Bushveld Minerals Limited (LON:BMN) has secured the final funding needed to support its acquisition of a 78.8% stake in Strategic Minerals Corporation from Evraz Group.
The South Africa-focused miner’s wholly-owned Bushveld Vametco Limited has agreed a bridge loan facility of up to US$11mln with Barack Fund SPC Limited to fund the acquisition.
The Barack financing also includes an inventory facility of up to US$7mln to Strategic Minerals subsidiary, Evraz Vametco Alloys Proprietary Limited. The facility will fund Vametco's inventory of finished NitrovanTM , a vanadium-nitrogen product, ready for distribution to customers.
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Bushveld has also secured financing from Wogen Resources Limited to help buy the stake in Strategic Minerals, which owns the Vametco vanadium mine in South Africa.
The financing comprises a US$3.0mln product prepayment as part of a debt package for the acquisition and inventory and receivable funds of US$6.0 million to support the operations of newly acquired Vametco Alloys Limited.
Bushveld said the Barack and Wogen financial ensures that it can complete the acquisition in “a manner consistent with its stated aim to minimise dilution to its shareholders, while simultaneously ensuring that, in addition to cash resources it holds, Vametco has working capital financing of up to US$13mln”.
Chief executive of Bushveld, Fortune Mojapelo said: "We are pleased to partner with Barak to assist with the funding of the acquisition. This will help unlock the cash flows of the operations of Vametco through working capital financing focused on the finished goods inventory.
“The Barak financing completes the funding package for the acquisition of Strategic Minerals whilst providing additional cash resources to the operation being acquired.”
The group agreed to buy Strategic Minerals from Evraz last year for US$17.2mln, saying it expects the deal to be complete at the end of March. The deal has secured unconditional approval from the Competition Commission.
"We look forward to working together with Barak, in addition to Wogen Resources Limited, as we leverage the production platform of Vametco to build a deeply integrated vanadium platform,” Mojapelo added.