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112 posts in a day, rather strange or agenda driven. You have to wonder why on a very ordinary quiet day.
Just a load of rubbish from snot cups. Bugger off.
CC yawn everyone sees through bull crap and all your doing is highlighting your motives more so.
BBN. - Bushveld Vanadium have given their parent g'tee its in the RNS m8.
Vametco Alloys, a subsidiary of Bushveld, has executed a debt instrument in the form of a PFA of US$30 million with an affiliate of Orion (as lender), to provide the necessary funding to finance the Vametco phase III expansion project to 4,200 mtV and debt repayment.
§ The security provided is customary for a secured financing of this nature, including cession of shares in the Borrower, security over the assets of the Borrower, and a PARENT GUARANTEE.
The rate is to "be serviced through quarterly repayment amounts (comprising repayment of principal and payment of interest)." So it's not pure royalty as it includes repayment of the principal be it that we don't know the exact breakdown between principal and interest. - AGREED WE DON'T KNOW.
Gross revenue rate of 1.175 per cent for years 2020 and 2021 and 1.45 per cent from 2022 and periods, thereafter, multiplied by the gross revenue for the quarter:
You MISSED out the payment of 1.175% for 2020 ....
Etc etc
I've read the RNS m8 it is all there to be read and understood, you can spin as much positivity into it as you want, you will have loads of supporters on this site, fact remains if you have read others over the years it is not the greatest mine finance deal.
But they've signed it and drawn it down so we have to live with it and its CLN's, 10% interest coupon etc etc.
Wise words and brilliant research as always BBN, thankyou for your time.
Do give it a rest CoffeeCups
Pub, being your usual condescending self, you seem to flit between that and self pity.
I changed it to 'Union Members" that'll cover it.
Coffeecups still up to your old tricks of trying to put a negative spin on everything.
Now if that is your honestly held opinion you have a right to express it on this bb, though clearly it does no favours to sentiment. But then of course you know that ...
What surprised me very much was this part of your post:
“... Then the workforce walk out on you .... well done Unions - thanks for that.”
Factually that is wrong.
First it was only part of the workforce, not the entire workforce as implied by your statement.
Second it is very well known that this action WAS NOT SUPPORTED BY THE UNIONS! Now you might like to pretend that this misleading statement is of no consequence. However I disagree. Interesting that you banged on about the unions in more than one post.
You like to portray yourself as worldly wise about this share, yet apparently you didn’t even know this was unofficial action and as such was never going to last long. That is a very surprising level of ignorance.
Of course their is another explanation .... that you did know this but deliberately portrayed it as union supported to give the impression that the plant has poor industrial action.
I will leave it to others to decide if your post was based on ignorance or deceit. Either way thank goodness others were able to call you out and not let you get away with it.
I hope no harm was done because I am sure many on here are already aware of the games that you like to play.
Respect to BBN for taking the time to respond in detail to your posts. I think he pretty much covered all that was necessary.
More telling is that you haven’t even got the courtesy to thank BBN for responding in such a thoughtful way to your points. Says it all.
Just my opinion of course.
@coffeecups
The PFA deal was agreed between Orion and Vametco Alloys, not Bushveld Vanadium. It is therefore sectioned off from the rest of the business and the gross revenue rates are therefore associated with Vametco only. So it's highly unlikely that parent guarantees would be set up for the whole vanadium business.
The rate is to "be serviced through quarterly repayment amounts (comprising repayment of principal and payment of interest)." So it's not pure royalty as it includes repayment of the principal be it that we don't know the exact breakdown between principal and interest.
It is tied to inflation but the denomination isn't given and so the S.A. inflation assumption is just that. As it is tied to revenues and these are in dollars (note unit price and vanadium price both in dollars), one would expect that this is the inflation currency.
Also,
"On each of the first three loan anniversaries, the Borrower has the option to repay up to 50 per cent of both constituent loan parts. If the Borrower utilises the loan repayment option, the gross revenue rate and the unit rate will reduce accordingly."
Given that this loan is tied to Vametco production but that BMN is expanding Vanchem through the separate CLN and is due to take its electrolyte plant into production late next year, there is a very good chance that BMN will be in a position to start to make such payments and reduce the gross revenue and unit rates stated.
Additionally, this year's gross revenue rate is lower at 1.175%. Therefore the increased rate of 1.45% from 2022, may not be around for very long (perhaps c. 3 years) and is perhaps why it was agreed in the first place, in order to give Orion a better return.
This deal as far as I can see has been based on the assumption that BMN will add significant production, reduce its production costs substantially and therefore have profit to pay down the loan. Therefore the gross rate and unit prices as they begin are of less relevance. What is however highly relevant is the refurbishment programme's success.
As for the Vametco workers taking advantage of this situation that's a bit of a jump for me. The strike commenced c. 5 months after this deal was closed and its outcome was a payment of R4,500 per Vametco worker. At last count, Vametco employed 380 people and management there wasn't a part of this deal. However, even if we say that everyone received a payment that equates to 1.7m Rand which is c. £85,000. In the scheme of things, such a sum is irrelevant.
It's a good deal for both parties that is designed to push BMN to perform and deliver up to 6,800 mtV. If they do that this deal will be remembered for what it was, the means to make the big plans come to fruition at a time when life was hard.
The deal had to be done. I think Fortune has clear sight of what is coming and BMN had to be ready for it. We will only find out in dribs and drabs like the e-plant,IES, Enerox news. We are having to join the dots ourselves for now, but to me there was a strong belief to commit to the improvements and expansion now and not next year by Fortune.
Well the industrial action for 5 days at the start of Q2 after the Q1 35 day maintenance stoppage just as Vametco was starting to ramp up production cost us 65 mtv according to the RNS.
That's 13 mtv per day early doors after implementation of the refurbishment, how much more can we eek out when up to speed?
The Orion deal was better than I expected ie. we are a junior miner operating in a junk status curruption riddled jurisdiction.
But more importantly it has funded our expansion to 8000 mtv and a chance at being a big player in the next multi billion dollar industry that is energy storage.
Ben, agreed re not Orion's usual business model and that they have taken additional security over the parent co and in royalties, CLN's, 10% interest coupon and index linked payments to S.A, inflationary pressures.
1 - 1.5% of net seems to be industry standard terms, this is for near term mining production of which BMN is much further advanced.
The rest on top is gravy to Orion, and to keep the BOD focused on doing what they are meant to, or under the terms of the agreement everything can revert to Orion, Parent Co guarantees taken, that means lock stock and barrel for $30m.
I don't look at it as a good deal, I look at it as being the only deal.
Then the workforce walk out on you .... well done Unions - thanks for that.
It was still a good deal IMO.
Orion's business model is royalties. They usually do not take shares, but a % on sales. The taking of shares by Orion was to offset the risk they see, to protect their investment, in case BMN cannot sell the increased capacity or upgrades don't work. As a royalty co, they can help with expertise and future finance. Maybe they will hold, but not for ever. IMO.
Very well said BBN.
In criticising the make-up of this deal it is all too easy to forget what brought us to this moment in time.
BMN completed the purchase of Vanchem in November 2019 knowing that they had significant finance to find to refurbish the plant to a level that made it profitable once more. Like so many businesses that are trying to better themselves they could not have envisaged that Covid would come along and completely upend their markets.
The timing for BMN couldn't have been worse. It has already been reported that the discussions with Orion had been in play since shortly after the Vanchem deal got done. The Durfeco payments were a line in the sand created before knowing what the future would hold. Covid not only removed BMN's revenues streams but decimated its share price at the exact point that they were attempting to get this deal over the line.
So bold decisions had to be made which is clear from the 17p agreed for the CLNs.
It is a testament to what BMN has to offer that Orion closed this deal at all but yes they did hold many of the cards and that shows in the deal structure. However, what better choice did they have in 2020?
This deal whilst likely costing shareholders up to c. 16% in dilution and perhaps some selling pressure, also delivers the funds to take this business to 6,800 mtV. Overall when given sufficient time to execute is a very good deal for shareholders.
That conclusion is further compounded by the fact that in the months leading up to the closing of the CLN deal on the 9th Nov 2020, the SP averaged around 12p. With their finances taking a battering due to Covid and bills to the like of Duferco coming due, attempting to raise the sort of capital needed in a placement, would have attracted far worse lenders and cost us all far more dilution.
BMN made the best of a bad situation and with it attracted one of the very best mining lenders onto the books. Yes, Orion will do very well out of this deal but so will BMN, given what it could have cost them and what Orion could have pushed for.
These things are forgotten all too easily. The plan is intact and the building process began in earnest when this deal got signed, but like all things mining time is required to execute.
Totally agree Pdub. Orion is an investment partner as you have stated. A large shareholder is more likely to offload when they reach a target price and it will not be announced in advance. Colt45
Quote from RNS of 30 November 2020:
Philip Clegg, Portfolio Manager at Orion, commented:
"We are thrilled to get the expansion at Vametco fully funded and to support the refurbishment plans at Vanchem. We are looking forward to partnering with Bushveld as it executes its growth strategy and ongoing advancement into battery technologies."
Partnering Bushveld as it executes its growth strategy doesn’t sound like words from an investor that wants to cut and run. Could of course be wrong and just my opinion.
Orion are our partners in the sense that the hold a royalty on our production, even if they dispose of the shares. My gut is that they will sell to recoup the capital outlay, still benefiting in the long term on the royalty.
When Orion came on board we had this as well .. they always looked to be very long term players - otherwise why have the royalty written in
If VFRB goes no-where they have the CLN get-out, but whilst VFRB is developing and in play that was never going to happen
I don't subscribe to the view there is a huge overhang caused by CLN's from Orion - we are depressed as out of fashion and the oft repeated BE promise is taking rather longer than anyone either thought or hoped.... but it is far from a non-starter, rather only just starting to gain traction
That's some serious research there, BBN :)
I topped up this morning at 15.2p. Happy to hold long-term for the big gains.
Great stuff BBN. Although talk is cheap in investing, sometimes it's also worth refreshing your memory on what certain individuals have said:
Fortune Mojapelo, CEO of Bushveld Minerals Ltd, commented: “It is pleasing that we have been able to execute both transactions in just two months, allowing us to begin allocating funds towards our growth plans.
“I would also like to welcome Orion as a significant investor into the Bushveld story, their support provides further confidence in our development plans we have in the coming years.
“With a solid balance sheet and a clear vision of where we want to be in the next few years, we enter 2021 re-energised. At the same time, the world also begins to see signs of an end to what has been a very difficult year for everyone, and signs that it could be followed by one of a recovery.”
Philip Clegg, Portfolio Manager at Orion, commented: “We are thrilled to get the expansion at Vametco fully funded and to support the refurbishment plans at Vanchem. We are looking forward to partnering with Bushveld as it executes its growth strategy and ongoing advancement into battery technologies.”
The other day I looked up Philip Clegg, who is a portfolio manager at Orion. There are a lot of mining forums on youtube where he is on the panel, and apart from sounding very articulate, he seems to highlight the importance of thorough due dilligence as well as ESG in the prospects that Orion take on. This does not sound like a 'hit and run' operation...but then, you never know what's going on.
2/2
My view is that Orion is a real long term partner in this and will likely (dependent on company performance of course) wait until much further down the line to convert. After all their price is set and they can make great returns by just picking up the interest. I could then see them converting towards the end of the deal or indeed immediately prior to payment at BMN's request which would then give them the best of both worlds. Again depending on BMN's performance during that period.
The caveat in that being that BMN can request their conversion once the share price sits 200% above the conversion rate of 17p for 15 consecutive trading days. Something I certainly expect them to achieve during that 3 year period.
Prior to that I simply don't see Orion converting unless they wish to sell the shares and given their style I personally don't see them seeking a fast buck on this. So it would have to be in a scenario where the SP is considerably higher than 17p. Their investment is as far as I can see supportive and designed to realise a far greater outcome later down the line.
My view only of course.
1/2
Afternoon everyone,
I just wanted to flesh out my thoughts on the Orion situation given it is a topic of concern.
First of all, here is a recent deal that Orion Mine Finance (OMF - which is who we are in business with) concluded with Occidental for $1.3BN.
The same article states that OMF has some $6.2BN in assets under management. Does that guarantee that they won't convert their CLNs and sell the lot? No.
What it demonstrates is just how big a mining asset player BMN has got into bed with. This is no YD or Orange Trust we are dealing with here. Their goals are arguably more long terms and for bigger prizes. Having searched the internet I cannot find another CLN deal that they have concluded. They tend to be more royalties orientated which is what their deal with HZM gained them.
https://apnews.com/article/f0e91d867ca4a311b49d02e4ac2ab746
The only deal I can see on the list of historic transactions that they provide that is even close to a 'convertible type loan is one with Stornaway Dimaonds in July 2014.
https://www.orionresourcepartners.com/orion-mine-finance
As far as I can see they then disposed of an amount of those shares in April 2019 which is some 5 years later. This despite the share price tanking from around 2016 onwards and ending up at c. 10% of the value it was when they took their shares.
Again does not remove the possibility that they won't convert, sell and walk but there's much evidence in the sort of transactions that they do to say that it isn't their style. Through their HZM deal, I have seen evidence that they do their homework and they invest for the longer term.
https://www.newswire.ca/news-releases/orion-mine-finance-disposes-of-shares-of-stornoway-diamond-corporation-893566333.html
In addition, it's important to appreciate that their $35m CLN delivers them $3.5m per annum in interest over a 3-year term. So simply sitting still would give them c. min. $10.5m in profit or c. 30% profit.
By converting and selling they would need to know that they could sell each tranch at a price that at the very least matched that return. One third could be converted now and the next third up to 12 months post the Dec 2020 transaction date.
At 17p each one-third element amounts to c. 49m shares. Interest after 1 year gives them another 14.7m each time.
So in total, the first tranche would be c. 63.7m shares or c. 5% of the revised total shares in issue.
To shift that amount of shares at a 30% profit they would a sizeable margin of support above the 22p mark because their sales would pull it right back down. It may of course pan out that they need the money for something else but I don't see $35m being a big problem for a company with over $6BN in total assets.