Bushveld receives initial R150m from Southern Point

Vanadium and energy storage solutions company Bushveld Minerals reported on Tuesday that it had received the R150-million ($8.1-million) in interim working capital from investment fund Southern Point Resources (SPR).

The interim facility will provide the group with additional working capital to fund the ongoing expansion of production at the Vanchem vanadium plant, while the completion of the SPR transactions is under way.

Earlier this month, Bushveld announced a binding term sheet agreement with SPR for a cumulative proposed investment of between $69.5-million and $77.5-million.

In terms of the agreement, SPR proposes to acquire 50% of the shares in Bushveld’s subsidiary that owns the Vanchem plant and its 64% equity interest in its subsidiary that owns the Mokopane project, for about $25-million; an equity investment by SPR of $12.5-million; medium-term trade finance of between $25-million and $30-million in terms of a new marketing and sales arrangement and a potential future commitment by SPR of $7-million to $10-million in Vanchem for the recommissioning of Kiln-1.

The completion of the transactions with SPR, as well as the refinancing of Orion Mine Finance’s convertible loan note, are key to Bushveld’s ability to continue as a going concern.

Bushveld CEO Craig Coltman stated that management was confident that the restructuring of the Orion mine finance convertible loan of $45-million (capital plus interest) would be completed.

“We continue to make progress in respect of the refinancing of the Orion convertible loan note and we are confident that this will be completed before the December 2023 due date. In addition, the proposed SPR transaction will solve many of the balance sheet pressures that have arisen, and on this point, we have now received the $8.1-million working capital funds that form part of the overall proposed transaction,” he said.

Meanwhile, in its six-month results announcement, the company reported that it remained on track to meet the revised 2023 production guidance of between 3 700 mtV and 3 900 mtV, as well as weighted average production cash cost (C1) guidance of between $26.6/kgV and $26.9/kgV (R481/kgV and R487/kgV).

Bushveld’s Vanchem processing facility produced 160 mtV in July and 175 mtV in August this year, 63% higher than the average monthly production of 103 mtV achieved in the first half of this year.

Bushveld’s Vametco mine and processing facility also produced 132 mtV in July, and 215 mtV in August.

"In recent weeks we have announced decisions addressing several of the challenges that were experienced in the first six months of the year and reflected in these financial results,” stated Coltman.

“The improved production at Vanchem, thanks to measures described in the second quarter operational update, tells us that we have a plant that is capable of reaching its full potential. We must now consolidate the improved efficiencies and achieve sustained target growth of 180 mtV per month for Vanchem by the end of this year. With incremental month-to-month improvements, we should be in a position of attaining this by the end of this year,” added Coltman.

FINANCIAL HIGHLIGHTS

Bushveld also reports that the company achieved revenue of $78.4-million for the six months ended June 30 this year, which is higher than the $76.2-million revenue achieved for the same period last year.

The company also reports sales of 2 096 mtV (1 644 mtV for the same period last year), which was supported by higher production of 1 784 mtV (1 641 mtV for the same period last year).

Costs per unit sold, including sustaining capital, was reported as $33.4/kgV, which is down from $37.8/kgV for the same period last year.

Bushveld also reports adjusted earnings before interest, taxes, depreciation and amortisation profit of $10.3-million, as well as an operating profit of $2.1-million.

The company indicates that the company achieved a net loss of $12.5-million, and a free cash outflow of $2.7-million.

Bushveld also reports cash and cash equivalents of $3.7-million, and a net debt of $90.7-million, including a production financing agreement of $35.1-million.