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@bassguy, At least you had a go, I wouldn't know where to begin! Although I'll have a bash at next Friday's finishing share price, I'm pretty sure it'll be 14.50 :-)
Don't be hard on yourself @Bassguy... None of us know and a little bouncing of ideas is no bad thing
Have a G & T and enjoy the weekend
If we cant work out the value BE offers the market has no chance...
:)
...ducks
good weekend all, keep nicely socially distanced form the p155heads - wonder how many fights will start due to someone being concerned about proximity and politely mentioning it...I'm staying in for three weeks to see if there is a spike in numbers following this weekend first.
Agree with you Knuttie, market needs to see it to believe (wait for JSE build up, which I just wonder has it stated this week?)
Yes Faramog, my numbers are dumb re looking at them, I have actually included the full sell price and then leasing costs as well....
it was also revenue without costs, so the PE and sp were nonsense.
will go and have a lie down
Not disruptive at all Knuttie ... discussion... I was disputing the 906M revenue figure - frankly, I cannot see vast and exponentially growing revenues, just a steady raise and a little leasing cream on top.
Very very profitable, lots of future dividends and hopefully at some point a proper re-rate to a more representative share price.
But as for 'if/when it happens' - yup, but if it does not then we are likely fairly priced and will grow organically with future production but not substantially. I do think future multi-pound valuations are a fantasy right now and hard to see how we realistically get there without multiple sustainable and fairly guaranteed income streams
Was just thinking along similar lines today!
I know FM mentioned doing something about the share price recently but I think they are doing everything right and putting each piece of the puzzle in at a time as you say right in front of our eyes!
The market will get it.....eventually! Until then buy when you can and hold as long as you can.
B
Which is why a couple of weeks ago I kind of speculated a bit of re-branding may be needed to bury Bushveld Minerals into a wider group that focuses on Energy....
THIs World for the moment is total fantasy land & I am ignoring it completely until something actually comes to fruition. That is how the market sees it so with apologies to all speculation is a potentially disruptive wast of time.
Will the market understand BMN selling to BE? If they cant get we arent just a miner they wont get that model either? But hey ho - that just means i can put more in as time goes by. I do get the feeling this us already known and the market is waiting for a 'eureka' moment when in fact FM and MN have been putting this together before our eyes. More fool them.
I think @Bassguy your numbers are a little on the large side. Also, as was pointed out in the Vanitec webinar the best recycling of Electrolyte is re-conditioning to more electrolyte. Recovery estimated between $1.5-$3.0/lb ... so even optimised perhaps a max of $10/kg in residual value. Remember that value represents the post recovery value (essentially profit).
So in a 10 year model, selling at $50/kg, residual of $10/kg, that $40 would be depreciated over 10 years. Lots of models but assume linear, so $4/kg pa. On top of that a charge (you say) of 8% would be possibly levied. This would be against the original $50, so another $4/kg. So it is reasonable at a really basic level to assume that an end user will pay $8/kg/year + an initial fee. That equates to $80/kg + fee over 10 years. That equates to an annualised return of just under 5% on the original $50/kg (not dazzling). I would have thought a 12% rate more likely (giving around 8.1% pa) and the capital part returning to the finance company with the 'interest' split - who knows: 30/70 ? but probably lower).
I think it would be madness to try and finance the lot (and very risky) - which is why the automotive land who sell veh leasing in the many 10's of billions don't do that and spread the load and share the reward.
I would be delighted if vast future revenue streams pour in, but can't see that happening. Sale of Vanadium by Bushveld to BE at Market (or some agreed price structure)- BE sell Electrolyte to individuals or a Leasing Company, getting a portion of the interest/profit stream is how I see it working ... still very accumulative !
I could not arrive at your $906M figure at all for 8,400 MTV and it is naive to think the vanadium is recovered to the same value - as was discussed on monday, it is not quite as straightforward or environmentally straightforward as is made out.
The Capital value between initial sale and recovered residual will be collected by the financing company (just like a mortgage or loan). The profit on the interest payments will be split with a small part going back to BE ... that is my guess.
But we will see !
If we assume that a utility scale vrfb project costs $400/kWh, then a 200MWh contract would be worth $80m.
That would include upfront purchase of the electrolyte.
We now know that if we strip out that cost and replace it with a lease, the total cost reduces by $18m.
So we can now put some rough numbers into the other activities.
BE valuation for 200 MWh contract (900t V)
1. Supplying the electrolyte. Revenue $18m. Profit $9m.
2. Lease agreement. Revenue $3.6m. Profit $0.5m (per annum)
3. Development and planning activities for the projects. Revenue $3m Profit $1m.
4. VRFB procurement (acting as a middleman). Revenue $55m Profit $1m.
5. Project installation and commissioning. Revenue $2m Profit $1m.
6. 25 year maintainance contract. Revenue $3m Profit $0.5m
Thank you for the working out mogwhy. It just goes to show what a huge deal Bushveld is going to be. Imagine the profit in 5 to 10 years time!!
It would be great to see more of a valuation that takes into account the current potential.
That gives us Bushveld Energy revenue of $18m for the electrolyte and profit of $9m.
BE valuation for 200 MWh contract (900t V)
1. Supplying the electrolyte. Revenue $18m. Profit $9m.
2. Lease agreement. Revenue $3.6m. Profit $0.5m (per annum)
3. Development, planning and engineering activities for the projects. Revenue $ Profit $.
4. VRFB procurement (acting as a middleman for our partners). Revenue $ Profit $.
5. Project installation and commissioning. Revenue $ Profit $.
6. Ongoing 25 year maintainance contract. Revenue $ Profit $.
mogwhy I expect that the cost of converting to electrolyte is less than $10/KgV
"So we now have revenue of $45m and profit of $15.3m for phase 1 of the BESS tender just for the vanadium and electrolyte production."
But I'm attempting to put a valuation on BE, so I need I need to strip out the Bushveld Minerals bit.
That leaves us with revenue of $18m for the electrolyte and profit of $4.5m.
Thanks Alfacomp. So the total revenue from the vanadium and electrolyte would be in the region of $45m.
We know the cost of the vanadium is around $18/kgV.
Until I can find a firm number, I'm going to put $15/kgV on the cost of converting into electrolyte.
That gives us a profit of $17 given a market price of $30.
So we now have revenue of $45m and profit of $15.3m for phase 1 of the BESS tender just for the vanadium and electrolyte production.
Thanks Alfa, where have you got that data from please?
Extrapolated to 8400t gives
$420m sales value at $50 (for one years output)
@8% over 10 years gives $906, 748,498 leasing revenue with the original value leftover
after 10 years and no growth then we will be pulling in $900m revenue each year doing nothing just collecting from the pipeline, assuming V price remains around $30.
Convert to £ and multiply by current PE of 6.5 I think it is and we have £4 per share (minus taxes / cost etc).
Check my figs!
Mogwhy - I would estimate that you can ascribe around another 20$/KgV for the Vanadium that is turned into V electrolyte.
Thus at a starting market point of $30/KgV the electrolyte would perhaps work out at around $50/KgV - thus 900 tonne of V turned into electrolyte would be saleable at around $45M.
I believe that Avalon have been applying an interest rate of around 8% pa for the electrolyte leasing, such that after 10 years the end user has paid about 220% of the initial capex - i.e. they have completely paid you once for the electrolyte at the point that they get their first opportunity to decide whether to continue with the deal for another period.
Thus 900 tonnes of Vanadium could be turned into a yearly repeating leasing revenue of $3.6M
I've previously speculated that the market currently values Bushveld Energy at around £0.
If we assume that BE captures 25% of the phase 1 Eskom BESS contract (800 MWh), that would be a convenient 200 MWh which is the annual capacity of the new electrolyte plant in East London.
That would require 900 tonnes of vanadium.
The value of the vanadium to the group is easy to quantify, but what about the rest of the activities that would go into satisfying the contract. These could be
1. Supplying the electrolyte.
2. Lease agreement.
3. Development, planning and engineering activities for the projects.
4. VRFB procurement (acting as a middleman for our partners).
5. Project installation and commissioning.
6. Ongoing 25 year maintainance contract.
For a 200 MWh contract, what revenue and profit would each of these activities generate and what would that make the market value of BE?
If anyone has specific knowledge of any of the above activities or where to find the information, please post your educated guesses and let's see if we can add some numbers for revenue and profit to them.
That will allow us to have a stab at a valuation for BE at that stage, hopefully later this year.