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Bushveld to divest Vanchem assets to ease financial concerns
South African vanadium producer Bushveld Minerals has announced a binding term sheet with Southern Point Resources Fund I (SPR) to divest its Vanchem processing plant for a maximum consideration of US$40.6 million (R755.05 million) .
Deal consideration includes an initial value of $20.6 million and a deferred value ranging from $15 million to $20 million.
Proceeds from the sale will meet Bushveld Minerals’ immediate working capital needs and ensure the company’s ongoing operations.
The company said it has evaluated all financing options, including issuing additional shares.
However, due to its shares trading below par value, the option was not considered viable.
It has been seeking additional financing to pay creditors and maintain sufficient working capital for its operations.
In line with this, SPR has consented to increase the interim working capital line secured against production at the Vanchem plant by a further US$9 million from the initial US$8.1 million.
Bushveld received an initial advance of US$3 million on May 3, 2024. SPR is expected to provide additional advances of US$5 million and US$1 million on May 31 and June 30, 2024, respectively, subject to certain conditions .
Additionally, a payment of US$3.5 million will be made upon closing of the disposition.
The deferred payment will be made quarterly but is subject to a minimum annual payment of $5 million.
Completion of the transaction is dependent on finalizing documentation, obtaining approval from Bushveld shareholders and receiving approval from the Competition Tribunal, expected in late July or early August 2024.
This agreement replaces the previous terms of a sale of a 50% stake in Vanchem.
Bushveld CEO Craig Coltman said: “The extension of the working capital facility provides vital funds to stay in business.
“The proposed sale of Vanchem will allow the group to move forward in a more agile and lean way and help pay our creditors.
“Further details will be provided in due course, but without this funding the company would have no option but to apply for business rescue.”
“Bushveld to offload Vanchem assets to ease financial concerns” was originally created and published by Mining Technologya brand owned by GlobalData.
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