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. 

Bushveld Minerals Limited

("Bushveld" or the "Company")

Proposed convertible loan note refinancing

5 May 2023

Bushveld Minerals Limited (AIM: BMN), the integrated primary vanadium producer and energy storage solutions provider, is pleased to announce that it has entered into a non-binding, investment committee approved, term sheet, with Orion Mine Finance ("Orion") to refinance its existing convertible loan note.

Highlights:

· The proposed agreement envisages that the convertible debt obligations of c.US$45 million due in November 2023 (including accrued interest) will be refinanced into the following components:

o  A three-year term loan totalling c. US$27 million, repayable in escalating capital amounts.

o  A new convertible loan note of c. US$13.5 million, maturing in June 2028.

o  Conversion of c. US$4.5 million of existing convertible loan note into shares at 6p per share.

o  Supplemental production financing agreement ("PFA") at not more than 0.22% of gross revenues - reducing by 80% at loan maturity.

· New structure has sculpted repayment schedule to align with expected internal cash generation projections.

· Transaction is conditional on several items, including due diligence, shareholder approval at a general meeting and definitive documentation.

Background

In 2020, Bushveld Minerals agreed a US$65 million financing transaction with Orion, which included a US$35 million convertible loan note ("CLN") maturing in November 2023, as well as a US$30 million PFA. The CLN was primarily intended to finance expansion plans at Vametco however, this was subsequently amended, following further studies, to also fund the refurbishment and expansion of Vanchem including the commissioning of Kiln 3. 

The total amount outstanding of the CLN facility (including accrued interest) is expected to be approximately US$45 million by the end of Q2 2023 ("CLN Balance").

Key Terms of the Proposed Refinancing

Bushveld and Orion have signed a non-binding, investments committee approved term sheet as outlined below:

§ 60% of the CLN Balance (c.US$27 million) will be converted into a 3-year secured term loan ("Term Loan") on the following terms:

o  Interest: 6.0% ("Margin") plus the greater of (i) 3-month SOFR1 and (ii) 3.0% per annum.

o  Interest payable quarterly in arrears in cash starting from the last business day of the quarter in which the closing of the transaction occurs and on the last business day of each quarter thereafter. In the event that the Company has insufficient cash available to pay interest on its due date, the interest due on that date shall continue to accrue. In the event of default, the Margin will be increased by 3%.

o  Principal repayments structured to

a. 25% of the facility amount to be repaid in June 2024,

b. 30% of the facility amount to be repaid June 2025 and

c. 45% of the facility amount to be repaid in June 2026.

II. The facility may be prepaid in whole or in part at any time. Prepayment is subject to the following fee early redemption schedule based on the outstanding balance at the time of prepayment.

o Prior to 30 June 2024: 4%

o After 30 June 2024 until 30 June 2025: 3%

o After 30 June 2025 until 30 June 2026: 2%

§ 30% of the CLN Balance (c.US$13.5 million) to remain as a convertible loan note with the following revised terms ("New CLN"):

o Interest: 12%

o Exercise price: 8p

o Maturity Date: 30 June 2028

o Bushveld shall have a one-time right to redeem 50% (in whole and not in part) of the New CLN in June 2026, subject to the right of Orion to elect for conversion of the same for a 30-day period

o Bushveld has the right to force conversion of the New CLN if the 60 Day VWAP of the Company's share price is in excess of 16p.

§ 10% of the CLN Balance (c. US$4.5 million) to be capitalised into a subscription for shares in Bushveld at 6p per share2, a 46% premium to the 30-day weighted average share price (as at 4 May 2023).

§ Gross revenue PFA top-up, on the same terms as the existing PFA during the tenure of the Term Loan, except for the following ("Additional PFA"):

o PFA repayment rate of 0.22% with a realised kgV of less than US$47/kgV.

o PFA repayment rate of 0.18% with a realised kgV of greater than US$47/kgV.

o Once the Term Loan has matured in June 2027, the top-up PFA rate will reduce by a further 80% for the life of mine.

o At the option of Orion, the additional PFA shall rank junior to the PFA in terms of payment, voting and/or security.

o The additional PFA will be a secured obligation of the Company.

1. Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.

2. To be estimated using the foreign exchange rate at the time of closing.

Conditions Precedent to completion

The proposed refinancing is conditional upon, inter alia:

§ Satisfactory confirmatory due diligence.

§ Shareholder, regulatory and nominated adviser approval.

§ Entry into definitive legal documentation.

§ Consent by the Financial Surveillance Department of the South African Reserve Bank.

§ At Orion's election, any other amendments to the existing security structure with Nedbank as may be required to implement the Proposed Refinancing.

Although the refinancing has been approved by Orion's investment committee, there are certain conditions precedent that need to be met, including completion of final legal documentation and final investment committee approval. At this stage there can be no guarantee the refinancing will be entered into; however, the Bushveld Management and Orion are confident of completing the transaction.

Conference call

Bushveld Minerals Chief Executive Officer, Fortune Mojapelo, Finance Director, Tanya Chikanza, will host a conference call at 12:00 noon UK time (1:00 pm SAST) today to discuss the announcement. Participants may join the call by dialling:

Tel: United Kingdom: +44 (0) 330 551 0200; South Africa: Toll Free: 0 800 980 512, USA Local: +1 786 697 3501

Password: Quote Bushveld Minerals - Conference call when prompted by the operator.

A replay of the conference call will be available on the Company's website post the call.

Fortune Mojapelo, CEO of Bushveld Minerals commented:

"I am pleased to announce today's proposed refinancing agreement with Orion and wish to express my and our board's appreciation at the support and confidence shown by Orion in our business and future plans.

The proposed refinancing will resolve a large liability that became current in 2023 and will remove significant near-term pressure on the Company's balance sheet, in the process supporting sustainable growth and cash generation of our business.

The new maturity profile is designed to allow the Group to repay the debt from internally generated cash flows in the years ahead as we see the benefits of our recent expansion plans at Vanchem come to fruition.

The proposed restructuring will be conditional upon shareholder approval which is expected to be sought at a general meeting. I would encourage all shareholders to vote in favour of the proposed refinancing. As part of the refinancing Orion has elected to convert some of the debt into shares at 6 pence per share, demonstrating their belief in the Company.

The restructuring is an important part of our strategy to restore value in the Company's share price, ensuring the Company delivers on its operational targets, simplify its corporate structure and sharpen its investment proposition."

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