Investment fund SPR GP1 (Southern Point Resources) has signed a binding term sheet to invest $69.5m-$77.5m in Bushveld Minerals, a South Africa-based integrated primary vanadium producer.

According to the terms sheet, an interim working capital facility of $8.1m will be provided to fund the ongoing expansion of production at the Vanchem vanadium processing facility in South Africa.

Through the investment, Southern Point Resources will gain a stake of 50% in Bushveld Minerals’ subsidiary, which owns the Vanchem vanadium plant.

Southern Point Resources will also acquire the vanadium producer’s 64% equity interest in a subsidiary that owns the Mokopane vanadium project located in the Mokopane District of Limpopo Province in South Africa. Both acquisitions will cost approximately $25m for Southern Point Resources.

Bushveld Minerals CEO Craig Coltman said: “Introducing a partner at Vanchem provides a pathway for the Group to increase production beyond the base case and would be value accretive, with synergies arising from Vanchem being able to access a steady supply slag with high vanadium content from the Highveld facility.”

Southern Point Resources will also make a new equity investment of $12.5m in Bushveld Minerals. The latter said that the number of shares to be subscribed will not exceed 29.9% of its ordinary shares of 1p each in issue.

Besides, the commitment will include a new marketing and sales arrangement under which Southern Point Resources will carry out all marketing and sales of products for Bushveld Minerals.

The former will provide a medium-term trade finance working capital facility of nearly $25m-30m to the vanadium producer.

Furthermore, Southern Point Resources plans to make a future investment of $7m-10m in Vanchem towards the recommissioning of Kiln-1 to increase output. This will be contingent upon feasibility studies.

Southern Point Resources stated: “Southern Point is proud to announce this series of collaborative transactions which will enable Bushveld to restructure their current balance sheet and allow all stakeholders to unlock significant benefit from a unique set of underlying assets which have much potential.”