Revised Arrangement on Mustang's VRFB-H Investment
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.
19 January 2022
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Revised Arrangement on the VRFB Holdings Limited ("VRFB-H") Investment by Mustang Energy Plc ("Mustang Energy")
Bushveld Minerals Limited (AIM: BMN), the AIM-quoted, integrated primary vanadium producer and energy storage solutions provider, with ownership of high-grade assets in South Africa, announces revised agreement terms regarding Mustang Energy's acquisition of a 22.10 per cent interest in VRFB-H.
On 27 April 2021, the Company announced an investment by Mustang Energy of approximately US$7.5 million into VRFB-H by subscribing for a 22.10 per cent interest in VRFB-H ("Mustang Subscription Shares"), being an indirect interest of 11.05 per cent in Enerox Holdings Limited ("EHL") which owns Enerox GmbH ("Enerox"), in terms of an Investment Agreement between VRFB-H, Bushveld Minerals and Mustang Energy ("Investment"). Enerox is a Vanadium Redox Flow Battery manufacturer providing grid scale and micro-grid energy storage solutions. Bushveld Energy Limited ("BEL") holds a 50.5 per cent shareholding in VRFB-H which in turn holds a 50 per cent shareholding in EHL. BEL[1], is an 84 per cent owned subsidiary of Bushveld Minerals.
Mustang Energy funded the Investment by way of an issue of US$8 million unsecured convertible loan notes ("CLNs") bearing a 10 per cent coupon to certain investors ("Mustang Capital Raise").
Post completion of the Investment, on 14 July 2021, the Company announced that Garnet Commerce Limited ("Garnet"), a 50 per cent shareholder in EHL, issued a claim form in the High Court of Justice: Business and Property Courts of England and Wales (Chancery Division) against VRFB-H and EHL ("the Litigation"). Garnet's claim form seeks declarations against VRFB-H concerning alleged breaches of the EHL joint venture agreement in respect of the indirect investment into EHL through VRFB-H by Mustang Energy. The matter is scheduled for trial commencing on 19 January 2022.
The Mustang Capital Raise and the concurrent acquisition by Mustang Energy of shares in the capital of VRFB-H constitutes a reverse takeover under the Financial Conduct Authority's Listing Rules and requires the publication of a prospectus. The ongoing uncertainty due to the Litigation, among other things, precludes Mustang Energy from issuing a prospectus which is a precursor for Mustang Energy's shares being readmitted to trading on the Standard List of the Main Market of the London Stock Exchange ("Readmission").
A condition of the Investment Agreement is that if Readmission did not occur by 31 December 2021 (the "Maturity Date"), Mustang Energy shall have had the right, by serving written notice on Bushveld Minerals within 5 Business Days following the Maturity Date ("the Notice Date"), to require that Bushveld Minerals shall, in return for Mustang Energy transferring to BEL all of the Mustang Subscription Shares and payment of a backstop fee ("Backstop Fee"):
· issue to each CLN holder by 28 January 2022 such number of new Bushveld Minerals shares (at a price equal to the 20-day volume weighted average prior to the date of issue, and rounded down to the nearest share) as is equivalent to the par value of the noteholders' CLNs together with accrued and unpaid interest; and
· procure that such Bushveld Minerals shares are admitted to trading on the AIM market of the London Stock Exchange plc within five Business Days thereafter ("Backstop").
As announced on 11 January 2022, the parties to the Investment Agreement and the CLN holders were in discussion to reach agreement to extend the Maturity Date to allow some visibility as to the potential outcome of the Litigation. Given these ongoing discussions, Bushveld Minerals and Mustang Energy agreed to extend the Notice Date to 18 January 2022.
Bushveld Minerals, Mustang Energy and the CLN holders have now agreed to an extension of the Maturity Date to 28 February 2022.
Fortune Mojapelo, Chief Executive of Bushveld Minerals Limited, commented:
"I am pleased we were able to agree on new terms given the unforeseen events that prevented the initial transaction from closing within the original timeframe. The extension of the Maturity Date may also allow some visibility as to the potential outcome of the Litigation.
" It is Bushveld's continued belief that vanadium redox flow batteries remain a favourable and competitive storage solution option given the metal's unique characteristics and the development and commercialisation of products, such as those produced by Enerox."
Summary of updated agreement terms:
§ Requirement for the publication of a prospectus by Mustang Energy and Readmission by no later than 28 February 2022.
§ In circumstances where Readmission does not take place by 28 February 2022, assuming Mustang Energy cannot redeem the CLNs:
o Mustang Energy will give notice to Bushveld Minerals to exercise the Backstop and to the CLNs holders that it has done so, with a request that the CLN holders advise of their election to convert their CLNs into Bushveld or VRFB-H shares by the end of March 2022;
o Bushveld will issue the new Bushveld shares under the Backstop in return for the transfer of Mustang Energy's shares in VRFB-H; and
o Mustang Energy will transfer up to an aggregate of 22.1 per cent of the shares in VRFB-H to Bushveld Minerals. In terms of the Investment Agreement, certain of the CLNs holders, on exercise of the Backstop, have the discretion to elect not to receive new Bushveld Minerals shares and instead receive shares directly in the capital of VRFB-H.
o The Backstop Fee payable by Mustang Energy to Bushveld Minerals will be reduced from 5.0% to 2.0% of the amount of any CLNs converted to Bushveld Minerals shares, to be satisfied by the issue of Mustang shares at a price of 20 pence each.
§ In the event that the Litigation is resolved such that Mustang Energy can continue to hold the VRFB-H shares and the Backstop has been exercised, then Mustang Energy has the option to buy back the VRFB-H shares that have been transferred to Bushveld Minerals in terms of the Backstop and Bushveld Minerals has the option to put those VRFB-H shares to Mustang Energy at the original subscription price.
§ One of the CLN holders, Primorus Investment Plc ("Primorus") has elected to sell US$1.0 million of its CLNs to other CLN noteholders. In addition, Bushveld Minerals has granted an option to Primorus to sell its residual CLNs (face value of US$1.5 million) to Bushveld Minerals ("Primorus Option"), to be exercised on or after 28 February 2022 in consideration for either cash or the issuance of new Bushveld Minerals convertible loan notes ("BMN CLNs") at the discretion of Bushveld Minerals. In the event that the Primorus Option is exercised, a tranche of one sixth of the BMN CLNs will be convertible into Bushveld Minerals shares, at the 20-day volume weighted average price on 28 February 2022 ("Conversion Price"), within every three months period after 28 February 2022 (with the ability to roll forward any unconverted tranche), plus additional Bushveld Minerals shares equivalent to the interest accrued at 10 per cent per annum from 28 February 2022. Bushveld shall have the right to redeem, after 28 February 2022, the BMN CLNs not exercised at face value plus accrued interest, plus an additional amount equal to the additional value of the BMN shares at the date of redemption, had they been converted at the Conversion Price. To the extent the BMN CLNs are not converted or redeemed by 14 July 2023 they will be repaid at face value plus accrued interest by Bushveld.
§ Bushveld has provided Mustang Energy with a working capital loan of US$220 000 at no interest ("Loan"), repayable in the event the Litigation is settled or determined such that Mustang Energy can hold shares directly or indirectly in VRFB-H. Mustang Energy shall repay the Loan in cash, or in shares (together with a warrant for every two shares), in full on the earlier of 31 December 2023 or Mustang Energy completing a capital raise. The Loan shall be waived in full in the event that the Litigation is settled or determined such that Bushveld Energy cannot hold shares directly or indirectly in VRFB-H and the Backstop arrangements have been implemented.
§ Sixty per cent of the Backstop Fee has been waived in the event the Litigation does not result in Mustang Energy being able to hold shares in VRFB-H.
The above terms have been encapsulated in an addendum to the Investment Agreement, a Novation Agreement between Primorus and Bushveld Minerals which includes an agreed form Bushveld Convertible Loan Note Instrument attached thereto, and a Loan Agreement between Bushveld Minerals and Mustang Energy.
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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Andrew Mari, 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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Grant Baker / Richard Parlons |
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Tavistock |
Financial PR |
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Gareth Tredway / Tara Vivian-Neal/ Adam Baynes |
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+44 (0) 207 920 3150 |
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 2020, the Company produced more than 3,600 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, 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 Vanadium is targeting to materially grow its vanadium production and achieve an annualised steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a by the end of 2022, from projects currently being implemented. Beyond that, pre-feasibility studies are in progress to determine the optimal path to increase production even further to a steady state production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in the medium-term and to a steady state production run rate of 8,400 mtVp.a in the long term.
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 BUSHVELD ENERGY LIMITED
Bushveld Energy is a leading energy storage solutions provider, focusing on the African market. Bushveld Energy recognises that the requirement for electricity in Africa touches on both the paramount potential for social transformation and 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 ("VRFB"). 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. Bushveld Energy's business model embraces a number of activities along the VRFB value chain, including electrolyte manufacturing, investment in VRFB manufacturing, battery deployment and project development.
ABOUT MUSTANG ENERGY
Mustang Energy PLC is a Special Purpose Acquisition Company (SPAC), whose shares are listed on the Standard List of the Main Market of the London Stock Exchange, which intends to utilise its strong management experience and strategic relationship with Acacia Resources Limited, the Company's largest shareholder, to acquire interests in energy storage and stationary battery assets.
[1] BEL is an 84% owned subsidiary of Bushveld Minerals. This was inadvertently incorrectly stated as 74% in the announcement of 11 January 2022.
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