REG - Bushveld Minerals Ld - Agreement for acquisition of interest in Vanchem

Bushveld MineralsAnnouncement

20/11/2023 07:15

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RNS Number : 9692T  Bushveld Minerals Limited  20 November 2023

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.

 

20 November 2023

Bushveld Minerals Limited

("Bushveld" or the "Company")

Definitive agreement for the acquisition by Southern Point Resources of a 50%
interest in Vanchem

 

Further to its announcement on 11 September 2023, Bushveld Minerals
Limited (AIM: BMN), the integrated primary vanadium producer, is pleased to
announce it has entered into a definitive agreement for the acquisition by
Southern Point Resources - Fund 1 SA L.P., represented by its general partner
SPR GP1 Proprietary Limited ("SPRF"), of 50% of the issued shares of Bushveld
Vanchem (Pty) Ltd ("BV"), which owns  the Vanchem vanadium processing plant
("Vanchem"), for an acquisition price of up to US$21.3 million (the
"Transaction"). The purchase by SPR (or an SPR affiliate) of Bushveld's 64%
equity interest in a subsidiary that owns the Mokopane Vanadium project for
US$3.7 million (the "Mokopane Acquisition"), which was announced on the same
date, remains on track.

 

Craig Coltman, CEO of Bushveld Minerals Limited, commented:

"We are pleased to be announcing a definitive agreement on another piece of
the overall US$69.5-US$77.5 million funding package first announced in
September. We look forward to working closely with our new partners at Vanchem
to unlock value in this significant asset. We hope to announce further
progress on the overall funding package in the coming weeks and months."

 

Background

On 11 September 2023, the Company announced that it had entered into a binding
term sheet with SPR GP1 Proprietary Limited ("SPR") regarding a proposed
package of inter-conditional transactions which, if successfully concluded,
would provide a cumulative investment by SPR (and its affiliates) into
Bushveld and its group companies of between US$69.5 - US$77.5 million. The SPR
investment was agreed to be structured as follows:

·      An interim working capital facility, totalling ZAR150 million
(~US$8.1 million) (the "SPR Facility").

·      The Transaction which the Company announces today that BV has
entered into with SPRF, and the Mokopane Acquisition.

·      An equity investment by SPR of ~US$12.5 million into the Company
(the "SPR Investment Agreement").

·      A new marketing and sales arrangement under which SPR will be
appointed to carry out all marketing and sales of product for Bushveld with
effect from January 2025. In line with this arrangement, SPR will provide a
medium-term trade finance working capital facility to the Company, totalling
~US$25-30 million.

·      A future commitment by SPR of an investment of US$7-10 million in
Vanchem for the recommissioning of Kiln-1.

 

 

Key terms of the Transaction

§ Up to US$21.3 million will be paid to BV for preference shares which will
constitute 50% of the issued share capital of BV, in two tranches:

-     US$21.3 million, less an amount equal to the outstanding balance
payable in terms of the SPR Facility (~US$8.1 million) which amounts to
~US$13.2 million, will be paid on the fifth business day after closing of the
Transaction for 99.5% of the preference shares ("First Tranche"); and

-     if the Mokopane Acquisition:

·     has become unconditional by the first anniversary of the closing of
the Transaction, then the second tranche for 0.5% of the preference shares
will be an amount equal to US$21.3 million less the First Tranche, which
amounts to  ~US$8.1 million; or

·     has not become unconditional by the first anniversary of the closing
of the Transaction, then the second tranche will be an amount equal to US$20
million less the First Tranche, which amounts to ~US$6.8 million.

§ The Transaction is conditional, amongst other things, upon the SPR
Investment Agreement being  signed, approval of the South African Competition
Commission and receipt of exchange control approval by SPR, in each case
before 30 April 2024.

§ Each of BV2, which currently wholly owns all of the issued shares in BV,
and Bushveld Minerals SA Pty Limited, which is party to the SPR Facility, has
provided SPRF with customary warranties and indemnities, subject to
limitations, and guaranteed BV's obligations under the Transaction, which are
also secured by the same security securing the SPR Facility.

§ The preference shares held by SPRF:

-     give SPRF the right to a cumulative preferential quarterly cash
dividend equivalent to 50% of BV's free cash flow, less any payments due to
SPR under the SPR Facility and all other amounts payable in connection with
the Transaction (the marketing fees payable by BV to SPR are not taken into
account when calculating BV's free cash flow);

-     convert into 50% of BV's ordinary shares on the first anniversary of
the Transaction closing, provided, inter alia, that the intercompany loan
between BV (as borrower) and Bushveld Vametco Alloys (Pty) Ltd (as lender) has
been fully repaid or discharged by that time;

-     are redeemable at the original subscription price, together with
applicable interest and other accrued dividends, should a dividend remain
unpaid or otherwise in certain circumstances there is an event of default
under the SPR Facility;

-     give the holder the right to appoint half of the board of BV. The
chairman of the board of BV, who will have a casting vote, will be the CEO of
Bushveld for so long as BV2 (or another Bushveld entity) remains a shareholder
of BV (i) if SPR has subscribed for Bushveld shares in the amount of US$12.5
million; and (ii) for so long as SPR has the right to appoint a director on
the board of Bushveld. If the US$12.5 million subscription does not complete,
or if following that subscription, SPR's right to appoint a director on the
board of Bushveld falls away, then the right to appoint the chairman of the BV
board (who will have a casting vote) will rotate between the shareholders
every three years, with BV having the right to make that appointment for the
first three year period; and

-     are transferable.

§ Shareholders in BV will also have pre-emptive rights over each other's
shares in BV, including on a change of control of a shareholder or on a breach
by BV2 of the agreement.

§ In relation to the commitment to invest US$7-10 million in Vanchem for the
recommissioning of Kiln-1, SPRF has also agreed to advance the funding to BV
on terms and conditions to be determined by the BV board. If such funding is
in the form of equity, BV2 will be entitled to provide an amount pro rata to
its shareholding, failing which BV2 will be diluted accordingly.

 

 

 

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 & Broker      +44 (0) 20 3470 0470
 Richard Morrison / Charlie Bouverat
 Grant Baker / Richard Parlons

 RBC Capital Markets                                 Joint Broker                    +44 (0) 20 7653 4000
 Jamil Miah / Sahil Suleman

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

 

 

ENDS

 

 

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a vertically integrated primary vanadium producer, it is
one of only three operating primary vanadium producers. In 2022, the Company
produced more than 3,800 mtV, representing approximately three per cent of the
global vanadium market. 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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