Potential investment in Enerox GmbH
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.
12 November 2019
Bushveld Minerals Limited
("Bushveld Minerals" or the "Company")
Potential investment in Enerox GmbH. ("Enerox")
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated primary vanadium producer, with ownership of high-grade vanadium assets in South Africa ("Bushveld"), is pleased to announce that it has signed a term sheet setting out the main terms and conditions on, and subject to which, a consortium of investors led by Bushveld Energy, an 84 per cent subsidiary of Bushveld Minerals, (the "Bushveld Consortium") would acquire the entire issued share capital of Enerox GmbH ("Enerox") on a debt free basis from CellCube Energy Storage Systems Inc. (the "Seller").
Enerox is one of the world's largest researchers, developers, manufacturers and distributors of vanadium redox flow batteries ("VRFB"), headquartered in Wiener Neudorf, Austria. It has installed VRFBs at over 130 sites globally.
The investment is in line with the Company's strategy of establishing a VRFB Investment Platform ("VIP") to lead investments in VRFB original equipment manufacturers ("OEMs") with attractive upside potential. The VIP is one of multiple avenues of partnering with OEMs.
§ The Company and its initial investments will play a catalyst role and mobilise additional capital from third party funders to establish an investment capital pool to support VRFB OEM growth.
§ These partnerships support Bushveld Energy's business model, that includes electrolyte manufacturing and rental, VRFB manufacturing and deployments.
§ Bushveld Energy intends to own a significant minority interest in the Bushveld Consortium, in line with its strategy of holding minority positions in select VRFB OEMs and being a catalyst to mobilise third party financing and assist the scale up VRFB OEMs.
Rationale of the specific transaction:
§ The Enerox VRFB product is one of the most widely deployed over the past 10 years, offering a unique value proposition in the industry.
§ Enerox developed one of the first containerised energy storage solutions in the market.
§ It has a global customer base with over 130 field installations over the past 10 years across five continents.
§ Enerox has a newly redesigned VRFB product oriented around a modular and stackable 40 ft container base configuration that increases standardisation to reduce costs of manufacturing, field installation and maintenance.
§ Diversification of Bushveld's customer and revenue base with preferential vanadium supply rights into energy storage products to support Bushveld's mining, processing and chemicals activities.
§ Under a separate agreement between Bushveld and Enerox, Bushveld Minerals will be awarded a right of first refusal to supply vanadium products to Enerox on the same material terms as any other supplier. This provides a future hedge to Bushveld's position against volatility in the vanadium price once the VRFB market has developed.
Highlights
§ The Bushveld Consortium has been granted exclusivity until the end of February 2020 to complete due diligence and negotiate definitive acquisition documents. The transaction will, if completed, see the Bushveld Consortium acquire the entire issued share capital of Enerox GmbH ("Enerox") from the Seller for a total sum of €11,000,000, and a working capital financing for Enerox of €1.5 million. The transaction is structured in three parts:
· Pursuant to the signing of the Term Sheet, The Bushveld Consortium will pay the Seller €300,000, which the Seller will in-turn contribute to Enerox as a shareholder capital contribution for Enerox to fund its short terms working capital requirements. If an Initial SPA (as defined below) has not been executed as soon as practicable, the Seller is obliged to pay back the Bushveld Consortium €300,000. These terms are legally binding but the remaining terms below are not.
· An initial sale and purchase agreement (the "Initial SPA"), to be signed as soon as reasonably practicable after the signing of the term sheet, whereby the Bushveld Consortium would for a sum of €1.65 million (including the €300,000 referred to above) purchase 24.90 per cent of the share capital of Enerox (the "Initial Shares"), including shareholder capital contributions of €1.2 million for working capital purposes over the course of the coming four months.
· A subsequent sale and purchase agreement (the "Main SPA"), subject to a technical, legal and financial due diligence, which will provide for the purchase of the remining 75.1 per cent of the shares of Enerox for a further consideration of €10.85 million, comprising:
o €8.35 million payable upon completion of the Transaction. Up to €2.0 million of this consideration can be paid, at Bushveld's discretion, in Bushveld Minerals shares (priced at the lesser of the 10-day volume-weighted-average-price prior to, or the price on, the 4th day before closing). It is intended that the Main SPA and other principal transaction documents will be signed on or before 31 December 2019, with completion to occur as soon as practical thereafter.
o An additional deferred consideration of €2.5 million payable by the Bushveld Consortium to the Seller over 30 months comprising €500,000 payable every six months starting in June 2020 (the "Deferred Consideration").
§ Should the Seller or Bushveld Consortium elect not to enter into the Main SPA, the Seller has a call option to purchase the Initial Shares at a price equal to €1.65 million paid by the Bushveld Consortium to the Seller and Enerox, plus an amount equivalent to 12 per cent of such amount. In the event the call option is not exercised by the Seller, the Bushveld Consortium has an option to put the Initial Shares to the Seller for the same amount. Should the Seller not honor the put, the Bushveld Consortium would have the option of increasing its holding in Enerox by 50 per cent plus one share for an additional amount of €250,000. In circumstances where the Main SPA is not entered into because the Bushveld Consortium withdraws from the transaction, it would continue to provide the working capital payments to Enerox.
§ Under a separate agreement between Bushveld and Enerox, Bushveld Minerals will be awarded a right of first refusal to supply vanadium products to Enerox on the same material terms as any other supplier.
§ Bushveld anticipates contributing not more than 50% of the Transaction and will in due course consider additional investors as part of its Consortium.
Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:
"The potential acquisition of Enerox is in line with Bushveld's previously announced strategy of establishing a VRFB Investment Platform through which the Company will mobilise additional capital from third party funders to help credible VRFB OEMs build scale to respond to a growing stationary energy storage market opportunity.
Investing in the development and deployment of VRFB technology is a key part of Bushveld's corporate strategy for several reasons. Firstly, the market opportunity presented by the widespread adoption of VRFBs is sufficiently attractive to grow Bushveld and generate returns for shareholders. Secondly, by helping to increase the speed and scale of adoption of VRFBs, the Company will help boost long term structural demand for vanadium, which is key for our existing primary vanadium production platform. In addition, the combination of vanadium production and commercial exploitation provides a natural hedge for the Company against vanadium price volatility.
The advantages this strategy brings are clearly illustrated by the right of first refusal agreement, also concluded with Enerox, whereby Bushveld will have the right to match commercial terms for the provision of vanadium products.
Enerox's existing platform complements the relationships that Bushveld Minerals and Bushveld Energy already have in place, for example, the Enerox acquisition will help the Company develop potential opportunities in Europe more quickly."
Brett Whalen, Interim president and Chairman, Cellcube Energy Storage Systems Inc. commented:
"As a leader in the VRFB space, Enerox deserves the capital necessary to maintain its competitive advantage. We are confident the Bushveld Consortium will maximise Enerox's full potential for its 4th generation project while increasing manufacturing capacity."
Inquiries: info@bushveldminerals.com
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Bushveld Minerals |
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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 / Stephen Wong |
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Abigail Wayne / Richard Parlons |
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Peel Hunt LLP |
Joint Broker |
+44 (0) 20 7418 8900 |
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Ross Allister / James Bavister |
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BMO Capital Markets Limited |
Joint Broker |
+44 (0) 20 7236 1010 |
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Tom Rider/ Michael Rechsteiner / Neil Elliot |
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Tavistock |
Financial PR |
+44 (0) 20 7920 3150 |
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Charles Vivian / Gareth Tredway |
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Brunswick |
Financial PR (South Africa) |
+27 (0) 11 502 7300 |
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Miyelani Shikwambana |
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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.
While the Company's focus is on vanadium operations and the development and promotion of VRFBs, it has additional investments in coal, power and tin.
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 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.
Launched in 2016, 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 by 2020, meeting the demand for utility scale energy storage in Africa by leveraging South Africa-mined and beneficiated vanadium.
Detailed information on the Company and progress to date can be accessed on the website www.bushveldenergy.com.
About Enerox
Enerox is the battery subsidiary of CellCube, specializing in the planning, development and turnkey construction of Utility Scale projects worldwide. It is one of the world's first and largest developers, manufacturers and distributors of vanadium redox flow batteries, headquartered in Wiener Neudorf, Austria.
With more than 136 installations across five continents, Enerox has substantial industry and operational experience. The technology has proven to deliver long lasting energy storage (now rated for 30 years) and infrastructure for deployment in a wide range of applications including: grid storage and micro grids; storage collocated with renewables such as solar and wind; time shift; diesel power replacement; commercial and industrial solutions such as farming; electrical vehicle charging stations; industrial plants; office buildings and emergency power sources.
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