REG - Bushveld Minerals Ld - Proposed conditional disposal of Vanchem

Bushveld MineralsAnnouncement

07/05/2024 07:15

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RNS Number : 3486N  Bushveld Minerals Limited  07 May 2024

Market Abuse Regulation ("MAR") Disclosure

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 

7 May 2024

Bushveld Minerals Limited

("Bushveld Minerals", "Bushveld" or the "Company")

Corporate Update

Proposed conditional disposal of Vanchem

Increase in Working Capital Facilities

 

Bushveld Minerals Limited (AIM: BMN), the primary vanadium producer,
announces that it has successfully secured additional funding to provide
immediate working capital relief and ensure continuity of operations. The
Company has entered into a binding term sheet with Southern Point Resources
Fund I S.A. LP ("SPR") to conditionally sell  the entire Vanchem asset for a
total consideration of up to US$40.6 million, comprising an initial
consideration of US$20.6 million and a deferred consideration of between US$15
million and US$20 million (the "Disposal"). The proposed terms of the Disposal
replace those announced on 20 November 2023 for the sale by Bushveld to SPR of
a 50 per cent interest in Vanchem. The Disposal is conditional upon
shareholder approval.

 

As Bushveld Minerals requires additional funding to pay creditors and ensure
that it has sufficient working capital to fund ongoing operations, SPR has
also agreed to increase the funding available through the interim working
capital facility secured against production at the Vanchem plant (previously
announced on 11 September 2023) from c.US$8.1 million by a further US$9
million. The Company received an initial additional advance of US$3 million on
03 May 2024 (the "Initial Working Capital Facility Advance"). SPR has agreed
to advance a further US$5 million on 31 May 2024 and a further US$1 million on
30 June 2024, subject to certain conditions.

 

Highlights

 

·      Bushveld Minerals has entered into a conditional binding term
sheet to sell Vanchem for a total consideration of up to US$40.6 million.

·      SPR has conditionally agreed to increase the interim working
capital facility secured against production at the Vanchem plant (previously
announced on 11 September 2023) by c.US$9 million.

·      Bushveld Minerals received a US$3 million cash injection to pay
creditors and ensure continuity of operations on 03 May 2024.

·      In addition, SPR will advance, as a loan to Vanchem, between US$5
million and US$$8 million for working capital and essential capital
expenditure.

 

Background and transaction rationale

 

As announced in the Q1 2024 Operational and Corporate Update, the Company's
working capital was extremely tight for a number of factors including (i) the
continued delay in receiving funds from the equity fundraising (announced on
05 December 2023) (ii) delay in the Completion of the sale of a 50% interest
in the Vanchem vanadium processing plant for US$21.3 million and the sale of a
64% interest in a subsidiary that owns the Mokopane Vanadium project for
US$3.7 million, the Company announced that approval from the South African
Competition Tribunal, initially anticipated for February 2024, is expected to
be granted at the earliest in July 2024 (iii) production levels being
materially affected (iv) notably weaker vanadium prices  (declining between
10 and 17% year to date across different markets). Accordingly, as previously
disclosed to shareholders the Company was dependent on receipt of further
funding to continue operations.

The Company has explored all available funding options including the further
issue of equity, however as a result of the Company's share price trading
below par value this was not a viable option, given the immediate need for
funding.  Accordingly, the Board has determined that in order for the Company
to continue as a going concern, having consulted with its key stakeholders,
the only viable option to bring in immediate funds is through an increased
working capital facility with SPR and to sell its remaining interest in
Vanchem on the following proposed terms.

SPR debt funding

SPR has agreed to increase its interim working capital facility by a further
US$9 million. The first advance of US$3 million was received on 03 May 2024.
SPR has agreed to provide a further US$5 million on 31 May 2024 and a further
US$1 million by 30 June 2024. The advance of the second and third payments is
conditional upon certain consents (including the consent of Orion Mine
Finance) and receipt of shareholder approval at a general meeting to be
convened by the Company to effect the Disposal on or by 31 May 2024.

 

Vanchem Capital Expenditure and Creditor Funding

 

As at 03 May 2024, Vanchem has creditor balances of approximately US$13
million, with numerous balances being long overdue. Vanchem also requires
ongoing funding for essential capital expenditure. Accordingly, SPR has agreed
to advance a loan to Vanchem of between US$5 million and US$8 million for
working capital and essential capital expenditure at an interest rate of 15%
per annum (the "Vanchem Facility"). In the unlikely event that the Disposal
does not close Bushveld will have to repay the loan plus the accrued interest.

 

Related Party Transactions

As a substantial shareholder in the Company as defined by the AIM Rules for
Companies ("AIM Rules") the increase in the interim working capital facility
with SPR and the provision of the Vanchem Facility constitute a related party
transaction pursuant to AIM Rule 13 (the "Transaction"). The independent
directors for the purposes of the Transaction, being the whole board, having
consulted with the Company's nominated adviser, consider that the terms of the
Transaction are fair and reasonable in so far as the Company's shareholders
are concerned.

 

 

Proposed Terms of the Disposal

 

Under the terms of the conditional binding term sheet, Bushveld Minerals has
agreed to sell its 100% interest in Vanchem for a total consideration of up to
US$40.6 million, comprising a deferred consideration of up to US$20 million to
be satisfied as follows:

 

Initial consideration of US$20.6 million

·      The initial consideration consists of:

o  US$8.1 million working capital facility received in September 2023;

o  An additional US$9 million working capital facility:

§ US$3m received on 03 May 2024;

§ US$5 million on 31 May 2024, subject to conditions set out below;

§ US$1 million on 30 June 2024, subject to conditions set out below;

o  A US$3.5 million payment on closing of the Disposal ("Closing Date").

 

Deferred consideration of between US$15 million and US$20 million

·      Following satisfaction of the conditions, and on the Closing
Date, SPR shall pay Bushveld as consideration for the sale of its shares in
Vanchem to SPR, 25% of the distributable free cash flow of Vanchem for the
3-years following the Closing Date ("Term" and "Deferred Consideration").

o  The Deferred Consideration shall be payable quarterly in arrears, but
shall be subject to:

§ a minimum nominal payment of US$5 million per annum paid as quarterly cash
payments of US$1.25 million, during the Term amounting to a total nominal cash
value of US$15 million over the Term.

§  a maximum payment of US$20 million over the Term.

 

The transaction is conditional upon:

·      Entry into final documentation, which is progressing.

·      Bushveld shareholder approval.

·      Competition Tribunal Approval, expected at the end July 2024/
beginning of August 2024.

 

Disposal of the Company's remaining shares in Vanchem

The Disposal which remains subject to the completion and execution of binding
documentation with SPR of the Company's remaining shares in Vanchem will
constitute a related party transaction pursuant to AIM Rule 13.

The Disposal will also constitute a fundamental change of business pursuant to
AIM Rule 15 of the AIM Rules and as such will require the approval of
shareholders at a general meeting to be convened by the Company. The Company
has agreed to hold a shareholders meeting on or before 31 May 2024 at which a
resolution for the approval of the Disposal will be proposed.  A further
announcement will follow in connection with the publication of a circular
containing the notice of the said general meeting. In the event that the
Disposal is not approved by shareholders, the Company may need to start formal
business rescue procedures.

 

Craig Coltman CEO of Bushveld Minerals commented:

"The extension of the working capital facility provides vital funds to
continue as a going concern. The proposed sale of Vanchem will enable the
Group to move forward in a more agile and lean manner and help pay down our
creditors. Further details will be provided in due course but absent this
funding the Company would have had no option but to apply for business rescue.

 

Fortunately, our turnaround at Vanchem has allowed us to achieve meaningful
value for this asset which we are able to monetise over a very short space of
time and focus on getting the Vametco plant and its long-life mine into an
efficient, sustainable, cash-producing position."

 

ENDS

 

Enquiries: info@bushveldminerals.com

 Bushveld Minerals Limited                                                                     +27 (0) 11 268 6555
 Craig Coltman, Chief Executive Officer
 Chika Edeh, Head of Investor Relations

 SP Angel Corporate Finance LLP                          Nominated Adviser & Joint Broker      +44 (0) 20 3470 0470
 Richard Morrison / Charlie Bouverat
 Grant Barker / Richard Parlons

 Hannam & Partners                                       Joint Broker                          +44 (0) 20 7907 8500
 Andrew Chubb / Matt Hasson / Jay Ashfield

 Tavistock                                               Financial PR                          +44 (0) 207 920 3150
 Gareth Tredway / Tara Vivian-Neal / James Whitaker

 

 

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a primary vanadium producer, it is one of only three
operating primary vanadium producers, with a diversified vanadium product
portfolio serving the needs of the steel, energy and chemical sectors.

Detailed information on the Company and progress to date can be accessed on
the website www.bushveldminerals.com (http://www.bushveldminerals.com)

 

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