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I was sceptical of this whole new deal, but then I read Oakblokes report on it. I think he puts it all into perspective very well.
Also, CC said they have a good relationship with Orion. So I think if the first payment in June can’t be met a compromise I am sure will be negotiated. It’s in Orion’s interests to do so.
Despite my earlier comments, I think we need to continue to trust in what CC is doing. All along he has said along the lines of BMN needs to get smaller to be future ready, so if we need to dispose of Vanchem in order to achieve that then so be it. There doesn’t seem to be any other option, although if he were able to convey that to shareholders on a call I think that would be prudent.
https://theoakbloke.substack.com/p/a-bird-in-the-bushveldbmn
@ hxulcolrdoh.
I cannot help but agree.
The galling thing is that three of our largest shareholders appear to have conspired to put BMN into this position.
Orion - 5.4%. Renogotiated their lending facility so that first payment was due end of June.
SPR - 14.5%. One of their "investors" was not forthcoming with the funds expected in December and then January. SPR did provide an interest free loan, but only after an 11 day (i think) closure of Vanchem. Costing BMN more money.
Acacia - 4.5%. They have not handed over the agreed $3.5M and BMN are now seeking legal action. Why????
HOW can 3 of our largest holders let BMN get into this position? Apparently, they are all on our side. The only one who may get some credibility would be Orion, because of the renegotiated loan. But what will happen after June when they do not get their payment?
In my opinion, BMN will go bust. And what three entities do you think will be picking up the pieces?
And if SPR are fully supportive of all things BMN, why do they not provide another interest free loan, until the sale of Vanchem - 50% and Mokopane gets ratified?
I hope i'm wrong, but something does not stack up.
Or put it another way, the long term debt (which BMN hasn't a mission of paying back) is going to be twice as hard to pay back.
I would be surprised if Orion are agreeble. Why would they kiss goodbye to half the assets on the balance sheet at the same time as their chances of default doubled.
On the SPR front going forward BMN gets maybe (subject to a deal being agreed/approved) $9.5m for VanChem ( $11.1m having been recieved and which disappeared like a fart in a hurricane) - 'the initial consideration'
Plus 'Eventually' over 3 years after a deal is concluded BMN will get $15m -> $20m as a deferred consideration' in quarterly installments.
Which does raise the question - if the plug was pulled post a SPR deal close what entity would in receipt of the deferred consideration payments ?
BMN really does look like toast.
Prices are historically highly correlated across regions so it should. Traders make it flow around where they find margins. You can also sketch BMN's SP to Chinese Vanadium price to see it.
From OEC re China - "In February 2024, Ferro-vanadium were exported mostly to South Korea ($2.9M), Japan ($2.09M), Netherlands ($1.25M), Malaysia ($426k), and Australia ($123k), and were imported mostly from Austria ($792k), Japan ($33.8k), and South Africa ($14.8k"
Can't see China having much impact on pricing in USA & Europe, Bushveld's main markets.
Historically, China is the key influence on global V prices. So even though BMN doesn't sell to China, that's the price to watch.
Pretty sure China 'controls' global V prices Lindon. So in theory if China V prices tick up, the rest of the world should surely follow, or do I have that wrong...? Call me out if so.
It’s only a MOU. They are a dime a dozen! BMN haven't exported to the China for the last 4--5 years, that includes well before their economic decline . Even before China imposed a 13.5% import tax - BMN exports to China only ran to around 2.5%. After that exports to that market stopped completely. That market has never had any material impact on BMN’s sp. The only market V price that is going to help BMN is the USA. The European Steel market has just released a further downgrade expectation for 2024- 25.
Lower demand for iron and steel products means less vanadium is produced from the iron production from ore. All their vanadium is a by product of that process. They still have their VFRB projects and areospace alloys to produce which may require imports of vanadium due to shortage of raw material locally ie s lag. Any sustained imports will start to increase the V price.
I mentioned it Cindercone, and yes good point you make, if they are shutting down production and importing instead, that cant be due to lack of demand. So what on earth would cause the shutdown of x 6 of their producers? Sounds government mandated - maybe environmental reasons...?
Someone mentioned last week that several of China's Vanadium Pentoxide powder producers stopped operating last month. If it was due to lack of demand, why is China importing vanadium pentoxide?
https://www.mining.com/web/vanadium-resources-enters-offtake-deal-with-chinese-vanadium-nitride-producer/
It's reasonable to ask Craig to lay out what mothballing instead would mean for BMN but there are some hints in the latest RNS.
First of all the $3m advance was received last week which suggests to me BMN are already out of cash. It is then states that Vanchem currently has $13m of debt with many of that long overdue so mothballing means no cash to even pay staff what they are owed let alone keep them on a retainer for when operations would be ramped back up all being well in say 4 or 5 months time. You then have to ask at what price would BMN choose to restart operations? They haven't made a profit even in the years where V averaged more than $38/kgV and would certainly need substantial funding to get back into operation so would it be dependent on when funders were happy with the risk/reward? $45/kgV
You have to assume that if Craig refuses this deal BMN need to find at least $5m just to pay the fixed costs for a few more months too and keep staff on retainers otherwise the cost of ramping back up would be prohibitive.
I'm sure Craig thought long and hard about this option and concluded it was the worst of options but to have him explain it would certainly be helpful.
Trevor - mothballing is not an unusual situation in Mining - eg see here https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2013/06/mothballing-mines-preempting-the-issues.pdf
Amongst the questions that Portillion has put to the board is "What other options have been considered by the board?"
It is not unreasonable to ask the board whether they have considered mothballing either or both of Vanchem and Vametco until such time as Vanadium prices recover. Obviously Orion would need to be required to play along with this, but someone puts a stop to the headlong running of Vanchem into SPR's arms, with essentially no additional upfront cash from them.
Thank you Trevor
Stopping production would only lead to a faster outflow of cash as there are fixed costs to be covered. In terms of V pricing, the volumes produced by Bushveld are very small from the global point of view, I don't imagine it would make any difference if they stopped producing, and if it did, they wouldn't benefit anyway, having sold off the stockpile.
If we sell Vanchem we would only have one product, nitrovanadium. We would loose arbitrage opportunities and it's only used in the steel sector experiencing a sectoral downturn, the demand for vrfb would probably not push price it as much as v pentoxide prices. What would be the consequence of stopping operation instead? At least it would increase vanadium price and our customers might realise it is in their interest to pay a fair price rather than a market price that pushes us out of the market for them to pay more for years afterwards. Can't they lobby for an accelerated sale of the 50% sale of vanchem rather than giving everything? If the union is so fearful why not work with them? Give the shares for helping lobby or something to align our interests
I’m all for not going bust, but I can’t not agree with Kamran’s stance to query the rationale behind this being Bushveld’s only way out of avoiding its demise.
I’m not ruling out an equity raise here, still think it could be an option. If V prices were to push up the SP and thus out market cap enough in the short term it would be anyway.
When was the last time we saw % increases in the 4’s…?
Meanwhile 100% of vanchem is being rushed through for sale to SPR. Hmm…
That makes no sense Steve - SPR agreed a deal well before Acacia signed up for $3.5m more shares in December.
I think the issue with Acadia not providing the previously agreed funding is connected to CC bringing SPR on board. It will be interesting to see if Bushveld do take legal action against them, although it will take time. Certainly stuff has been going on in the background
Cindercone I think you will find he has a CV anyone in the mining industry would be proud of. I'm not questioning his capability but rather his motive here.
Kamran has my backing here. We need to get someone onboard to see what the feck is really going on behind the scenes
Question is, did Coltman really have the experience to sort out this mess? I doubt it. Fact is, Mojapelo took on outrageous levels of debt with no fall back should the vanadium price turn, which it did. That is amateur hour management.
BELCO is another great example of how not to run a company - spending $10m on a chemical plant while completely misjudging the requirement for the product. Little boys playing silly games at shareholders' expense. The only thing FM got right is sticking his hand in the till to make sure he'd be looked after if it all went tits up.
Currently KS is the only one asking the questions that need answered by the BOD. We need to get to how such a crap deal is the only alternative we have. That's after they got mokapane and Vanchem at such a reduced price. I reckon there is more going on here than meets the eye. Who brought Coltman in? What is he upto as clearly he isn't looking out for us shareholders with this deal and the sale of assets at knockdown prices.
Agreed 70k and acting off a bb typical troll pedalling a narrative