Bushveld Minerals Limited (BMN) Earnings Call Transcript & Summary

Good day, and welcome to the Bushveld Minerals Conference Call. At this time, I'll turn the call over to your host today, Mr. Fortune Mojapelo, CEO. Please go ahead, sir.

Thank you very much. It's a good afternoon to you all, and thank you for joining us for this call. As usual, I have with me today our Group CFO, Tanya Chikanza, who will be supporting me in this call. We are pleased to be announcing today the conclusion of our discussions with Orion and the agreement to refinance the $35 million convertible loan note plus accrued interest of approximately $10 million that was due later this year. As you may well recall the convertible notes, together with the accumulated interest would have come due in November of 2023. As I mentioned in today's announcement, we believe that the new structure removes significant near-term balance sheet pressure and resolves this material liability that became current in 2023. In a nutshell, the approximately $45 million amount or it has been smooth, restructured into 3 key components. The first one being a 3-year term loan totaling $27 million, repayable in escalating capital amounts over a 3-year period, that represents about 60% of the outstanding CLN balance. Then the about 30% of that is being structured into a new convertible loan note totaling $13.5 million with redemption in June 2028 at an exercise -- revised exercise price of 8p. Together with an option are exercisable by Bushveld Minerals to redeem half of that are convertible loan note in 2026. That is the election subject, however, to Orion having the right upon receiving such another redemption notice the right to convert into Bushveld shares at 8p. Attaching to the loan is a supplemental production finance agreement at no more than 0.22% of gross revenue. And this percentage will also reduce by 80% at the maturity of the 3-year term loan. I'm also delighted that as part of the financing -- of the refinancing, the third component, is in the form of Orion converting $4.5 -- approximately $4.5 million of the debt into a Bushveld Minerals shares at $60 per share, which is a significant premium to the prevailing share price. The proposed refinancing supports sustainable growth and cash generation to enhance shareholder value, while providing for a more compelling Bushveld Minerals investment proposition. The new profile, maturity profile, should allow the group to repay the debt from internally generated cash flows in the years ahead as we see the benefit of our recent expansion plans at Vanchem come to fruition. This last week as part of our first quarter update, we highlighted the ongoing stability in our operations, particularly at Vametco and how we are on track to meet annual group production and cost guidance. Vanchem's power curtailment solutions with the local municipality which we announced recently, has so far provided a more reliable feed of electricity contributing to improved operational stability in the months of March and April. This will support a reliable and stable production going forward for Vanchem. In addition, securing third party, low silica or feed for Vanchem will support Vanchem's production plans going forward. As I indicated Vametco continues to perform with a pleasing degree of consistency. Completion of the refinancing announced today is conditional upon other things, shareholder approval, which we will be seeking at this year's Annual General Meeting. And I would encourage our shareholders to vote in favor the refinancing, which we believe to be incredibly value accretive. We are grateful for Orion's continued commitment to this business, which provides further proof of confidence in the development plans that we have for the coming years. In summary, I am confident that today's announcement removes any financing overhang on the company. This, coupled with the focus by management on efficiency and cash generation will facilitate a more compelling investor proposition paving the way to a strengthened equity story and the rating of the company's shares. I should mention also that the -- what we announced today, of course, is subject to the finalization of definitive agreements, which we are confident working with the relationships that we have enjoyed with Orion that has been very collaborative and cooperative that we will be able to get that completed in short order ahead of the Annual General Meeting. Let me just conclude by just commenting very briefly on near-term catalysts. As a business, we've highlighted several priorities that we are solely focused on as a management team. Resolving the pain points associated with the near-term debt of the financing that we're just restructuring was a very critical priority for us as a company. So I'm very pleased that, that particular priority, we have made significant progress in respect of it, which paves the way for us to have a more strengthened balance sheet to support the company's plans going forward. Alongside this, we will continue to focus on our priorities around our operations, particularly ensuring that we met our production and our cost targets and also ensuring that we deliver positive margins from our business and that our operations are cash generative. We also have indicated that we are focused on ensuring that we simplify and we sharpen our investment proposition to the market. And the part of doing that is the carve out of Bushveld Energy that we have communicated to the market in the past. You will recall that we have announced in recent past a transaction to consolidate the shareholding of CellCube and a transaction with Garnet, which is an important part of the Bushveld Energy carve out process that is currently underway. We look forward to providing an update to the market in due course as we continue to advance that particular strategic objective. I want to thank you all for your time to join this call and to discuss this particular announcement that we made today. And I will like to pause now and take your questions. Thank you.

[Operator Instructions] At this stage, I'll have to hand the call back over to Mr. Mojapelo for any additional or closing remarks.

Well, thank you very much. I don't have much more to add, but to thank you all for making the time to listen in on this call. I think that the restructuring that we announced itself is fairly clear, and I certainly do welcome the initial positive response from the market. We do believe that with the restructuring that we've announced we take a significant step forward in our efforts to ensure that Bushveld share price is closer reflective and more reflective of the significant intrinsic value that we believe we have built. And we continue to build going forward as we continue focusing on our strategic objectives and priorities. I certainly look forward to speaking with you in due course as we continue on this pathway. And as we continue to execute on our strategies that we have communicated to the market, I certainly am very optimistic for the future, and I look forward to providing further updates with in due course. Thank you very much for your time.

Thank you very much, sir. Ladies and gentlemen, that will conclude today's conference. Thank for your attendance. You may now disconnect.