Bushveld Minerals PLC (LON:BMN) has knocked down the price it will pay for vanadium group Vanchem by more than a fifth.
Current market conditions were cited as the reason the cost has come down to US$53.5mln from US$68mln, with Bushveld adding that the initial conditions for the transaction have been met.
Under the new terms, US$30mln will be paid in cash with the balance coming from the issue of unsecured convertible loan notes.
Vanadium prices have fallen back recently and the new terms reflect this while affirming the medium to long term vanadium market outlook, the company said in a statement.
Bushveld has a long-term annual production target of more than 8,400mtV (metric tonnes) and ambitions to build a downstream vanadium-based energy storage platform.
Fortune Mojapelo, Bushveld’s chief executive, repeated that acquiring Vanchem takes it a long way towards being a leading low-cost producer of vanadium products.
“With this acquisition, the company will have two quality primary processing assets producing a complementary suite of products, with a four-kiln configuration, that gives it unmatched production flexibility.
"The vanadium chemicals capability will be particularly key as Bushveld grows its exposure to the emerging stationary energy storage industry through vanadium redox flow batteries", he added.
Bushveld has also agreed an early pay-off of the earn-out agreement with Yellow Dragon, the previous owner of vanadium business Vametco.
Two deferred payments of US$600,000 have now been paid and instead of a price based on Vametco’s 2020 earnings, Bushveld will pay Yellow Dragon US$13.5mln now as a final settlement.
Payment will comprise US$3mln in cash and US$10.5mln in Bushveld shares.
Mojapelo added that this deal is the final leg of its balance sheet simplification exercise, which should coincide with the acquisition of Vanchem.
-- adds Yellow Dragon details -