Bushveld Minerals Regulatory News (BMN)

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. 

12 April 2023

Bushveld Minerals Limited

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

Conditional acquisition by VRFB-H of Garnet's interest in Enerox Holdings Limited

Bushveld Minerals Limited (AIM: BMN), the integrated primary vanadium producer and energy storage solutions provider, announces that VRFB Holdings Limited ("VRFB-H") has entered into a conditional agreement with Garnet Commerce Limited ("Garnet" or the "Seller") and Mustang Energy plc ("Mustang") pursuant to which VRFB-H has agreed to acquire Garnet's 50% interest in Enerox Holdings Limited ("EHL"), which wholly owns Enerox GmbH (the "Garnet Acquisition").

Highlights:

· On the assumption that all stages of the proposed Garnet Acquisition complete and Readmission of Mustang takes place, Bushveld Minerals will hold approximately between 21% and 23% of Mustang with final shareholding interest dependent on the final amount raised by Mustang.

· On Readmission, Mustang will own 100% of VRFB-H, which will in turn own 100% of EHL, which owns the entire issued share capital of Enerox GmbH ("Enerox"). The resulting simplified ownership structure will allow investors greater transparency of value for the underlying energy storage assets.

· The standalone energy storage focused company will be better positioned to attract the appropriate energy storage focused investors and achieve a market valuation that is more reflective of underlying value.

· Mustang will have a dedicated Board and management team focused on implementing its strategy of a scalable energy storage platform that is fully integrated across the VRFB value chain.

· The sale of Bushveld's interest in VRFB-H to Mustang is an important part of the Group's previously announced process to carve out Bushveld Energy into an independent entity focussed on the VRFB value chain. The carve out is now expected to be completed during the second half of 2023.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: 

"I am pleased to announce today's transaction, another step in simplifying and consolidating the ownership structure of this exciting energy storage platform.

As mentioned previously and with the commitment of its investors, this series of transactions provide Enerox and its CellCube brand access to the capital markets, the ability to achieve a transparent market value and attract energy focused investors looking to participate in this exciting growing sector.

As we have communicated in recent months, we feel this is the right time for this emerging energy storage story to take on a life of its own, while still keeping an interest in the business and most importantly maintaining our vertically integrated business model."

Transaction Details

§ Conditional acquisition announced on 26 April 2021, by Mustang for a 22.1% interest in VRFB-H ("Acquisition (Stage 1)").

§ Conditional acquisition announced on 3 August 2022, by Mustang for Acacia Resources Limited's ("Acacia") 27.4% interest in VRFB-H ("Acquisition (Stage 2)").

§ Conditional acquisition announced on 28 November 2022, by Mustang for the remaining 50.5% interest in VRFB-H ("Acquisition (Stage 3)") held by Bushveld Energy Limited, an 84% owned subsidiary of AIM-quoted Bushveld Minerals Limited. 

The Garnet Acquisition is expected to complete contemporaneously with the Acquisition (Stage 1), Acquisition (Stage 2) and Acquisition (Stage 3).

Following completion of the Acquisition (Stage 1), Acquisition (Stage 2), Acquisition (Stage 3) and the Garnet Transaction, and subject to the completion of certain regulatory approvals (as more fully detailed below), Mustang would be readmitted to trading and listing and own the entire issued share capital of VRFB-H, and VRFB-H would own the entire issued share capital of EHL. EHL owns the entire issued share capital of Enerox GmbH ("Enerox"), the owner of the CellCube brand (see below for further details on CellCube).

 Purchase Consideration

The total consideration payable by Mustang on behalf of VRFB-H for the acquisition of Garnet's interest in EHL is US$33,166,667 ("Purchase Price"). The Purchase price comprises of:

§ A US$7,500,000 payable in the form of:

· A cash payment of between US$5,000,000 and US$7,500,000, with the final amount to be determined by the quantum of the proposed equity fundraise to be undertaken by Mustang ("Fundraise") at the time of the proposed readmission of its enlarged issued share capital to listing on the Official List (by way of Standard Listing under Chapter 14 of the Listing Rules) and to trading on the London Stock Exchange's Main Market for listed securities ("Readmission"); and

· The issue of up to US$2,500,000 of convertible loan notes (the "Convertible Loan Notes") by Mustang dependent on the amount of the Fundraise.

· The aggregate amount paid in cash and Convertible Loan Notes by Mustang to Garnet is not more than US$7,500,000.

§ The sum of US$25,666,667, to be converted to Pounds Sterling using an exchange rate of GBP£1.00/US$1.225 and to be satisfied by the proposed issue of 104,761,905 new ordinary shares in the capital of Mustang, priced at 20 pence per share (the "Consideration Shares").

The Garnet Acquisition is conditional upon, inter alia:

· The publication of a prospectus by Mustang, having been approved by the Financial Conduct Authority, and Readmission (and thereby completion of Acquisition (Stage 1), Acquisition (Stage 2), Acquisition (Stage 3)).

· Mustang having obtained the relevant approvals from its shareholders to allot and issue the Consideration Shares and any ordinary share arising on conversion of the Convertible Loan Notes (the "CLN Shares") (and waiver of any applicable rights of pre-emption in respect of such shares).

· If required, the issue of the Consideration Shares and/or the CLN Shares having been approved by Mustang's independent shareholders in accordance with The City Code on Takeovers and Mergers (the "Takeover Code"), and The Panel having waived any obligation on any applicable party to make a general offer under Rule 9 of the Takeover Code.

· The approval of the Federal Ministry of Labour and Economic Affairs of the Austrian Government regarding the proposed change of control of Enerox. By way of brief background, a Foreign Direct Investment regime was introduced in Austria in 2020 (after EHL had acquired control of Enerox), which aims to protect foreign investment into sectors relating to national security or public order (including energy related matters). An application for approval of the transaction has been made and a formal response is expected within the next 30 days.

· Mustang raising a minimum of US$15 million at the time of Readmission.

Convertible Loan Note Issue

Pending readmission, Mustang will raise up to US$2,000,000 through the issue of a new Convertible Loan Notes (the "2023 CLNs") to new and existing investors (the "2023 CLN Holders"). Pursuant to a loan agreement entered into between Mustang and Enerox (the "Enerox Loan"), the proceeds of the 2023 CLNs will be used to provide Enerox with additional funding until Readmission. Both Acacia and Garnet have agreed to subscribe for US$500,000 each of the 2023 CLNs.

The terms of the 2023 CLNs are as follows:

Maturity 31 July 2023

Interest 10.0% per annum

Conversion on Readmission, into new Mustang shares at the lower of £0.17 per share or a 20% discount to the price per share which is placed with or otherwise subscribed by new and existing investors in connection with the Mustang's fundraise.

If (i) the full amount of the 2023 CLNs has not been raised by 30 April 2023; (ii) the full amount has been raised, but Mustang has not obtained binding commitments of at least US$15 million towards its proposed fundraise at Readmission, nor funded Enerox with another US$1 million until the end of June 2023, in each case by 31 May 2023; or (iii) Mustang has not obtained approval of its proposed prospectus in relation to Readmission by the 30 June 2023, Garnet will have an option to terminate the Garnet Acquisition, and upon investing a minimum of US$3.5 million into EHL, take a controlling position in EHL. In such circumstances Mustang may still choose to complete the Acquisition (Stage 1), Acquisition (Stage 2) and Acquisition (Stage 3) and continue to Readmission but only with its minority position in EHL which would be approximately 46.4%.

If Readmission does not occur by 31 July 2023, the 2023 CLN Holders will be able to effect the backstop arrangements similar to those previously agreed between Bushveld and Mustang (as more fully detailed in Mustang's announcements dated 31 August 2022 and 28 November 2022), which would result in the issuance to each 2023 CLN Holder such number of new ordinary shares in Bushveld at a price equal to the 20 day volume weighted average price prior to the date of issue, equivalent to the principal amount of each 2023 CLN Holder's CLNs together with all accrued and unpaid interest). In return for Bushveld issuing the relevant shares to the 2023 CLN Holders, Mustang will novate to Bushveld the benefit of the Enerox Loan.

Update on Existing loan notes

Mustang is in discussions with the holders of the existing US$8 million convertible loan notes that were issued to investors in April 2021 as part of the Acquisition (Stage 1), to extend the maturity date of such notes to 31 July 2023 on the same terms as the 2023 CLNs. Under the loan note instrument governing these convertible loan notes, the Company has until 28 April 2023 to finalise this extension. Once an agreement has been reached with the existing noteholders, a further announcement will be made.

ENDS

Enquiries: info@bushveldminerals.com

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, owning 2 of the world's 4 operating primary vanadium processing facilities. In 2022, the Company produced 3,842 mtV, representing more than 3% of the global vanadium market. Bushveld Vanadium is targeting to grow its vanadium production and achieve an annualised steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a in the near term from existing capacity. Growth plans to expand to 8,000 mtVp.a. will be pursued, subject to funding and market conditions.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

About Enerox

Enerox is an Austrian-based vanadium redox flow battery ("VRFB") manufacturer that has invested more than 20 years of research and development into its energy storage system, branded under the name CellCube. Its vanadium-based technology is known to be state-of-the-art in the battery market and has already deployed or is currently deploying more than 130 systems / 43 MWh across 5 continents. In the preceding 12 months Enerox has announced 5 new orders for 34 MWh, which includes a 16 MWh battery to an Australian based renewable project developer - Enerox's largest battery order to date.

About CellCube

CellCube designs and delivers sustainable and cost-effective energy storage solutions for microgrid and grid scale-applications. The CellCube brand is a leader in the energy storage eco-system and has developed a reputation for client service, system reliability and technical innovation. It has a stack and system production capacity and is focused on large commercial projects using the new generation FB 500-2000 technology.