Bushveld Minerals Limited (AIM:BMN), the primary vanadium producer, notes the recent open letter ("Letter") by Business Venture Investments No 1833 (Proprietary) Limited ("BVI") dated 18 May 2024 regarding the recently announced agreement to dispose of 100% of Vanchem ("Vanchem Disposal" or the "Transaction") to Southern Point Resources Fund I S.A. LP ("SPR").

The Board further notes BVI's stated intention to vote against the Vanchem Disposal, which could result in immediate business rescue or insolvency. Through both processes, shareholders are unlikely, in the context of the Company's debt position, to achieve any value.

The Company has prepared the following answers to the points raised in the Letter in order to assist BVI to reconsider their voting intentions.

1. Why can SPR vote their shares at the upcoming general meeting given that they remain in default of their subscription agreement?

The Company has taken appropriate local legal advice and is acting in accordance with it. SPR's right to vote is not tied to receipt of the subscription funds, but rather to the issue of shares, which were issued as fully paid. The subscription monies owed, as first announced on 03 January 2024, are classified as a short-term receivable on Bushveld's balance sheet until they are received. In specific reference to clause 78 of the Company's Articles, the amount owing under the subscription agreement is not owing "in respect of these shares" but is a separate standalone debt.

The US$12.5 million loan which has been provided on an interest free, non-refundable and unsecured basis (to be repaid once SPR provides Bushveld with the entire US$12.5 million pursuant to the SPR subscription agreement) is a debt. SPR is treated as an equity holder in relation to their equity and a debt holder in relation to their debt.

There is nothing contravening South African foreign exchange regulations, the Company articles or the AIM Rules for Companies which prevents SPR from voting.

2. The proposed Vanchem disposal does not give Bushveld any additional cash in the near future than the original 50% Vanchem sale.

The proposed sale of Vanchem will enable the Group to move forward in a more agile and lean manner without incurring the additional Vanchem near term losses, capital expenditure requirements or consequential Vanchem working capital demands. From July 2024 until the Closing Date, SPR has committed to advance a loan to Vanchem of up to US$8 million for working capital purposes and for critical capital expenditure, where such requirements were previously incurred by the Group on behalf of Vanchem. SPR's deferred consideration constitutes a minimum of US$15 million (12 quarters of US$1.25 million) but could be up to US$20 million. It will be payable quarterly in arrears commencing on the Closing Date. This means that part of the deferred consideration will be unlocked as early as Q4 2024, with potential for further upside exposure to Bushveld and its shareholders over the 3-year deferred consideration term, if in aggregate the distributable free cashflow is positive and exceeds the minimum quarterly payments of US$1.25 million.

In Summary, the structure of the Vanchem Disposal preserves Bushveld's underlying going concern asset value, significantly reducing the ongoing financial burden of a loss-making enterprise at the prevailing vanadium prices which are down US$10/kgV since June 2023, and allows the Company's balance sheet resources focus to be on the Vametco turnaround, unlike the original 50% Vanchem sale.

3. The proposed Vanchem disposal is irrational and unreasonable in the context of a pending completion of the sale of 50%, whose only remaining condition precedent for completion is approval of the transaction by competition authorities.

Under the original proposal to sell 50% of Vanchem, Bushveld would likely, given the current cash position, need to suspend all operations for an indefinite period of time, given that the vanadium market has shifted dramatically against the Company compared to the time when the original agreement with SPR was entered into. With the Vanchem Disposal, SPR is going to advance Vanchem a loan for the ongoing costs of Vanchem in the interim period, including creditors and working capital, while concluding Competition Commission approval, which will reduce Bushveld's financial burden associated with running Vanchem and only be repayable in the unlikely event that the Transaction doesn't close.

The Company originally expected the proceeds from the Vanchem 50% sale to have been received by February / March 2024. The approval by the Competition Authorities ("CA") was significantly deferred when SPR's lawyers were informed by the CA that the threshold for the transaction constituting a large merger was breached when they considered the financial information of SPR's shareholders in combination with the financial information of the Bushveld Group. This was not foreseeable by the Company in advance of the submission and added additional complexity and hence delay. In addition, the Company was informed that the Minister of Trade, Industry, and Competition would participate in the transaction review, which has again extended the timeframe. These events were beyond the control of Bushveld and have delayed vital funds that would have allowed the business to normalise creditors and significantly improve its working capital position. Under South African law, the transaction cannot complete without the CA approval, meaning the Company has had to rely on loan advances from SPR. The Company has been advised by the authorities that it will not be possible to accelerate this process and a decision is expected in July/August 2024.

4. The proposed Vanchem disposal removes from Bushveld a key growth asset. which is key to lowering the Company's unit costs while leaving Vametco and therefore Bushveld shareholders saddled with the debt.

Under the Vanchem Disposal, the current Vametco / Vanchem subordinated inter-company loan shall be equitized ahead of drawing down any advance from SPR. Given that this is an inter-company balance which is consolidated into the accounts of the Company without impacting upon the cash flow or balance sheet of the Company, this loan has no relevance to the financial standing or liquidity of the Company. Further, the primary reason for the inter-company balance has been the continued loss-making and urgent capital needs of Vanchem. This was known to BVI and was done in order to prevent Vanchem entering into insolvency proceedings or care and maintenance.

Without further funding, Vanchem may be required to consider filing for business rescue or liquidation. In the face of these challenges, full recovery of the Vanchem loan is therefore not a likely outcome. However, the proceeds of the Vanchem disposal will be applied to paying down the inter-company loan balance to Vametco.

5. The financial consequences of the Vanchem disposal outlined in the Circular are selective and do not present a complete picture for shareholders to vote with.

The Board disagrees with the statement and has included relevant financial information in respect of the asset for sale as well as post transaction balance sheet information on Bushveld Minerals. In particular, the Circular clearly states that "Without further funding, Vanchem and/or Vametco may be required, pursuant to the South African Companies Act, 2008, to consider filing for business rescue or liquidation which may, depending on the circumstances, result in a total loss of income for the Group, and Shareholders are therefore likely to lose a substantial part or all of their investment."

6. There are better alternatives that could have been pursued and were likely not.

As part of the initial SPR investment process, the Company undertook an extensive outreach programme to interested parties. The Company has explored all viable funding options, including the sale of the energy and coal assets. The Company has also considered the issuance of further equity; however, as a result of the Company's share price trading below par value and limited shareholder support, this was not a viable option, given the immediate need for funding and the absence of any investors willing to advance funds other than Orion an SPR.

Once the original SPR investment (50% Vanchem disposal) was agreed and the Orion restructuring was implemented, all security of the Company, as well as the off-take of the Company had been pledged to secure these transactions. As such, in the very limited time available and given the entrenched nature of the incumbent investors in SPR and Orion, it was not possible to secure viable alternatives, and the amount required to secure the future of the Company was beyond what existing shareholders would be willing to provide, given the appetite and participation in the last round of funding.