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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…
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.
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
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.
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.
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.
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/
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...?
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.
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.
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.
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.
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.
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.