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It may have already have been discussed here, but is anybody else wondering why the Bushveld MInerals Twitter account has made no mention of the Eskom BESS Tender webinar?

The webinar took place on 25th Sept 2019. Bushveld Minerals tweeted on 18th and 26th Sept and generally at least once a week since then. So they are 'active.'

Given everything we have discussed regarding the size of the opportunity that the Eskom BESS project presents Bushveld and its partners, I find the silence associated with the webinar release, deafening.

The webinar it should be noted, was an opportunity for those interested in tendering to better understand the project and start to prepare themselves for the tender. I would be shocked if FM and his team did not tune in.

And yet, the Bushveld twitter feed is silent on the subject.

Indeed.

There's news coming through that the wrong IRP has been gazetted and will need to be within and re-issued.

So detail to one side for the time being, the IRP is officially gazetted, an achievement, which itself should not be underestimated. After all this is the first plan to be promulgated since 2011, and as we all know, a great deal has happened in the world of energy since that time.

The key takeaway for me here is that the plan is gazetted. That the various government bodies and SOEs, now have a clear, measurable and referable plan, from which to implement their own plans further.

The Eskom BESS Project is reporting currently waiting on, at the very least, the Minister of Public Enterprises to sign it off. I am not fully on board with the authority to do so, without a revised IRP Plan, that states that battery storage technology is included.

"The IRP is the national electricity infrastructure development plan based on least cost-electricity supply and demand balance that takes into account security of supply and the environment."

Therefore, to develop battery storage outside of this remit, requires at the very least, a ministerial determination, that is difficult to come by. The release of the IRP removes that need.

It would therefore not now come as a surprise to see the BESS Project tender signed off shortly after this IRP Plan release.

The other observation/opinion I wanted to add here, is that the BESS Project timeline of completion by Dec 2021, demonstrates a precedent for technology stated within the IRP, being procurable prior to the date set by the plan (The 513 MW if battery storage is set as 2022).

Therefore, the 1,575 MW determined for implementation 'by' 2029, should be entitled to follow the same path, and be implemented any time up until 2029.

https://www.esi-africa.com/industry-sectors/generation/south-africas-irp-approved-by-cabinet-for-release/

Serenity permit variation to the Oil Discharge permit has now also moved to ‘Approved’ status.

The Serenity variation is now fully permitted once more.

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I3E's right to do so is being pulled up on that fact the well data employed to assess the prospect, sits in an adjacent block, whose lines have, in part, been decided by the historical ownership and relinquishment of the blocks in the immediate area.

I3E are 2.5km from the nearest discovery that tests the reservoir, they believe the Serenity prospect forms part of. However, there is further modelling that supports oil having migrated to Serenity (and Liberator Extension), even if the connection between the 2 blocks (Tain and Serenity) turns out not to be true.

Yes WH Ireland attach a 56% COS to the Serenity "exploration prospect/appraisal" but there is significant evidence to support an understanding as to why I3E, consider it to be 72% as well.

Nobody has questioned CORO's COS on Tambak-2 because they haven't had a failed drill in the lead up to it. Other than that, the I3E prospect has a lot more going for it, in terms of modelling and closer proximity (1 to 2.5km vs 13.5km) to 3 successful drills/appraisals, yet because of a failed drill that has yet to be fully reported back on, it is all written off and everything must be proved once more.

Whether Serenity is a success or not, this whole experience goes to show just how quickly very extensive data and analysis, and the respected parties that helped drive its production, can be almost completely written off, through a perception that is driven by a perceived failure, despite the fact that the data demonstrates that to not be the case.

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Good morning.

I am also a shareholder in CORO, who this week announced the results of their Tambak-2 appraisal well on their Duyung Production Sharing Contract ("PSC") in the West Natuna basin.

The well was a 13.5km step out from the original discovery and carried a 75% COS.

On the CORO website the company states the following ;

"Identified exploration targets, both above and beneath the field, include the Tambak prospect (scheduled for 2019 drilling) with mid-case prospective resource potential of approximately 250 Bcf and a chance of geological success ("CoS") of 45% and the Mako Shallow prospect with mid-case resource potential of 100 Bcf and a CoS of 75%"

Note the use of the words "exploration targets" and a "prospect", yet the Tambak-2 well is stated in the presentations and the RNS from 15th Oct, as being an "appraisal of the Mako gas field."

Of course this well was a step out within a field that sits entirely within the CORO owned (15%) block. However, as is always the case, they will have employed the well results from the previous 4 wells drilled in the block but in the main, the Mako-South 1X well, which is the well that cored and tested the reservoir.

So in essence, we have an appraisal well that is 13.5km from the original discovery well, that is identified as an exploration target, and carried a 75% COS.

I3E in S1, have also employed a mixture of the words exploration/appraisal well. Their "prospect" sits 1km away from the nearest oil discovery and just 2.5km away from a well that was employed to test the reservoir.

I3E believe that the Tain "discovery" is connected to the Serenity "prospect" making them effectively 1 reservoir.

In addition, WH Ireland confirm the belief that the Paleo model created by I3E, that "tracks the geological history of the region", demonstrates that "for the prospectivity of the both Serenity and the Liberator Extension, during the most relevant geological times, the region's dip orientation to the South was steeper."

"This would have encouraged oil migration from the Blake field (where oil is known to have been present) to the North and in particular towards Serenity and Liberator Extension prospects."

"By implication, even if the current structural maps are modestly inaccurate (and there is no oil communication between the relevant fields, as I3E has modelled) oil should have filled Serenity and the Liberator Extension during the Mio-Piocene."

Because I3§ have had a perceived failed drill on the LIB phase 1 area, the COS is understandably being questioned.

However, as the CORO example shows, other companies out there employ the very same wording as I3E have done. Other companies call a 13.5km step out in the same field, an appraisal.

Enclosed is the webinar from the Eskom BESS tender, where you can find the quotes I have employed from the WBG.

https://www.youtube.com/watch?v=SrYuqFZmizk

Now this is where it gets interesting for me.

Since the draft plan in 2018, Eskom's financial problems have really come to the fore, such that Ramaphosa, Gordhan and Mantashe, to name but a few, now really have a big headache.

This is further enhanced by their indicated intention to employ green funds (see Word Bank statements below) to somehow offset or house Eskom debt, away from the business. Then we have 2 key statements by the World Bank delivered as part of the BESS Project webinar, by a stakeholder who are and will be key to this potential policy moving forward.

"SA's electricity masterplan (2030 IRP) "will soon be finalised", with targets on battery capacity"

"A $11 billion climate finance facility "is being developed" , to support South Africa's just energy transition"

Prior to Eskom almost going out of business, the ANC's biggest headache was keeping the unions happy, and that meant support for coal.

Now they have another problem. The solution to the Eskom debt crisis is to seek monies from sources led by the WBG, that itself wants to see more RE, supported by battery storage, a technology they clearly state as being "key to accomplishing 2 degree C and SDG7" so climate change, and that their programme is for accelerating "battery storage development."

If the ANC are really serious about accessing that $11 billion of funding that the WBG itself talks about, then a 9.3% reduction in coal to 2030 plus! just 513MW of battery storage over the next 10 years, surely is simply not going to cut it.

So it will be very interesting to see which way this final plan is going to go here. The March 2019/2018 plan did not have the Eskom headache. It very much does now.

The ANC have to respect the unions, despite it going completely against their needs, but at the very same time they have to access those green funds and demonstrate to the WBG, that they are serious, and the IRP will demonstrate that in very plain sight.

I look forward to pawing over the details in due course.

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As we all eagerly await the release of the updated IRP, it is worthwhile revisiting the March 2019 draft IRP, in order to gauge what it will be measured against.

As we already know that 2019 update for the first time, introduced energy storage capacity to the plan, which itself was a major step forward.

Page 11 makes a statement about the energy mix ;

"South Africa continues to pursue a diversified energy mix that reduces reliance on a single or a few primary energy sources. The extent of decommissioning of the existing coal fleet due to age and commitment to reduced emissions post-2030, could provide space for a completely different energy mix relative to the current mix."

The reality of that within the plan, is a recognition of the removal 12,000MW coal generation through decommissioning between 2020-2030, but that replaces 6,542MW of that loss with new coal generation. Meaning the total reduction in coal is just 3,458MW upto 2030.

Given total coal generation at the start of the period (2018) was 37,149 MW, the reduction amounts to just 9.3%. Personally I don't see a great deal of ambition in that figure and it ties very much in with Minister Mantashe's recent comments on clean coal technologies and the revised IRP "making space for all."

The trouble is that the draft plan from 2018, upon which this NEDLAC update was based, was very clear when it said ;

"the scenario without RE annual build limits provides the least-cost electricity path to 2050."

There will also be a further 12,000MW of coal decommissioned between 2030 -2050.

So both those figures and any revised approach to those coal figures, is something well worth looking out for.

Page 42 of the enclosed draft plan stated this about Energy Storage;

"When energy storage costs were revised to the latest information, and taking into account the longer gas infrastructure lead time, the model selects more energy storage. This can be expected, given the extent of the wind and solar pv option in the IRP."

"It must be noted that Eskom is already preparing to pilot an energy storage-technology project based on batteries. The pilot will enable the assessment and development of the technical applications and benefits, the regulatory matters that relate to a utility - scale energy storage technology and the enhancement of assumptions for future iterations of the IRP."

To date, the plan states 513MW in 2022 and 1,575MW in 2029. So again, well worth keeping an eye for any change there.

One key development of course, since that March update, is the announcement of the Eskom BESS project, which itself, if its punctual, will deliver 360MW of energy storage between 2020-21.

If the IRP plan remains the same, then there is a further minimum 150MW floating around out there for Eskom or other parties to employ, but it has to last 8 years.

https://www.egsa.org.za/wp-content/uploads/2019/03/Updated-Draft-IRP2019-6-March-2019.pdf

@Olderandwiser Am out and about today, so a brief answer if I may.

I have today down as day 64.

The 10th Jan 2019 update stated ;

“The Company expects its three-well 2019 drilling programme to cost c.US$41 million with additional capex to 2020 first oil of c.US$90 million, inclusive of considerable contingency.”

The 3 drill programmes issued by I3E total 120 days inclusive of ‘contingencies.’ I take that to be those referred to in the10th Jan update.

Since then the company has announced actual costs of $36m and BGHE have agreed to defer $3m.

Even if I ignore the $2m discrepancy and employ the original $41m figure, then the total 120 day cost still ‘only’ comes in at $38m

I3E have raised circa $49m in 2019.

So whilst it is important to continue to monitor the total days, the information to hand points to there being no issue with finance.

I3E have circa 56 days left to complete S1 and A3. S1 could well need to be, worst case scenario, re-spud, which would test the 120 day boundary, but it may be as I suspect a mechanical sidetrack, which should reduce the time period needed to complete S1.

If everything is running to plan but we need to add the permit variation in. What that means days wise I would not wish to offer an opinion on, but as I say the finances look to be under control and there remains a misunderstanding in some quarters, that it’s all about the 94 programme.

That’s all from me today.

Serenity permit variation to the EIA ‘Direction to Undertake Drilling Operations’ and Chemical Permit, have both now moved to ‘Approved’ status.

Whatever variation it is, is now likely under way.

@Ninvestor No problem. BMN is still my largest holding but I do not comment quite as often because its generally doing everything right, heading in the right direction, and just needs time and space to grow and flourish.

Its merely about the time needed for that kettle to start boiling.

I expect the buzz phrase of 2020 to be 'large scale energy storage mandates.'

Point gladly taken on board Ophidian.

From the Vanchem acquisition RNS dated 1st May 2019.

"The Vanchem Business has secured sufficient ore supply from third parties to support current levels of production, until Mokopane's development has been completed."

So there is clearly a strong indication that the company expects the Mokopone transaction to tie in with the Vanchem deal, and that there is a belief that a timeline in play for Mokopone, which must include the license. What it also says is there is time available to get Mokopone up and running without relying on Vametco, a point I had missed. How much time is not clear.

"The Company retains the optionality to supply magnetite concentrates from Vametco to the Vanchem Business."

This was my point be it perhaps poorly communicated. Mokopone is definitely the preferred option but the company has communicated that Vametco is capable. My point and belief was that Vametco can handle even more than the current 1,000mtV, be it likely not sustainble over a longer period, you clearly believe otherwise, and I respect that and your experience.

It may well be that Vametco has been stockpiling concentrate in preparation for this event. A head start if you will, although its just a theory and not confirmed.

"Upon receipt of the mining right, Mokopane will be a primary source of feedstock to the Vanchem Business as a result of its large mineral reserve, therefore the Transaction facilitates the expedited development of Mokopane. The Mokopane-Vanchem model will represent a fully integrated business, in line with the Company's strategy for Vametco."

It is interesting that they say "upon receipt of the Mokopone license, Mokopane will be a primary source of feedstock to the Vanchem Business" What they do not say is "and its development into a mine" or something similar.

All in all, you may well be right. I was referring to the possibilities that the company has, which make Mokopone important but not critical to the plan at this time. There is space to breathe if you will.

That said, the company is certainly giving off indications that the Mokopone license date is perhaps not unknown to them, and that the Vanchem transaction completion is perhaps key, as it was for the section 11 for Vametco.

Who says lightning never strikes twice.

@Alexios According to the BEIS regulations, there are only 3 circumstances that would lead to a variation to the permit being sufficient.

These are ;

1. "if it is decided to side-track to a new geological target during the course of the drilling operation, the original applications should be varied and submitted to the Department, requesting a Post Direction Amendment (PDA) of the original EIA."
Direction;

2. "if problems are encountered during the drilling operation and it is necessary to undertake a mechanical side-track, the original applications should be varied and submitted to the Department, requesting a PDA"

3. "If it is necessary to re-spud the well during the proposed operations, the original applications should be varied and submitted to the Department, requesting a PDA."

See page 47.

All other possibilities are either included (planned or contingency sidetracks) or they require a new permit (re-enter an existing well to side-track to a new target).

All 3 remain possible, but as we discussed previously, I don't see how they were far enough into the drill to establish a need to change geological target, and the speed of the permitting and subsequent review, lend themselves to a localised issue and not a re-spud. I also envisage that I3E would RNS a re-spud, which could still come.

However, I am opinionating against the data and I cannot state that my view point is correct on this.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/778899/OPRED_EIA_Guidance_2019_Revision_5_-_14Feb19.pdf

The Serenity permit variations to the EIA Direction to Undertake Drilling Operations and chemical permit, have both moved to decision status.

As suspected and in line with other examples on the energy portal, the process on variations tends to be much quicker than initial applications.

I would add that the moment that BMN clearly establish alternative revenue streams that are not reliant on vanadium's core steel market, and they are of substance, then that will be a watershed moment in the life of BMN.

Add in the fact it is tied into an energy market that is not solely reliant on world economy success, and the impact should be substantially amplified.

Two revenue streams in two completely different worlds, carves the risk out of the BMN profile. The list of institutions and funds that would wish to make a permanent home, in such a business, should be considerable. So long as the information is there to understand it. When and what that is is still to be seen, but it will be for me certainly be the very best example of when and not if, it happens.

Recession proof earnings in a business that can exploit the very best of global expansion when it is available, is a very attractive proposition indeed.

@Ninvestor Mokopone is a very nice to have but it is not a necessity. It does not form part of what is core here, right now.

BMN were certainly confident enough to tie it into Vanchem when announcing the deal, which I do take as being significant, because they did not need to. They Vametco, which still holds the highest grade vanadium in the business and is available immediately. Even if the license were to land tomorrow, Mokopone is not.

So one way or the other Vametco has to start supplying Vanchem and so the tie in with the resource make up and the plant, must become a reality. By that I mean it must be possible.

Vametco is in my opinion big enough to handle a larger Vanchem. Vanchem currently sits at c. 1,000mtV. I believe that BMN can increase this significantly with limited CAPEX. Just like at Vametco, I see the higher percentage of the reported $45m refurbishment costs being associated with the tasks that are harder and take longer to do. So the refurbishment plan that the company has indicated will be released post transaction completion, is also very important.

If it is as I believe it to be, and Vametco can indeed support a larger operation there, then BMN should be able to move beyond 5,000 mtV without ever having to concern itself with the Mokopone license. That we would all welcome and encourage the Mokopone license and its development, is clear. However, right now BMN need to concentrate and those options that require the least amount of CAPEX input, but deliver the greatest increase in revenues and scale.

So Mokopone is important but it doesn't in my view need to be pushed too hard or worried about.

At 5,000 mtV plus production, BMN has the necessary firepower it needs to drive the electrolyte plant and downstream value chain items such as battery assembly (large scale mandates considered of course). That is where the value creation and the multiplication of the company valuation, will really see the most benefit. That added firepower and understanding, can and I believe will, open up many new doors for BMN, such that the Mokopone's of this world, will far more readily come home to roost.

Its all about the core items. Its all about the core system that drives the full value chain creation. If revenues pick up due to stronger vanadium prices, (which are by the way a matter of when and not if, be it this year, next or at some point in the future, they will happen), then the plan can be expedited and the Mokopones driven far harder. But right now it is for me, about employing the cash pile as efficiently as possible to ensure maximum gain, which itself further protects the business from risks, such as lower vanadium prices and increasing operational costs.

Morning all,

I would assume that if everything associated with the Vanchem acquisition is going according to the plan, which I have absolutely no reason to doubt, then we should very soon be hearing about the debt facility and its structure.

In the lead up to the completion of the Vametco transaction, we did not begin to hear a great deal about the make up of
the payment structure, until approximately 2 weeks prior to the closure of the deal.

What we do know because BMN management have time and again demonstrated it, is that the preparations are never left ot the last minute, and BMN do not make statements associated with said transactions, without being very sure of their position.

The 29th August update was clear ;

"The Company is progressing the negotiations with local banks for a debt facility to supplement existing cash resources. Further updates and progress on the satisfaction of the remaining conditions precedent and the approval of the debt facility will be provided as appropriate."

My belief is that said debt facility is agreed and what the sign off is waiting on is the completion of the remaining "conditions precedent," with the South Africa Reserve Bank, likely being the key item, particularly if said debt facility is being raised against the capital in the Vanchem facility.

I remain in awe of BMN's ability to complete the Vametco deal in such an orderly and timely manner, way back in March/April 2017.

The way they were so nonchalantly able to declare that the "section 11 of the Mineral and Petroleum Resources Development Act, of 2002 ("MPRDA") for the Ministerial consent to the Acquisition" was achieved, just 1 day after the full finance package, including the bridging finance from Barak Fund, should really warm the ****les of every BMN shareholder's heart.

It demonstrates clearly that when BMN really want to get something done, they do, and extended section 11 approvals, such as those that weigh heavy on Brits right now, are not unattainable, when those S.A. regulatory and government orientated levers are pulled in BMN's favour.

So I expect the deal to close when they say it will close, and I expect an announcement in the lead up to that date, be it it may run very close to said deadline.

@Ophidian. Apologies, I missed your post on the COS terminology and calculation. Thank you, very informative and recommended.