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Fascinating read this topic!
Well done all :)
Have a good weekend.
Bassguy, Sanchez, Libero.
Great replies and I respect your points of view. A good debate topic and a nice example of the board being used well here.
I'm sure we will each be correct in some ways and wrong in others.
"You really have to be thinking long term in this one to reap the real rewards"
This is very true and also the reason why there is so much discontent/disbelief around BMN. The project has always been a long term one but we are not seeing incremental improvement in the value as things develop. When I first invested 3 years ago everything was imminent, the price will rerate soon, coiled spring, cheap as chips, just hold etc etc yet despite all the progress we are still below 20p and I and many others are underwater. The question the market is waiting on I think is "how long" and maybe even "show me the money" as thus far it has just not believed in BMN. Right now everyone is saying the same as three years ago. I really think/hope this time it is different and we are on the cusp but I hope any progress is presented so the market can understand and attribute value so everyone can benefit finally. I think JSE has always been an integral part of this and "when the time is right" has a certain meaning which does not actually refer to current share holders needs.
Whatever happens I will be a BMN holder for many years but like NiNvestor I am not sure Eskom tenders will see an instant significant rerate unless the market knows how to value the new business won. This is where the board will really need to engage with the investment community imo.
Great to 're China prices now $35.25!!! Even without Eskom we should do well long term (hopefully also very short term) :)
I know that the Eskom News is never going to front page news here in the UK, but it will still be huge news for those interested or invested in the sector of energy storage, and so I honestly believe you’re underestimating the significance it will have.
Having said that, in an ideal world, this would happen:
- Lemur disposal RNS
- Rebrand RNS into “one single entity organisation” (this is a quote from an internal doc shared online)
- Dual list on JSE and move to LSE Main Market
- New Institutional investors buy in, cos there’s no longer any coal, or cos they’re South African focused IIs
- Eskom news RNS
- Electrolyte Plant construction commencement RNS
Meanwhile Vanadium prices reach $45kgV
One can dream : )
You really don't have to just think long term at all to see very strong returns. I strongly disagree with that outlook.
Firstly in the very short term we are demonstrably undervalued against banked V price rises.
Secondly, if V prices keep going up to $45 BMN is a cash monster, hits the sweet spot for FCF and VRFB and will be getting towards numbers comparable with 2018 - This would mean a further very substantial rerate in a pretty short timeframe.
Thrirdly, we should then be capable of approaching 6000MTV by next year - and with some momentum in our newsflow and prices holding at decent levels this year, combined with all the progress that has been made, we will be an entirely different proposition again SP wise.
People would do well to remember BMN is a different animal to 2018. And that progress has never been recognised in an appreciating market.
Rising prices will change all that.
I agree that not being involved with Eskom shouldn't change the share price; it's going to be announced in stages and wouldn't be headline news in the UK, other items such as Electrolyte Plant progress and the rising Vanadium price would offset each announcement that doesn't include Bushveld.
I'm not sure I agree that positive Eskom news would re-rate BMN either though. This is a really volatile share in a poorly regulated market; if Eskom news landed at 7am it would not surprise me to see us open +30% and finish in the red. Equally; the MMs might see it fit to designate us a new P/E ratio by themselves and we never see sub 20p again.
The product of my ramblings is basically the same old shayte: You really have to be thinking long term in this one to reap the real rewards. Good weekend all.
BBN, thanks for another great post.
This is precisely what I think too.
" [All the] various VRFB/energy storage angles.... None of that is priced into my very crude comparison. Right now they carry next to zero value but have the ability to act as substantial triggers, by demonstrating BMN is a green tech/transition company."
I believe that the BE/ non-mining side of Bushveld is valued at ZERO.
So I feel if we were not to do well with the Eskom contracts, I'd be disappointed, but I wouldn't expect the share price to fall because there's no expectation priced in, and - based on the mining business alone - this is already incredibly undervalued, and that will not change.
Whereas if we're successful with the Eskom contracts then it would come as a huge surprise to the market and cause us to re-rate immediately.
And I believe that re-rating could then continue if Bushveld is then seen as a Green Technology company as a result of the win.
Hence why I believe we could see share prices beyond our most optimistic dreams if we are successful in winning the Eskom contracts.
It's also why I believe the most significant thing about the Eskom contracts will be proof of concept for the Green side of the BMN. Not necessarily the revenues involved / Bushveld's slice of the pie.
Very exciting times ahead : )
If I ever come across another Fizzy Top Tip I'll be sure to do the exact opposite. Moron.
@Fizzydrink we are hopefully not judging the success of our company on the failings of others, merely enquiring about their Lom. Largo are a well run mine with good production, profits etc. one that I really hope we will surpass in due time, but we do have some way to go just yet. I am positive on our future success at the moment, FM has and is doing tremendously well and I believe we will reap the rewards of being in here soon.
Quite astonishing really when you look how many years supply we’ve got left at brits alone.
I suspect any new deposits will increase production costs while we know from FM the production cost will reduce as production increases.
Sorry HaleSpur our posts crossed.
Reports on Largo last year were that their LOM on current V205 reserves was 8 years.
Expansion has been talked about, but at what lenght of time, grade cut off and at a what cost is unknown.
Largo - under 8 years life of mine now. If they can investigate satellite deposits they can increase another 12 years.
We just do not know what the future holds there.
Fizz unfortunately I have to disagree. You need to be aware of all the facts. If Largo has only x amount of years left in its mine then this will have been discounted in its shareprice- after all would you buy into a company that would not be around in a few time due to future supply issues? But this I’m trying to clarify.
It’ll cost Largo far m0re to expand than BMN as Bushveld already have the infrastructure in place, it just needs refurbishment. Once that refurb is done then maybe a another kiln at Vametco and following on from that Mokopane. By that time we’ll be producing 25,000 tonnes a year! Probably cost about 500 million dollars all told including a few more electrolyte plants but you’ll be talking about a company worth many billions of dollars. BMN have the proven reserves where Largo are just saying that they have room for expansion. Till that is confirmed I would suggest Largo should be worth a lot less than BMN.
Gambit, never judge the success of your company on the failings or limitations of others. It can help give a competitive advantage but its not a recipe for success.
Look at the fundimentals or limitations within is fizzys top tip.
Hi BBN one other major point that is seriously worth considering when mentioning Largo is “ how many years it has left of actual ore supply compared to Bushveld “ I am not familiar how many years that is but a few members on here have said it’s not very long at all? Could someone more Knowledgeable on the subject please clarify this ?
Apologies, I got interrupted before I could add/reiterate, what are for me, a couple of important points.
Whether we like it or not, BMN has got to start delivering on their guidance. As i stated earlier, I got a clear message from FM in the Q4 analysts webinar, that this was something he was acutely aware of, given it was he that brought it up.
There was also a clear indication (when encouraged), that Vametco may well deliver additional output, post the 35 day shutdown.
Despite attempting to make a comparison, no 2 companies are the same, especially when traded on different exchanges. Each has its history, its geography etc etc and we are only talking about a share price moment in time, which alters day by day.
What is absolutely an advantage for BMN, is if they can start to demonstrate their ability to meet guidance, then the next phase of expansion, can be far more readily accepted.
In addition, Largo, whilst expanding again this year, is running out of leg room on their plant, without adding more capacity elsewhere.
BMN don't have that problem. They have a number of stages still to come, which can eventually double their production capacity. A belief that they can achieve it + a clear path towards it, can also add greatly to the valuation.
In addition to all of the above, are the various VRFB/energy storage angles, that BMN potentially has ahead of it. None of that is priced into my very crude comparison. Right now they carry next to zero value but have the ability to act as substantial triggers, by demonstrating BMN is a green tech/transition company.
Finally, what Largo demonstrates, is that an expanded trustworthy vanadium production profile, can allow investors to include much of the future value, in the share price, well before it becomes a reality.
So that (very crude) 45p like for like comparison, at c. $40 FeV, should really be a base case, based purely on a mining business, reacting to an improving vanadium price market and being loved just as much as Largo.
Have a lovely weekend everyone.
I've recently had an extensive look at Largo Resources and as always, its a very complicated exercise, attempting to define what Largo is and what ultimately, BMN is, can and will be.
In a nutshell, I have Largo at EV valuation of c. £600m, whilst BMN is running at c. £260m, when the Orion CLNs are fully included.
So for me that's c. 130% difference in valuation, not 200% as you have stated.
A review of the accounts for Largo demonstrates, that in the first 9 months of 2020, despite what Largo advertise in their quarterly updates, their break even was around $5.40 per lb V205.
In 2021, Largo is signalling a 20% increase in production, to 12,250t V205.
At the current c. $7 per lb V205 price, that should deliver Largo c. $54m (£38m) in pre-tax profits, when one takes into accounts reduced costs from the larger production profile. (12,250t v 10,260t sales in 2020).
In very simplistic terms, I have BMN achieving roughly the same, when/if the V price hits $40 per kg.
This is based on my estimate of $27.50 per kg total cash cost and 4,225 mtV produced/sold.
However, what we mustn't lose sight of, is the fact that Largo have regularly hit their production guidance, where as BMN, are yet to do so.
In their defense, BMN bought ageing brownfield assets, which have required lengthy refurbishment, whilst Largo built a far more reliable new plant from scratch.
That said, this is the year that BMN needs to start demonstrating that they can do what they say they can.
This is why FM's recognition of this fact and explanation that in 2021, the BOD want to under promise and over achieve, was a critical point in proceedings and something I highlighted at the time.
Personally, I genuinely believe that BMN are finally playing it safe in 2021 and that said guidance is the minimum that we should expect. If true, then the first sign we should of this, is through the Vametco 35 day maintenance programme, which FM has indicated, may well bring additional production from Vametco.
That aside, if FeV hits $40 (which I must stress, is very simplistic, given the complicated mature of BMN product range these days, which itself has additional value, be it that it needs to be demonstrated more clearly), then in my view, BMN should justifiably be matching that current Largo valuation.
So at £600m valuation and c. 1,35BN shares in issue (Orion CLNs fully included), we should be looking at c. 45p
If we are being super accurate, then an allowance has to be made for the reduction in cash, due to the investment in the expanded 4,225 mtV, which affects the enterprise value but in very simple terms, like for like, that's where we should be.
Importantly, this very simple valuation, allows nothing for anything else that BMN owns (Invinity etc) or that it may achieve (VRFB contracts, electrolyte plant, better production etc).
Also, if prices hold into 2022 and 4,225 mtV becomes 6,000 mtV, well then...
Excellent summary BBN
@Alfa .. perhaps worth adding some of that summary to the 'big picture'
Well said PB, Sanchez, somtam, abbynparit, and Pdub!
Alfa is a huge asset to the Bushveld community.
Wow 101 recommends in a short space of time, it does give an idea of just how many read the BB
Pigpen, lol at two faced .... at 50p thats going down, at 8p thats going up ... if thats 2 faced so be it ...
I've changed my ways and become a Stepford wife now ... ra ra everything's got pound signs, the board are magnificent at everything ...
Well said PB, Sanchez, somtam, abbynparit, and Pdub!
Alfa is a huge asset to the Bushveld community.
Alfa and I disagree about the intentions & power of the MMs (I do not think that they want to or can stop us from rising much at all).
But otherwise we're two peas in a pod in our outlook for Vanadium & Bushveld ... except he's the fountain of all knowledge on both subject matters of course, and the ultimate troll destroyer. Whereas I'm merely the cheer leader tried to keep the crowd pumped whilst Bushveld's share price takes their time coming out for the encore to what happened in 2018 (I jest - we're going to reach 100p this year!)
Full credit to him.
And, whilst I'm at it, full credit to BBN, Sanchez, Pdub, Knuttie, Floyd81, LionelGreen, & many more whose contributions I really value. Keep up the great work!