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Faramog, for a profitable and producing business to be below book value makes no sense. So from a book value if we assume the historic cost is below current market rates but in the event of a fire sale you don't get market rates then book value probably is around market value so 40% upside i.e. a 10p share price.
From an earnings valuation point of view - the better perspective as BMN isn't being sold off, far from it. The Price Earnings ratio is an estimated 2022 PE ratio of 5 and 2023 PE ratio of around 2.2 at current prices is clearly obscenely cheap. So fair value would be a PE of around 9 (is the average for the mining peer group) suggesting we arrive at a target share price of 31p - which is SP Angel's estimate too. ARC's estimate of 20p only looks at 2022 and doesn't attempt to peer into 2023.
We've seen progress at BMN so it is reasonable to assume that the projections are possible - especially projecting from the current quarter or even extrapolating the Q3 2021->Q1 2022. That's before any upside from VRFBs which many large names like Siemens are now getting behind. If FeV pricing returns to 2018 levels and BMN production expansion remains on track and a little optimism returns then 50p+ is absolutely possible here (again applying a forward PE of 9).
That makes it a future 7+ bagger. Hope that helps. And a mere 2 bagger if not!
GLA.
so Agricore .. that 30% discount to NAV .. where do you expect a faire valuation of 'just the mining' side would be then ?
Thanks for info Agricore. Compare that post with the trolls and hajones (who's track record points to him being a complete cretin).
Agricore
I have been studying the financials in detail and have come to much the same conclusions as you. This looks great value sub 10p
Have read the accounts and compared the 2021 results to the brokers estimates (essential to establish which brokers are trustworthy :) )
My advice would be to chuck the H1 2021 accounts in the bin. You already know how dreadful they were. The 2021 results are only meaningful if you deduct the interims out (H1 2021) and instead double the H2 to understand run rate and trajectory. It is very illuminating. It gives me expectation that the 2022 PBT forecasts of $7m (SP Angel) - $14m (ARC) are perfectly achievable - in fact we will do better. From the Q1 update we know too that we are about 30% ahead ($40-$47/Kg FeV) on estimated price and just under 10% the run rate for 2022 production (but that's to be expected because of Kiln3 coming on line will mean H2 production is higher). Q2 FeV pricing is a little lower but around $39 by my estimation (so again ahead of SP and ARC's estimates). We don't yet know Q2 production but we know - at least - there's no RNS to tell us of issues.
Anyway, I've seen other people's estimates of $30-50m "profit" for 2022. I can only assume they are talking about EBITDA which in my view is not helpful (since the "I" and "DA" bits of EBITDA are substantial at Bushveld :) )
Bushveld Energy being spun out. I'm happy about that. We will be able to raise capital to fund it while retaining a stake. There are 3 benefits for BMN shareholders: 1. A smaller slice of a larger pie is usually worth it in business. 2. Bushveld Energy drives demand for vanadium so is a win-win for BMN. 3. Assuming it is sufficiently capitalised it takes the capital funding away from BMN. If you have read my past posts I was extremely negative about the capital being poured into Bushveld Energy in 2020 and early 2021 without any kind of accountability. Later revelations about appointing a consultant there justified my criticism I feel.
Going concern - has anyone read this? The Directors and the Auditors are happy even under stress tests that BMN is sufficiently liquid. For the non-accountants reading this think about the aircraft have reached sufficient speed to leave the runway before you run out of tarmac. I think the fact that the market hasn't seen this as an extremely positive aspect to the situation reflects the extreme pessimism.
So to the real kicker. Has anyone actually compared the current market cap versus the net assets? My calculations show that you can buy shares in BMN at a *30% discount to net assets*. $150m market cap is around $105m. For a business that has a (proven) trajectory of increasing profitability (I appreciate the 2021 and 2020 accounts show heavy losses but these are irrelevant to extrapolate the future - the trajectory has changed). It is crazily cheap - if you bought it up and shut the whole thing down you'd make nearly 50% profit on the book value of the assets.
All in all, I'm happy with the 2021 results but only because I've not read them at face value, and picked out what I believe to be key points.