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Has anyone else come across Bill Chipanes letter to BMN? It's damning for sure. Alfa posted it on 1 of the telegram chats. Alot the BOD and Craig have to answer. Il be voting against this deal. Unless BMN reply with a valid response... However I can't see they can refute what he has said especially that another bid at many multiples of the current SP was made.
Here's a link for the letter that I have been sent.
The usual 3Ws followed by .transfernow.n3t/dl/20240518ISeOQkb4
Change the 3 in n3t to an e to give net.
Or less see if it works in full
www.transfernow.net/dl/20240518ISeOQkb4
Oops meant let's see... It works. Pretty damning of the board with the biggest question for me being why was the bid at many multiples not disclosed to the market!!!
This confirms what I thought all along.. Coltman is a stooge put in place to steal assets.
Alfa if you are listening.. Follow the trail... DeBeers and their owners.. I know most won't understand.. Faramog being the most obvious.. but whats gonna happen.. is gonna happen
After reading that letter........what a sh*tshow......nothing surprises me any more with this company and the complete fckwits that have been running it absolute knts
Thanks 0308966. Well worth a read.
Between this and Portillion's letter, it is pretty damning of Craig and the BOD, making them look like SPR stooges or just outright incompetent. Glad I'm not alone in my thinking.
I dont usually bother but I will be voting against the deal. A token gesture perhaps, but it will help BVI and Portillion with needed numbers to counter SPR. You should consider voting (against) too. BMN's future is f@cked on this path.
Any chance of a repost of that? Link not working for me. Thanks!
@ reteps - Its a bit lengthy. Try this:-
www.transfernow.net/dl/20240518ISeOQkb4
- or, Highlight the link and right click to bring up a list. Click 'go to www...' not search,. Or copy and paste it into your address bar. Click download once there.
The Board of Directors
Bushveld Minerals Limited
Dear Sirs
18 May 2024
Oak House
Hirzel Street
St Peter Port
Guernsey
GY1 3RH
RE: Intention To Vote Against the Proposed Disposal of 100% Of Bushveld Vanchem at the Upcoming General Meeting
1. INTRODUCTION
The recently announced proposed transaction in terms of which Southern Point Resources (“SPR”) will conditionally acquire 100% of the issued shares of Bushveld Vanchem (“Vanchem”) from Bushveld Minerals Limited (“Bushveld” or the “Company”) bears reference. The transaction is proposed to replace a previous transaction in terms of which SPR would have acquired a 50% shareholding in Vanchem (the “50% Vanchem sale”) for a sum of US$21.6m.
The new transaction, the Vanchem disposal, is subject to approval by shareholders of the Company at a general meeting set to take place on 31 May 2024. Like the 50% Vanchem transaction, the proposed Vanchem disposal is also subject to approval by the competition authorities in South Africa.
Business Ventures Investments 973 Pty Ltd and Business Ventures Investments 1183 (Pty) Ltd (hereinafter referred collectively as “BVI”) as major shareholders of the Company intend to vote against the proposed transaction. This open letter outlines BVI’s rationale for objecting to the proposed Vanchem disposal.
Collectively BVI held 13% of Bushveld Minerals prior to the improper issuance of 14.4% shares to SPR following the equity subscription for shares in Bushveld Minerals in December 2023. The issuance of shares to SPR and the ability of the SPR shares to be voted at the upcoming general meeting are subject of a complaint laid by BVI with AIM Regulation and with the South African Reserve Bank on the basis that pending SARB approval (a) the US$12.5m loan payment by SPR to the Company cannot be attributed to the subscription as doing so would contravene South African exchange control regulations; and (b) the shares cannot be considered paid up and thus their issuance contravenes AIM Rules and the Company’s articles.
BVI’s rationale for its intention to vote against the proposed Vanchem disposal is described in more detail below. It can be summarized as follows:
(a) The proposed Vanchem disposal does not give Bushveld any additional cash in the near future than the original 50% Vanchem sale;
(b) The proposed Vanchem disposal is irrational and unreasonable in the context of a pending completion of the sale of 50%, whose only remaining condition precedent for completion is approval of the transaction by competition authorities. Despite its negligent handling, the approval could be finalized within weeks ensuring that the Company receives asset sale cash proceeds of ~US$17m.
(c) The proposed Vanchem disposal removes from Bushveld a key growth asset which is key to lowering
The Company’s unit costs while leaving Vametco and therefore Bushveld shareholders saddled with the debt incurred to acquire and refurbish Vanchem in the first place while there appears no effort made to address the recoverability of the debt from Vanchem, a Vanchem Loan governed by an existing loan agreement between Vametco and Vanchem.
(d) The financial consequences of the Vanchem disposal outlined in the Circular are selective and do not present a complete picture for shareholders to vote with.
(e) There are better alternatives that could have been pursued and were likely not. Even then, at this point, there is a better solution that preserves value for Bushveld shareholders and is a win-win for Bushveld shareholders, SPR and Orion Mine Finance.
2. INTENTION TO VOTE AGAINST VANCHEM DISPOSAL
We outline below, the basis for objecting to the proposed Vanchem disposal.
2.1. The proposed Vanchem disposal does not give Bushveld Minerals more cash than expected under the 50% Vanchem sale
A comparison of the proposed Vanchem disposal and the sale of 50% of Vanchem is summarized below:
Under the transaction announced on 20 November 2023:
• Bushveld sells 50% of Vanchem for US$21.6m, which together with the US$3.4m payable on sale of Mokopane would see the Company receive US$25m in total.
• The Company has received US$8.1m as a working capital loan. In spite of SPR’s commitment per the “Definitive sales and marketing agreement signed with Southern Point Resources” and announced on 15 December 2023 to “provide Bushveld with a provisional working capital facility of US$25-30 million, to replace the existing working capital facilities”, it is likely the US$8.1m will be set off against the US$25m, meaning that the Company is due a net US$17m from SPR upon completion of the 50% transaction.
Under the proposed new Vanchem disposal transaction:
• The Company receives interim financing of up to US$9m between 30 April and 30 June (US$3m paid already on 3 May) and an additional US$3.5m upon the closing of the Vanchem disposal, implying a total US$12.5m.
• Assuming that the sale of the Mokopane project remains in place that payment of ~US$3.7m would be payable also upon completion of the Mokopane disposal.
• The total cash receipt in this instance is US$16.2m. The remaining consideration of US$15m-US$20m for the second 50% share of Vanchem is then payable over three years subject to free cash flow performance of Vanchem.
• Thus, under the original 50% transaction the Company would, by end of June or July at the latest, have received US$17m compared with the US$16.2m payable under the new Vanchem disposal.
• The only benefit to the Company it would appear is that the Company receives an interim payment of up to US$8m by the end of May or US$9m by the end of June and rids itself of cash commitments for the year (including outstanding creditor payments and sustaining capital commitments). In return for this, the board conclude
2.2.
The handling of the competition commission approval for the 50% Vanchem sale has been negligent and resulted in avoidable delays in completing the transaction. This negligence notwithstanding, BVI believes this approval can still be secured imminently and remains the best path way forward.
BVI notes and agrees with the concerns raised by Portillion in its public letter to the board, quoted below:
1. Your announcement of 20 November states the acquisition of 50% of Vanchem to be conditional on the approval of the transaction by the Competition Tribunal, and not the Competition Commission. which would suggest that you ought to have known that this transaction would be treated as a large merger requiring Competition Tribunal rather than just the Competition Commission approval. For clarity, the difference between the two is that an intermediate merger would be within the remit of the Competition Commission to approve while with a large merger the Commission makes a recommendation to a body called the Competition Tribunal for final approval. Your management should know this and given the importance of the transaction one would have expected you to be more proactive in securing the required approvals from the competition authorities.
2. Your response lacks important specifics. Portillion understands that the competition papers were only filed 6 months after the SPR transaction was first announced and more than 3 months after the definitive agreements for the transaction were signed in November 2023? Would the company please confirm specifically,
a) When the competition analysis to determine whether the transaction is a large or an intermediate merger was conducted?
b) When the company was informed about the transaction being a large merger?
c) When the competition approval papers were first filed?
d) Why the November announcement referenced Competition Tribunal approval rather than Competition
Commission?
e) When did the company last follow up with the Competition authorities to ascertain the status of the
application?
f) What was the status of the competition approval process when the company determined to enter into
the revised SPR transaction, if the company did attempt to ascertain this?
3. The involvement by the Department of Trade and Industry is neither an excuse for the management of the
transaction process, nor a material factor in the delays in getting this approval process completed on time. Can the company confirm if it has in fact engaged with the DTI at all?
An application by BVI, in terms of the Public Access to Information Act (“PAIA”) will provide the specific answers to the above listed questions and establish the validity or (lack thereof) of BVI’s concerns that the process is potentially being manipulatively delayed to drive the Company to distress, thereby creating a pretext for the proposed revised Vanchem disposal.
BVI believes that a focus on this would see the competition approval for the 50% Vanche
There are better value-accretive alternatives.
The board states in the Circular that:
“The Company has explored various available funding options, including the issue of further equity. However, as a result of the Company’s share price trading below par value this was not a viable option within the required timeframe. Accordingly, the Board has determined that in order for the Company to continue as a going concern, having consulted with certain key stakeholders, the only viable option to bring in immediate funds is through an increased working capital facility with SPR and to sell its remaining interest in Vanchem on the proposed terms...”
BVI believe that there are better, more value accretive alternatives than the proposed Vanchem disposal. As described above the proposed disposal does not give additional cash to the Company than the 50% disposal over the next 8 weeks. Expediting the completion of the 50% sale together with the proposed additional Orion funding, along with potential additional equity contributions by the Company’s shareholders is far more preferable and doable.
Furthermore, BVI understands that the Company has in the past 12 months received more than one approach for the entire business which were at values that are many multiples above the Company’s value then and now. Pursuit of the shareholders’ best interests would have required that the Board at a minimum present such offers to shareholders for a decision.
3. ALTERNATIVE PROPOSAL
In the current context, BVI still believes that there is a better funding solution and proposes one below. This entails a plan that creates a net positive cash impact of >US$30m, without departing from the original sale of 50% of Vanchem, thereby preserving the production growth and unit cost reduction proposition of Vanchem. Furthermore, it maintains the inter-company debt between Vametco and Vanchem and ensures that Bushveld shareholders are not left carrying the burden of debt acquired for the acquisition and refurbishment of Vanchem. The plan is summarised below:
a) A short-term interim financing of US$5m – this ought to have been an interim payment by SPR pending the completion of the 50% Vanchem sale, which BVI believe is imminent, particularly at the point the Company agreed to extend the Vanchem long stop date from Q1 2024 following the inexplicably delayed Competition Commission submission.
b) Completion by no later than 15 June 2024, of the Vanchem 50% sale to receive total of US$17m outstanding from SPR in respect of which SPR has a legal obligation.
c) BVI hopes that under those circumstances, Orion should continue its proposed additional US$10m in financing as communicated in the Circular as well as a deferment of the US$7m loan repayment (due in June 2024) by at least 12 months along with the rest of the repayment instalments.
d) Acacia Resources Limited has offered to Orion, SPR, BVI and the Company that under those circumstances to complete its subscriptio
CONCLUSION
BVI believes that the proposed Vanchem transaction gifts SPR an attractive growth asset (that is finally showing results) while Bushveld retains substantial debt associated with Vanchem acquisition and refurbishment. Vametco is a tier one vanadium asset but does not have meaningful near-term growth prospects to sustain this debt level.
The Vanchem disposal is presented as being predicated on delays in getting competition approval for the 50% Vanchem sale. It offers no additional cash to the Company in the short term other than supposedly solving a ~2-months cash crunch that has been caused by the entirely avoidable delays in securing Competition Commission approval for the 50% Vanchem sale. It thus rewards, with a free option on an additional 50% of Vanchem - the same SPR that has created the cash crunch in the first place - rather than hold it accountable to fulfil its obligations under the 50% Vanchem sale.
As indicated above, the Competition Commission approval for the 50% Vanchem transaction is achievable in weeks. This should be the focus of everyone to secure the release of US$17m (less the US$3m received in early May). This alongside the potential US$10m investment by Orion, alongside a potential US$5m investment by Bushveld shareholders and/ or a strategic third party, will ensure the Company a strengthened balance sheet, while retaining exposure to the Vanchem volume growth and its contribution to lowering costs alongside other cost-lowering initiatives of the Company.
It is essential we all work with the Company to find an agreeable solution that is in the best interest of all shareholders. The above proposed approach is sensible and reasonable and win-win for everyone. We hope this is evident to all concerned. In the absence of any changes to the proposed Vanchem disposal, BVI will vote against this transaction and immediately commence its own processes for recourse. This includes (but is not limited) to application for access to information under the South African PAIA Act to gain access to the records of the competition approval process for the 50% Vanchem transaction, which BVI are confident will lay bare the manipulation of this process.
Finally, having attempted to address the issues raised in this letter with you for weeks now and considering the short timeframes that you have set for the upcoming General Meeting, we have made the decision to issue this letter to you as an open letter in the interests of transparency on the issues BVI has raised, which issues we believe are of interest to all shareholders.
Thanks for sharing Lindon.
If, as BVI claim, the proposed deal provides no additional cash, then why does Mr Sattar feel that the responsible action is to vote for it?
He thinks that he can flog some of his shares back to PI's at slightly higher than it is now, should the deal get passed. He cannot but suspect that SPR will never pay back the £40M loan that Vametco made to Vanchem to refurbish it and thus BMN will be left with a fraction of its operating assets and all the Orion debt, giving it no long term chance of survival. He's just after a quick out.
And a not so subtle ramp of saying 10p is possible
Re proposed deal and "why does Mr Sattar feel that the responsible action is to vote for it?"
Does he? The following implies he does not.
https://www.portillioncapital.co.uk/Portillionletter-BMN-06-05-24.pdf
See last paragraph
"Portillion is disappointed with the transaction as announced today and the way management have communicated with shareholders and is inclined not to support it when presented
to shareholders at the general meeting."
Curiously the implied date of the document pre dates the announced date of the relevant RNS.
Hxulcolrdoh, I was referring to his more recent post on X, as posted by Lindon on 19th May. Here it is again:
https://x.com/kamsattar/status/1792086628971708527?s=48&t=tT-u2maftvtvfGWS_76-YQ
Anyone know what’s going on with Largo? Share price is breaking out.
It moves with the nasdaq and nasdaq just broke an all time high.
It's certainly not performance related - they just announced a $13m loss for Q1 with V now 10% lower than their average sales price in Q1 so heading for an even bigger loss in Q2... but they remain solvent and ready to benefit when V does eventually turn.
Ah yes, a rising tide lifts all boats…well, perhaps not all, and especially not the ones I’m invested in.
Thanks for that, Lindon.
Protests at the Rhovan mine are increasing EU prices, per Metis.