TIDMBMN
RNS Number : 5640A
Bushveld Minerals Limited
30 September 2020
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.
30 September 2020
Bushveld Minerals Limited
("Bushveld Minerals", "Bushveld" or the "Company")
Bushveld enters into US$30 million Production Financing
Agreement with Orion Mine Finance
&
Announces a Convertible Loan Note Instrument to raise up to a
further US$35 million
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated
primary vanadium producer and energy storage provider, with
ownership of high-grade assets in South Africa, is pleased to
announce that it has signed a long-term Production Financing
Agreement of US$30 million (or the " PFA ") with mining-focused
investment business Orion Mine Finance ("Orion"), primarily to
finance its expansion plans at Vametco and debt repayment. Drawdown
on the loan is subject to completion of certain conditions
precedent as described in this announcement.
Under a separate investment agreement, Orion has also
conditionally agreed to subscribe for a minimum of US$10 million,
and a maximum of US$20 million of convertible loan notes under a
US$35 million convertible loan notes instrument (the "Instrument").
The Company intends to seek other subscribers for the balance of
the total. The Instrument's proceeds will go towards the first
phase of Vanchem's critical refurbishment programme and debt
repayment.
Since both the PFA and the Instrument require the prior written
consent of Nedbank Limited ("Nedbank"), the Company and Bushveld
Vametco Alloys (Proprietary) Limited ("Vametco Alloys" or the
"Borrower") are in discussions with Nedbank on the outstanding term
loan and revolving credit facilities, including discussions on the
potential pre-payment of the outstanding debt facilities on
completion of the PFA. The outstanding balance of the Nedbank
facilities is ZAR375 million (circa US$21.9 million), plus accrued
interest of US$0.3 million.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"We are excited to announce the innovative funding agreement
with Orion, which puts us on track with our expansion plans at
Vametco, and we look forward to further elaborating on these plans
and the impact on our business in the coming months.
Importantly, the long-term nature of the PFA and its early
repayment options caters for the cyclical nature of the vanadium
market and enables Bushveld to take advantage of the long-life,
high-grade resources we are proud to own at Vametco, for the
benefit of all our stakeholders. The Instrument's proceeds will go
towards the first phase of Vanchem's refurbishment programme and
debt repayment.
In addition, I am pleased to announce that the previous owner of
Vanchem, Duferco Participations Holding S.A., has agreed to accept
an early repayment of US$11.5 million of their US$23 million
convertible loan notes issued in accordance with the terms of
acquisition announced on 23 October 2019. US$6.5 million will be
repaid through the issue of new Bushveld shares and US$5 million of
the loan notes, plus interest of US$1.15 million will be settled as
a cash payment. This puts us in an even stronger financial position
with a solid balance sheet.
While there are certain conditions and approvals outstanding,
this total funding solution provides us with flexibility around our
capital expenditure plans, which we were forced to review as a
result of the Covid-19 pandemic.
Once again, the relatively small amount of investment required
for such a large uplift in production, vindicates our strategy of
acquiring these brownfield processing facilities over the past
several years, allowing us to ramp up production quicker and at a
lower capital intensity than what would be required to build such
capacity from greenfield investments.
We look forward to working with Orion, one of the leading
mining-focused investment business with more than US$6.2 billion
under management"
Philip Clegg, Portfolio Manager at Orion commented:
"Orion is delighted to become a cornerstone investor in
Bushveld. We have been attracted to the quality and growth profile
of Bushveld's portfolio of mining and processing assets for some
time, and we also recognise the leading role that the Company has
assumed in the supply of crucial raw materials to the vanadium
redox flow battery industry. We are looking forward to partnering
with Bushveld as it continues on its growth trajectory and
supporting the Company as it realises its full potential. "
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo, and
Finance Director, Tanya Chikanza will host a conference call at
9:30am BST (10:30am SAST) today to discuss the announcement with
analysts. Participants may join the call by dialling:
Tel: United Kingdom: +44 (0) 330 336 9127; South Africa: +27 11 844 6054
Toll Free: United Kingdom: 0800 358 6377; South Africa: 0800 998 654
Pin: 2792652
Webcast link https://webcasting.brrmedia.co.uk/broadcast/5f6e055667e6d719f1fc1362
A replay of the conference call will be available on the
Company's website post-call.
Key Highlights
Production Financing Agreement
-- Vametco Alloys, a subsidiary of Bushveld, has executed a debt
instrument in the form of a PFA of US$30 million with an affiliate
of Orion (as lender), to provide the necessary funding to finance
the Vametco phase III expansion project to 4,200 mtV and debt
repayment.
-- The PFA amortises over the life of mine and will be serviced
through quarterly repayment amounts (comprising repayment of
principal and payment of interest).
-- The security provided is customary for a secured financing of
this nature, including cession of shares in the Borrower, security
over the assets of the Borrower, and a parent guarantee.
-- The quarterly repayment amount will be determined as the sum
of a gross revenue rate and a unit rate calculated as follows:
- Gross revenue rate of 1.175 per cent for years 2020 and 2021
and 1.45 per cent from 2022 and periods, thereafter, multiplied by
the gross revenue for the quarter:
-- From the beginning of the 2022 calendar year and throughout
the remaining life of the loan, where the average quarterly
vanadium price realised equals or exceeds US$47 per kgV, the gross
revenue rate shall be 1.175 per cent, subject to a gross revenue
amount floor.
- Unit rate of US$ 0.443/kgV multiplied by the aggregate amount
of vanadium disposed of by the Borrower or Vametco Holdings to any
third party or Borrower Group Member for the quarter.
-- The unit rate will be adjusted for inflation at each
anniversary of the loan agreement's execution date.
- Once Vametco reaches life of mine vanadium sales of
approximately 132,020 mtV during the term of the facility, the
gross revenue rate and unit rate will reduce by 75 per cent (i.e.
to 25 per cent of the then applicable rates).
- On each of the first three loan anniversaries, the Borrower
has the option to repay up to 50 per cent of both constituent loan
parts. If the Borrower utilises the loan repayment option, the
gross revenue rate and the unit rate will reduce accordingly.
Material Conditions to Completion include (amongst other
things):
-- Exchange control authorisation from the South African Reserve
Bank Financial Surveillance Department;
-- Execution and delivery of certain security documents to
Orion;
-- Provision of certain legal opinion(s) in relation to the
Borrower and each of its guarantors; and
-- Agreeing revised terms or prepayment with Nedbank in relation
to the Nedbank Financing (including all amendments required to the
Finance Documents in a form approved by Orion).
Convertible Loan Note Instrument and Investment Agreement
Bushveld is to issue unsecured convertible loan notes, pursuant
to the Instrument dated 29 September 2020, up to an aggregate
amount of US$35 million. Under an investment agreement entered into
between Bushveld and an affiliate of Orion on 29 September 2020
(the "Investment Agreement"), Orion has conditionally agreed to
subscribe for a minimum of US$10 million and up to US$20 million of
the Instrument with the remaining balance to be offered on similar
terms to interested third party investors ("Other
Noteholders").
Financing terms of the Instrument
-- A fixed 10 per cent per annum coupon with a three year
maturity date from the drawdown date.
-- All interest will accrue and be capitalised on a quarterly
basis in arrears, but compounded annually.
-- Accumulated capitalised and accrued interest is convertible
into Bushveld ordinary shares. For further information, see
"Conversion feature", below. All interest and principal, to the
extent not converted into ordinary shares, is due and payable at
maturity date.
-- Funds raised are to be used for capital investment purposes
for the first phase of Vanchem's critical refurbishment programme,
and the balance for debt repayment purposes.
Drawdown
-- Bushveld can serve 15 business days' notice to Orion drawdown
in one tranche only, for a minimum of US$10 million and a maximum
of US$20 million, at any time from the date of satisfaction of the
conditions until 30 November 2020.
-- The issuance of convertible loan notes is conditional, inter
alia, on completion of the PFA.
-- Bushveld will first draw down on Orion's maximum commitment
of US$20 million prior to drawing down on the US$15 million from
other Noteholders.
Conversion feature
-- Between drawdown and the Instrument's maturity date
Noteholders may, at their option, convert an amount of the
outstanding debt, including capitalised and accrued interest, into
Bushveld ordinary shares as follows:
- First six months: Up to one third of the outstanding amount;
- Second six months: Up to two thirds of the outstanding amount
(less any amount previously converted);
- From the anniversary of drawdown until the maturity date: the
outstanding amount under the Instrument may be converted;
- Bushveld also has the option to convert all, but not some, of
the amount outstanding under the Instrument, if its volume weighted
average share price is more than 200 per cent of the conversion
price over a continuous 15 Trading Day period, a Trading Day being
a day on which the AIM market is open for the trading of
securities.
-- At any time until the convertible maturity date, the
Noteholders may convert the debt as abovementioned into an amount
of ordinary shares equal to the total amount available for
conversion under the Instrument, converted to pounds sterling at
the average exchange rate of the 15 days leading to the date on
which the Drawdown Notice is served, divided by a conversion
price.
-- The Conversion Price will be the lesser of (i) 130 per cent
of the volume weighted average closing price of a Bushveld ordinary
share for the 15 Trading Days leading to the date on which the
Drawdown Notice is served; and (ii) 25p.
Customary orderly market provisions, anti-dilution protections,
events of default, warranties and pre-emptive rights on future
financings are incorporated as part of the agreements.
Alternative Resource Capital, a previous broker to the Company,
acted as lead broker on the transaction with Orion Mine
Finance.
ENDS
Enquiries: info@bushveldminerals.com
Bushveld Minerals Limited +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
Richard Morrison / Soltan
Tagiev
Abigail Wayne / Richard Parlons
BMO Capital Markets Limited Joint Broker +44 (0) 20 7236 1010
Tom Rider / Michael Rechsteiner
/
Neil Elliot
Peel Hunt Limited Joint Broker +44 (0) 20 7418 8900
Ross Allister / Alexander
Allen
Tavistock Financial PR
Charles Vivian / Gareth Tredway
/
Edward Lee +44 (0) 207 920 3150
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; 100 per cent of
Bushveld Vanchem, a primary vanadium processing facility with a
beneficiation plant; 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. 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.
Bushveld Energy, the Company's energy storage solutions provider,
plays a leading role in the development and promotion of the role
of vanadium in this market.
The Company's approach to project development recognises that,
whilst attractive project economics are imperative, they may be
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 .
About Vametco
Vametco is located near Brits on the Western Limb of the
Bushveld Complex. The integrated operation comprises a vanadium ore
mine and a processing plant that produces mostly Nitrovan(TM) , a
trademark product sold in major steel markets across the world. The
mine lies adjacent to the Brits Vanadium Project, which will in
future serve as an alternative source of near surface run of mine
("ROM") ore feed to the Vametco plant.
The Vametco mining operation uses open pit bench mining methods
to mine a well-defined orebody. The deposit is continuous with
limited faulting and dips in a northerly direction at approximately
19 degrees.
ROM ore is fed into a primary, secondary and tertiary crushing
circuit, followed by milling and magnetic separation to produce
magnetite concentrates. The magnetite concentrates are fed into the
extraction process which includes the kiln for roasting followed by
leaching and precipitation. Thereafter the precipitated vanadium as
ammonium metavanadate is converted to modified vanadium oxide
("MVO") in rotary calciners. MVO is fed into the mix plant and
finally into the shaft furnaces to produce Nitrovan(TM) .
About Vanchem
Vanchem is situated at Ferrobank Industrial Park in Emalahleni
Local Municipality, Mpumalanga Province in the Republic of South
Africa. Vanchem is a primary vanadium producing facility with a
beneficiation plant capable of producing various vanadium oxides,
ferrovanadium and vanadium chemicals. Vanchem uses the salt roast
beneficiation process, similar to the one used at Vametco. The
plant comprises: a core salt-roast processing plant, including 3
roasting kilns, an electric smelting ferrovanadium converter, an
alumino-thermic smelting facility, also located at Highveld, a
vanadium chemical plant; and a rail siding linking the plant with
Bushveld deposits and additional potential supply sources through
the national rail network.
About Bushveld Energy Limited
Bushveld Energy is a leading energy storage solutions provider,
focusing on the African market. Bushveld Energy recognises that
electricity in Africa intersects paramount potential for social
transformation with an immense commercial opportunity.
Bushveld Energy is focused on developing and promoting the role
of vanadium in the growing global energy storage market through
application in vanadium redox flow batteries. Its near term
strategy is to deploy several VRFB systems as part of its longer
term vision to become a significant electricity storage provider in
Africa, meeting the demand for utility scale energy storage in
Africa by leveraging South Africa-mined and beneficiated
vanadium.
http://www.bushveldenergy.com
About Orion
Orion is a global alternative investment management firm with
approximately US$6.2 billion under management (as of 3/31/2020).
Orion specializes in institutional metals and mining investment
strategies in the industrial and precious metals space. Orion's
private equity, hedge fund, and merchant service divisions enable
us to access in-depth knowledge of the global metals and mining
supply chain and robust insight into the physical and financial
demand driving global metals prices.
For more information visit www.orionresourcepartners.com .
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