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LONDON (Alliance News) - Bushveld Minerals Ltd, the AIM-listed mineral development company, on Friday said it agreed exclusivity with Evraz Group SA to acquire the Vametco vanadium mine and plant in South Africa.
The acquisition, which would be classed as a reverse takeover under stock exchange rules, is subject to due diligence, financing and shareholder approval, Bushveld said in a statement.
A deal would see Bushveld acquire Evraz's 78.8% economic interest in Strategic Minerals Corp, the owner of the Vametco vanadium mine and plant in South Africa. Bushveld said it will pay in cash in the event the acquisition goes through.
Bushveld said it has enough working capital and facilities for its "basic" corporate activities for the time being. Whether or not it must pay an exclusivity fee, Bushveld said, the company will "need to raise additional capital in order to complete the ccquisition and to continue to develop its existing assets."
The terms of the agreement with Evraz provide Bushveld with exclusivity for six weeks May 5 to complete due diligence.
In return for exclusivity, Bushveld said it placed USD500,000 on deposit with its solicitors. That money will be paid to Evraz on expiration of the exclusivity period if, by that time, Evraz has executed, but Bushveld has not executed, a sale and purchase agreement. The exclusivity fee will be offset against money due in the event of an acquisition going through.
"The proposed acquisition is transformational for the company and is exactly in line with our strategy of building our vanadium platform. Vametco is a low cost producing asset with an established management team who have collectively worked across all the vanadium processing plants in South Africa. The asset, located adjacent to our recently acquired Brits vanadium project, offers a unique opportunity to acquire a producing asset at a small fraction of the cost of a similar greenfield asset," Fortune Mojapelo, chief executive officer of Bushveld, said in a statement.
"We have undertaken significant due diligence on this asset for over the past 15 months and will now advance funding opportunities to meet the initial payment on May 12," Mojapelo said.
The exclusivity agreement also grants Bushveld a right of first refusal with regard to competing offers received by Evraz during the the period of exclusivity and for a further period of three months.
If during the exclusivity period Evraz gives effect to an equity investment in Strategic Minerals, the sale of its interests in Strategic Minerals or the disposal of any of Strategic Minerals' assets, Evraz will pay to Bushveld a break fee of USD500,000.
Trading in Bushveld's share will remain suspended until an admission document is published or Bushveld announces its or Evraz's withdrawal from the acquisition process.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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