty.

An amount of £514,800 being the accumulated outstanding interest plus including the penalty for late settlement was paid to Darwin Strategic on 8 November 2016.

12. Events after the reporting date

Details of events after the reporting date are provided in the performance report on page 5.