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Yet the price/demand has crashed and yet to reverse. The US steel mills have been pretty busy over the last couple of years. Europe has and is still very subdued. China is supposed to be increasing production again, but not its property sector - its greatest consumer, and is being threatened with tariffs/sanctions in the West, because it is getting cheap oil/gas from Russia to make its steel. So may not reach previous production levels again. China has a lot of problems and may never recover that capacity. How quick will India/Europe/ROW fill the vacuum and what state will BMN be in by the time $40 kg/V comes back? I agree it will happen, but time is ticking and patient is on life-support. You are a dreamer if you are not worried.
Yes @Marc... but the question is can Bushy hold on long enough for a recovery ?
What the doomsters on here dont seem to want to acknowledge is that whilst yes, China has driven the prices of V, going forward demand for steel will come from other developing countries like India.
I lol at the idea that just because China's taken a hit that global demand for V falls off a cliff, nah, sorry dont buy that.
You are right but we agree demand increased and so did price.But at this level company is losing money on production.
Cinder is right. A load of buildings fell down in an earthquake. Again.
Quote from Tavi "The current scenario is setting the stage for what is likely to become one of the longest commodity bull markets in history."
https://x.com/TaviCosta/status/1777378865909813480
"It was construction boom in china due to which vanadium hit 130 level."
No it wasn't, it was the central government's decision to enforce increased rebar standards to cut down on the use of low-quality steel.
But that sort of money tends to flow into Gold and recently a lot has gone into cryptocurrency.It was construction boom in china due to which vanadium hit 130 level.What transpired afterwards is a different story and nobody knows where it will end.Demand was expected to increase after covid but that did not happen.
"Why don't you see Vanadium price recovering?"
You can't be this stupid. Historically, the construction industry in China drives vanadium prices and yet China is currently undergoing the worst property crisis in three decades with massive property developers going bust. That's why the vanadium price is dismal and there is no sign of recovery with house prices now dropping for eight consecutive months due to oversupply.
What other factors will see a reversal in the V price? VRFBs? No. China has plenty of its own now that the demand is not there for steel and can further import cheaply from Russia.
When the global economy struggles, what to they then do? Yes, they print the money. They've been holding everything up with programmes like the US infrastructure bill. Their playbook is to kick the can down the road. Can't see them having the appetite to do anything different. BMN just need to get through the short term. Currency debasement will lead to a rush to hard assets which BMN could benefit from.
These"definitive statements" I am making are based on RNS.We had an update according to which if they dont get no money then they will need to suspend operations.As far as price of vanadium is concerned it was construction boom in china that drove the price up in 2016 and right now gobal economy is struggling.Company is shot of funds and would need to raise money soon in my opinion.
Lamps, the status quo is that vanadium pricing is significantly below the all in cost of production. Unless someone can prove that there are reasons to expect an increase in pricing, then the market will assume current pricing will continue. That's the crux of the matter.
Sham - you are making definitive statements with no qualification or reasoning. Why don't you see Vanadium price recovering? How do you know that production `will' be stopped'. Debt repayments are geared aren't they? I think the basic problem is that the company has short term cash flow problem due to circumstances beyond their control. Let's see what Craig C. has to say on Monday. Hopefully he has figured out a solution.
Problem is they cant keep on deferring it forever and besides that money will need to raise money for working capital as well.Now look at full picture they are not making money at current levels , have massive debt to pay and production will be stopped soon.If Vanadium prices dont increase company is in big trouble and I cant see that happening.
'How can we say company does not need immediately they need to pay 7 millions to Orion shortly '
Actually that appears to be true, read the bit below in the middle:
60% of the CLN Balance (US$28.3 million) will be converted into a secured term loan ("Term Loan") on the following terms:
Interest: 6.0% ("Margin") plus the greater of (I) 3-month Secured Overnight Financing Rate ("SOFR") and (ii) 3.0% per annum.
Interest payable quarterly in arrears in cash starting from the last business day of the quarter in which the closing of the transaction occurs and on the last business day of each quarter thereafter. In the event that the Company has insufficient cash available to pay interest on its due date, the interest due on that date shall continue to accrue. While there is a continuing default, the Margin will be increased by 3%.
O Principal repayments structured to:
a. 25% of the Term Loan (US$7.1 million) to be repaid by 30 June 2024.
b. 30% of the Term Loan (US$8.5 million) to be repaid by 30 June 2025.
c. 45% of the Term Loan (US$12.7 million) to be repaid by 30 June 2026.'
_____________________
Obviously it means racking up even more debt and interest though but in terms of short term survival there does appear to be wiggle room.
"Same for BE, wasn't NM suppose to be trying to get electrolyte orders? The amount of money the company sank into that must be astronomical. "
$10m for the plant. Nikomarov's salary must have eaten a further $1m + running costs/staffing a few million more. And what do they have to show for it? F*ck all. Nikomarov's little pet project needs to be defunded and his salary is one cost that can be reduced.
How can we say company does not need immediately they need to pay 7 millions to Orion shortly and need to raise money to fund day to day expenditures as they are not making any money at current price.2.2 millions wont last long and this sort of money would certaintly lead to shareholders wipeout!
The cost cutting that can be made pales in comparison to the lost revenue from the fall in vanadium prices - year on year (Q1 on Q1) average sales price will have reduced by about $13.5/kgV, that's $13.5m per 1000mtV produced / $54m if extrapolated out for an entire year. Craig might be able to get direct costs down further from here but spending is necessary to really reduce costs, like with the barren dam, and BMN don't have the cash to do that now. You then have significant financing costs and interest on the debt that can't simply be reduced. Of course that was Craig's plan from day one, to deleverage the balance sheet by selling off some of the assets, but so far all the financing has been eaten up by cash burn and legacy debts.
And what do you mean 'stopping production is not going to work, or even happen'? The losses per month now will be more than the $2.2m cash BMN has remaining, they won't have the funds to pay staff, suppliers etc without further funding forthcoming. It's not a tactical halting operations if it happens, it's a necessity.
He needs to jettison the areas that are leaking money which would help reduce costs, which are still to high. I have no doubt he has tried to offload Lemur and suspect we cannot give it away. Same for BE, wasn't NM suppose to be trying to get electrolyte orders? The amount of money the company sank into that must be astronomical. Hoping for an update as to what they are going to do with it next week.
I also think that this option of stopping production is not going to work, or even happen. There is no way they can lay workers off without any serious backlash, the unions are far more organised and militant than anything we have. Vanadium prices may be low but the company have wasted millions over the last few years which is hardly the workers fault.
Basically he needs to raise more cash, which he said wouldn't be necessary until next year earliest. Enough to keep lights on until V prices recover.
When Fortune left at the end of June last year there was $3.7m cash. Since we have seen the majority of the stockpile sold, borrowed $8.1m from SPR and issued around 1B new shares for equity and BMN are back producing the same as they were before with none of the major capex projects having gone ahead, with $2.2m cash left and significant interest accruing on new Orion loans.
Issues with SPR have confounded the situation but this vanadium price is simply unsustainable for an indebted miner like BMN and beyond any CEO's ability to navigate - the most Craig can do is buy a bit more time and hope V price recovers substantially and soon.
I love a short term trade but this is just too risky given the precarious cash position. Administration or heavy dilution beckons...
Over the last two years this share has hardly let any trader escape with a profit and is in dire need of funds.But that wont stop gamblers from taking gamble I guess.
The word bargepole comes to mind. The cash position is dire. Unlikely to be anything left for shareholders. Good luck if you are in this for a trade
It's difficult to get your head round our current situation. Not that we are alone in this downward market trend. Resources and plant in place hust need to go canny till prices rise. We need to slow or mothball plant and sit tight with the backing of someone with vision of a turnaround. Maybe SPR will save us ? GLA