Update on VRFB Holdings Limited (“VRFB-H”) Investment

Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated primary vanadium producer and energy storage solutions provider with ownership of high-grade assets in South Africa, announces amended terms to investment agreement between BMN, VRFB-H Holdings Limited (“VRFB-H”), Bushveld Energy Limited (“BEL”, a 74% owned subsidiary of BMN and the holder of a 50.5% interest in VRFB-H), Acacia Resources Limited (which holds a 27.4% interest in VRFB-H) and Mustang Energy Plc (“Mustang”; “LON: MUST”).

On 27 April 2021, the Company announced an investment by Mustang into VRFB-H to acquire an indirect interest of 11.05 per cent in Enerox GmbH (“Enerox”). Enerox is a Vanadium Redox Flow Battery (“VRFB”) manufacturer providing grid scale and micro-grid energy storage solutions. Mustang invested approximately US$7.5 million to subscribe for a 22.10 per cent interest in VRFB-H (“Mustang Subscription Shares”), to be deployed into Enerox through its holding company, Enerox Holdings Limited (“EHL”). Mustang funded its investment by way of an issue of US$8 million unsecured convertible loan notes (“CLNs”) bearing a 10 per cent coupon to certain investors (“Mustang Capital Raise”).

Post completion of the investment, on 14 July 2021, the Company announced that Garnet Commerce Limited (“Garnet”), a shareholder in Enerox through its holding in EHL, issued a claim form in the High Court of Justice: Business and Property Courts of England and Wales (Chancery Division) against VRFB and EHL (“the Litigation”). Garnet’s claim form seeks declarations against VRFB-H concerning alleged breaches of the joint venture agreement in relation to EHL, in respect of the indirect investment into EHL through VRFB-H by Mustang Energy Plc. The matter is scheduled for trial commencing on 19 January 2022.

The Mustang Capital Raise and the concurrent acquisition by Mustang of shares in the capital of VRFB-H, constitutes a reverse takeover under the Financial Conduct Authority’s Listing Rules and requires the publication of a prospectus. The ongoing uncertainty due to the Litigation precludes Mustang from issuing a prospectus which is a precursor for Mustang’s shares being readmitted to trading on the Standard List of the Main Market of the London Stock Exchange (“Readmission”).

A condition of the CLNs is that if Readmission had not occurred by 31 December 2021 (the “Maturity Date”), Mustang shall have the right, by serving written notice on BMN within 5 Business Days following the Maturity Date (“the Notice Date”), to require that BMN shall, in return for Mustang transferring to BEL all of the Mustang Subscription Shares and payment of a backstop fee, issue to each Noteholder by 28 January 2022, such number of new BMN Shares (at a price equal to the 20 day volume weighted average price of a BMN Share prior to the date of issue, and rounded down to the nearest share) as is equivalent to the par value of the noteholder’s CLNs together with accrued and unpaid interest, and shall procure that such BMN Shares are admitted to trading on the AIM market of the London Stock Exchange plc within five Business Days thereafter.

The parties to the transaction are in discussion and are nearing an agreement to extend the Maturity Date to allow some visibility as to the potential outcome of the VRFB-H litigation. Given these ongoing discussions, BMN and the Mustang have agreed to extend the Notice Date from 5 Business Days to 9 Business Days. Such extension does not affect any of the other provisions applicable to the 27 April 2021 transactional documents or arrangements.

The Company will update the market accordingly when an agreement is finalised between the parties or if those discussions are terminated without agreement being reached.

In the film below, SP Angel Analyst John Meyer highlights the investment case for Bushveld Minerals