LONDON: Bushveld Minerals Limited, a leading vanadium producer listed on AIM, has announced a strategic move to sell its Vanchem asset to Southern Point Resources Fund I S.A. LP (SPR) for up to $40.6 million.

The deal includes an initial consideration of $20.6 million and a deferred payment of $15 to $20 million. This decision comes as a replacement for the previously announced sale of a 50% stake in Vanchem and is subject to shareholder approval.

To address immediate working capital needs and creditor payments, Bushveld has also secured additional funding from SPR. This includes an increase in the interim working capital facility by $9 million, with an initial advance of $3 million received on May 3, 2024. Further advances of $5 million and $1 million are expected on May 31 and June 30, respectively, contingent on certain conditions.

The company’s financial strain was highlighted in the Q1 2024 update, citing delayed funds from equity fundraising, postponed asset sales, and weaker vanadium prices. With the share price below par value, issuing more equity was deemed unfeasible, leading to the increased working capital facility and asset disposal as the most viable solutions.

Vanchem currently faces creditor balances of around $13 million, with overdue payments necessitating a loan of $5 to $8 million from SPR for working capital and capital expenditure at a 15% annual interest rate. If the asset sale does not finalize, Bushveld will be obligated to repay this loan with interest.

The transactions with SPR are considered related party transactions under AIM Rule 13 and have been deemed fair and reasonable by the company’s independent directors. The asset sale also triggers a fundamental business change under AIM Rule 15, requiring a shareholder meeting for approval. If the disposal is not sanctioned, Bushveld may have to initiate business rescue proceedings.

Craig Coltman CEO of Bushveld Minerals commented: “The extension of the working capital facility provides vital funds to continue as a going concern. The proposed sale of Vanchem will enable the Group to move forward in a more agile and lean manner and help pay down our creditors. Further details will be provided in due course but absent this funding the Company would have had no option but to apply for business rescue.

Fortunately, our turnaround at Vanchem has allowed us to achieve meaningful value for this asset which we are able to monetise over a very short space of time and focus on getting the Vametco plant and its long-life mine into an efficient, sustainable, cash-producing position.”

Bushveld Minerals secures partnerships with Southern Point Resources and Highveld