TIDMIRON
RNS Number : 6718M
Ironveld PLC
18 September 2023
Ironveld Plc
("Ironveld" or the "Company")
Operations Update
Ironveld plc ("Ironveld" or the "Company"), the AIM quoted
mining development company, is pleased to provide an update on
recent activities.
Operational and Financial Update Highlights
-- Newly installed power generation at Rustenburg smelter now supplying two furnaces as planned;
-- Ironveld secured a cash generative short term contract from a
third party to undertake metals processing;
-- Third furnace refurbishment now due to commence in October;
-- Directors have provided working capital support for the
Company with a facility of up to GBP500,000 to maintain flexibility
of funding;
-- Encouraging market conditions for near-term High Purity Iron
and future iron powders products; and
-- Burnstar Technologies Pty Ltd. ("Burnstar") Liquified Natural
Gas ("LNG") to hydrogen project on track.
Ironveld Smelting Operations
During July and August, activities at Ironveld Smelting's
Rustenburg facilities focused on ensuring that the two refurbished
furnaces as well as the Argon Oxygen Decarburization ("AOD")
Convertor and the Granulator could operate successfully. Although
the refurbished plant operated as planned without any material
issues, it became clear that further electrical power supply would
be required to run all equipment simultaneously to optimum levels.
To resolve this problem, additional generators were ordered and
then fully installed earlier this month. Whilst this resulted in a
short delay in the anticipated level of activity from the first two
furnaces, the additional power is now capable of operating all
equipment as planned on a full-time basis, which is expected to
continue going forward. Final works and commissioning of the third
planned furnace at the smelter had been placed on hold pending the
arrival of the additional generators and this is now expected to
start in October.
Environmentally Friendly and Economical Energy Solution
The use of generators at the site has always formed part of
Ironveld's short-term solution to remain off-grid, allowing it to
avoid the daily 'load shedding' imposed by the state electricity
provider, ESKOM. As previously announced, Ironveld has contracted
for installation of a full solar-LNG hybrid system at its
Rustenburg site to provide all power requirements on a materially
cheaper basis than both diesel generators and grid power which is
expected to be installed during Q1 2024.
In addition, all works are proceeding as planned with respect to
the BurnStar LNG to hydrogen project which is presently on track
for commissioning around the end of 2023, followed by commencement
of supply during Q1 2024. This may enable Ironveld to use hydrogen
as a reductant in the smelting process, thereby further enhancing
the Company's 'green metals' credentials.
Third-party Smelting Contract Demonstrates Capabilities of
On-site Team and Equipment
In August, whilst waiting for the installation of the additional
generators and seeking to utilise the power available at the time,
the smelter was able to successfully process a test quantity of
third-party metal product to generate revenue. This is expected to
lead to an additional cash generative fixed term and quantity
contract in the short term whilst the customer conducts maintenance
on its own facilities. The outcome has been to demonstrate not only
the flexibility of the production team at the smelter, but also the
Company's ability to generate value from its on-site equipment. In
due course, the fourth furnace at the smelter is also expected to
be brought into production and may become available for third party
contracts.
The refurbished Granulator at the smelter performed
significantly above expectations during this recent processing. The
plant was able to consistently generate a minus two-millimetre
final product, which based on current feedback, should lead to an
increased number of customers for the Company's High Purity Iron
product.
Ironveld Mining's IPace DMS Magnetite Joint Venture
Progressing
As announced on 1 September 2023, an amendment to the structure
of the IPace DMS Magnetite Joint Venture ("JV") has been signed
with Sable Exploration and Mining ("SEAM"), bringing in SEAM as
funding partner. SEAM has already advanced funding as envisaged by
the agreements. At the mine site, ground works and civil works for
the DMS Magnetite JV are progressing well and all processing
equipment is expected to be installed in approximately four weeks,
with first product sales around two to four weeks after that.
General mining activities to provide the smelter with necessary
ore have enabled stockpiles to be created at both sites.
High Purity Iron Powders Opportunity
Ironveld's Board has been very encouraged by recent
conversations with potential customers for its planned iron powders
products. At present there is no production of water atomised iron
powders in the southern hemisphere and, once production of these
powders commences, Ironveld will enable local customers to avoid
importing these critical materials. The Company has a fully costed
capital investment programme of approximately ZAR 80 million
(approximately GBP3.4 million) to upgrade the Rustenburg production
facilities and is considering a number of ways to best finance this
expansion without further recourse to shareholders.
Additive Manufacturing Research reported earlier this week that
metal 3D printing markets had grown 16 per cent year-on-year and
Ironveld's planned iron powders will feed into this growing market.
For example, the aerospace industry, including Airbus and Boeing,
is increasingly using metal 3D printing for parts, and last month
Apple announced that it would be using 3D printers to make the
chassis for some of the upcoming Apple Watch Series 9 models. The
new manufacturing process that Apple is testing will use less
material than the large slabs of metal that are needed for
traditional computer numerical control manufacturing, as well as
cutting down on the time that it takes to make new devices.
Direct Funding Discussions
As announced on 30 March 2023, the Company reported that it was
aware that Grosvenor Resources (Pty) Limited ("Grosvenor") was in
talks with potential funders to facilitate its investment
transactions. An institution introduced by Grosvenor is now in
direct funding discussions with the Company and the Company will
provide a further update when appropriate.
Working Capital Loan Facility
As a result of the short delay in reaching full production
capacity at the Rustenburg smelter complex and the additional
diesel generator costs as explained above, the Company's operating
expenditure has been higher than anticipated at the time of the
February 2023 placing. In order to ensure that the Company has a
sufficient working capital buffer until the expected receipt of
increased product sales from the recently installed additional
on-site power, Ironveld has entered into working capital loan
facility agreements (the "Facility") with certain Directors, being
Peter Cox, Giles Clarke and Nick Harrison, together with Tracarta
Limited (in which John Wardle has a beneficial interest). The
Facility consists of a maximum of GBP500,000 in order to provide
the Company with flexibility in meeting ongoing operating costs
over the coming months.
The key terms or the agreements are as follows:
-- Interest on funds drawn at 11% per annum;
-- Arrangement fee of 2.5% of the Facility value;
-- Term of six months;
-- Repayment of any funds drawn down plus interest immediately
upon receipt of funds drawn down from any replacement institutional
debt facility or conversion at the issue price in the event of any
future equity placing during the loan term; and
-- There are no warrants immediately awarded in connection with
the Facility however, conditional upon a replacement institutional
debt facility being drawn down during the loan term, 62,500,000
warrants (in total) will be issued to the lenders exercisable at
0.80p per share. The exercise price represents a 162.3% premium to
the closing mid price per Ironveld share of 0.305p on 15 September
2023.
Martin Eales, Chief Executive Officer, commented:
"We are extremely pleased to have the processing plant up and
running effectively and efficiently again. It was not without great
deliberation that we decided to pause certain activities but,
ultimately, the decision to do this and install additional
generators, until such time as the solar hybrid facility is
commissioned, was the correct one.
"Positive discussions with potential iron powder customers are
progressing well. In addition, the Company in engaged in
preliminary discussions with direct funders, introduced by
Grosvenor, which could see the Company further accelerate its
activities.
"Ironveld is edging closer to a fully operational smelting
plant, with the planned three furnaces nearing full operational
status before the end of the year. The sheer size of the mine site,
and the vast amounts high grade ore there, together with our
ability to process and sell the product, means the upside potential
is enormous.
"Notwithstanding the terms of the Facility being provided by the
Directors and Tracarta, at present the Company has no intention of
seeking new equity capital, and it will give us an important
financial buffer as we continue the commissioning and production
process.
"We look forward to sharing further positive updates during the
remainder of the year."
Change of Name of Nominated Adviser
The Company also announces that its Nominated Adviser and Joint
Broker has changed its name to Cavendish Capital Markets Limited
("Cavendish") following completion of its own corporate merger.
Related Party Transaction
The Facility participation by Giles Clarke, Nick Harrison, Peter
Cox and John Wardle, all Directors of the Company, constitutes a
related party transaction pursuant to Rule 13 of the AIM Rules for
Companies. The Company's independent Directors (being Martin Eales
and Malebo Ratlhagane) consider, having consulted with the
Company's nominated adviser, Cavendish, that the terms of the
Facility are fair and reasonable insofar as the Company's
shareholders are concerned.
For further information, please contact:
Ironveld plc c/o BlytheRay
Martin Eales, Chief Executive Officer +44 20 7138 3204
Cavendish (Nomad and Broker)
Christopher Raggett / Charlie Beeson / George
Dollemore +44 20 7220 0500
Turner Pope (Joint Broker)
Andrew Thacker / James Pope +44 20 3657 0050
BlytheRay
Tim Blythe / Megan Ray +44 20 7138 3204
NOTES TO EDITORS
Ironveld (IRON.LN) is the owner of Mining Rights over
approximately 28 kilometres of outcropping Bushveld magnetite with
a SAMREC compliant ore resource of some 56 million tons of ore
grading 1.12% V2O5, 68.6% Fe2O3 and 14.7% TiO2.
In 2022 Ironveld agreed to acquire and refurbish a smelter
facility in Rustenburg, South Africa, in which it can process its
magnetite ore into the marketable products of high purity iron,
titanium slag and vanadium slag. This transaction became
unconditional in March 2023.
Ironveld is an AIM traded company. For further information on
Ironveld please refer to www.ironveld.com .
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