Member Info for Alfacomp

Lindon - an excellent find and Richken has done us a service by identifying the only interesting piece of information in the whole document which is otherwise a turgid mess of planning speak and backside-covering 'consultation' (thank no doubt to our good friends in the management consultant sector.)

Looking for the definitive statement on where the UK stands on energy storage I went to the 'Future Energy Scenarios' documents described in the planing consultation document described above.

This is summarised here:- http://fes.nationalgrid.com/media/1357/fes-2018-in-5-minutes-web-version.pdf

Alas there are lots of pretty clip-art diagrams of renewables this or that, and plenty of shouty headlines so we know what we are meant to be told, but little clear information for anyone who wishes to figure out what shape this energy storage is to come in, how much of what duration, and where, and how much the grid guys and government are really really hoping that we'll all be able to buy electric cars and then happily allow the government the decision as to when they can be charged and by how much (so called Vehicle-to-Grid energy, V2G energy storage).

But find this information could I not. Looks like we need to dig deeper - who wishes to enter the rabbit hole with me ?

on energy storage

https://www.utilitydive.com/news/unlayering-peak-demand-could-accelerate-energy-storage-adoption/546098/

I'm not sure that it favours any particular type of battery duration (eg 2hr lithium-ion vs 4-6hr VRFB) but it repitches the problem as between finite duration batteries and gas peaker plants (effectively infinite duration if you are prepared to pay for the fuel - but alas the burning generates CO2).

This re-expressing of the problem almost eliminates the question 'is battery storage necessary for me' and replaces it with the answer 'this is how long the battery duration is going to need to be for you sir "

Degsy - the problem for me is that if I put say a hundred grand into buying Iron shares the price would shoot up. Unfortunately it is just too small a play now, but good luck anyway.

7) Fortune Mojapelo and Mikhail Nikomarov - I have spoken to them and seen them present numerous times. Unlike most other AIM company executives who give the impression of simply marking out their time until their next paycheck or NED job comes along these guys have my complete trust and confidence. They are in this to really create an entirely new industry in south africa and I think both see this as their life's work and greatest ambition. In addition I think they are both strategically excellent thinkers and have exactly the right attitude to building commercial networks and relationships with VRFB technology partners and Energy Storage customers. Mikhail is now in charge of Vanitec's Energy Storage committee and meetings and is putting in place a global marketing campaign on behalf of all VRFB manufacturers. Fortune of course controls 5% and ultimately >10% of world Vanadium production. Between them I believe that they will be able to create the long-term relationships that will nurture the global VRFB industry and not simply kill it whilst in the cradle via excessively high Vanadium prices. Between them they run the BMN subsidiary Bushveld Energy, which handles the Energy Storage side of the BMN business. ( http://www.bushveldenergy.com/ )

It is easiest to get a feeling for these guys by watching them, on video:-https://www.thebushveldperspective.com/slides/bmn-video-1

This could yield company valuations of perhaps a factor of 10 larger than it currently is.

6) What does the future hold for Vanadium? The key fact is that Vanadium is the only element that can exist in aqueous solution in 4 different contiguous oxidation states (2,3,4 and 5) - in 1990 it was proven by Prof. Maria Skyllas Kazacos of UNSW that this allowed for a flow battery to be made entirely with the same electrolyte on both sides of the semi-porous membrane that divides the positive electrolyte from the negative electrolyte. This means that any transmission of any electrolyte through the membrane does not cause any problems (in other flow battery chemistries if this happens you get irreversible loss of battery energy storage capacity which inevitably increases over time). Between 1990 and 2010ish UNSW had this patented and tried with a number of companies to get the Vanadium Redox Flow Battery (VRFB) industry off the ground.

A simple video showing the principle of the VRFB :-https://www.thebushveldperspective.com/slides/slide/how-the-vanadium-redox-battery-vrb-works-16
A detailed article from our VRFB partners , UniEnergy technologies :-https://spectrum.ieee.org/green-tech/fuel-cells/its-big-and-longlived-and-it-wont-catch-fire-the-vanadium-redoxflow-battery
The world's largest battery, now being built in China, is a VRFB:-https://electrek.co/2017/12/21/worlds-largest-battery-200mw-800mwh-vanadium-flow-battery-rongke-power/

The UNSW people were 25 years too early, for megascale (and gigascale to come) energy storage was not a thing then. With prices per Joule now less for PV than for coal or gas there is growing demand for the storing of huge amounts of energy to get over the daily 'duck curve'.https://www.vox.com/energy-and-environment/2018/3/20/17128478/solar-duck-curve-nrel-researcher

The key thing for me though is that in the last 9 months China has nailed its colours to the VRFB mast with the announcement that they would be '"developing multiple 100MW-scale Vanadium flow batteries by the end of 2020" and that they "selected a vanadium flow battery because they have superior safety, reliability and lifecycle economics compared to lithium-ion and other battery types."

https://globenewswire.com/news-release/2017/11/01/1172376/0/en/Pu-Neng-Wins-Contract-for-the-Largest-Vanadium-Flow-Battery-in-China-as-the-China-National-Development-and-Reform-Commission-Initiates-a-Major-Push-for-Energy-Storage-in-Support-of.html

5) One thing that has irked many people on the LSE board is how the 'official' AIM analysts have made predictions that have seemed unduly conservative, and have basically only mirrored what the share price was doing. This is why we now track all analysts SP target predictions as well as the assumptions that they use to justify these predictions :-https://www.thebushveldperspective.com/blog/public-blog-1/post/analyst-watch-232 When you see that our own broker's (SP Angel) valuation of 33.6p assumes that the price of Vanadium is somehow going to fall from the current 80 USD/Kg back to 35 USD/Kg on the 1st of January 2019 you can see just how much leeway they are building into the future for price upgrades.

This brings us to a back of the envelope calculation of profitability.

All in it costs Vametco roughly 23 USD to make each KgV of Niitrovan (1 KgV is the amount that contains 1Kg of Vanadium)
A long term average sale price of 35 USD/KgV yields 12 USD nett profit/KgV
If long term average Vanadium prices settle around 65 USD/KgV then this is 3.5 times higher at 42 USD/KgV (65 USD/KgV is close to the average obtained this year).

Furthermore our production is increasing in the next year from 3750 Tonnes to 5000 Tonnes per Annum

At 3750 TPA, and average sales prices of 65 USD/KgV over the year Vametco profit before tax would be 157.5M USD, our 59.1% of this is 93M USD. Take off Tax and royalties and you may get down to 65M USD (51M GBP) . At the current Share price BMN is valued at 300M GBP - this is a Price to Earnings ratio of 6. As another of our contributor's, Calder Capital, has shown here ( https://www.thebushveldperspective.com/blog/public-blog-1/post/bushveld-minerals-vs-aim120-financial-analysis-281 ) the average for similarly sized companies on AIM should be closer to PE=25, some 4 times higher than where we are at now.

This is before any further development of the two other greenfield sites that BMN owns: a) Brits, which is right next door to the Vametco mine, and b) Mokopane about 100 miles to the North East)https://www.thebushveldperspective.com/blog/public-blog-1/post/bushveld-locations-223 - both are top-tier level deposits and the plan is to use these to allow BMN to double production again to 10,000 Tonnes Per annum, some 10% of world supply, in the next couple of years.

3) Why has the market not responded with fair value for BMN yet ? This video gives a brief hint at the reason - essentially in an illiquid market the audience of investors is small enough that the share price can easily be pinned or dictated by the action of just a single large investor :-https://www.thebushveldperspective.com/slides/slide/bushveld-minerals-in-a-minute-50 in this case between December 2017 and March 2018 the share price of Bushveld Minerals was entirely dictated by the fact that one large owner of shares (the Erongo group that BMN had purchased the Uis Tin mine in Namibia from) was unlocked from selling their 41 million shares in BMN. Despite signficant developments which should have propelled the BMN share price up it was pinned in the range 8-9p until all 41m were sold. (The Erongo guys wanted cash to buy BMW's with not paper shares.)

There is more detailed analysis of the Erongo overhang which I undertook here:- https://www.thebushveldperspective.com/blog/public-blog-1/post/the-end-of-erongo-260 - I am happy to say that the prediction that I made on the 5th of february this year was borne out by the movement of the share price a month later. That was quite a piece of investigative work, but fun. This was just the start of the movement of the share price from 8p to 28p where it now lies.

Up until december 2017 BMN was a minority (26.6%) shareholder in Vametco, so could not simply assert on its balance sheet that it had received 26.6% of Vametco's profit. It was only after it bought out Yellow Dragon in december 2017 that it became the Majority (59.1%) owner/controller of Vametco, at which point under accounting rules it can assert that it takes 59.1% of Vametco profit. Put simply the truth about BMN's Vametco profitability has not yet appeared on any end of Year financial reports yet so as far as most of the market is concerned it hasn't happened. Of course once it does hit then the crowd will arrive and investors will have missed the opportunity to be ahead of the curve.

4) How do we know the company really is selling as much as it is, even before the company reports production figures or end of year results (Q1 2018 was the last reported production period, we are eagerly awaiting Q2 production figures right now) - one of our contributors, Paludina, has undertaken an ongoing analysis of US customs clearance reports (publicly available) which allows us to see all of the product that Bushveld Vametco is shipping to the US (about 55% of all sales).https://www.thebushveldperspective.com/blog/public-blog-1/post/nitrovan-shipments-to-the-us-183 - needless to say this is very healthy and though it tells only the half the story it is still a very valuable way of dispelling the 'it really sounds too good to be true' concern that reasonable people might have.

reposted from a couple of months ago:

If you are at all interested in the general challenge of share ownership and unpicking the behaviour of the markets you should definitely be interested in the website https://www.thebushveldperspective.com which I created when I saw how easily lies and misinformation could be spread on other Private Investor (PI) social media sites such as http://www.lse.co.uk/ShareChat.asp?ShareTicker=BMN , ADVFN is even worse.

I concluded that the forum type of investor information board was not adequately policed and that good research and analysis could very easily be submerged by a torrent of nonsense and misinformation by those who make money by shorting shares. Since setting up The Bushveld Perspective (TBP) it has become a sort of online distributed research hub with different individuals curating different aspects of research into the business of Bushveld Minerals (BMN), Vanadium and Vanadium Flow Batteries. In itself this is quite an interesting development in the area of private investing and may indeed become a future model for how I act as more than just a passive investor, however I will need to spend a long time looking to find another company as good as BMN and the opportunity that Vanadium presents right at the moment.

So to some highlights:

1) Firstly Loudspeaker's (the nicnames are those of the same individuals on the LSE forum system) tracking of Vanadium prices :-https://www.thebushveldperspective.com/vanadium-prices shows how a number of factors have all combined together right at the moment to propel the price of Vanadium up by 500% in 2 years.

2) These factors are perhaps best summarised by the independent analyst Terry Perles who regularly covers the market at the meetings that the world vanadium organisation, Vanitec, holds. I have reported on the last 3 of these meetings. Terry's bit is usually in part 1 of each report.

June 2017 before the Vanadium shock in July that yearhttps://www.thebushveldperspective.com/blog/public-blog-1/post/vanitec-2nd-energy-storage-meeting-part-1-206

October 2017 https://www.thebushveldperspective.com/blog/public-blog-1/post/vanitec-3rd-energy-storage-meeting-part-1-175

July 2018 https://www.thebushveldperspective.com/blog/public-blog-1/post/vanitec-4th-energy-storage-meeting-part-1-274

Inner Harmony - I would have thought with all your posting on the BMN board you might know something about Iron and Vanadium now - evidently not.

bobf - the point which I was making and which I think it is only fair to understand is whether these tenders specify a battery technology or not.

Knuttie - I can't see why they would wish to suppress it, maybe they just don't get it and think that energy storage is either 1) lithium-ion so from america (no korea and chinas actually) or 2) hydroelectric so in wales or scotland but of no interest to those in the home counties.

What they need is a UK champion for energy storage that they could tell the story of - RedT should be fullfiling this role but unfortunately they have, ahem, sometimes not communicated this as well as they might have to the journalist public.

Expert - the general problem with photosynthesis is that it is relatively inefficient in terms of land usage and the hydrocarbon produced does not have a high energy density relative to say liquid hydrocarbons:

Per kg wood has perhaps only a quarter of the energy density of a fuel oil - this you need 4 times as much weight to get the same amount of energy, but the lower density of wood means that you need about 10 times the volume of wood.

https://www.forestry.gov.uk/forestry/infd-9peg3u

Comparing with the 70 litre fuel tank in your car if you wanted to store the same energy in wood you would need to completely fill the boot of a Volvo V70 estate ( https://www.carbuyer.co.uk/reviews/volvo/v70/estate/practicality ) and some. Plus the internal combustion engine doesn't work on wood chips

Mikinaman - I suspect the idea would be to use it to capture and then use heat or some other process to release the nasty into a separate controlled environment where you can do what you want with it - eg in the case of CO2 inject it into a mine or some such carbon capture scheme. Simply using an expensive atom like vanadium to capture only a single CO2 and then lock it away forever would make no economic sense.

If you are trying to scrub the atmosphere the general problem is that it only contains 400 parts per million of CO2 (up 20% from when I was born - https://scripps.ucsd.edu/programs/keelingcurve/co2-graphs/ ) so only one molecule in a thousand or so what you would like to capture - you need a selective filter that just pulls out the CO2 - trees are good at this, and they also produce oxygen which is good for the fauna.

kevkan - this is down one of the intrinsic but fairly unique properties of the electronic structure of the Vanadium atom - basically you have a bunch of different electronic orbitals that are all rather close in energy level so there are many different ways of setting up the atom. In solution these correspond to different oxidation states of the Vanadium ion, in a solid these correspond to having Vanadium as the pivot point around which many (typically oxygen or sulphur) atoms can bond to form pyramidal atomic cell structures - these structures can act like sponges to allow other ions in (whilst also forming weak bonds with the welcoming Vanadium ion).

In short Vanadium is a great atom to do lots of energy storage tricks and conversion (eg catalysis) tricks with. Right now the world is waking up to the fact it needs energy storage and conversion that does not involve breaking up hydrocarbons from the earth and depositing them in the sky and water.

bobf - can you let us know which sort of tender would specify a technology of energy storage rather than simply energy, power rating, response time, availability, acceptable degradation, safety performance etc ?

If tenders like these are being written in this country then the Vanitec Energy Storage committee needs to be informed so that they can help encourage this sort of 'best practise' in other territories around the world.

I think having seen the BMN story they can now appreciate how things can really change once an explorer becomes a producer.

Anyone who wanted offload 'free' shares would have done so at the start, not just at the point that the price starts going to Romford.

vauch - I suspect that they have concluded that simply paying joe public to chuck a couple of panels on one of their roofs is not going to cut it. The possibilities for UK on and offshore wind are really great though, the best by far in europe, and wind of course is present throughout the year so does not exacerbate the seasonality problem.

220 people have read yesterday's trading analysis already

https://www.thebushveldperspective.com/blog/public-trade-analysis-6/post/trading-analysis-17th-jan-2019-398

I wonder whether the behaviour identified yesterday afternoon will continue today.

who would have guessed it.

https://www.ft.com/content/58b9b060-1a41-11e9-b93e-f4351a53f1c3

Now commented upon - you may wish to add your own comments but go easy on the FT readers, they are a pretty well versed lot (apart from 'the mole' of course)