ORION Mine Finance has agreed to refinance and extend $46.9m in debt with Bushveld Minerals paving the way for the recapitalisation of the vanadium miner.
Shares in Bushveld Minerals gained nearly 4% in the first hour’s trade on the London Stock Exchange. The share is 43% weaker year-to-date after failing to stem cash losses.
A key element of the refinancing is the conversion of 10% in maturing convertible debt obligations totalling $4.7m into shares at a new price of three pence per share. The notes were previously priced at 6p/share.
At the lower conversion value, the outstanding loan notes will match a proposed $12.5m equity investment in Bushveld Minerals by Southern Point Resources (SPR), a South African investor that will commit up to $77.5m.
The new loan note agreement, announced Monday, has been extended to a new maturity date of January 31 from a previous maturity date of December 21.
Orion’s refinancing agreement includes a new convertible loan note of $14.1m which represents 30% of the balance of the loan note, maturing in June 2028, and a term loan of $28.1m representing 60% of the balance of the loan notes.
Finally, the refinancing includes a supplementary royalty at not more than 0.264% of Bushveld’s gross revenues and reducing by 80% at the term loan maturity. The refinancing proposal requires the support of Bushveld Minerals shareholders.
Craig Coltman, CEO of Bushveld Minerals said it was “imperative” the firm reach an agreement with Orion. “The restructuring is a key part of our strategy to restore value in the company, along with ensuring Bushveld delivers its operational targets, simplifies its corporate structure and refines its investment proposition,” he said.
Bushveld’s future trading prospects were thrown into doubt earlier this year as the company continued to post cash losses. It reported a cash outflow of $2.7m for the year to June. While this was less than the $7.1m cash outflow in the previous year, cash on hand dwindled to $3.7m. This resulted in the departure of Bushveld’s founding CEO, Fortune Mojapelo amid major shareholder discontent.
As part of its recapitalisation plans, SPR injected R150m in working capital into Bushveld, keeping it liquid in the near-term. The rest of its recapitalisation requires it buying 50% of Bushveld’s Vanchem vanadium plant and 64% of its Mokopane project in Limpopo as well as takong over the marketing of vanadium production.
For his part, Coltman has promised to simplify Bushveld by returning it to its basic proposition of producing vanadium profitably for the carbon steel sector. Under Mojapelo, Bushveld had invested in downstream battery technology companies in an effort to stimulate new demand for the mineral.
On November 20, Bushveld Minerals announced it intended to sell its 25.25% stake in CellCube, an energy storage battery manufacturer.