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.
Following the acquisition, Bushveld Minerals will hold 100% of the issued share capital of Bushveld Vametco (BVL) and, through BVL, will own a 78.8% economic interest in Strategic Minerals Corporation.
Strategic Minerals Corporation, in turn holds 75% interest in Vametco Holdings, which has a 100% 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.
Bushveld Minerals 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 (Yellow Dragon) for a purchase price of US$11.1 million.
The purchase price of $11.1 million is to be satisfied on admission by a cash payment of $4.5 million and the issue of 54 766 364 new ordinary shares in the company by Bushveld Minerals to the seller, credited as fully paid, at 9.06 pence per share. The consideration shares will represent 6.34% of the enlarged issued share capital of Bushveld Minerals and will be issued credited fully paid.
In addition, there will be two deferred payments of $0.6 million each, payable following publication of the accounts for Vametco Holdings 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 accounts for the year ended 31 December 2020 to be calculated by reference to the EBITDA of Vametco Holdings for the period covered by its 2020 accounts.
“We are delighted to have reached agreement with Yellow Dragon for its interest in Bushveld Vametco," says Bushveld Minerals CEO, Fortune Mojapelo.
“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 Minerals culminating completion of the initial phase of our vanadium strategy.
"Moreover Bushveld Minerals 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," concludes Mojapelo.
Feature image credit: Wikimedia.