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Morning all,
I would assume that if everything associated with the Vanchem acquisition is going according to the plan, which I have absolutely no reason to doubt, then we should very soon be hearing about the debt facility and its structure.
In the lead up to the completion of the Vametco transaction, we did not begin to hear a great deal about the make up of
the payment structure, until approximately 2 weeks prior to the closure of the deal.
What we do know because BMN management have time and again demonstrated it, is that the preparations are never left ot the last minute, and BMN do not make statements associated with said transactions, without being very sure of their position.
The 29th August update was clear ;
"The Company is progressing the negotiations with local banks for a debt facility to supplement existing cash resources. Further updates and progress on the satisfaction of the remaining conditions precedent and the approval of the debt facility will be provided as appropriate."
My belief is that said debt facility is agreed and what the sign off is waiting on is the completion of the remaining "conditions precedent," with the South Africa Reserve Bank, likely being the key item, particularly if said debt facility is being raised against the capital in the Vanchem facility.
I remain in awe of BMN's ability to complete the Vametco deal in such an orderly and timely manner, way back in March/April 2017.
The way they were so nonchalantly able to declare that the "section 11 of the Mineral and Petroleum Resources Development Act, of 2002 ("MPRDA") for the Ministerial consent to the Acquisition" was achieved, just 1 day after the full finance package, including the bridging finance from Barak Fund, should really warm the ****les of every BMN shareholder's heart.
It demonstrates clearly that when BMN really want to get something done, they do, and extended section 11 approvals, such as those that weigh heavy on Brits right now, are not unattainable, when those S.A. regulatory and government orientated levers are pulled in BMN's favour.
So I expect the deal to close when they say it will close, and I expect an announcement in the lead up to that date, be it it may run very close to said deadline.
thanks BBN
only 11 trading days to go - been a long time. i certainly feel like when vametco completed and soon vanchem it will unleash the rest of the business as i fervently believe that the two gives fm what he wanted and always set out to do - namely 10,000mtv of brownfield. he can now deliver the rest of the vision as i put out in my note the other day. exciting times ahead no doubt....
Good to hear from you BBN.
RichKen has commented that he believes Mokopane news and the Vanchem finalisation could be closely linked (time-wise)
I'm possibly not the only one who has given up trying to estimate anything to do with M!
Any chance I can press you for your views on this?
@Ninvestor Mokopone is a very nice to have but it is not a necessity. It does not form part of what is core here, right now.
BMN were certainly confident enough to tie it into Vanchem when announcing the deal, which I do take as being significant, because they did not need to. They Vametco, which still holds the highest grade vanadium in the business and is available immediately. Even if the license were to land tomorrow, Mokopone is not.
So one way or the other Vametco has to start supplying Vanchem and so the tie in with the resource make up and the plant, must become a reality. By that I mean it must be possible.
Vametco is in my opinion big enough to handle a larger Vanchem. Vanchem currently sits at c. 1,000mtV. I believe that BMN can increase this significantly with limited CAPEX. Just like at Vametco, I see the higher percentage of the reported $45m refurbishment costs being associated with the tasks that are harder and take longer to do. So the refurbishment plan that the company has indicated will be released post transaction completion, is also very important.
If it is as I believe it to be, and Vametco can indeed support a larger operation there, then BMN should be able to move beyond 5,000 mtV without ever having to concern itself with the Mokopone license. That we would all welcome and encourage the Mokopone license and its development, is clear. However, right now BMN need to concentrate and those options that require the least amount of CAPEX input, but deliver the greatest increase in revenues and scale.
So Mokopone is important but it doesn't in my view need to be pushed too hard or worried about.
At 5,000 mtV plus production, BMN has the necessary firepower it needs to drive the electrolyte plant and downstream value chain items such as battery assembly (large scale mandates considered of course). That is where the value creation and the multiplication of the company valuation, will really see the most benefit. That added firepower and understanding, can and I believe will, open up many new doors for BMN, such that the Mokopone's of this world, will far more readily come home to roost.
Its all about the core items. Its all about the core system that drives the full value chain creation. If revenues pick up due to stronger vanadium prices, (which are by the way a matter of when and not if, be it this year, next or at some point in the future, they will happen), then the plan can be expedited and the Mokopones driven far harder. But right now it is for me, about employing the cash pile as efficiently as possible to ensure maximum gain, which itself further protects the business from risks, such as lower vanadium prices and increasing operational costs.
I would add that the moment that BMN clearly establish alternative revenue streams that are not reliant on vanadium's core steel market, and they are of substance, then that will be a watershed moment in the life of BMN.
Add in the fact it is tied into an energy market that is not solely reliant on world economy success, and the impact should be substantially amplified.
Two revenue streams in two completely different worlds, carves the risk out of the BMN profile. The list of institutions and funds that would wish to make a permanent home, in such a business, should be considerable. So long as the information is there to understand it. When and what that is is still to be seen, but it will be for me certainly be the very best example of when and not if, it happens.
Recession proof earnings in a business that can exploit the very best of global expansion when it is available, is a very attractive proposition indeed.
@BBN - Thanks for taking the time.
to follow on from that we are soon to be in a position whereby bmn is a business with a diverse set on incomes including:
- 6 products from vanchem
- vametco
- electrolyte plant (separate to vanchem's electrolyte)
- bushveld energy which itself will open up numerous income streams
- mokopane - ore sales
- lemur/afritin investments
with no reliance on a single asset such as we were when a strike hit vametco we are strengthening the business and investment proposition
@BBN - I'm not completely in agreement with you on this one. From day one I don't doubt that Vanchem ore needs can be serviced from Vametco but I don't see this as having significant longevity and I do believe that we need to see Mokopane development to be able to sustain both current production levels but more importantly growth.
Right now Vametco moves a little over seven and a half thousand tonnes of rocks per day. To sustain Vanchem at it's current production level requires an addition (approx.) eighteen hundred tonnes of rocks per day. Whilst there is some additional crushing and milling capacity at Vanchem it is a far better solution to do that as close to the point of quarrying as possible and that means for me at Mokopane.
If we wish to see both Vametco and Vanchem to grow then significant additional groundworks will be necessary (and that mean a lot of big heavy plant wheeling around the pits) Vametco cannot sustain that expansion economically, logistically or safely for both Processing plants.
We need Mokopane, we need groundworks as a matter of priority and we do not have and in my view could not achieve sufficient supply from Vametco alone.
Ophidian
Point gladly taken on board Ophidian.
From the Vanchem acquisition RNS dated 1st May 2019.
"The Vanchem Business has secured sufficient ore supply from third parties to support current levels of production, until Mokopane's development has been completed."
So there is clearly a strong indication that the company expects the Mokopone transaction to tie in with the Vanchem deal, and that there is a belief that a timeline in play for Mokopone, which must include the license. What it also says is there is time available to get Mokopone up and running without relying on Vametco, a point I had missed. How much time is not clear.
"The Company retains the optionality to supply magnetite concentrates from Vametco to the Vanchem Business."
This was my point be it perhaps poorly communicated. Mokopone is definitely the preferred option but the company has communicated that Vametco is capable. My point and belief was that Vametco can handle even more than the current 1,000mtV, be it likely not sustainble over a longer period, you clearly believe otherwise, and I respect that and your experience.
It may well be that Vametco has been stockpiling concentrate in preparation for this event. A head start if you will, although its just a theory and not confirmed.
"Upon receipt of the mining right, Mokopane will be a primary source of feedstock to the Vanchem Business as a result of its large mineral reserve, therefore the Transaction facilitates the expedited development of Mokopane. The Mokopane-Vanchem model will represent a fully integrated business, in line with the Company's strategy for Vametco."
It is interesting that they say "upon receipt of the Mokopone license, Mokopane will be a primary source of feedstock to the Vanchem Business" What they do not say is "and its development into a mine" or something similar.
All in all, you may well be right. I was referring to the possibilities that the company has, which make Mokopone important but not critical to the plan at this time. There is space to breathe if you will.
That said, the company is certainly giving off indications that the Mokopone license date is perhaps not unknown to them, and that the Vanchem transaction completion is perhaps key, as it was for the section 11 for Vametco.
Who says lightning never strikes twice.
@Ninvestor No problem. BMN is still my largest holding but I do not comment quite as often because its generally doing everything right, heading in the right direction, and just needs time and space to grow and flourish.
Its merely about the time needed for that kettle to start boiling.
I expect the buzz phrase of 2020 to be 'large scale energy storage mandates.'
Thank you for your research BBN and Ophidian.
Are we expected to hear about Eskom and the BMN potential Battery storage contracts in the coming month or two?
Would be amazing if it occurred so soon after the Vanchem acquisition.
Ps topped up a few at 21.97p and was expecting to pay more this afternoon after yesterday’s rise.
@BBN - I too was considering that they might have been stock piling concentrate. My considerations are really more about growth than limping along at current levels (which I think probably could just about be maintained in the short term). just FYI, I've been playing about with a model for Vanchem production and I'm of the opinion that current ore supply is not as rich as that available from Vametco or ultimately from Mokopane. (either that or the one Kiln operating at Vanchem is operating considerably sub-optimally). Point being that we could see an almost immediate uplift in production by transitioning to either Vametco ore or supply from Mokopane.
Ophidian
Great discussion. Do either of you have any thoughts on the "cessation of certain commercial agreements" mentioned before. Is this likely to be the ore supply arrangement or product off take or something else?
Information seems minimal but I would assume it refers to some sort of agreement currently in place with a competitor (or competitors).
Morning all,
Yesterday's news is in my opinion far more significant than looks on paper.
For those that may have understandably forgotten my post from Weds 16th Oct (10.53am), here's an extract ;
"I remain in awe of BMN's ability to complete the Vametco deal in such an orderly and timely manner, way back in March/April 2017.
The way they were so nonchalantly able to declare that the "section 11 of the Mineral and Petroleum Resources Development Act, of 2002 ("MPRDA") for the Ministerial consent to the Acquisition" was achieved, just 1 day after the full finance package, including the bridging finance from Barak Fund, should really warm the c*ckles of every BMN shareholder's heart.
It demonstrates clearly that when BMN really want to get something done, they do, and extended section 11 approvals, such as those that weigh heavy on Brits right now, are not unattainable, when those S.A. regulatory and government orientated levers are pulled in BMN's favour."
Jump forward to 21st Oct 2019 and we have history repeating itself once more.
BMN have now managed to complete what are significant regulatory hurdles, for 2 company making projects, at exactly the point in time that they needed them, in South Africa. Those that follow South Africa politics closely and understand the problems and delays that can be experienced there, will know that is no mean feat.
To do it once could be put down to good fortune. To do it twice, can for me only be put down to Fortune Mojapelo and his very effective and clearly very connected team.
In a follow up post on 16th Oct, I posted the following quotes from the Vanchem acquisition RNS dated 1st May 2019 ;
"The Vanchem Business has secured sufficient ore supply from third parties to support current levels of production, until Mokopane's development has been completed."
My observation at the time ;
"So there is clearly a strong indication that the company expects the Mokopone transaction to tie in with the Vanchem deal, and that there is a belief that a timeline is in play for Mokopone, which must include the license."
For me yesterday's incredibly punctual news, is a clear example that BMN is successfully exploiting those stakeholder linkages with the IDC.
6th October 2016 RNS ;
"The IDC also has important stakeholder linkages with the South African government, regulators and utilities and other key players that are necessary to provide a catalytic stimulus for the energy storage industry as they have for the renewable industry to date. We look forward to continuing to work with the IDC to develop the energy storage industry in South Africa."
Two times BMN have come up against regulatory approvals that were required to complete significant brownfield acquisitions, that greatly assist BMN's (and IDC) "catalytic stimulus for the energy storage industry."
Two times they have delivered on time.
As I said last Weds "who says lightning never strikes twice,.
Not I sir, not
Not I sir, not I. . .
Remember, buy rating and 80p broker target 3 weeks ago so plenty of upside still to come imo
Needs a re-rate after yesterday’s RNS
If anybody is now having any doubt as to where this is heading, then I suggest a cold shower and a very loud wake up call is in order.
A company that completes such problematic regulatory approvals so nonchalantly, is demonstrating itself to be a very capable adversary indeed.
For me yesterday's message is that Vanchem will complete, that the finance will is fully in hand (did anyone ever doubt it?), and that, through the IDC at least, BMN is being backed to drive this new South Africa industry, at a very high level in South Africa.
As it stands, Vanchem has "sufficient ore supply. . .until Mokopane's development has been completed."
So now its all about financing the development of Mokopone, initiating the refurbishment of Vanchem, and then pushing production higher and therefore operating and unit costs lower, in order to begin to service that pending Electrolyte plant in East London and achieve the most competitive pricing levels.
If I had any lingering doubt about Bushveld Energy's ability to play a significant role in the Eskom BESS project tender, then I don't have it anymore, be it we should all be careful not to become too over confident.
That is why I say that the news yesterday is far more significant than it looks on paper. It is about what it demonstrates about BMN's/BE's place in the South African economy, about how the IDC is assisting this company to reach the goals that they both set, when they signed that co-operation agreement back in June 2016.
Lets remind ourselves once more ;
"The IDC also has important stakeholder linkages with the South African government, regulators and utilities and other key players that are necessary to provide a catalytic stimulus for the energy storage industry as they have for the renewable industry to date. We look forward to continuing to work with the IDC to develop the energy storage industry in South Africa."
Government. Regulators, and most importantly for me, "utilities".
The IDC was the leader of the Energy Storage Committee that analysed the potential for a South African Energy Storage industry, that had as its members both Eskom and NERSA, who is the S.A. Energy REGULATOR.
That committee through the USTDA, produced a "South Africa Energy Storage Technology and Market Assessment," some 9 months after the IDC had signed its agreement with Bushveld Energy.
In my opinion, everything that is happening here, from the Section 11 at Vametco, right through to the Eskom BESS Project, is a pathway, that has been designed to ensure that South African minerals are locally beneficiated through a localised energy storage industry, and Bushveld Energy has positioned itself to be the first to walk it because of the preparations it has made to get there in the first place.
In my humble opinion, its a co-operation agreement on paper, but in reality it is the key to the city and a pathway laden with gold.
For those that haven't seen/read the South Africa Energy Storage Technology and Market Assessment, here it is below.
Key quote ;
"The objective of the South Africa Energy Storage Technology and Market Assessment was to provide advisory services to the IDC and Steering Committee that will help guide and promote the adoption of energy storage technologies in South Africa."
"As a state-owned development finance institution, the Industrial Development Corporation of South´Africa Limited (IDC) is interested in evaluating the potential of energy storage technologies to increase access to reliable, affordable electricity in South Africa, encouraging policies to support the adoption of energy storage technologies, and exploring opportunities to invest in energy storage projects."
Since the release of this market assessment in March 2017, the IDC has not only continued its co-operation agreement with Bushveld Energy, which includes an electrolyte plant and VRFB installation at Eskom, but it is remains the only co-operation agreement that the IDC has with an energy storage related company.
Furthermore, the above statement says ;
"encouraging policies to support the adoption of energy storage technologies."
The Eskom partnership with the World Bank Group on the Eskom BESS Project, is specifically designed to encourage the adoption of energy storage technologies.
Co-incidence? Possible, but not from where I am sitting.
Not when the authors of the market assessment, the USTDA, then go on to issue a grant to Bushveld Energy in August 2018, that is specifically designed to further enhance the demonstration battery at Eskom, which in turn assists BE with its assault on large scale mandates.
All of that is fed by the mines and processing that BMN is so nonchalantly going about acquiring.
The support is clearly there. The connections are clearly there, even if everyone is keeping things very business like ( as they should) and not shouting too hard about the weapons they clearly have at their disposal.
https://www.crses.sun.ac.za/files/research/publications/technical-reports/USTDA_Public+Version+1.pdf