Shares of Bushveld Minerals Limited (LON:BMN) have resumed trading following news that it has secured US$5.2 mln of financing to complete the first phase of the acquisition of Strategic Minerals Corporation from Russian major Evraz Group (LON:EVR).
Strategic Minerals is the owner of the Vametco vanadium mine and plant in South Africa, and as it turns Bushveld at a stroke into a producer, the acquisition is likely to be transformative.
However, partly in order to avoid reverse takeover rules on London’s Aim market, Bushveld will partner with private South African vehicle Yellow Dragon in the financing of phase one of the acquisition.
Under the terms of this partnership will retain 45% of BVL, a special purpose vehicle established to act as a holding company for Strategic Minerals, while Yellow Dragon will hold the other 55%.
BVL will be financed via loans in proportion to the parties’ interest in it, such that Bushveld will provide US$2.33 mln and Yellow Dragon US$4.7 mln.
Bushveld’s portion will be sourced via a placing of just over 98 mln new shares with institutional investors at 1.8p per share to raise £1.7 mln, led by a subscription from Yellow Dragon for US$1.3 mln.
In addition one warrant will be granted for every two shares, exercisable at 2.4p.
On completion of this phase of the funding, BVL will have an effective interest in Strategic Minerals of 23%.
This will increase to 78.8% on completion of phase two of the transaction, which is worth US$12.5 mln.