In a recent interview, Bushveld Minerals Limited LON:BMN Chief Executive Officer Fortune Mojapelo discussed their bid for AXS listed Lemur Resources and the convertible loan note for the intended transaction.
“About 2 years ago Bushveld Minerals Limited launched a bid to acquire Lemur, at the time we were trying to acquire 100% of the company, we ended up with about 54%, subsequent to which we have increased our shareholding, to date we sit with about 63% so our interest to consolidate our position in Lemur has always been there.
The proposal to Lemur shareholders, which we think is a fair and attractive proposition, is driven from our point of view by an interest to create better alignment amongst the group’s shareholders. We control 100% of Bushveld Resources which is the platform through which we’re developing our flagship vanadium project. We’ve got Greenhills Resources, a 100% owned subsidiary through which we’re developing our portfolio of 10 assets and if successful, we would like to see ourselves holding 100% of Lemur Resources. That structure in our view provides the perfect alignment within the group’s shareholders.”
Fortune went on to discuss the benefits of Bushveld Minerals’ bid to Lemur’s shareholders and their financing structure.
“This is a cash offer. Lemur’s share price over the last 12 months hasn’t traded very well. Since we closed our bid, the last time we did it, the share price has gone south over that period of time and not for any lack of performance by the management. One of the drivers if the liquidity of the share practically disappeared and that was on the back of Bushveld Minerals becoming a controlling shareholder. With this offer, we’re offering Lemur shareholders who currently have very limited liquidity in their share, we’re offering them cash. This is being offered at a premium to the 12 month trading averages and we think that’s attractive. The other thing to consider here is that there isn’t an alternative proposal on the table. We don’t think that any alternative proposal is likely in the near future and we see this offer we’ve put on the table as the best offer there is for the shareholders.
The first time we offered, we did a share based offer but we think that’s one of the reasons we couldn’t get 100%. The reality is that you’ve got quite a number of shareholders in Australia who are not familiar with AIM and how AIM operates and AIM operates quite different to ASX. Then you have to deal with issues of relative valuation. What is the value of a Bushveld share compared with the value of a Lemur share? So therefore, what is the right ratio that you provide? On top of that, with the regulatory requirements in terms of the bid process, we think that a cash based offer is the most straight forward, there’s no debating what the value of what’s being offered on the table, 6 cents per share is 6 cents per share, and it’s a lot more straight forward. For Australian shareholders who might have concerns about getting onto AIM and operating in an AIM environment, this proposal gets around all of those issues.
As this is a cash offer, we needed to make sure we could finance this and we’re financing it through this facility with Riveridge which is an existing shareholder with Bushveld Minerals. We’ve entered into a transaction where we borrow £2.6 million for the purpose of executing and completing this transaction. The terms we think are attractive on a short term basis. What’s also very attractive about the financing structure we’ve got is the comfort ability we’ve got. We hope that Riveridge, in time, will convert that loan into shares and we’ve got an 8p conversion price which is an attractive one for us. By doing it that way, we believe that a completion of this bid and the success of this bid will see the company share price rerate significantly. We have a project, were completing our pre-feasibility study and with a successful completion of the bid for Lemur, we think that the company is in a much better footing and we expect to see a response in terms of our share price and we think that’ll provide a sufficient incentive for someone like Riveridge to hopefully convert and if they do that, the advantage of course is that the cash resources within the group are preserved as opposed to some of it being used to repay the facility.”
