Bushveld Minerals: Revised Arrangement on Mustang’s VRFB-H Investment

19th January 2022

Revised Arrangement on the VRFB Holdings Limited (“VRFB-H”) Investment by Mustang Energy Plc (“Mustang Energy”)

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 revised agreement terms regarding Mustang Energy’s acquisition of a 22.10 per cent interest in VRFB-H.

On 27 April 2021, the Company announced an investment by Mustang Energy of approximately US$7.5 million into VRFB-H by subscribing for a 22.10 per cent interest in VRFB-H (“Mustang Subscription Shares”), being an indirect interest of 11.05 per cent in Enerox Holdings Limited (“EHL”) which owns Enerox GmbH (“Enerox”), in terms of an Investment Agreement between VRFB-H, Bushveld Minerals and Mustang Energy (“Investment”). Enerox is a Vanadium Redox Flow Battery manufacturer providing grid scale and micro-grid energy storage solutions. Bushveld Energy Limited (“BEL”) holds a 50.5 per cent shareholding in VRFB-H which in turn holds a 50 per cent shareholding in EHL. BEL[1], is an 84 per cent owned subsidiary of Bushveld Minerals.

Mustang Energy funded the 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 50 per cent shareholder in EHL, issued a claim form in the High Court of Justice: Business and Property Courts of England and Wales (Chancery Division) against VRFB-H and EHL (“the Litigation”). Garnet’s claim form seeks declarations against VRFB-H concerning alleged breaches of the EHL joint venture agreement in respect of the indirect investment into EHL through VRFB-H by Mustang Energy. The matter is scheduled for trial commencing on 19 January 2022.

The Mustang Capital Raise and the concurrent acquisition by Mustang Energy 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, among other things, precludes Mustang Energy from issuing a prospectus which is a precursor for Mustang Energy’s shares being readmitted to trading on the Standard List of the Main Market of the London Stock Exchange (“Readmission”).

A condition of the Investment Agreement is that if Readmission did not occur by 31 December 2021 (the “Maturity Date”), Mustang Energy shall have had the right, by serving written notice on Bushveld Minerals within 5 Business Days following the Maturity Date (“the Notice Date”), to require that Bushveld Minerals shall, in return for Mustang Energy transferring to BEL all of the Mustang Subscription Shares and payment of a backstop fee (“Backstop Fee”):

  • issue to each CLN holder by 28 January 2022 such number of new Bushveld Minerals shares (at a price equal to the 20-day volume weighted average prior to the date of issue, and rounded down to the nearest share) as is equivalent to the par value of the noteholders’ CLNs together with accrued and unpaid interest; and
  • procure that such Bushveld Minerals shares are admitted to trading on the AIM market of the London Stock Exchange plc within five Business Days thereafter (“Backstop”).

As announced on 11 January 2022, the parties to the Investment Agreement and the CLN holders were in discussion to reach agreement to extend the Maturity Date to allow some visibility as to the potential outcome of the Litigation. Given these ongoing discussions, Bushveld Minerals and Mustang Energy agreed to extend the Notice Date to 18 January 2022.

Bushveld Minerals, Mustang Energy and the CLN holders have now agreed to an extension of the Maturity Date to 28 February 2022.

Fortune Mojapelo, Chief Executive of Bushveld Minerals Limited, commented:

“I am pleased we were able to agree on new terms given the unforeseen events that prevented the initial transaction from closing within the original timeframe. The extension of the Maturity Date may also allow some visibility as to the potential outcome of the Litigation.

“It is Bushveld’s continued belief that vanadium redox flow batteries remain a favourable and competitive storage solution option given the metal’s unique characteristics and the development and commercialisation of products, such as those produced by Enerox.”

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