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. 

20 November 2023

Bushveld Minerals Limited

("Bushveld" or the "Company")

Definitive agreement for the acquisition by Southern Point Resources of a 50% interest in Vanchem

Further to its announcement on 11 September 2023, Bushveld Minerals Limited (AIM: BMN), the integrated primary vanadium producer, is pleased to announce it has entered into a definitive agreement for the acquisition by Southern Point Resources - Fund 1 SA L.P., represented by its general partner SPR GP1 Proprietary Limited ("SPRF"), of 50% of the issued shares of Bushveld Vanchem (Pty) Ltd ("BV"), which owns the Vanchem vanadium processing plant ("Vanchem"), for an acquisition price of up to US$21.3 million (the "Transaction"). The purchase by SPR (or an SPR affiliate) of Bushveld's 64% equity interest in a subsidiary that owns the Mokopane Vanadium project for US$3.7 million (the "Mokopane Acquisition"), which was announced on the same date, remains on track.

Craig Coltman, CEO of Bushveld Minerals Limited, commented: 

"We are pleased to be announcing a definitive agreement on another piece of the overall US$69.5-US$77.5 million funding package first announced in September. We look forward to working closely with our new partners at Vanchem to unlock value in this significant asset. We hope to announce further progress on the overall funding package in the coming weeks and months."

Background

On 11 September 2023, the Company announced that it had entered into a binding term sheet with SPR GP1 Proprietary Limited ("SPR") regarding a proposed package of inter-conditional transactions which, if successfully concluded, would provide a cumulative investment by SPR (and its affiliates) into Bushveld and its group companies of between US$69.5 - US$77.5 million. The SPR investment was agreed to be structured as follows:

· An interim working capital facility, totalling ZAR150 million (~US$8.1 million) (the "SPR Facility").

· The Transaction which the Company announces today that BV has entered into with SPRF, and the Mokopane Acquisition.

· An equity investment by SPR of ~US$12.5 million into the Company (the "SPR Investment Agreement").

· A new marketing and sales arrangement under which SPR will be appointed to carry out all marketing and sales of product for Bushveld with effect from January 2025. In line with this arrangement, SPR will provide a medium-term trade finance working capital facility to the Company, totalling ~US$25-30 million.

· A future commitment by SPR of an investment of US$7-10 million in Vanchem for the recommissioning of Kiln-1.

Key terms of the Transaction

§ Up to US$21.3 million will be paid to BV for preference shares which will constitute 50% of the issued share capital of BV, in two tranches:

- US$21.3 million, less an amount equal to the outstanding balance payable in terms of the SPR Facility (~US$8.1 million) which amounts to ~US$13.2 million, will be paid on the fifth business day after closing of the Transaction for 99.5% of the preference shares ("First Tranche"); and

- if the Mokopane Acquisition:

· has become unconditional by the first anniversary of the closing of the Transaction, then the second tranche for 0.5% of the preference shares will be an amount equal to US$21.3 million less the First Tranche, which amounts to ~US$8.1 million; or

· has not become unconditional by the first anniversary of the closing of the Transaction, then the second tranche will be an amount equal to US$20 million less the First Tranche, which amounts to ~US$6.8 million.

§ The Transaction is conditional, amongst other things, upon the SPR Investment Agreement being signed, approval of the South African Competition Commission and receipt of exchange control approval by SPR, in each case before 30 April 2024.

§ Each of BV2, which currently wholly owns all of the issued shares in BV, and Bushveld Minerals SA Pty Limited, which is party to the SPR Facility, has provided SPRF with customary warranties and indemnities, subject to limitations, and guaranteed BV's obligations under the Transaction, which are also secured by the same security securing the SPR Facility.

§ The preference shares held by SPRF:

- give SPRF the right to a cumulative preferential quarterly cash dividend equivalent to 50% of BV's free cash flow, less any payments due to SPR under the SPR Facility and all other amounts payable in connection with the Transaction (the marketing fees payable by BV to SPR are not taken into account when calculating BV's free cash flow);

- convert into 50% of BV's ordinary shares on the first anniversary of the Transaction closing, provided, inter alia, that the intercompany loan between BV (as borrower) and Bushveld Vametco Alloys (Pty) Ltd (as lender) has been fully repaid or discharged by that time;

- are redeemable at the original subscription price, together with applicable interest and other accrued dividends, should a dividend remain unpaid or otherwise in certain circumstances there is an event of default under the SPR Facility;

- give the holder the right to appoint half of the board of BV. The chairman of the board of BV, who will have a casting vote, will be the CEO of Bushveld for so long as BV2 (or another Bushveld entity) remains a shareholder of BV (i) if SPR has subscribed for Bushveld shares in the amount of US$12.5 million; and (ii) for so long as SPR has the right to appoint a director on the board of Bushveld. If the US$12.5 million subscription does not complete, or if following that subscription, SPR's right to appoint a director on the board of Bushveld falls away, then the right to appoint the chairman of the BV board (who will have a casting vote) will rotate between the shareholders every three years, with BV having the right to make that appointment for the first three year period; and

- are transferable.

§ Shareholders in BV will also have pre-emptive rights over each other's shares in BV, including on a change of control of a shareholder or on a breach by BV2 of the agreement.

§ In relation to the commitment to invest US$7-10 million in Vanchem for the recommissioning of Kiln-1, SPRF has also agreed to advance the funding to BV on terms and conditions to be determined by the BV board. If such funding is in the form of equity, BV2 will be entitled to provide an amount pro rata to its shareholding, failing which BV2 will be diluted accordingly.

Enquiries: info@bushveldminerals.com

ENDS

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a vertically integrated primary vanadium producer, it is one of only three operating primary vanadium producers. In 2022, the Company produced more than 3,800 mtV, representing approximately three per cent of the global vanadium market. With a diversified vanadium product portfolio serving the needs of the steel, energy and chemical sectors.

Detailed information on the Company and progress to date can be accessed on the website www.bushveldminerals.com