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Bushveld Minerals Limited

Bushveld Minerals Limited Completes 21.22% interest in Strategic Minerals Corporation for $20m USD

Bushveld Minerals Limited (LON:BMN), the AIM listed, integrated primary vanadium producer, with ownership of high grade vanadium assets, has today announced that it has today completed the acquisition of a 21.22 per cent interest in Strategic Minerals Corporation, an intermediate holding company of Vametco Alloys Proprietary Limited, from Sojitz Noble Alloys Corporation for a total cash consideration of US$20,000,000. On completion of the Acquisition, Bushveld has increased its indirect beneficial interest in Vametco from 59.1 per cent to 75 per cent.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:

“This Acquisition is a significant achievement as it fulfils the Company’s undertaking to simplify its corporate structure in order to increase exposure to the underlying cash flows at Vametco. Vametco’s strong cash generation capabilities are demonstrated by the Revenue and EBITDA generated in H1 2018 of ZAR 1,050 million and ZAR 521 million an increase of 139.1% and 429.6% respectively, compared to H1 2017.

“The transaction is in line with our priorities laid out earlier this year as part of the US$22 million placing and sets the Company in an advantageous position to deliver on its strategy to grow into a significant, low-cost vertically integrated vanadium platform.”

Acquisition Highlights

· The Company has acquired all of Sojitz’ shareholding interest and accompanying rights in SMC, the 75 per cent owner of Vametco, for a total consideration of US$20,000,000 (twenty million US dollars).

· The US$20,000,000 consideration payable comprises:

o US$17,500,000 in cash (seventeen million five hundred thousand US dollars) for the sale shares; and

o US$2,500,000 in cash (two million five hundred thousand US dollars) in full and final settlement of accrued but unpaid dividends on the sale shares;

· The Sojitz shareholding in SMC is acquired free from all claims, liens, equities, charges, encumbrances and adverse rights of any description, and together with all rights attaching thereto, accrued or contingent.

· Following completion of the transaction Bushveld, through wholly owned Bushveld Vametco Limited, will own 100 per cent of SMC and therefore have an indirect beneficial interest of 75 per cent in Vametco.

· Bushveld used its existing cash resources to complete the Acquisition.

Rationale for the Acquisition

The Acquisition increases the Company’s see-through controlling interest in Vametco from 59.1 per cent to 75 per cent. The Directors believe that the Acquisition will benefit the Company and its shareholders for the following reasons:

· Increased exposure to vanadium, a commodity with compelling fundamentals:

o Robust and growing demand from steel manufacturers and energy storage;

o A significant structural supply deficit due to concentrated and constrained primary production; and

o Limited new global vanadium production on the horizon.

· The vanadium price has enjoyed a strong performance recently, seeing a cumulative price increase of over 200 per cent in the last 12 months, with the 2018 year to date average price of US$70/KgV (source: Metal Bulletin);

· Vametco is a high grade, low-cost, open-cast and simple mining proposition with access to brownfield processing infrastructure. Vametco is one of only three producing primary vanadium operations globally;

· Increased exposure to Vametco’s underlying cash flows. Bushveld now own a 75 per cent shareholding in Vametco, with the Black Economic Empowerment partner and the Community partnership being the only minority interest, with an ownership of 25 per cent;

· Vametco enjoys a significant 3 per cent share of the global vanadium market which is targeted to grow to more than 5 per cent in the medium term, supported by one of the largest primary vanadium resource bases in the world (under the ownership of Bushveld);

· Vametco has the potential to diversify its product range beyond its NitrovanTM product;

· The Acquisition is in line with the Company’s stated intentions at the time of its US$22 million placing in March 2018, to use part of the proceeds to simplify Bushveld’s organisational and corporate structure to improve Bushveld’s exposure to the underlying cash flows of its assets; and

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