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daisydog, because the 'Market' is a small number of investors who are actually aware of the story controlled by an even smaller number of market makers who are simply moving the price so as to line their pockets.
Agree in general. The bit I cant fathom is that this deal has little ( nothing?) That could derail it now. It has approval. The funding is largely from cash generated in the V spike. Why is the market not pricing at least some of that in as a done deal.
That's the difference Daisydog between being positive or negative in outlook. Summarised perfectly. Differing opinions are good for debate.
I would point out that the sp rose as one would expect with the Vametco acquisition.mperfectly logical in spite of AIM, because it added production, revenue and profit. AIM is in one respect like every other market ... it loves cash.
Vanchem will add significant production, revenue and profit. I anticipate that this will stimulate sp growth, just as in any other market.
Of course that is just my opinion, but the logic behind it is sound.
Pdub; you are applying logic to an AIM share. I get that. Some of us think the market might respond illogically. Actually, I really hope you are right. But fear you'll be wrong!
I would also point out that at the time of the initial Vametco purchase the V price was around $26 to $28 which is less than today's V price !!!
Nobody can say with any degree of precision exactly how an AIM share will react to a major strategic move in the development of a company that increases significantly sales, revenue and profit.
However here is an interesting timeline of the month before the original purchase of 26% of Vametco. It might give an indicator of things to come with the Vanchem acquisition.
Sp before 3.81p
17 March 2017. BMN announces good progress in fulfilling terms of agreement and financing.
Sp 4.29p
Sp before 4.29p
20 March 2017. BMN announces sales and marketing agreement with Wogen.
Sp 5.08p
Sp before 7.57p
30 March 2017. BMN announces financing agreement complete.
Sp 7.54p
Sp before 8.00p
06 April 2017. BMN announces that Bushveld Vametco acquisition of Evraz 78.8 % holding in Strategic Minerals Corporation complete. Bushveld Vametco is 45% BMN 55% Yellow Dragon. Gives BMN around 26% of Vametco. Profits not attributable to BMN.
Sp 8.17p
So in the month leading up to completion of the acquisition the sp went from 3.81p to 8.17p. That's an increase of 114%. This was driven by announcements of fulfilling terms, marketing agreement, finances in place and final acquisition.
It is my hope that BMN run a similar sequence of RNSs leading to Vanchem acquisition, with hopefully a similar response from the market. It would be a brave person or a fool that tried to pretend there would be no market reaction to this excellent acquisition.
Remember that as with Vanchem debt funding was used to secure Vametco. This borrowing did not stop the sp rising and was paid off from revenue in very short time. I see no reason why that pattern shouldn't be repeated, even allowing for current V price.
Just my opinion.
I am amazed that some on here are speculating that the Vanchem deal won't push up the sp! Remember Vanchem is not just adding 'potential'. It is adding almost 1,000 mtV pa attributable to BMN. As BMN owns 74% of Vametco it could be argued that around 2,100 mtV pa of Vametco production is attributable to the company (74% of 2,800 mtV pa). Vanchem will therefore add around 45% + to the attributable V production from BMN.
This is 'actual' production, revenue and profit to BMN. Please don't try to kid me that this won't cause a stir in the market. The market loves cash!
Alfa - there is no “all of a sudden” about it. It’s a market view. The market has plenty of both mining and pharma stocks which are full of expected ‘potential’ which isn’t reflected in their sp.... value only realised once that potential is shown to be starting to become reality and actually produce the goods. The market has never given a scrap of value for the potential of BE to BM’s sp being a case in point... it will, but only when it starts to supply the goods.
This deal when it gets over the line will immediately unlock a clear path to an increase in production levels of approximately 200% above current 2019 levels. Yes this increase may take 3-5 years to come to fruition (at that stage the mining side alone should be generating circa £80-100m post tax profit), but I expect the market to recognise this growth potential upon completion and the SP to move significantly north.
Well put Alfa
Lindon - "rarely is there a premium in the sp for ‘future potential’ " that is clearly not what happened prior to the closing of the Vametco deal so why all of a sudden do you think it is the case now ?
Personally I would like to see some more detail on the Leasing Arrangement in the Interim. Particularly how deals will affect the bottom line with regard to income. If BMN is only looking to increase production to 10000 tons per year with say 50% to steel and 50% to electrolyte then this caps income however what the markets may not have factored in is how Lease income adds to the bottom line and when deals end the V comes back for recycling and back into another Lease deal... As time goes on this all starts to have a compounding effect. Then there's battery assembly and manufacturing... more added value. To lift the SP substantially we need a big surprise.. Something that will give us more than we have right now and bring in the bacon early... like an investment or another M&A or RTO...
The Vanchem purchase probably won’t result in any immediate large rerate, but it should help give the sp a small uplift simply because of the immediate increase in revenue it’s expected to bring in. It should also help give the market more confidence and help create a more positive sentiment and hopefully the motivation for a slower sustained sp rise. Any immediate rise will probably be tempered by how the deal is financed and the reality of how much more funding it's going to require before its up to full production capacity... which will take the next few years to achieve.
What might NOT result in much difference in the sp level is news of the of the much hyped ‘imminent’ granting of the Mokopane licence. The time when the benefit of the license will start to accrue is also to someway off. The time when they start digging... have an operational mine in place and are actually processing the proceeds of that mining operation and seeing the cash from it starting to flow into the bank is when the sp will reflect the value of the it.
The mining industry is similar to the Pharma industry.... rarely is there a premium in the sp for ‘future potential’ no matter how promising... it’s more often the case that it’s only when the product is seen to be actually flying off the shelf that the value is reflected in the sp.
We will not know what the operational costs will be for Vanchem, we know what they are for Vamecto but its taken some time to adjust and settle down and Vanchem will be different. Initially the increased production including Vanchem will be around 15% , but its not just a simple case of adding an extra 15% to our profit for the reason. I also think that the company did not expect the Vanadium price to drop to where it is now, exactly where they though it would be we will probably never know but certainly I'm sure they expected it to be higher. This would probably mean borrowing more to complete the deal. Thats why I was emphasising that good news on the BE front is just as likely to have a positive effect on the sp , as would an increase in the price of Vanadium. It is a very fine balancing act.
Personally I'm with Steve. The market attributes little value to the traditional side of the business at these V prices. Its BE news that we need and it's been very quiet. Like everyone else, I thought 2019 would be amazing for us. Looks like 2020-21 now.
I absolutely agree with James0309 on that - I'm not sure it will surge straight back up to 35p but I expect a good bounce back to 30p+ upon completion of the Vanchem deal. Of course, other related news could help propel it further and if we get momentum and the mood changes enough we could go much nearer to our broker valuations. Where we are now is laughable it really is but it provides ample opportunity for new investors to reap the rewards that are surely coming. The end of 2019 into 2020 could be very exciting indeed!
@uksteve- I cannot believe that the Vanchem deal is priced in. I recall we touched around 35p after the conditional deal was announced. I would hope and expect when completed we should see the SP back above that level.
I'm not convinced that the vanchem news will result in the sp rerating or going up significantly. If the price of Vanadium does go up before the announcement then this would help, but it seems to have flattened out below $40 and has been there for a few months. I would also like to see some firm progress on the BE side, whether its positive news regarding Eskom testing and/or some contract announcements prior to Vanchem announcements. 'New' news seems to have dried up.
Who is selling when vanchem news soon.
Also surprised SP held at this level. Any reasons
If the MMs have just bought 2m at 21.0 then who is their buyer? Who do we know who might now be looking to purchase double this...
Another 750k to add on.
https://capita.moneyam.com/trades/BMN/Bushveld-Minerals.html-trades
I have the 500K down as a sell, from someone who has just handed half a million shares to the market makers at 21.0p. This could be simply someone who lost patience, or I think more likely part of a large worked tame seller's block that the MMs have simply printed for themselves whilst chuckling to themselves 'oh sorry mate I, erm I mean the market, just would not pay any more !'
Robbery
on the other side of the coin...if it was a 500k buy i would them to charge a premium. Check the post from 15.12...they were offering 20.52 for almost three times the size of this trade. Regardless its history now.
won't be the first time the MMs have allowed a buy below to go through below what we would expect.. also if it was a sell you would expect the Bid to have dropped immediately given the size of the deal... its been dropped today for a lot less..
i dont think so...HFX want 21.30 just for £200...got to be a sell