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The issue of profitability on vanadium stales has been discussed many times on him. We really could do with the price of vanadium increasing another 30% to 40%. SP angel revised their target share price down to 31p earlier in the year based on the fact that the costs had increased to $20 and $26 for the two plants.
BBN thanks for posting your links to your analysis of BMN following today’s update. Informative and well researched and referenced as always. Very much appreciated
It has been a tough journey to get to 4,000 mtV but again that is already +56% higher than what they were achieving when the last surge took place. So 2018 prices need not apply. As an example, $60 vanadium, so less than half the peak of 2018, would deliver $120m in pre-tax profits even if current costs and production stayed still.
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So if that's the case do BMN break even when V is at $30? Despite it rising recently the price of V does seem pretty stubborn considering we're supposed to be in a commodity supercycle...
@AlastairMcgrift I agree with you in part and absolutely respect your position.
However, in my view, you give Largo too much credit and the markets not enough. Largo are hugely profitable at current vanadium prices. They also have a weak Brazilian Real at their backs. Prior to January 2020 the Real couldn't break above c. 4.10 to the dollar. Then at the start of 2020 it started to surge peaking at c. 5.80 real/dollar in May 2020. It now sits at c. 5.25 a dollar. That's a c. 30% improvement on 2019.
Now take the Rand. It sat at c. R14.30/ dollar at the start of 2020 and also surged that month, hitting a peak of over R19 to the dollar in April that year. The problem is it has since receded and now sits lower than that January 2020 level.
That's what is hurting BMN right now and helping Largo stay elevated.
This allows Largo to run at all-in costs of c. $5.30 per lb V205. So prices of +$8 per lb are very attractive to a market that isn't stupid. At my last count, Largo also had c. $70m in the bank and no debt. BMN is taking on debt to deliver a brownfield expansion.
Yes, Largo is pushing into energy storage but what contracts have they won? What substance would the share price have to hold on to? Right now next to nothing. It's all words.
BMN does not sell its energy storage story well enough but it is happening and it is far more worthy than Largo's headlines. I don't believe the market is anymore excited about Largo's energy storage angle than BMN#s. What it likes is that Brazilian Real price and what it does for Largo the miner.
In South Africa, something has to give because the market is pricing a bigger success than most minerals are giving them to date. So either the Rand falls or commodity prices go up. I think the latter will apply across the board.
FM's ability to tell this story is increasingly becoming a problem. It has opened the door for the chinese to come in, on good terms for them, and copy and paste Glencore at Largo. Fund a processing plant at Mokopane and get an offtake.
Without evidence to the contrary Largo are moving ahead of Bushveld Energy, christ the speed at which BE are doing things even FAR will start to move ahead! Pleased to see BE getting separate updates but only if they end up being quarterly as a bare minimum. The silence on BE, Lemur and failure to report fundamental details such as having a partner on the eskom tender are simply not acceptable. A failure to control cost is also a threat because part of the whole vertically integrated model is helped by being a low cost producer - with just a 5$ swing between V price and cost is not good enough. FM needs to start communicating better, the market gets Largo because it is told with enthusiasm and is a simply story to understand - we mine V, sell it to the steel industry but see a massive move towards VRFB so we are going after it big time. that is the story largo are telling and that is as simple as is needed at BE/BMN. stop with the smoke and mirrors, stop with the silence.
Let's try that again.
@cindercone Again very much appreciated but in all honesty, there are some very well versed investors in BMN.
That aside, at current prices and my estimated total costs, the outcome that this BMN management team achieved on their Invinity investment will likely add 40% to the profitability of the company this year. That's great business acumen and is worth far more than PR in my book.
However, despite the clear need for better communication and guidance, starting with what 2022 is going to look like, this team has delivered a +4,000 mtV producing mining company just as vanadium prices look set for another surge.
Yes costs are higher and the Rand is really sticking the knife in at the moment but that in itself points to where the market expects these commodity prices to head. If not then the Rand falls back. It likely can't have both.
Quite frankly no one in this for the long energy storage game likely wants to see a repeat of 2018 but let's be honest, it wouldn't hurt our pockets now, would it?
It has been a tough journey to get to 4,000 mtV but again that is already +56% higher than what they were achieving when the last surge took place. So 2018 prices need not apply. As an example, $60 vanadium, so less than half the peak of 2018, would deliver $120m in pre-tax profits even if current costs and production stayed still.
That's not an impossibility given what is happening in the vanadium market today. This management team delivered that and this market, however stupid it may wish to look, will notice that if it happens. PR or not.
If the said surge in pricing takes longer to come through which is what FM indicated in their analysts call ( and that is what it was an analyst call, not an investor call) and I have to, then even with these bumps in the road production is going to be higher than 4,000 mtV in 2022 and that will reflect even more in the SP.
Right now $35 vanadium is healthy but the market wants more in order to buy into it. Just like they did in 2016/17. But mark FM's measured words in that call, steel production is much stronger than it was in 2016. BMN is sending much more material into China now. That reflects a Chinese market that is in deficit and they are maxing out on production in a very high iron ore price environment. That is a recipe for significant price rises and a great deal of pressure for the US/Europe because they need material to come out of China not be sent into it.
@cindercone Again very much appreciated but in all honesty, there are some very well versed investors in BMN.
That aside, at current prices and my estimated total costs, the outcome that this BMN management team achieved on their Invinity investment will likely add 40% to the profitability of the company this year.
Yes costs are higher and the Rand is really sticking the knife in at the moment but that in itself points to where the market expects these commodity prices to head. If not then the Rand falls back. It likely can't have both.
However, despite the clear need for better communication and guidance, starting with what 2022 is going to look like, this team has delivered a +4,000 mtV producing mining company just as vanadium prices look set for another surge.
Quite frankly no one in this for the long energy storage game likely wants to see a repeat of 2018 but let's be honest, it wouldn't hurt our pockets now, would it?
It has been a tough journey to get to 4,000 mtV but again that is already +56% higher than what they were achieving when the last surge took place. So 2018 prices need not apply. As an example, $60 vanadium, so less than half the peak of 2018, would deliver $120m in pre-tax profits even if current costs and production stayed still.
That's not an impossibility given what is happening in the vanadium market today. This management team delivered that and this market, however stupid it may wish to look, will notice that if it happens. PR or not.
If the said surge in pricing takes longer to come through which is what FM indicated in their analysts call ( and that is what it was an analyst call, not an investor call) and I have to, then even with these bumps in the road production is going to be higher than 4,000 mtV in 2022 and that will reflect even more in the SP.
Right now $35 vanadium is healthy but the market wants more in order to buy into it. Just like they did in 2016/17. But mark FM's measured words in that call, steel production is much stronger than it was in 2016. BMN is sending much more material into China now. That reflects a Chinese market that is in deficit and they are maxing out on production in a very high iron ore price environment. That is a recipe for significant price rises and a great deal of pressure for the US/Europe because they need material to come out of China not be sent into it.
it is a tedious listen and FM did not seem his usual enthusiastic self - sounded tired I though but did liven up towards the end
Usual rubbish question from meyer but an interesting comment on why the risks and costs might be higher - a lot of the refurb involves a lot of steel and there is a supply pinch and higher costs along with some unknowns ... kind of casually spoke of 1 month or so delay being possible) - makes sense but I would have thought they had agreed pricing and delivery on order. Hence costs may be at the higher end (which was picked up by the analysts) - interesting from around 20 mins.
All seemed a technical clarification, but seemed to matter to the analysis - I just wonder that if costs in a quarter depend on the audited (later) data from the previous quarter, whether it is less mirror and more smoke at times (but all evens out I bet)
27 mins interesting talk on Vametco Phase 3 plans and why it seems a bit slow. Personally I thought it the result of realising the plant is older and does need upgrading and bedding as it grows, but interesting non the less.
Got the feeling it is not so much they slowed the pace of expansion, but have more appreciation it is harder and needs to be done meticulously and carefully
Have a good w/e all
Have to agree with this. Had to be the most boring Q&A I have listened to. The tone of voice was pessimistic and really not encouraging. It was really hard to listen to.
No there isn't BBN.
FM's done a great job for the most part, but BMN seriously needs someone with a bit of marketing savvy to simplify the message/strategy and make it more attractive. It's not like story isn't appealing, because it is.
That investor call was a load of boring twaddle - no one's going to invest based on that. It's 2021, play the AIM game or get off it.
I appreciate that HarChris. Here they are. I trust they are worth it and easy enough to follow. It's just my opinion remember. There are lots of very good other ones out there too.
https://www.bbnbigbitenow.com/post/bushveld-minerals-review-of-q1-2021-update-part-1
https://www.bbnbigbitenow.com/post/bushveld-minerals-review-of-q1-2021-update-part-2
I'm sure it's not just me more interested in what BBN has to say than BMN!
A tough listen, Managed 7 minutes zzzzzzzz
Personally I preferred Gary Barlow :-)
I'm not into impersonations so don't know what you're talking about...
Let's just say Fortune wasn't doing his famous Robin Williams impersonation.
Why?
What do you mean?
Anyone who thought the rns was down key should not listen to the analyst call.