REMINDER: Our user survey closes on Friday, please submit your responses here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
they why are you whining about dividend payments and buyback ..
"only people wanting a divi now or a buyback are short termers .. looking for their target %"
I've been in this over 6 years so that is quite frankly utter nonsense
only people wanting a divi now or a buyback are short termers .. looking for their target %
"Do you agree fyoz?"
No, my original post currently has 28 rec's so sentiment sides with me at the moment. However, since we've had an excellent explanation from BBN of why it's not prudent to use cash right now I'm prepared to carry on waiting for a while longer yet. And I suspect many who rec'd the original post are as well
The thrust of the post though, to halt the SP slide, is still relevant in my opinion
Imagine if any of the shareholders calling for buybacks and dividends were actually sat in a room with Fortune having these discussions. I think we all know that what would actually happen is that Fortune would simply articulate the plan and the big picture and no one would even mention either of those two things. There is a real need to separate knee-jerk emotional responses to the share price from what the company is actually doing here.
I guess that with Alfa having 25 recommendations versus 10, that Alfa’s sentiment seems to represent the majority. Do you agree fyoz?
Absolutely spot on BBN.
@Larky again with all due respect to your opinion, whilst that looks good on paper it simply isn't the reality of how a well run business should be operating. That is far too speculative and short term a move and BMN to date has been built on strategy and getting ahead of the market with intelligent investments both externally and internally.
If the Mokopone license were to land and the company wishes to push on with its reported $20m investment there, then it already has front end commitments of $88m even before we start talking about the development of Vanchem, the electrolyte plant, and any further investments in vanadium rental products or indeed VRFB projects.
Now I have no doubt that the IDC, at least in part is going to come through on the electrolyte plant. There may be other ingenious methods for reducing the expenditure on some of these other investments. One good example is that the Vanchem purchase price may well get revised down once working capital movements have been accounted for. The European FeV price is down circa $10 per kg alone since the 1st May announcement, which very simply put halves the profitability of any inventory held at Vanchem.
That aside and even assuming these good ideas come through, we are back to that $88m figure. Even a further delay on Mokopone, which to be clear isn't required now that Vametco has demonstrated sizeable further resources are available, still places us at $68m, which as far as I can see cannot be covered by current 'attributable' cash and 2019 income. Therefore, debt is going to be needed and the company is not going to be helping its cause by expending cash resources on a buy back at a time when it wants to be demonstrating to a set of banks that its balance sheet is strong enough to justify their trust.
It is in my opinion important not to lose sight of the reality of the current pricing environment when looking at how strong a cash generative position BMN holds.
That is why with such a strong existing and available resource at Vametco, the development timing of Mokopone even with a signed off license, will no doubt be thought through very carefully by the company prior to executing. The balance between driving debt in order to pursue their plans and ensuring their gearing is kept in check, will be key. I have no doubt that FM and Co will air on the side of caution until Vanchem and Vametco have really started to deliver added volumes.
I’m of the view we need the money for future investment, however I still don’t get why we don’t have a share buyback as we have the money in the bank, and if we really are confident of Mokopane and Vanchem completing, our share price re-rates and we sell back the shares and make a tidy return, then we have even more money to invest for our future and would also have a positive impact on our SP too!
ninja... yes a div is coming but not it may not be next year. FM has not said one will be paid next year. He has said they will review free cash and investment need annually and then come to a decision.
Personally I think it unlikely next year .. still far too much future investment needed. A small special would be peanuts but not sure it is in our best interests.. I am looking gorward to divs of 10p+ as the future vfrb rental streams come in....
Speaking of growth, apologies for changing the subject somewhat, what are people's views on cellcube who are commercially supplying VRFB batteries and are also vertically integrated, I also believe they have also entered into consortiums in the UK and North america and have active sales of their product. I feel we should be accelerating our progress rather than share buy backs.
A dividend is coming. As stated by the company. Next year. Fortune has said that. He has also said it is a growth company.
Personally, I think a dividend will help support the SP, as it will come from profits. Of which we have quite a lot of. Every week. And that is a rare thing on AIM.
More importantly, and with reference to a special dividend now. There is a test they have for children which is the best indicator of future success. Better than education, intelligence or social class:
A child is offered one sweet now. Or two sweets 15 minutes later.
Those able to delay gratification are more successful.
(2 of 2)
The above incentives are all effectively triggered by Vanchem and that transaction must be closed without any of the above help.
So right now existing cash is about supporting and closing that transaction and opening up the path to increasing production and wider non cyclical based revenue streams that are more greatly supported by operating cash flows as opposed to currently more limited post tax profits. It is not about a dividend bandage designed to make investors feel more at ease with the current pain they are feeling.
I said the other week, if investors are here for the long term and the rewards that should entail, then they are going to have to endure a little pain in order to get there. That remains the case right now but as I have demonstrated above there is much to like about where BMN is positioning itself and how strong its position will be once some of the key transactions have been completed and the belief in the growth of the company is further cemented.
(1 of 2)
@Fyoz With all due respect a dividend is not the answer at this stage and would only hinder BMNs growth not assist it. If the valuation is going to rise here then it has to be built on foundations that are built from far stronger materials than a dividend.
BMN is a growth company on a steep curve and with growth comes growing pains. But what we want to see at the end of it all is a strong individual that can handle any and all knocks that the investment cycle can throw at it. In the meantime, it needs to protect its capital and employ it to the best of its ability to achieve the growth plans that have been set out by the company.
By doing that and demonstrating to the market that it can fund itself, that it can grow even when the market is against it, will set it up for far greater and more successful times down the road.
The first goal here is to complete the purchase of Vanchem in a manner that protects existing shareholders interests. Subsequent investments in the plant should then be far more beneficial to the company as they should be taking advantage of the 12I Tax Allowance Incentive to expand Vanchem and perhaps even Vametco at a later date.
The enclosed website page explains very clearly what is on offer and how "preferred status" is achieved, which in the case of what BMN is proposing to achieve, should not be too taxing.
https://www.thedti.gov.za/trade_investment/export_incentive.jsp?id=45&subthemeid=26
"55% of Qualifying Assets or a maximum of R550 million investment allowance in the case of any Brownfield project with a preferred status"
"The Investment Allowance may be deducted from taxable income in the financial year when assets are brought into use (start of production)."
A staged development of Vanchem employing this scheme, whose application scheme currently runs until March 2020, should allow BMN to deduct the full $45m of investment proposed for Vanchem from their taxable income.
Furthermore, the positioning of the electrolyte plant within the East London SDZ also creates a set of tax incentives, which afford BMN comfort even during reduced income periods (See pages 12 and 13 in the first document below).
https://assets.kpmg/content/dam/kpmg/ng/pdf/tax/ng-incentives-in-africa.pdf
The 2nd document below gives a good example of what this basically means and what is needed to achieve said status.
https://businesstech.co.za/news/business/299640/the-tax-benefits-of-a-special-economic-zone/
The company must be incorporated in S.A. Hence why BMN have incorporated Bushveld Energy (Pty) Limited6 as their "energy development" company in S.A.
That unlocks 15% corporation tax instead of 28% and allows access to the same 12l tax incentives listed above but on a greenfield basis rather than brownfield.
The dividend Policy has been clearly stated by the company. Don't wish for what you can't have.that way you can manage your expectations and perhaps not mislead other shareholders into hoping for something that won't happen.
Divi possibly in 2020 if free cash flows allow it. End of story.
I want this company to grow and give longterm value to its shareholders. As to who to trust to have the clearest vision as to how to deliver? Well certainly not impatient pi's that have only partial knowledge of the financial needs of the company. Given his track record of delivering long term share value to genuine patient long term holders I trust CEO Fortune Mojapelo.
Let him get on with it.
Spot on squirtyflower. We have to avoid handing out shares to the shysters at all cost.
The company needs the money it currently has to finance future Acquisitions and expansions. We need to have $61 million by end of October for completion of the Vanchem deal, this will almost certainly mean cash from coffers plus finance arrangement of whatever sort. We would need cash going forward to expand the Vanchem and Vamecto production capacity. Vanchem will have its own running costs which are unknown at present.
Not in favour of a special dividend. The company has an announced dividend policy and should stick to that. I struggle to see why the market would react positively to a company that flip-flops on dividends e.g. by suddenly deciding its got the money for one after previously saying money needed elsewhere in short-term but possibly one from 2020 onwards. Also, not in favour of giving shareholders say £10m only to take on £10m of debt + interest to pay for projects or, even worse, having to dilute and hand out cheap shares to another bunch of shysters who will just rinse and repeat the current experience of shorting.
Frankly, to me, a 1p special dividend is irrelevant compared to the many tens of pence I expect the share price to grow over the next 12 months and beyond through the company just getting on with delivering on its plans and not giving a sh*t about the game players in the meantime.
you can have whatever opinion you like Fyoz, but you do not have the right to suggest that Fortune will be wanting to make solar panels in the future when there has been zero suggestion ever made that he has even thought of the idea
"I do not consider it to be in my best interests"
You're fully entitled to your opinion Alfacomp. Am I?
I do not consider it to be in my best interests
"A special divi is not what is in investors best interest."
You've no idea what's in my best interests
You'd rather damage the growth and future success of the company in order to receive an early windfall? A special divi is not what is in investors best interest. What is in investors best interest is using the capital to be successful in an emerging amd future multi billion dollar market. That is what will bring investors the greatest returns. There are plenty of rainbows out in the aim market if you want quick cash. Id suggest you go chase one.
@ FYOZ, Absolutely 100 percent this is the correct thing to do. Couldn’t agree more. A special divi would boost the sp instantly, increase investor confidence and bring in new investment. Great post.
yes your first one received 11 recommendations in 9 minutes which is not credible