TIDMBMN
RNS Number : 9188X
Bushveld Minerals Limited
30 November 2017
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 2017
Bushveld Minerals Limited
("Bushveld", the "Group" or the "Company")
Proposed Acquisition of 55 per cent. of Bushveld Vametco,
Publication of Admission Document and Notice of General Meeting
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(R) 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."
Enquiries: info@bushveldminerals.com
Bushveld Minerals +27 (0) 11 268 6555
Fortune Mojapelo, Chief
Executive Officer
SP Angel Corporate Finance
LLP +44 (0) 20 3470 0470
Nominated Adviser & Broker
Ewan Leggat
Blytheweigh
Financial PR
Tim Blythe / Nick Elwes +44 (0) 207 138 3204
Gabriella von Ille +27 (0) 711 121 907
Introduction and background
The Company announced earlier today that it had entered into a
conditional agreement to acquire 55 per cent. of the issued share
capital of Bushveld Vametco (being all of the ordinary shares in
Bushveld Vametco not currently owned by the Group) from the Seller.
Following the Acquisition (assuming it is approved by Shareholders
at the GM), the Company will hold 100 per cent. of the issued share
capital of Bushveld Vametco and, through Bushveld Vametco, will own
a 78.8 per cent. economic interests in Strategic Minerals
Corporation. Strategic Minerals Corporation, in turn holds 75 per
cent. of Vametco Holdings, which has a 100 per cent. interest in
the Vametco vanadium mine, a high quality, low cost mine and plant
with a trademark vanadium product and a global vanadium customer
base.
The initial consideration for the Acquisition is US$11.1 million
which will be satisfied through the issue of the Consideration
Shares and US$4.5 million in cash by the Company to the Seller. In
addition, there will be two deferred payments of US$0.6 million
each (following publication of the Vametco Holdings accounts for
the years ended 31 December 2018 and 2019), and a further payment
calculated by reference to the EBITDA of Vametco Holdings in 2020
(following publication of the Vametco Holdings accounts for the
year ended 31 December 2020).
The Acquisition constitutes a reverse takeover under the AIM
Rules for Companies. As a result, the Company is seeking
Shareholder approval for the Acquisition at the General
Meeting.
The Company is also seeking to refresh its Shareholder authority
for the issue of Ordinary Shares on a non pre-emptive basis, having
used up a substantial amount of its current authority since the
Company's annual general meeting.
The Company was incorporated on 5 January 2012 and was admitted
to trading on AIM on 26 March 2012 as a mineral development company
focused on exploring and developing mineral projects on the
Bushveld Complex in South Africa. In November 2013, the Company
announced its focus on developing a vanadium platform. In April
2014, the Company completed a scoping study on the Mokopane
Vanadium Project followed by a prefeasibility study in February
2016. On 6 April 2017, the Company, together with Yellow Dragon,
acquired, through Bushveld Vametco, a 78.8 per cent. economic
interest in Strategic Minerals Corporation, the ultimate holding
company of the primary vanadium mining and processing company,
Vametco Alloys, from the Evraz Group for US$16.466 million.
This acquisition was in line with the Company's stated strategy
to develop a significant, vertically integrated vanadium platform
and accelerated Bushveld's path to production by several years. The
acquisition was further aligned with the Company's aspirations in
the global energy storage space by providing capacity for potential
electrolyte manufacturing.
Bushveld Vametco has been the beneficiary of higher vanadium
prices in 2017, enabling it to repay external acquisition debt. The
proposed Acquisition announced today represents a continuation of
the Company's strategy of building a vertically integrated vanadium
platform and will, if approved, increase the Company's indirect
interest in Vametco Holdings from 26.6 per cent. to 59.1 per
cent.
The Acquisition Resolution will be proposed at the General
Meeting to approve the Acquisition and effect the Proposals.
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 will take place on 21 December
2017.
Information on Vametco Alloys
Introduction
The Vametco Mine is situated about 6.5 kilometres northeast of
the town of Madibeng, (formerly known as Brits). The mine is an
operational open cast vanadium mine, located in the Bojanala
Platinum District within the North West Province of the Republic of
South Africa. The operations are near Mmakau and Rankothea
villages, approximately 500 metres to the south and west of the
operations respectively.
Ore Reserves
Ore Reserves are declared for open pits inside the life of mine
pit design (the optimised pit shell in this instance). Ore tonnes
and grades are reported as run of mine tonnes after modifying
factors for mining losses and dilution have been applied as
expected to be delivered to the concentrator (i.e. before
beneficiation plant recoveries have been applied). Ore Reserves are
declared for in-situ tonnes in the pits and exclude any
stockpiles.
Ore Reserve Statement for Vametco Mine as at 06 October 2017
Gross Net (26.6%)
---------- ---------------------------------------------------- ----------------------------------------------------
Category Tonnes Magnetite % V(2) O(5) % Contained Tonnes Magnetite % V(2) O(5) % Contained
(millions) contained in Metal (millions) contained in Metal
magnetite Total magnetite Total
V(2) O(5) V(2) O(5)
(tonnes) (tonnes)
---------- ---------- ----------- ---------------- --------- ---------- ----------- ---------------- ---------
Lower Seam
----------------------------------------------------------------------------------------------------------------------
Probable 26.12 26.79 1.96 137,152 6.95 26.79 1.96 36,482
---------- ---------- ----------- ---------------- --------- ---------- ----------- ---------------- ---------
Total 26.12 26.79 1.96 137,152 6.95 26.79 1.96 36,482
---------- ---------- ----------- ---------------- --------- ---------- ----------- ---------------- ---------
Note: 1. All tonnages reported are on a dry basis
Note 2: There are no Measured Mineral Resources classified at
Vametco Mine and therefore no Mineral Resources were converted into
Proved Ore Reserves
Financial Performance of SMC Group
FY 2014 FY 2015 FY 2016 H1 2017
GBP'000 Audited Audited Audited Unaudited
----------------------- -------------------- ---------------------- ---------------------- --------------------
Revenue 33,167 32,666 38,460 26,436
------------------------ -------------------- ---------------------- ---------------------- --------------------
No. of
tonnes
sold 1,884 2,340 2,810 1,342
------------------------ -------------------- ---------------------- ---------------------- --------------------
Gross Profit 9,616 5,453 7,709 8,528
------------------------ -------------------- ---------------------- ---------------------- --------------------
Gross Margin 29% 17% 20% 32%
------------------------ -------------------- ---------------------- ---------------------- --------------------
Operating
Profit 4,315 847 687 4,669
------------------------ -------------------- ---------------------- ---------------------- --------------------
Total comprehensive
profit/loss 6,279 (268) (1,176) 3,477
------------------------ -------------------- ---------------------- ---------------------- --------------------
Net Assets 34,474 31,423 31,999 33,782
------------------------ -------------------- ---------------------- ---------------------- --------------------
Revenue primarily relates to the sale of two vanadium products,
modified vanadium oxide and Nitrovan(R). Sales volumes in mtV have
increased by over 20 per cent. from FY 2014 to FY 2016. Revenues
fell though in FY 2015 despite an increase in number of tonnes
sold, primarily due to a fall in prices. In FY 2016, the average
selling price of vanadium increased by 27 per cent. which resulted
in a 17 per cent increase in sales and a 41 per cent. increase in
gross profit.
Products are predominantly exported. Evraz was historically
responsibly for sales globally (excluding South Africa, Japan,
China and Korea). Sojitz, a 21.2 per cent. minority economic
interest in SMC, is responsible for sales into Japan, China and
Korea. Customer contracts were directly with Evraz who received a 5
per cent. Fee. Following the acquisition of the SMC Group by
Bushveld Vametco, an agreement was entered into with Wogen to
provide the sales and marketing services previously provided by
Evraz. Sales in South Africa are made directly by the Vametco
Group.
Development Strategy
Vametco's development strategy comprises three elements:
(a) raising production capacity to increase sales;
(b) diversification of its production base to enhance the
product range and broaden client customer reach;
(c) Downstream manufacturing development to maximise the
beneficiation dividend.
Capacity has recently been raised to 3,035 mtV per annum and two
further phases of expansion will increase this to 3,750 mtV per
annum and to over 5,000 mtV per annum. The latter is anticipated to
be reached by the end of 2019. The Company is exploring ways to
expand its product portfolio to include other vanadium products in
addition to Nitrovan(R). Finally, the Company intends to leverage
its integrated platform for development of downstream operations by
manufacturing value added vanadium products.
Net Present Value
The MSA Group has undertaken a discounted cash flow (DCF)
analysis/valuation of Vametco. The valuation is based upon a LOM of
50 years, which includes the Indicated and Inferred Mineral
Resources, and extends beyond the current converted mining right
(which is valid until 2038). Furthermore, consistent with the
development strategy, production is increased over a three year
period to achieve consistent output of 4,920 mtV per annum from
2020 onwards. The long-term FeV price is set at US$30/kg. On the
basis of a 10 per cent. real discount rate, Vametco has a NPV of
US$211 million.
Overview of the Vanadium Market
The vanadium market is characterised by a robust and growing
demand profile and a constrained and concentrated supply. Vanadium
supply has seen significant reductions in the past 24 months
resulting in a significant structural deficit projected to continue
for the foreseeable future. This structural deficit has resulted in
vanadium prices increasing from a low of US$13.55/kgV in January
2016 to US$23.60/kgV in December 2016. The price improvement has
been maintained in 2017, with prices as of the end of October at
US$34.13/kgV. of the average market price (Metal Bulletin mid) for
2016 was US$17.30/kgV, which rose to an average market price of
US$27.53/kgV for the first 9 months of 2017.
On the demand front, approximately 90 per cent. of usage is in
the steel industry, where growing intensity of use is anticipated,
driven primarily by greater enforcement of construction standards
in China, requiring higher vanadium-bearing rebar. Growth is also
forecast in non-ferrous alloys (consuming 4.5 per cent. of vanadium
output) and the chemical industry (consuming 3.5 per cent.).
Looking ahead, the most significant driver of vanadium demand is
expected to come from the energy storage sector. Industry estimates
envisage vanadium flow batteries' share of vanadium consumption
growing from approximately 1 per cent. in 2014, to 3 per cent. in
2016 and potentially up to approximately 20 per cent. by 2030.
Vanadium supply, on the other hand, is significantly
constrained. The closure of the Evraz Highveld steel and vanadium
plant and subsequent provisional liquidation of the Mapochs mine,
as well as the suspension of operations at Vanchem in 2016, removed
more than 10 per cent. of vanadium supply from the market and left
the Vametco mine and Glencore's Rhovan operation as the only South
African producers of vanadium, significantly contributing to the
current global strain in vanadium feedstock.
China is the largest producer of vanadium in the world. The bulk
of the supply feedstock in China comes from steel plants that
process low-grade vanadium-bearing magnetite ores to produce steel
and a vanadium slag which is then further processed through a
process similar to the primary production processes (salt roast and
leach operations). This source of vanadium is significantly
constrained due to:
-- High input costs as a result of mining and processing
low-grade captive ores, relative to the higher quality and low-cost
seaborne haematite ores;
-- Steel plants that have to be designed for extraction of
titanium and vanadium, resulting in operating costs that are
significantly higher than simple blast furnace operations
processing haematite ore; and
-- No leverage on steel prices as a consequence of the small
share of steel production that the high-cost vanadium and titanium
bearing magnetite ore processing steel plants have.
As a consequence, these plants are under enormous economic
pressure, with some resorting to blending their ores with cheaper
and higher-quality hematite ores (that contain no vanadium)
resulting in further supply reductions. New sources of supply
require higher vanadium prices to be sustained. Furthermore, few
projects have the requisite vanadium grade to operate economically
as primary vanadium operations, while the option to develop them as
steel or pig iron producers with a vanadium slag by-product carries
large and often prohibitive capital costs. Nonetheless,
persistently higher vanadium prices will likely provide an
incentive for some suppliers to start producing vanadium, notably
stone coal miners in China which host sedimentary style vanadium
deposits. These operations, though, pose substantial environmental
challenges, which impinge on their feasibility of bringing
additional supply onto the market.
Principal Terms of the Acquisition
On November 2017, the Company entered into the Acquisition
Agreement, pursuant to which it conditionally agreed to acquire all
of the ordinary shares in Bushveld Vametco not currently owned by
the Group from the Seller for a purchase price of US$11.1 million
to be satisfied on Admission by
(i) a cash payment of US$4.5 million and
(ii) the issue of the Consideration Shares by the Company to the
Seller, credited as fully paid, at the Consideration Share
Price.
In addition, there will be:
(i) two deferred payments of US$600,000 each, payable following
publication of the accounts for Vametco Holdings for respectively
the years ending 31 December 2018 and 31 December 2019 and (
(ii) a further payment to be made on publication of the Vametco
Holdings accounts for the year ended 31 December 2020 ("2020
Accounts") to be calculated by reference to the EBITDA of Vametco
Holdings for the period covered by the 2020 Accounts.
The Consideration Shares will represent 6.343 per cent. of the
Enlarged Issued Share Capital and will be issued credited fully
paid. Pursuant to the Acquisition Agreement the Seller has also
agreed to enter into an orderly market agreement for a period of 12
months from Admission in respect of all Ordinary Shares held by it
on Admission (including the Consideration Shares).
Completion of the Acquisition Agreement is conditional on inter
alia the passing of the Acquisition Resolution by Shareholders at
the General Meeting, and Admission.
General Meeting
A notice convening the General Meeting, which is to be held at
18-20 Le Pollet, St Peter Port, Guernsey GY1 1WH at 10 a.m. on 20
December 2017, for the purpose of considering, and if thought fit,
passing the Resolutions which seek to do the following:
-- approve the Acquisition and authorise the Directors to issue
the Consideration Shares for the purposes of the Acquisition;
and
-- authorise the Directors to issue, grant rights to subscribe
for, or convert any securities into up to 287,793,087 new Ordinary
Shares in the Company, being approximately one third of the
Enlarged Issued Share Capital, and to disapply pre-emption rights
for up to 100,000,000 new Ordinary Shares, being approximately 11.6
per cent. of the Enlarged Issued Share Capital, having used up a
substantial amount of its existing authorities through the issue of
the Convertible Bonds and Convertible Bond Warrants.
The Acquisition Resolution will be proposed as an ordinary
resolution (Resolution 1). The Authority Resolutions will be
proposed as an ordinary resolution (Resolution 2) and as a special
resolution (Resolution 3). An ordinary resolution, in order to be
passed, requires the approval of a simple majority of those voting
in person or on a proxy or on a poll, and a special resolution
requires the approval of 75 per cent. of those voting in person or
on a poll by proxy.
It is a condition to completion of the Acquisition that the
Acquisition Resolution is approved by Shareholders.
About Bushveld Minerals Limited
Bushveld Minerals is an AIM quoted mineral project development
company with a portfolio of vanadium and coal assets in Southern
Africa and an investment in tin.
The Company's flagship vanadium platform includes the Mokopane
Vanadium Project, the Brits Vanadium Project, and an interest in
Bushveld Vametco Alloys (Pty) Ltd primary vanadium mining and
processing company. The coal platform comprises the wholly-owned
Imaloto Coal Project, which is being developed as one of
Madagascar's leading independent power producers. The Company's tin
interests are held through its shareholding in AIM listed AfriTin
Mining Limited.
Bushveld's vision is to become one of the largest, low cost,
integrated primary vanadium producers through owned high grade
assets. This incorporates development and promotion of the role of
vanadium in the growing global energy storage market through
Bushveld Energy, the Company's energy storage solutions provider.
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.
The Company's approach to project development recognises that,
whilst attractive project economics are imperative, they are
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
Competent Person
The scientific and technical information relating to Mineral
Resource estimation contained within this announcement has been
reviewed and approved by Mr. Jeremy Witley, a professional
geologist with more than 25 years' experience in base and precious
metals exploration and mining as well as Mineral Resource
evaluation and reporting. He is Principal Resource Consultant for
the MSA Group and has the appropriate relevant qualifications,
experience, competence and independence to be considered a
"Competent Person" under the definitions provided in the JORC Code
2012 Edition.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQGMMZMFLGGNZZ
(END) Dow Jones Newswires
November 30, 2017 02:01 ET (07:01 GMT)
Bushveld Minerals (LSE:BMN)
Historical Stock Chart
From Apr 2024 to May 2024
Bushveld Minerals (LSE:BMN)
Historical Stock Chart
From May 2023 to May 2024