TIDMBMN
RNS Number : 8256Q
Bushveld Minerals Limited
23 October 2019
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
23 October 2019
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Vanchem Acquisition Completion Update
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated
primary vanadium producer, with ownership of high grade vanadium
assets in South Africa, announces an update to the acquisition,
announced on 01 May 2019, of:
-- the Vanchem Plant and 100% of the issued shares in Ivanti
Resources (Pty) Limited ("Ivanti") from Vanchem Vanadium Products
(Pty) Limited ("VVP"), a subsidiary of Duferco Vanadium Investment
Holding S.A. ("Duferco");
-- the SAJV Business from South African Japan Vanadium
Proprietary Limited ("SAJV"), a wholly owned subsidiary of VVP;
(collectively, the "Vanchem Business").
The Company is pleased to announce that it has renegotiated the
consideration payable for the acquisition with the sellers and that
the initial conditions to closure of the transaction have been
met.
The total consideration has been reduced from US$68 million to
US$53.5 million, of which US$30 million will be payable in cash and
the balance through the issue of Bushveld Minerals unsecured
convertible loan notes (as detailed below).
The improved terms take into account current market conditions
while affirming the medium to long term vanadium market outlook of
the Company, which is the natural buyer of Vanchem.
This acquisition ensures that the Company is in a solid position
to achieve its long-term production target of more than 8,400
mtVp.a. and to build a leading downstream vanadium-based energy
storage platform. Due to the revised payment terms the transaction
is now expected to be completed on 07 November 2019 ("Transaction
Closure").
Transaction Conditions Met
All conditions for Transaction Closure have been met.
Renegotiated acquisition terms
Total consideration has been revised from US$68 million to
US$53.5 million, payable as follows:
-- US$30 million in cash (which includes the US$6.8 million
deposit paid into an escrow account on 1 May 2019) payable on
Transaction Closure.
-- An additional payment of US$23.0 million to be satisfied
through the issue on Transaction Closure of Bushveld Minerals
unsecured convertible loan notes ("Loan Notes") with the following
repayment, redemption and conversion terms (in addition to
customary covenants, warranties and acceleration provisions):
o Interest at a coupon of 5% per annum payable annually in
arrears or on conversion or redemption;
o Repayable in cash after the second anniversary of Transaction
Closure, plus any accrued interest;
o Convertible at the holder's option in two tranches of up to
US$11.5 million each, after the first and second anniversary of
Transaction Closure respectively, at a 5% discount to the
prevailing 10-day volume weighted average Bushveld Minerals share
price leading up to conversion;
o Early redemption of the Loan Notes at the election of Bushveld
Minerals, subject to the condition that the holder will have an
option of converting up to 50% of the early redemption amounts into
Bushveld Minerals shares on the same terms set out above;
o Scope for acceleration of redemption of up to US$5 million of
the Loan Notes 12 months after Transaction Closure if an average
ferrovanadium price of $40/kgV is realised during any nine-month
period during the12 month period after Transaction Closure;
o Obligation to repay an amount equal to 40% of any cash
received on a new share issue which raises more than US$30m,
provided no more than 50% of the Loan Notes have already been paid,
redeemed or converted;
o Obligation to repay an amount equal to 50% of any debt raised
over US$15 million, provided no more than 50% of the Loan Notes
have been repaid, redeemed or converted;
o Obligation to repay on a substantial sale of assets or change
of control;
o The holder will not be able to divest any Bushveld Minerals
shares received for six months following conversion and be subject
to an orderly market arrangement for the following six months.
-- A deferral of US$0.5 million plus an amount equal to the
working capital adjustment payable in cash after two years.
-- All other terms remain substantially the same as per the
original agreement announced on 1 May 2019.
The aforementioned revised Transaction terms, and other
consequential changes, have been captured in an addendum to the
original agreement which was signed on 22 October 2019.
The revised terms ensure the transaction remains competitive
under current market conditions and allows the Group to continue
executing on its growth plans even in a volatile price
environment.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"Bushveld's ambition to become a leading low cost producer takes
a big step forward with the acquisition of Vanchem. With this
acquisition, the Company will have two quality primary processing
assets producing a complementary suite of products, with a four
kiln configuration, that gives it unmatched production flexibility.
This is supported by the Company's high grade resource base, that
is well serviced by logistics infrastructure. Furthermore,
Vanchem's attractive suite of vanadium products complements the
Nitrovan(TM) produced at Vametco. These include ferrovanadium,
vanadium pentoxide vanadium trioxide and vanadium chemicals. The
vanadium chemicals capability will be particularly key as the
Company grows its exposure to the emerging stationary energy
storage industry through vanadium redox flow batteries.
"The Vanchem acquisition completes at a time when vanadium
prices have seen a market-dip necessitating the revised transaction
terms. The Company's view on the vanadium outlook however remains
positive and supportive of the Company's production growth
aspirations. We look forward to completing this Transaction and
unlocking its value as Bushveld continues on its journey into a
significant low cost, vertically integrated primary vanadium
company."
Transaction Rationale
The acquisition is consistent with the Company's long-term
strategy of acquiring existing, low-cost scalable brownfield
operating assets in South Africa to expedite the development of the
Company's significant and high-grade resource base. The Directors
believe that the acquisition is value accretive as the
Transaction:
-- Provides increased exposure to vanadium, a commodity with compelling fundamentals:
o Robust and growing demand from steel manufacturers and energy
storage
o A structural supply deficit due to concentrated and
constrained primary production
o Limited new global vanadium production on the horizon
o By sustainably reducing costs, Vanchem will generate healthy
margins throughout the commodity cycle
-- Provides diversification to Bushveld Minerals through the
addition of another processing facility:
o Following the refurbishment and ramp-up programme, Vanchem is
expected to support steady state production of 4,200 mtVp.a.
o Diversification of Bushveld Minerals' mining and processing
footprint within South Africa
-- The Vanchem Plant has the potential to expedite the development of Mokopane:
o The two assets will together create a fully integrated
business in a shorter timeline, with reduced costs and risks than
developing Mokopane on a standalone basis
o Three kilns provide optionality and increased availability
during planned and unplanned kiln maintenance programme
-- Provides optimal product diversification:
o The Vanchem Business is capable of producing various vanadium
oxides, ferrovanadium and vanadium chemicals, complementing
Vametco's existing NitrovanTM offering
-- Enhances Bushveld Minerals' ambitions in the global energy
storage and vanadium redox flow battery space:
o Provides further capacity for electrolyte manufacturing
through the existing chemical plant and vanadium oxide
production
Enquiries: info@bushveldminerals.com
Bushveld Minerals +27 (0) 11 268 6555
Fortune Mojapelo, Chief Executive
Officer
Chika Edeh, Head of Investor
Relations
SP Angel Corporate Finance
LLP Nominated Adviser & Broker +44 (0) 20 3470 0470
Ewan Leggat / Richard Morrison
Abigail Wayne / Richard Parlons
BMO Capital Markets Limited Joint Broker +44 (0) 20 7236 1010
Jeffrey Couch / Tom Rider
Michael Rechsteiner / Neil
Elliot
Peel Hunt LLP Joint Broker +44 (0) 20 7418 8900
Ross Allister/ James Bavister
David McKeown
Tavistock Financial PR +44 (0) 20 7920 3150
Charles Vivian / Gareth Tredway
Brunswick Financial PR (South Africa) +27 (0) 11 502 7300
Miyelani Shikwambana
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, integrated, primary vanadium
producer, with ownership of high-grade vanadium assets.
The Company's flagship vanadium platform includes a 74 per cent
controlling interest in Bushveld Vametco Alloys (Pty) Ltd, a
primary vanadium mining and processing company; the Mokopane
Vanadium Project and the Brits Vanadium Project.
Bushveld's vision is to become a significant, low-cost,
integrated primary vanadium producer through owning high-grade
assets. This incorporates development and promotion of the role of
vanadium in the growing global energy storage market through
Bushveld Energy, the Company's energy storage project developer and
component manufacturer. Whilst the demand for vanadium remains
largely anchored in the steel industry, Bushveld Minerals believes
there is strong potential for an imminent and significant global
vanadium demand surge from the fast-growing energy storage market,
particularly through the use and adoption of Vanadium Redox Flow
Batteries.
While the Company's focus is on vanadium operations and the
development and promotion of VRFBs, it has additional investments
in coal, power and tin.
The Company's approach to project development recognises that,
whilst attractive project economics are imperative, they are
insufficient to secure capital to bring them to account. A clear
path to production within a visible timeframe, low capital
expenditure requirements and scalability are important factors in
ensuring a positive return on investment. This philosophy is core
to the Company's strategy in developing projects.
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com.
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END
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