REG - Bushveld Minerals Ld - Posting of Circular and Notice of General Meeting

Bushveld MineralsAnnouncement

13/05/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240513:nRSM1309Oa&default-theme=true

RNS Number : 1309O  Bushveld Minerals Limited  13 May 2024

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.

 

13 May 2024

Bushveld Minerals Limited

("Bushveld" or the "Company")

Posting of Circular and Notice of General Meeting

Bushveld Minerals Limited (AIM: BMN), the primary vanadium producer,
announces that the Company has published a Circular (the "Circular") in
connection with the Proposed disposal of Vanchem and notice of general meeting
is being post to Shareholders today. The General Meeting will be held at
at 10.00 a.m. (UK time) on 31 May 2024 at Oak House, Hirzel Street, St
Peter Port, Guernsey, GY1 3RH.

 

The Circular and Form of Proxy can be accessed on the Company website:
 www.bushveldminerals.com/investors/meetings/

 

A comprehensive Q&A document, answering questions posed to the Company
since the release of the announcement has been drafted and will be available
in the coming days on the Company's website: www.bushveldminerals.com
(http://www.bushveldminerals.com/)

 

For those shareholders that hold their Bushveld shares through a broker or
other intermediary (non-registered/ beneficial shareholders), a completed
voting instruction form should be deposited in accordance with the
instructions printed on the form by no later than 10am (UK time) on 29 May
2024. Please contact your broker or intermediary for further instructions on
how to vote, including through electronic means where available.

 

The Company and the Board of Directors consider that the Resolution is in the
best interests of Shareholders as a whole and unanimously recommend that
Shareholders vote in favour of the resolution, as they intend to do so in
respect of their own beneficial holdings of 6,094,142 Ordinary Shares,
representing 0.26 per cent. of the existing issued ordinary share capital of
the Company at the upcoming General Meeting.

 

In addition to Southern Point Resources' (SPR) 330,687,830 Ordinary Shares
(representing 14.31% of the Existing Ordinary Shares), the Company has
received irrevocable undertakings from certain shareholders holding in
aggregate 262,649,673 Ordinary Shares (representing approximately 11.37% of
the existing Ordinary Shares) to vote in favour of the Resolution.

 

Enquiries: info@Bushveldminerals.com (mailto:info@Bushveldminerals.com)

 Bushveld Minerals Limited                                                                                       +27 (0) 11 268 6555
 Craig Coltman, Chief Executive Officer

 SP Angel Corporate Finance LLP                          Nominated Adviser, Joint Broker & Joint Bookrunner      +44 (0) 20 3470 0470
 Richard Morrison / Charlie Bouverat
 Grant Barker / Richard Parlons

 Hannam & Partners                                       Joint Broker & Joint Bookrunner                         +44 (0) 20 7907 8500
 Andrew Chubb / Matt Hasson / Jay Ashfield

 Tavistock                                               Financial PR                                            +44 (0) 207 920 3150
 Gareth Tredway / Tara Vivian-Neal / James Whitaker

 

LETTER FROM THE CHAIRMAN

 

Dear Shareholder

 

Proposed disposal of Vanchem and Notice of General Meeting

 

1. INTRODUCTION

 

On 7 May 2024, the Company announced that it had entered into the SPR Term
Sheet to secure additional funding to provide immediate working capital relief
to the Group, and ensure continuity of the Group's operations. The Company and
relevant members of the Group have now entered into the Definitive Documents
which implement the terms of the SPR Term Sheet.

Pursuant to the Vanchem SPA, the Group has conditionally agreed to sell the
entire issued share capital of Vanchem for a total consideration of up to
US$40.6 million, comprising an initial consideration of US$20.6 million and a
deferred consideration of between US$15 million and US$20 million. The
proposed terms of the Vanchem Disposal replace those announced by the Company
on 20 November 2023 for the sale by the Company to SPR of a 50 per cent
interest in Vanchem. Due to the relative size of the transaction, pursuant to
AIM Rule 15, the Vanchem Disposal is conditional, amongst other things, upon
Shareholder approval.

The Company requires additional funding to pay creditors and ensure that it
has sufficient working capital to fund ongoing operations. SPR also agreed to
increase the existing funding available from it through the interim working
capital facility secured against production at the Vanchem plant (previously
announced on 11 September 2023) from c.US$8.1 million by a further US$9
million, each of which amounts will be set off against the price payable by
SPR for the Vanchem Disposal. The Company drew down and has already received
an initial advance of US$3 million of this additional amount on 3 May 2024.
SPR has agreed to advance a further US$5 million on 31 May 2024 and a further
US$1 million on 30 June 2024, subject to certain conditions.

Additionally, the Company is in discussions with Orion pursuant to which Orion
has indicated, on a non-binding basis, that it will, subject to certain
conditions (including completion of the Vanchem Disposal), provide further
funding to the Group by matching the additional funds paid by SPR on a $ for $
basis up to a maximum of US$10 million. Further details are set out on
paragraph 5 of this letter.

The Company has sought South African legal advice from business rescue and
insolvency law legal practitioners (the Insolvency Practitioners) on the
question of the solvency of Vanchem and Vametco, in light of the Proposals,
the details of which were shared with the Insolvency Practitioners. It was
noted by the Insolvency Practitioners that, in the view of the Company's
management team, if the Proposals were implemented the funds expected to be
received would be sufficient to (i) cover outstanding debt obligations
(including overdue creditors); and (ii) meet working capital requirements to
continue operating. The advice received from the Insolvency Practitioners,
based on this information was that (assuming the Proposals were implemented as
expected) the Directors were not, at this time, obliged to take steps to put
Vanchem and/or Vametco into business rescue, but that this would not be the
case in the event that circumstances changed. Accordingly, the advice of the
Insolvency Practitioners was that if the Proposals were not implemented then
further advice would be required and that putting Vanchem and/or Vametco in to
business rescue would be highly likely. As Vanchem and Vametco are the income
generating operations of the Group, if they were to go into business rescue it
would be likely that the Company would be forced to consider administration.
The Proposals can only be implemented in the event that the Resolution is
passed at the General Meeting.

In the event that the Resolution is not passed the Proposals will not proceed,
and the Company will be forced to consider administration as, if no
alternative funding becomes available immediately, Vanchem and/or Vametco
would be required, pursuant to the South African Companies Act, 2008, to
consider filing for business rescue or liquidation which may, depending on the
circumstances, result in a total loss of income for the Group, and
Shareholders are therefore likely to lose a substantial part or all of their
investment.

The purpose of this Circular is to provide you with the details of, background
to and reasons for the Proposals and to explain why the Directors believe that
they are in the best interests of the Company and its Shareholders as a whole.

The action that you should take to vote on the Resolution, and the
recommendation of the Board, are set out in paragraphs 10 (Action to be Taken)
and 14 (Recommendation), respectively, of this letter.

2.      INFORMATION ON THE GROUP

The Group is a primary vanadium producer. It is one of only three operating
primary vanadium producers in the world. In 2023, the Group produced more than
3,700 mtV.

The Group's principal vanadium operations are the Vametco vanadium mine and
processing plant which it first acquired an interest in during April 2017, and
the Vanchem production facility, a primary vanadium producing facility with a
beneficiation plant capable of producing various vanadium oxides,
ferro-vanadium and vanadium chemicals, acquired in November 2019.

The Company is in the process of divesting its interest in CellCube, a
vanadium redox flow battery manufacturer and has started the process of
looking for additional investors for Bushveld Electrolyte Company (Pty) Ltd.

3.      CURRENT TRADING AND PROSPECTS, AND RATIONALE FOR THE PROPOSALS

As announced by the Company on 23 April 2024, in the Q1 2024 Operational and
Corporate Update, the Company's working capital was extremely tight for a
number of reasons including:

(i) the continued delay in receiving funds from the equity fundraising
undertaken in December 2023;

(ii)    delay in the completion of the Vanchem 2023 Disposal and the Pamish
Disposal (Disposals) due to delays in obtaining the approval from the South
African Competition Tribunal, initially anticipated for February 2024, but
which is now expected in July/August 2024 as the Vanchem 2023 Disposal is
treated as a "large" application in respect of which the Minister of Trade,
Industry and Competition (South Africa) has exercised his discretion to
participate;

(iii)   vanadium production levels being materially affected; and

(iv)   notably weaker vanadium prices (declining between 10% to 17% year to
date across different markets).

Accordingly, as previously disclosed to Shareholders, the Company is dependent
on the receipt of further funding to continue the Group's operations.

The Company has explored various available funding options, including the
issue of further equity. However, as a result of the Company's share price
trading below par value this was not a viable option within the required
timeframe. Accordingly, the Board has determined that in order for the Company
to continue as a going concern, having consulted with certain key
stakeholders, the only viable option to bring in immediate funds is through an
increased working capital facility with SPR and to sell its remaining interest
in Vanchem on the proposed terms with SPR set out below.

 

 

4.      DETAILS OF THE SPR ARRANGEMENTS

Pursuant to the SPR Term Sheet and the Definitive Documents the Company has
conditionally agreed on (inter alia) the following:

(i) the sale to SPR of the entire issued share capital of Vanchem for a total
consideration of up to US$40.6 million pursuant to the Vanchem SPA; and

(ii)    SPR to advance, as a loan to Vanchem, between US$5 million and US$8
million for working capital and essential capital expenditure, which will be
repayable, with interest at 15% per annum either (a) by Vanchem 3 months after
the closing date of the Vanchem SPA or such later date as SPR and Vanchem may
agree to in writing; or (b) in the event that the conditions (as set out
below) to the Vanchem Disposal are not satisfied and the Vanchem Disposal does
not complete, the date falling 3 calendar months after it becomes clear that
the conditions will not be met, being in the event (inter alia) that (i) the
Resolution is not passed at the General Meeting or (ii) the Competition
Tribunal Consent is refused, or such later date as may be agreed between the
Company and SPR.

Vanchem Disposal

The proposed terms of the Vanchem Disposal replace those announced on 20
November 2023 for the sale by the Company to SPR of a 50 per cent interest in
Vanchem.

The total consideration for the Vanchem Disposal will be up to US$40.6
million, comprising:

(i)   an initial consideration of US$20.6 million consisting of:

·      the US$8.1 million working capital facility received in September
2023;

·      an additional US$9 million working capital facility of which:

o   US$3 million was received on 3 May 2024;

o   US$5 million can be drawn down on 31 May 2024;

o   US$1 million can be drawn down on 30 June 2024;

·        a US$3.5 million payment on the date of the closing of the
Vanchem Disposal (Closing Date);

(ii)    a deferred consideration of between US$15 million and US$20 million
payable quarterly in arrears over a term of three years commencing on the
Closing Date (the Term) equivalent to 25% of the distributable free cash flow
of Vanchem during the Term subject to:

·      a minimum payment of US$5 million per annum paid in quarterly
cash payments of US$1.25 million each, amounting to a total cash value of
US$15 million over the Term; and

·      a maximum payment of US$20 million over the Term.

The Vanchem Disposal is conditional on (inter alia):

(i)    such conditions as are customary in a transaction of a nature
similar to the Vanchem Disposal;

(ii)    the passing of the Resolution at the General Meeting;

(iii)   Orion consent to the SPR Arrangements; and

(iv)   Competition Tribunal Approval, which is expected at the end July
2024/beginning of August 2024.

If the conditions are not met and the Vanchem Disposal does not complete, then
the US$3 million advanced on 3 May 2024, together with any other payments
received by the Group from SPR will be repayable on the same basis as the
US$$8.1 million advanced in September 2023 under the working capital facility
described in RNS No 9925 published by the Company on 11 September 2023.

The Vanchem Disposal will constitute a related party transaction pursuant to
AIM Rule 13 and a fundamental change of business pursuant to AIM Rule 15.

In the event that the Resolution is not passed the Proposals will not proceed,
and the Company would be forced to consider administration as, if no
alternatively funding becomes available, Vanchem and/or Vametco would be
required, pursuant to the South African Companies Act, 2008, to consider
filing for business rescue or liquidation and Shareholders are therefore
likely to lose a substantial part or all of their investment.

5.      DETAILS OF THE ORION 2024 FINANCING PACKAGE

In 2020, the Company agreed the Orion 2020 Financing Package, which was
restructured on the terms of the Orion 2023 Financing Package as announced in
November 2023.

The Company is currently in discussions with Orion with a view to:

(i) agreeing a further funding package, on an indicative and non-binding basis
as at the date of this Circular, which would result in Orion providing further
finding of up to US$10 million in cash on the basis that Orion's investment
would match $ for $ the additional monies from SPR (up to an aggregate of
US$10 million); and

(ii)   to explore all possible solutions regarding the repayment of the
first tranche of the US$28.3 million term of US$7.1 million due by 30 June
2024. The Company is confident that it will reach a favorable solution for its
shareholders and both parties.

The Orion 2024 Financing Package remains subject to the execution of
definitive documents, which will be conditional on (inter alia) SARB approval
and the passing of the Resolution.

A further announcement will be made in connection with the Orion 2024
Financing Package in due course.

6.      FINANCIAL EFFECTS OF THE PROPOSALS AND USE OF PROCEEDS

Based on unaudited management accounts for the year ended 31 December 2023,
Vanchem reported sales of ZAR843.0 million (approx. US$45.7 million) (31
December 2022: ZAR 603.6 million (approx. US$ 36.9 million)), loss before tax
of ZAR595.0 million (approx. US$32.2 million) (31 December 2022: ZAR688.7
million (approx. US$42.1 million)) and net assets of ZAR578.7 million (approx.
US$31.1 million) (31 December 2022: ZAR1,054.8 million (approx. US$62.1
million)). The net assets decreased in 2023 primarily due to an increase in
borrowings and trade and other payables and decrease in property, plant, and
equipment.

Following completion of the Proposals, the Company will no longer consolidate
Vanchem into its consolidated accounts. The profit on the Vanchem Disposal is
estimated to be approximately US$5.2 million. On Completion, the Board intends
to use the cash proceeds from the Vanchem Disposal to pay certain outstanding
liabilities including, but not limited to, trade creditors, and to incur
necessary capital expenditure on the Vametco assets.

Following Completion, assuming the Orion 2024 Financing Package is agreed, the
Company will have available facilities and cash resources of US$8 million and
net debt of US$90 million (total debt US$105 million less SPR owing for
Vanchem US$15 million). According to the Company's internal working capital
forecast, assuming unconstrained production and an average selling price of
US$30/kgV at an exchange rate of R19:US$1 for the period May to December 2024,
the Company will have sufficient working capital to sustain operations.

7.       STRATEGY FOLLOWING COMPLETION

The Company's strategy for Vametco will be focused on optimising operations by
right-sizing the organisation to ensure that Vametco is a cash generating
asset, by maximising value through operational efficiency and strategic cost
management, organic growth and exploring growth opportunities in the vanadium
market. The Company will streamline operations and enhance productivity
through a focused capital expenditure and planned maintenance programme, while
maintaining a strong focus on safety, environmental stewardship and social
responsibility.

8.      RISKS

One of the Company's principal risks is working capital, which includes going
concern and insolvency risks, all rated as high risks. This resulted from the
financial challenges that the Company has been facing over time, due to low
vanadium prices and the low share price, affecting the Company's ability to
generate cash and to raise capital, respectively. It is critical that
Shareholders approve the proposed disposal of Vanchem to ensure the continuity
of the business and operations, as failure to obtain the required approval on
time will significantly increase the risk of insolvency materialising, meaning
that all operations may have to be suspended.

The future profitability, cashflow generation and viability of the Group will
be dependent upon the market price of Vanadium. The volatility of the vanadium
price is a risk that the Company monitors constantly.

Like all commodities, the vanadium price is affected by global market
volatility and demand and supply fundamentals. A significant decrease in the
vanadium price would have a material adverse effect on the Company's business,
financial condition and results of operations.

The Company's assets, earnings and cashflows are affected by a variety of
currencies. Most of the Company's revenue is in USD, and majority of the
Company's costs are in Rand; hence, a significant strengthening of the Rand
could impact the Company's earnings and cash flow generation. The Group does
not enter into hedging arrangements with respect to foreign currency.

The Group's profitability and cashflow will depend on Vametco's operations.
Planned production may not be achieved, or may be achieved at lower levels
than envisaged, as a result of unforeseen operational problems and other
disruptions resulting in reduced, or in extremis, no production at site. There
is no assurance Vametco will be able to continue to operate profitability
which would matierally adversely affect the Company's financial condition and
prospects.

A description of other principal risks and uncertainties associated with the
Group's business and how they are being managed is included in the Group's
Annual Report and Financial Statements for the year ended 31 December 2022.

9.    GENERAL MEETING

In order for the Proposals to be put into effect the Resolution needs to be
passed by the Shareholders at a general meeting and accordingly the Company is
now convening a General Meeting for 10.00 a.m. on 31 May 2024 to consider and,
if thought fit, pass the Resolution.

The Resolution must be passed either (i) on a show of hands by a simple
majority of those Shareholders present in person or by proxy and voting or
(ii) on a poll by those Shareholders (present in person or by proxy and
voting) holding a simple majority of the Ordinary Shares voted, in each case,
at the General Meeting.

It is intended that the votes on the Resolution will be taken as a poll in
order that those Shareholders voting by proxy are properly accounted for.

Resolution

The Resolution, if passed, will approve the Vanchem Disposal for the purposes
of Rule 15 of the AIM Rules, which in turn will allow the SPR Arrangements and
the Orion 2024 Financing Package to be implemented.

Record Date

Pursuant to Regulation 41 of the CREST Regulations, the Company specifies that
only those members registered on the Company's register of members at the
Record Date (or, if the General Meeting is adjourned, at 6:00 p.m. on the day
two days prior to the adjourned meeting) shall be entitled to attend and vote
at the General Meeting.

10.  ACTION TO BE TAKEN

Shareholders will find enclosed with this Circular a Form of Proxy for use at
the General Meeting. Whether or not Shareholders intend to be present at the
meeting, Shareholders are requested to complete and return the Form of Proxy
in accordance with the instructions printed thereon in the envelope provided
so that it arrives at Link Group, PXS 1, Central Square, 29 Wellington Street,
Leeds, LS1 4DL as soon as possible and in any event so as to be received by
post or by hand (during normal business hours only) not later than 10,00 a.m.
on 29 May 2024. Completion and return of the Form of Proxy will not prevent
Shareholders from attending and voting at the meeting should they so wish.

Alternatively, you can submit a proxy vote online via the Link Investor Centre
app or by accessing the web browser at
https://investorcentre.linkgroup.co.uk/Login/Login
(https://investorcentre.linkgroup.co.uk/Login/Login) . To be effective, the
proxy vote must be submitted so as to have been received by the Company's
registrars no later than 10.00 a.m. on 29 May 2024.

 

CREST members who wish to appoint a proxy or proxies through the CREST
electronic appointment service may do so for the General Meeting by using the
procedures described in the CREST Manual. CREST personal members or other
CREST sponsored members, and those CREST members who have appointed (a) voting
service provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
In order to be valid the appropriate CREST message (a CREST Proxy Instruction)
must be transmitted so as to be received by the Company's agent by no later
than 10.00 a.m. on 29 May 2024.

Proxymity Voting - if you are an institutional investor you may also be able
to appoint a proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io
(http://www.proxymity.io) . Your proxy must be lodged by 10.00 a.m. on 29 May
2024 in order to be considered valid or, if the meeting is adjourned, by the
time which is 48 hours before the time of the adjourned meeting. Before you
can appoint a proxy via this process you will need to have agreed to
Proxymity's associated terms and conditions. It is important that you read
these carefully as you will be bound by them and they will govern the
electronic appointment of your proxy. An electronic proxy appointment via the
Proxymity platform may be revoked completely by sending an authenticated
message via the platform instructing the removal of your proxy vote.

11.  IRREVOCABLE UNDERTAKINGS

In addition to SPR's 330,687,830 Ordinary Shares (representing 14.31% of the
Existing Ordinary Shares), the Company has received irrevocable undertakings
from certain shareholders holding in aggregate 262,649,673 Ordinary Shares
(representing approximately 11.37% of the existing Ordinary Shares) to vote in
favour of the Resolution.

12.  RELATED PARTY TRANSACTION

SPR, as a substantial shareholder in the Company (as defined by the AIM
Rules), is a related party of the Company. Accordingly, the Vanchem Disposal
to SPR constitutes a related party transaction pursuant to AIM Rule 13. The
independent directors for the purposes of the transaction, being the whole
board, having consulted with the Company's nominated adviser, consider that
the terms of the transaction are fair and reasonable in so far as the
Company's shareholders are concerned.

13.  Q&A

In order to assist Shareholders, the Company has prepared a "Frequently Asked
Questions" document, dealing with questions regarding the Proposals that
Shareholders may have for the Company. An announcement as to where this can be
located will be announced separately.

14.  RECOMMENDATION

The Directors consider that the Resolution is in the best interests of
Shareholders as a whole and unanimously recommend that Shareholders vote in
favour of the Resolution as they intend to do in respect of their own
beneficial holdings of 6,094,142 Ordinary Shares, representing 0.26 per cent.
of the existing issued ordinary share capital of the Company.

If you are in any doubt as to any aspect of the proposals referred to in this
Circular or as to the action you should take in respect of them, you should
seek your own advice from your stockbroker, bank manager, solicitor,
accountant or other professional adviser duly authorised under the FSMA if you
are in the United Kingdom, or another appropriately authorised independent
adviser if you are in a territory outside the United Kingdom.

Yours sincerely

Michael Kirkwood

Independent Non-Executive Chairman

 

 

 

ENDS

 

 

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a primary vanadium producer, it is one of only three
operating primary vanadium producers, 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 (http://www.bushveldminerals.com/)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCEASSDFSKLEEA