Bushveld Minerals Ltd, an AIM quoted, integrated primary vanadium producer and energy storage provider, with ownership of high-grade assets in South Africa, has announced that it has satisfied the conditions required to drawdown the US$30 million under the production financing agreement (PFA) and the unsecured convertible loan notes (notes) of US$35 million, to be subscribed by Orion Mine Finance first announced on 30 September 2020. The company is in the process of drawing down funds under the PFA and has given notice to Orion to drawdown on the full amount of US$35 million under the notes.
PFA transaction details
Bushveld will repay the principal amount and pay interest via quarterly payments determined initially as the sum of:
- A gross revenue rate (set at 1.175% for 2020 and 2021 and 1.45% from 2022 onwards, subject to adjustment based on applicable quarterly vanadium prices) multiplied by the gross revenue for the quarter.
- A unit rate of US$0.443/kgV multiplied by the aggregate amount of vanadium sold for the quarter.
Once Vametco reaches vanadium sales of approximately 132 020 t during the term of the facility, the gross revenue rate and unit rate will reduce by 75% (i.e. to 25% of the applicable rates).
On each of the first three loan anniversaries, Bushveld has the option to repay up to 50% of both constituent loan parts (each may only be repaid once). If Bushveld utilises the loan repayment option, the gross revenue rate and/or the unit rate will reduce accordingly.
Convertible loan notes details
The company will raise a total of US$35 million through the issue of the notes pursuant to the related convertible loan instrument (the instrument). The notes bear a fixed coupon of 10%/y (which will accrue and be capitalised on a quarterly basis in arrears but compounded annually) and have a maturity date of three years from the date of issue (the maturity date).
The notes will be issued in one tranche, in December 2020, upon receipt of funds by the company. The notes are convertible by the holder into Bushveld ordinary shares of 1 pence each in the company at a price equal to 17 pence.
Between issue and the maturity date, Orion may, at their option, convert an amount of the outstanding notes, including capitalised and accrued interest, into Bushveld ordinary shares as follows:
- First 6 months: up to one third of the outstanding amount.
- Second 6 months: up to two thirds of the outstanding amount (less any amount previously converted).
- From the anniversary of drawdown until the maturity date: the outstanding amount under the Instrument may be converted.
Bushveld also has the option to convert all of the notes outstanding, in one tranche, if the volume weighted average share price is more than 200% of the conversion price over a continuous 15 trading day period, a trading day being a day on which the AIM market of the London Stock Exchange is open for the trading of securities.
Use of proceeds
The PFA capital will provide funding to continue to grow production at Vametco to more than 4200 tpy production level vanadium and debt repayment. The proceeds raised from the issue of the notes will be applied towards capital investment purposes for the first phase of Vanchem's critical refurbishment programme, and debt repayment purposes.
The proceeds of the proposed drawdown under the instrument, together with the proceeds from the PFA will be used as follows:
Vametco Phase III expansion project
- Upgrade of screenhouse distribution systems as well as SRP surface condenser.
- Pre-feasibility and detailed design and implementation including the upgrade of leach circuit, kiln firing systems, leach mill and tertiary crushers. This will also include the installation of SRP3, Boiler 4, MVO reactor 3 as well as Furnace 5.
- Overall production increase leading to 4200 tpy vanadium.
Totals approximately US$24 million.
Vanchem Phase I refurbishment
- Critical refurbishment including: extending the calcine dump facility, replacement of heavy moving equipment, upgrade of the electrical reticulation system and construction of a storm water treatment facility.
- Refurbishment of the third kiln for modular production increase leading to 2600 tpy vanadium.
Totals approximately US$20.3 million.
Pre-payment of Nedbank term loan = approximately US$15.7 million.
Pre-payment of Duferco convertible = approximately US$5 million.
Total gross proceeds = US$65 million.
A portion of the gross proceeds will be used to pay for fees and expenses related to the finance raised.
Revised Nedbank debt terms
The proceeds of the instrument will also be used by Bushveld Minerals to prepay in full the ZAR 250 million term loan. For the ZAR 125 million remaining revolving credit facility, the margin will increase by 0.25% to 3.85%.
In addition, the following amendments will be applied to the financial covenants:
- Removing the cumulative DSCR covenant.
- Increasing the default level on the Group net debt to Group EBITDA ratio to 2.5 times.
- Changing the gross interest cover ratio to a net interest cover ratio.
Fortune Mojapelo, CEO of Bushveld Minerals Ltd, commented: “It is pleasing that we have been able to execute both transactions in just two months, allowing us to begin allocating funds towards our growth plans.
“I would also like to welcome Orion as a significant investor into the Bushveld story, their support provides further confidence in our development plans we have in the coming years.
“With a solid balance sheet and a clear vision of where we want to be in the next few years, we enter 2021 re-energised. At the same time, the world also begins to see signs of an end to what has been a very difficult year for everyone, and signs that it could be followed by one of a recovery.”
Philip Clegg, Portfolio Manager at Orion, commented: “We are thrilled to get the expansion at Vametco fully funded and to support the refurbishment plans at Vanchem. We are looking forward to partnering with Bushveld as it executes its growth strategy and ongoing advancement into battery technologies.”
Read the article online at: https://www.globalminingreview.com/finance-business/30112020/bushveld-minerals-satisfies-conditions-for-orion-mine-finance-funding-package/
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