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Great post Endion, hard choice for a troll - do they pick a rising vanadium price or the last profitable quarter of record production, Vanchem being introduced and further lowered costs.
Slim pickings.
Personally I couldn't care less whether the MM's choose to move us down or not around Q4 results. All it will be is a chance for even more bonus cheap shares before the inevitable rise this year. People would do well to remember that if it happens.
In addition to the lack of ongoing maintenance by the plants previous owners there is also the small issue of them topping up the in ground ore at Vametco with much richer Vanadium sl-a-g from the highveld processing plant. Whether this was made clear to BMN when they bought the mine, or not, is not clear to me. But it may explain why Evraz were so keen to give us such a good price on the Vametco plant. A year ago, whilst visiting Vametco I was told that the previous owners did not think that Vametco could be profitable just using the in-ground Vanadium.
With the addition of a few very smart geologists and much more careful plant maintenance and operation I think that point has already been proven to be incorrect.
A fair observation Drifter... But a big lesson was learned... Don't assume old plant and operational ways are easy to scale.
What was found was plant that had been repeatedly patched up and just was not up to sustained higher rates. Cue significant capex to upgrade and plant management changes... Nameplate 5k MTV is now what 2021/2 and even then there is no plan to sustain that rate but rather produce at around 4.4k with the flex to update if needed
A lot more mature operation..
Fantastic post Endion. Sums it up for me too, thanks.
Bryn
Good post Endion, a perfect summary of the current situation.
I'd agree bassguy. The sp has been down and consolidating for quite a few months now. With everything that has happened the past half year it is now not a matter of if but when. And with every week that when grows much closer. The usual trolls are about I see, masquerading and reasonable investors with certain 'qualms'. Switching from novice investor to seasoned Pro over night and somehow knowing the dynamics of the interaction on this board despite having only just joined. But I feel these people are quite transparent. The number of hooks they are able to hang onto to seed doubt are growing less and less, and they know it. It is now I think no longer really about shorting but about trying to achieve the best buy price to go long on the inevitable coming rise.
Since the sp was last here bmn have increased their ownership of vametco from 59.1 to 74%, set in place employee insentives to prevent further strikes, progressed on phase one of ramping up production to 3400 mtv, acquired Vanchem which massively diversifies their product base and de-risks the entire business with 4 potential kilns whilst unlocking the ability to utilise the ore at mokopane, the license for which only now seemingly needs to be signed off, created an investment group through BE that is acquiring Enerox and have taken a stake in the merged avalon/redt business giving them right of first refusal to all Vanadium products with both businesses. And if people think that these two investments are the last of the consolidation of the vrfb industry then they are wrong. You don't create a consortium of investors just to put money into one company.
And after all this the market currently values the company as less than what it was before. It is quite clearly wrong.
Nice to hear from you Endion
Things turning here soon methinks
Gla
Chinese New Year is next weekend also. This usually kickstarts many industries in China that have been dormant over winter, including rebar production as construction generally slows over the cold winter months.
I was in China for 6 weeks last summer, and that scale of the construction is astounding. Entire cities are being built from scratch in the middle of nowhere. Rows upon rows of apartment blocks. I saw one stretch that had at least 30 being built on the same site. Not only that but in Beijing I counted at least 15 new skyscrapers being built in the district I was staying in, and Beijing is huge. I do wonder whether all of these buildings are using the appropriate level of Vanadium in their rebar as per the new regulations, I can only assume that so far they are not. Shifting an industry of that scale would have quite dramatic impact of Vanadium demand, and despite the spike in prices last year the deficit, whilst still projected going forward, has not immediately been apparent. I can only imagine that if and when China enforce the new regulations with greater discipline, that it will begin to have a meaningful impact on Vanadium demand.
And this is completely ignoring the emerging Indian construction market, which in coming years will outstrip China in its growth.
You suggested it could take time for prices to get to $25 Steve, to springboard the Chinese moves. I am sure you will be delighted to know that there already offers over $26 in Europe, only one day later than I posted.
Certainly moving up more quickly than some have suggested.
There should now be an uptick in the European prices shown on vanadium price.com early next week
NOBLE ALLOYS MARKET REPORT 17/01: FeV moves up in active spot market; V2O5 follows
Trade log January 2020: Ferro-vanadium, V2O5
The latest ferro-vanadium and vanadium pentoxide (V2O5) transactions, bids, offers and assessments in Europe and China.
To view the latest price assessments, follow the links below:
Europe
- Ferro-vanadium basis 78% V min, 1st grade, ddp Western Europe, $/kg V
- Vanadium pentoxide 98% V2O5 min, in-whs Rotterdam, $/lb V2O5
China
- Ferro-vanadium 78% V min, fob China, $/kg V
- Vanadium pentoxide 98% V2O5 min, fob China, $/lb V2O5
Friday January 17
Ferro-vanadium - $24.80-26.20 per kg
- 3 tonnes sold at $25.60 per kg in Europe
- 5 tonnes sold at $24.90 per kg in Europe
- 10 tonnes sold at $25.20 per kg in Europe
- Prices indicated at $24-26 per kg in Europe
- Offers at $26-26.50 per kg in Europe
- 15 tonnes sold at $24.85 per kg in Europe
- Material reportedly sold at $25.40 per kg in Europe
- Offers at $26.40-26.50 per kg in Europe
- Prices indicated at $25.50-26 per kg in Europe