Bushveld Minerals Ltd (AIM:BMN) Proposed Acquisition of 55% of Bushveld Vametco

Bushveld Minerals Limited (AIM: BMN), a mineral project development company with a portfolio of vanadium and coal assets in Southern Africa and an investment in tin, is pleased to announce the conditional acquisition of 55 per cent of Bushveld Vametco, being all the ordinary shares in Bushveld Vametco not currently owned by the Company (“Acquisition”). The Acquisition constitutes a reverse takeover under the AIM Rules and is therefore subject to shareholder approval and re-admission of the Enlarged Group to trading on AIM (“Admission”). Following the Acquisition (assuming it is approved by shareholders at General Meeting), the Company will hold 100 per cent. of the issued share capital of Bushveld Vametco Limited (“BVL”) and, through BVL, will own a 78.8 per cent. economic interest in Strategic Minerals Corporation. Strategic Minerals Corporation, in turn holds 75 per cent. interest in Vametco Holdings Limited, which has a 100 per cent. interest in the Vametco vanadium mine, a high quality, low cost mine and plant producing a trademark protected vanadium product and a global vanadium customer base.

Highlights:

Acquisition details

· The Company has entered into an Acquisition agreement, pursuant to which it has conditionally agreed to acquire all of the ordinary shares in BVL not currently owned by the Group from Yellow Dragon Holdings Limited (“Yellow Dragon” or the “Seller”) for a purchase price of US$11.1 million.

· The purchase price of US$11.1 million is to be satisfied on Admission by a cash payment of US$4.5 million and the issue of 54,766,364 new ordinary shares in the Company (“the Consideration Shares”) by the Company to the Seller, credited as fully paid, at 9.06 pence per share. The Consideration Shares will represent 6.34 per cent. of the Enlarged Issued Share Capital of the Company and will be issued credited fully paid.

· In addition, there will be two deferred payments of US$0.6 million each, payable following publication of the accounts for Vametco Holdings Limited for respectively the years ending 31 December 2018 and 31 December 2019, and a further payment to be made on publication of the Vametco Holdings Limited accounts for the year ended 31 December 2020 to be calculated by reference to the EBITDA of Vametco Holdings Limited for the period covered by its 2020 accounts.

· Completion of the Acquisition agreement is conditional on inter alia shareholder approval at a General Meeting and Admission

· Following completion of the Acquisition, Yellow Dragon will hold 79,766,364 shares representing 9.24 per cent of the Enlarged Issued Share Capital

· The General Meeting for shareholders will be held at 10.00 a.m. on 20 December 2017 at 18-20 Le Pollet, St Peter Port, Guernsey GY1 1WH. The notice of this meeting is available on the Company’s website at www.bushveldminerals.com and will be sent to shareholders today.

· As a consequence of the Acquisition constituting a reverse takeover under the AIM Rules for Companies, the Company is required to apply for re-admission of the enlarged Group to trading on AIM. It is expected that Admission to trading becomes effective and commencement of dealings of the Enlarged Issued Share Capital will take place on 21 December 2017.

Rationale for the Acquisition

The Acquisition will increase the Company’s indirect interest in Vametco Holdings from 26.6 per cent. to 59.1 per cent enabling it to fully consolidate the Strategic Minerals Corporation (“SMC”) Group in its financial statements. The Directors believe that the Acquisition will benefit the Company and its shareholders for the following reasons:

· Increased exposure to vanadium, a commodity with a robust and growing demand profile amid a constrained and concentrated supply environment resulting in a sustained structural deficit with no significant new supply anticipated in the near future;

· Bushveld will own a majority shareholding in a high grade, low-cost open-cast and simple mining proposition with access to brownfield processing infrastructure that is being acquired for considerably less than its replacement cost;

· Vametco enjoys a significant c.3.5 per cent. share of the global vanadium market;

· The production base has the potential to expand within 3 years to over 5,000 mtV per annum, supported by one of the largest primary vanadium resource base in the world (under the ownership of Bushveld);

· Vametco has the potential to diversify its product range beyond its Nitrovan® product; and

· The Acquisition is further aligned with the Company’s aspirations in the global energy storage space by providing capacity for potential electrolyte manufacturing.

Fortune Mojapelo, Chief Executive Officer of Bushveld commented:

“We are delighted to have reached agreement with Yellow Dragon Holdings for its interest in Bushveld Vametco Limited.

“Vametco has to date illustrated its strong cash generation capacity and, with the expansion initiatives underway, the drive toward a lower cost base which, in a rising vanadium price environment, ensures the transaction is accretive to our shareholders. This is a transformational transaction for Bushveld culminating completion of the initial phase of our vanadium strategy. Moreover the Company now completes its transition into a vanadium producer and launches a new chapter in its development. We now look forward to growing this platform in furtherance of our objective to build a low-cost, vertically integrated and scalable production base.”



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