Bushveld satisfies conditions of US$65m funding
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 November 2020
Bushveld Minerals Limited
("Bushveld Minerals", "Bushveld" or the "Company")
Bushveld satisfies the outstanding conditions in respect of US$65 million funding package with Orion Mine Finance
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 satisfied the conditions required to drawdown the US$30 million under the Production Financing Agreement ("PFA") and the unsecured Convertible Loan Notes ("Notes") of US$35 million, to be subscribed by Orion Mine Finance ("Orion") first announced on 30 September 2020. The Company is in the process of drawing down funds under the PFA and has given notice to Orion to drawdown on the full amount of US$35 million under the Notes.
PFA Transaction Details
Bushveld will repay the principal amount and pay interest via quarterly payments determined initially as the sum of:
§ a gross revenue rate (set at 1.175 per cent for 2020 and 2021 and 1.45 per cent from 2022 onwards, subject to adjustment based on applicable quarterly vanadium prices) multiplied by the gross revenue for the quarter; and
§ a unit rate of US$0.443/kgV multiplied by the aggregate amount of vanadium sold for the quarter .
Once Vametco reaches 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 applicable rates).
On each of the first three loan anniversaries, Bushveld has the option to repay up to 50 per cent of both constituent loan parts (each may only be repaid once). If Bushveld utilises the loan repayment option, the gross revenue rate and / or the unit rate will reduce accordingly.
Convertible Loan Notes Details
The Company will raise a total of US$35 million through the issue of the Notes pursuant to the related Convertible Loan Instrument (the "Instrument"). The Notes bear a fixed coupon of 10 per cent per annum (which will accrue and be capitalised on a quarterly basis in arrears but compounded annually) and have a maturity date of three years from the date of issue (the "Maturity Date").
The Notes will be issued in one tranche, in December 2020, upon receipt of funds by the Company. The Notes are convertible by the holder into Bushveld ordinary shares of 1 pence each in the Company at a price equal to 17 pence.
Between issue and the Maturity Date, Orion may, at their option, convert an amount of the outstanding Notes, including capitalised and accrued interest, into Bushveld ordinary shares as follows:
§ First six months: Up to one third of the outstanding amount;
§ Second six months: Up to two thirds of the outstanding amount (less any amount previously converted);
§ From the anniversary of drawdown until the maturity date: the outstanding amount under the Instrument may be converted
Bushveld also has the option to convert all of the Notes outstanding, in one tranche, if the volume weighted average share price is more than 200 per cent of the conversion price over a continuous 15 trading day period, a trading day being a day on which the AIM market of the London Stock Exchange is open for the trading of securities.
Use of Proceeds
The PFA capital will provide funding to continue to grow production at Vametco to more than 4,200 mtV per annual production level and debt repayment. The proceeds raised from the issue of the Notes will be applied towards capital investment purposes for the first phase of Vanchem's critical refurbishment programme, and debt repayment purposes.
The proceeds of the proposed drawdown under the
Instrument
, together with the proceeds from the PFA will be used as follows:
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Approx. US$ million |
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Bushveld Vanadium |
Vametco Phase III expansion project § Upgrade of screenhouse distribution systems as well as SRP surface condenser § Pre-feasibility and detailed design and implementation including the upgrade of leach circuit, kiln firing systems, leach mill and tertiary crushers. This will also include the installation of SRP3, Boiler 4, MVO reactor 3 as well as Furnace 5 § Overall production increase leading to 4,200mtv per annum |
24.0 |
|
Vanchem Phase I refurbishment § Critical refurbishment including: extending the calcine dump facility, replacement of heavy moving equipment, upgrade of the electrical reticulation system and construction of a storm water treatment facility. § Refurbishment of the third kiln for modular production increase leading to 2,600mtv per annum |
20.3 |
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Debt Prepayment |
Pre-payment of Nedbank term loan Pre-payment of Duferco convertible |
15.7 5.0 |
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Total Gross Proceeds |
65.0 |
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A portion of the gross proceeds will be used to pay for fees and expenses related to the finance raised.
Revised Nedbank Debt Terms
The proceeds of the Instrument will also be used by Bushveld Minerals to prepay in full the ZAR250 million term loan. For the ZAR125 million remaining revolving credit facility, the margin will increase by 0.25 per cent to 3.85 per cent.
In addition, the following amendments will be applied to the financial covenants:
§ Removing the cumulative DSCR covenant;
§ Increasing the default level on the Group net debt to Group EBITDA ratio to 2.50 times;
§ Changing the gross interest cover ratio to a net interest cover ratio.
Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:
"It is pleasing that we have been able to execute both transactions in just two months, allowing us to begin allocating funds towards our growth plans.
I would also like to welcome Orion as a significant investor into the Bushveld story, their support provides further confidence in our development plans we have in the coming years.
With a solid balance sheet and a clear vision of where we want to be in the next few years, we enter 2021 re-energised. At the same time, the world also begins to see signs of an end to what has been a very difficult year for everyone, and signs that it could be followed by one of a recovery."
Philip Clegg, Portfolio Manager at Orion, commented:
"We are thrilled to get the expansion at Vametco fully funded and to support the refurbishment plans at Vanchem. We are looking forward to partnering with Bushveld as it executes its growth strategy and ongoing advancement into battery technologies."
ENDS
Enquiries: info@bushveldminerals.com
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Bushveld Minerals Limited |
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+27 (0) 11 268 6555 |
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Fortune Mojapelo, Chief Executive Officer |
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Chika Edeh, Head of Investor Relations |
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SP Angel Corporate Finance LLP |
Nominated Adviser & Broker |
+44 (0) 20 3470 0470 |
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Richard Morrison / Charlie Bouverat |
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Abigail Wayne / Richard Parlons |
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BMO Capital Markets Limited |
Joint Broker |
+44 (0) 20 7236 1010 |
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Tom Rider / Michael Rechsteiner / |
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Neil Elliot |
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Peel Hunt Limited |
Joint Broker |
+44 (0) 20 7418 8900 |
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Ross Allister / Alexander Allen |
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Tavistock |
Financial PR |
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Charles Vivian / Gareth Tredway / Edward Lee |
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+44 (0) 207 920 3150 |
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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 , a 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.
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.
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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