REG - Bushveld Minerals Ld - Conditional acquisition of interests in Vametco

Bushveld MineralsAnnouncement

30/10/2023 07:15

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RNS Number : 6226R  Bushveld Minerals Limited  30 October 2023

Market Abuse Regulation 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.

 

30 October 2023

Bushveld Minerals Limited

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

Conditional acquisition of minority interests in Vametco

 

Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated primary
vanadium producer and energy storage solutions provider, is pleased to
announce that it has entered into a conditional agreement which will result in
the Company increasing its ownership to 100% of the Vametco vanadium mine and
production facility ("Vametco") (collectively the "Transaction").

 

Highlights
§ Bushveld has entered into a definitive agreement to acquire the 26% minority interest in Bushveld Vametco Holdings Proprietary Limited ("BVH") owned by a Black Economic Empowerment ("BEE") consortium in return for, inter-alia, the issue of 232,836,255 shares in the Company (the "Consideration Shares"), representing 13% of the enlarged issued share capital (assuming no other issuance of shares).
§ The Transaction:
-    will result in Bushveld owning 100% of the Vametco mine and vanadium plant, and acquiring full operational, management and financial control of Vametco.
-    gives the Group complete control over Vametco's cash flows, which have previously been restricted due to minority interest.
-    is immediately value accretive to Bushveld Shareholders and is expected to enhance earnings per share going forward.
-    70% of the Consideration Shares will be subject to a 6 month lock-in period.
 

Further approvals and requirements

§ The Transaction is subject to South African Reserve Bank ("SARB") approval, which is expected to be received within 6 weeks.
§ Completion of the Transaction will take place on the later of the fifth business day following SARB approval being granted or the Company publishing an announcement to confirm completion of the Company's debt restructuring transaction.
§ Following completion of the Transaction, BVH will apply to the Minister of Mineral Resources and Energy (in terms of section 102 of the Mineral and Petroleum Resources Development Act, 2002) to amend and update the BVH Mining Right to reflect the updated ownership structure.
 

 

Details of the Corporate Restructuring

The Company currently owns 74% of the issued share capital of BVH through intermediary subsidiary companies. The remaining 26% is owned by Business Venture Investments 973 Proprietary Limited ("BVI 973") and Business Venture Investments No. 1833 Proprietary Limited ("BVI 1833") (collectively the "Vendors" and "BEE consortium"). Under the terms of the Transaction, BVI 973 and BVI 1833 will sell their shares in BVH in exchange for:
§ The issue of the 152,069,166 of the Consideration Shares to BVI 973, representing 8.49% of the enlarged issued share capital (assuming no other issuance of shares), and 80,767,089 of the Consideration Shares to BVI 1833, representing 4.51% of the enlarged issued share capital (assuming no other issuance of shares), respectively. An aggregate total of 232,836,255 shares in the Company will be issued to the BEE consortium.
§ Payment of ZAR18 million in cash to BVI 1833.
§ Cession to BVI 973 of an A Class Share in Oakleaf Investments 115 (Pty) Ltd (which holds 100% of BVI 1833) which entitled it to 20% of all distribution therefrom.
§ Cancellation of a loan to one of the intermediate subsidiary companies in the BEE structure of US$0.513 million.

BVI 973 is owned 25% by the Vametco Community Trust  and 75% Marble Gold 208 (Pty) Limited, a wholly owned subsidiary of Jaxson 640 (Pty) Ltd ("Jaxson 640"). Jaxson 640 is owned 70% by Mr Billy Chipane, a South African entrepreneur and director of BVH, and 30% by the Peo Matlafatso Trust, a trust owned by the local Mothotlung communities.
 
BVI 1833 is 100% owned by Oakleaf Investments 115 (Pty) Ltd, which in turn is 100% owned by Jaxson 640.

 

Lock in agreement

BVI 973 and BVI 1833 have each agreed that for a period of 6 months following Completion, they will not dispose of 70% of their Consideration Shares.
 
In consideration for the shareholders agreeing to the aforementioned lock in, the Company grants BVI 973 and BVI 1833  the right to subscribe, at their own cost, for up to such number of shares as shall maintain or reinstate (as the case may be) their collective shareholding in the Company at or to 13% of the aggregate issued shares, at the same subscription price at which a third party shall be entitled to subscribe for shares, in the event that their collective shareholding expressed as a percentage of all issued shares falls below 13% due to a subscription for shares by a third party or third parties for a period of 6 months from Completion.

 

Related Party Transaction

Mr Billy Chipane is a director of BVH, a subsidiary of the Company, and
accordingly the Transaction is classified as a related party transaction
pursuant to the AIM Rules for Companies. The directors of Bushveld Minerals
(all of whom are independent of the Transaction) consider, having consulted
with SP Angel Corporate Finance LLP, the Nominated Adviser of Bushveld, that
the terms of the Transaction are fair and reasonable insofar as shareholders
are concerned. Following completion of the Transaction, Mr Billy Chipane will
resign from the board of BVH.

 

Financial details

Bushveld Vametco Holdings reported sales of ZAR 1,972,478,766 (approx.
US$105.4 million), profit before tax of ZAR 490,355,989 (~US$26.2 million) and
net assets of ZAR 1,613,397,934 (~US$86.1 million) in the year ended 31
December 2022. Following completion of the Transaction, the Company will no
longer account for non-controlling interests in BVH. In the year ended 31
December 2022, profits attributable to non-controlling interests in BVH were
US$3.5 million.

 

Next Steps

The Company will work towards completing the outstanding conditions being SARB
approval and the convertible loan note refinancing. Following which the
Company will issue the Consideration Shares to the Vendors. Further
announcements will be made as appropriate.

 

Craig Coltman, CEO of Bushveld Minerals Limited, commented:

"This is an important transaction as it consolidates the ownership of this
valuable vanadium producing asset under a single entity - Bushveld Minerals.
As South Africa navigates its way beyond the original Black Economic
Empowerment ownership requirements at asset level as set in law, we see it fit
to now transfer this interest to a stake at the top level of the Company,
providing see through value in a listed stock and access to Bushveld's future
growth plans across the Group. For Bushveld it allows us to consolidate the
structure and take full control of the asset."

 

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 & 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                                       +44 (0) 207 920 3150

 

 

 

 

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a low-cost, vertically integrated primary vanadium
producer, it is one of only three operating primary vanadium producers. In
2022, the Company produced 3,842 mtV, representing more than 3% of the global
vanadium market. With a diversified vanadium product portfolio serving the
needs of the steel, energy and chemical sectors, the Company participates in
the entire vanadium value chain through its two main pillars: Bushveld
Vanadium, which mines and processes vanadium ore; and Bushveld Energy, an
energy storage solutions provider.

 Bushveld Energy is focused on developing and promoting the role of vanadium
in the growing global energy storage market through the advancement of
vanadium-based energy storage systems, specifically Vanadium Redox Flow
Batteries ("VRFBs")

 

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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