Market Abuse Regulation ("MAR") Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. 

28 November 2022

Bushveld Minerals Limited

("Bushveld Minerals" "Bushveld" or the "Company")

Conditional sale of interest in VRFB Holdings Limited to Mustang Energy PLC and amendment to terms of the Mustang Convertible Loan Notes

Bushveld Minerals Limited (AIM: BMN), the integrated primary vanadium producer and energy storage solutions provider, is pleased to announce that Bushveld Energy, its 84%-owned subsidiary, has entered into a conditional agreement to sell its entire 50.5% interest in VRFB Holdings Limited ("VRFB-H") to Mustang Energy PLC ("Mustang").

VRFB-H's principal asset is a 50% interest in Enerox Holdings Limited ("EHL") which in turn holds the entire issued share capital of Enerox GmbH ("Enerox"). Enerox is an Austrian-based vanadium redox flow battery ("VRFB") manufacturer that has invested more than 20 years of research and development into its energy storage system, branded under the name CellCube. Its vanadium-based technology is considered state-of-the-art in the battery market and has already deployed more than 23 MWh via 130 systems across 5 continents. In the preceding 12 months Enerox has announced 5 new orders for 34 MWh, which includes a 16 MWh battery to an Australian based renewable project developer - Enerox's largest battery order to date.

CellCube designs and delivers sustainable and cost-effective energy storage solutions for microgrid and grid scale-applications. The CellCube brand is a leader in the energy storage eco-system and has developed a reputation for client service, system reliability and technical innovation. It has a stack and system production capacity and is focused on large commercial projects using the new generation FB 500-2000 technology.

The consideration for the sale is US$19.4 million, to be converted to GBP[1] and to be satisfied by the proposed issue to Bushveld Energy of 79,353,604 new Mustang Ordinary Shares, priced at 20 pence per share.

As part of the sale, Bushveld Energy will have the right to appoint two directors to the board of Mustang and will enter into a lock-in agreement and relationship agreement, further details of which will be set out in Mustang's forthcoming prospectus.

In addition to the proposed sale, Bushveld Minerals holds US$2.75 million in unsecured convertible loan notes in Mustang which bear 10% interest per annum and convert at an issue price of 17 pence per new Ordinary Share in Mustang (previously 18 pence). The issue of Ordinary Shares in Mustang to Bushveld Energy in relation to the convertible loan notes is conditional upon Mustang completing a reverse takeover. On the assumption that Mustang obtains the relevant approvals from its shareholders, the FCA and the Takeover Panel, Bushveld Minerals and Bushveld Energy will collectively hold 51.5% of Mustang. This will result in Bushveld Minerals having an indirect economic interest of 25.76% in Enerox.

Before the suspension, Mustang was trading at a significant premium to the 17 pence to 20 pence per Mustang share at which, respectively, the conversion of the Convertible Loan Note and the sale of the VRFB-H shares are being concluded.

Related Party Transaction

As Mustang already holds a 22.1% legal and beneficial interest in VRFB-H, a company in which Bushveld Energy has a 50.5% interest. Mustang is deemed to be a related party of Bushveld under the AIM Rules for Companies.

Accordingly, the conditional sale of Bushveld Energy's interest in VRFB-H to Mustang is a related party transaction pursuant to AIM Rule 13.

The directors of Bushveld consider, having consulted with its nominated adviser, that the terms of the sale are fair and reasonable insofar as its shareholders are concerned.

Rationale of the transaction

§ The transaction is an important step in the previously announced process to carve out Bushveld Energy from the Bushveld Minerals Group.  

§ Mustang, will have a dedicated board and management team focused on its success as an energy storage business.

§ The standalone energy storage focused company will be in a better position to attract the appropriate energy-focussed investors and market valuation.

§ The transaction will provide Bushveld Minerals with a controlling interest in Mustang and a shareholding in Enerox, allowing it to retain its vertical integration proposition.

Existing loan notes

Bushveld notes the Mustang announcement today regarding the ongoing review process of its prospectus for the readmission of its shares to trading on the London Stock Exchange. As a result, an agreement has been reached with the 2021 Noteholders and Bushveld Minerals (as the holders of the 2021 Mustang Convertible Loan Notes and the 2022 Mustang Convertible Loan Notes respectively (collectively, the "Convertible Loan Notes")) to extend the maturity date of the Convertible Loan Notes from 28 October 2022 to 31 March 2023 (the "Extended Maturity Date").  

The 2021 Noteholders, Bushveld Minerals and Mustang have also agreed to: (a) amend the conversion price, being the price at which the Convertible Loan Notes are to be converted into ordinary shares of Mustang at the time of Readmission, from 18 pence to 17 pence; and (b) settle all accrued and unpaid interest on the Convertible Loan Notes (together with the accrued interest in respect of the 2022 Convertible Loan Notes) up to (and including) the Extended Maturity Date regardless of Readmission occurring prior to such date.

Mustang has elected to settle the accrued and unpaid interest by the issue of its ordinary shares. Bushveld Minerals now holds a total principal amount of US$2.75 million Convertible Loan Notes (and accrued and unpaid interest thereon together with accrued interest).

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: 

"I am pleased to announce today's transaction, effectively giving Bushveld a majority stake in a London-listed energy storage business. The transaction provides Bushveld Energy access to the capital markets and will allow the company  to achieve a transparent market value and attract specialist investors looking to participate in this exciting growing sector.

From our early days of investigating ways to support the development of VRFBs as a competitive long-duration energy storage ("LDES") solution, Enerox was identified as a leader in the space with a compelling LDES proposition. The company has since gone from strength to strength with over 130 systems now deployed across five continents.

As we have communicated in recent months, we feel this is the right time for this emerging energy storage story to take on a life of its own, while still keeping an interest in the business and most importantly maintaining our vertically integrated business model."

ENDS

Enquiries: [email protected]

ABOUT BUSHVELD MINERALS LIMITED

Bushveld Minerals is a low-cost, vertically integrated primary vanadium producer. It is one of only three operating primary vanadium producers, owning 2 of the world's 4 operating primary vanadium processing facilities. In 2021, the Company produced 3,592 mtV, representing approximately 3% of the global vanadium market. With a diversified vanadium product portfolio serving the needs of the steel, energy and chemical sectors, the Company participates in the entire vanadium value chain through its two main pillars: Bushveld Vanadium, which mines and processes vanadium ore; and Bushveld Energy, an energy storage solutions provider. Bushveld Vanadium is targeting to materially grow its vanadium production and achieve an annualised steady state production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a by the end of 2022. Growth plans to expand to 8,000 mtVp.a. will be pursued, subject to funding and market conditions.

 Bushveld Energy is focused on developing and promoting the role of vanadium in the growing global energy storage market through the advancement of vanadium-based energy storage systems, specifically Vanadium Redox Flow Batteries ("VRFBs")

Detailed information on the Company and progress to date can be accessed on the website www.bushveldminerals.com