Bushveld Minerals to sell Vanchem unit to ease financial woes
Vanadium producer Bushveld Minerals (LON: BMN) will sell its Vanchem processing plant in South Africa to Southern Point Resources Fund (SPR) for up to $40.6 million, in a bet to ease financial concerns.
The transaction comprises an initial consideration of $20.6 million and a deferred consideration of between $15 million and $20 million.
By divesting the asset, which is conditional on shareholder approval, Bushveld hopes to secure additional funding to pay creditors and focus on its core business operations.
To ensure that Bushveld has sufficient working capital to fund ongoing operations, the company obtained a commitment from SPR to increase the funding available through the interim working capital facility secured against production at the Vanchem plant by a further $9 million.
“Fortunately, our turnaround at Vanchem has allowed us to achieve meaningful value for this asset, which we are able to monetize over a short space of time and focus on getting the Vametco plant and its long-life mine into an efficient, sustainable, cash-producing position,” chief executive Craig Coltman said in the statement.
“Further details will be provided in due course but absent this funding the company would have had no option but to apply for business rescue,” Coltan warned.
The company has received an initial $3 million as part of Southern Point Resources’ increased working capital facility, with further conditional advances expected.
Bushveld acquired the Vanchem plant in Mpumalanga in 2019. The company’s other significant operation, Vametco, is located in the country’s North West province.
