Bushveld Minerals' vanadium ore
Aim-listed primary vanadium producer Bushveld Minerals has entered into a definitive agreement to sell 64% of its issued shares in Pamish Investments No. 39 (known as the Mokopane project), to Southern Point Resources - Fund 1 (SPRF), represented by its general partner, SPR GP1, for $3.7-million.
The Mokopane project – located on the central portion of the Northern Limb of the Bushveld Complex – includes one of the world's biggest primary vanadium resources, with an average grade of 1.8% vanadium oxide in-magnetite.
The Mokopane project’s 298-million tonne resources and reserves have grades ranging from 1.6% to over 2% vanadium oxide.
As part of the agreement, $3.7 million will be paid to Bushveld for its 64% interest in Mokopane; while the parties have agreed to a right of first refusal with respect to ore mined at the Mokopane mine for use at Bushveld’s Vanchem vanadium processing facility.
The transaction is conditional upon SPRF conducting a satisfactory confirmatory legal due diligence; completing the acquisition by SPRF of 50% of the shares in Vanchem, which owns the Vanchem vanadium plant; waiving pre-emptive rights by minority shareholders in Mokopane to Bushveld's interest in Mokopane; consent of the Department of Mineral Resources and Energy Minister to the change of control of Mokopane regarding each mining and prospecting licence; and approval from the South African Competition Commission.
The acquisition of Bushveld's indirect interest in Mokopane forms part of a proposed package of interconditional transactions which, would provide a cumulative investment by SPRF into Bushveld and its group companies of between $69.5-million and $77.5-million.
Sales, Marketing Agreement
Bushveld has also entered into a definitive sales and marketing agreement with SPRF, in which SPRF will carry out all marketing and sales of vanadium product, produced at both the Vametco and Vanchem plants on an exclusive basis and, subject to the consent of Bushveld's joint venture partner in BELCO, in relation to electrolyte.
This agreement will see SPRF providing Bushveld with a provisional working capital facility of between $25-million and $30-million, to replace the existing working capital facilities.
This is payable to Vametco and Vanchem on the basis of 85% of the potential sales value.
As part of the agreement, SPRF will implement at marketing fee, applicable to 3.75% of the total revenue, 5% on achieved sales above $40/kg of vanadium for vanadium oxide flake product (trigger price).
The equivalent trigger price would be $9/lb of vanadium oxide and chemical products, plus the price premium achieved for chemical products above the vanadium oxide flake price.
However, the total marketing fee will not exceed 5% of the gross realised price for any such sale of finished product.
The SPRF marketing and sales arrangement will replace existing marketing and sales arrangements, as and when they expire, between June 2024 and June 2026.
Bushveld CEO Craig Coltman says the sales and marketing agreement with SPRF puts Bushveld in a stronger financial position through the provision of the necessary near-term working capital.
“This agreement is just one in a package of interrelated transactions which will fundamentally transform the company.
“The added benefits of SPR's partnerships, particularly with Highveld mean that there are further synergies to be explored beyond this transaction,” he says.