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Annual Report page 10

Two key statements

"Vertical integration is key not only to strengthen the vanadium demand profile, but it also unlocks significant economic opportunities for the Company along the vanadium value chain."

"Bushveld Minerals’ vertical integration strategy provides a natural hedge against volatility in the vanadium price."

This is the key to the step change in value that I expect to see take place here. The value chain is being realised but as I have said it takes time and investors need to be patient.

There will though come a point in time when the energy arm is sufficiently string enough or as I feel sufficiently understood and appreciated, that it will dawn on the market that a fully integrated platform offers substantial re-occurring revenues even during a downturn in the global market or indeed any other supply/demand shocks that may come along.

Once the funds, particularly those attached to pensions, get a sniff of that capability, of that consistency, and that it comes with regular free cash flow related dividends, then BMN stock is going to be in high demand.

However, it won't simply be a switch. It won't be about waking up on a certain day and buying BMN stock, it is a process that in my view will come in stages and will likely sneak up on us all whilst we are sleeping.

@SOTRR My feeling is that Vametco will continue to concentrate on the steel market and Vanchem will be progressed as the electrolyte plants main source of material. That's not to say that there won't be overlap but Vametco is where Wogen is involved contractually and with production above 3,400 mtv expected to be phased in over the next 2-3 years, it represents a steady market with established customers.

Vanchem doesn't carry the burden of existing customers. There are no known distribution agreements either. With the chemical plant it is a natural location for the primary conversion of the Vanadium prior to shipping to East London.

At 9670 mtv it essentially will be able to cover the planned first 200MWh of electrolyte with the ability to scale up with the facility as the energy storage platform begins to take off. I am sure that any further surges in orders or interest will lead to Vanchem and the facility being ramped up quicker than perhaps the initial reports currently state.

All just my own view and feel of course but it makes sense not top mix and match and Vanchem now allows that to be avoided.

(2 of 2)

"Leveraging proven in-house project development expertise and working with multiple stakeholders places Bushveld Energy in a unique competitive position to secure large-scale energy storage mandates in Africa"

This statement is basically confirming what I have just alluded and that the demonstration project at Eskom coupled with the political and regulatory might of the IDC, enables the team to firstly secure Eskom contracts and then go on to export this expertise in Southern Africa (i.e. The SADC). That the connections established through Eskom's own network of projects and contracts will be exploited to enable energy storage solutions from BE to gain traction in the SADC. Perhaps further afield also but the initial network in in those 13 SADC countries that signed up to the free trade agreement and that is plenty to be working with.

That is why the company was so clear so early on that the Eskom battery would be accessible for potential future customers. It is more than just an Eskom lead it is an SADC beacon.

Put another way. Could there be a better customer to have in your portfolio than Eskom when you are trying to engage and convince the utilities of Southern Africa to buy your product? Particularly when you can take those star struck visitors into the heart of Eskom to see it?

As the Vametco VRFB develops it too will open up other avenues but the initial penetration for me comes through Eskom, the utilities, and those large scale mandates.

The company has spelled it out in its vision but as always the vision for me is far closer to a reality than we will ever be able to imagine, prior to being told that it was so all along.

(1 of 2)

The BMN Annual Report is another demonstration of a company telling the market exactly where it is going if it would only be prepared to listen and act.

Page 2 states the following ;

"leveraging the low-cost production platform to build a leading stationary energy storage player participating in the vanadium redox flow battery value chain through the supply of electrolyte, project development and ownership of VRFB technology"

Now all companies make bold statements in their official releases but how many have consistently delivered them in the way BMN has? In doing so what does that say about the future plans and the preparation and progress that has already been made in order to be able to make that headline statement.

Then on Page 3 BMN lays out very clearly what this means and how this will be achieved.

"Ownership of processing capacity at Vametco and potentially at Vanchem means Bushveld Minerals can optimise electrolyte production through an in-stream process flow design, providing significant cost advantages."

This statement indicates strongly the time and energy invested in achieving the Vanchem acquisition. It has clearly been a very important cog in the BMN integrated wheel for a very long time. Those thinking that it is all rather convenient that Vanchem's chemicals business is a perfect fit for the planned electrolyte facility, should think again.

I put it to this BB that Vachem was a target as far back as the close out of Vametco, it was just that a producing Vametco was needed in order to achieve it.

"With vanadium making up 30 to 50 per cent of the cost structure of a VRFB and given potential to source other components for VRFBs locally, Bushveld Energy will deploy battery systems with the highest local content of any technology in South Africa"

Breathe that statement in. Bushveld Energy will deploy not only the highest local content batteries in S.A. but the highest of any technology currently operating in S.A.. That's quite a statement.

For those that appreciate the SADC free trade agreement and more importantly the local supplier based criteria that Eskom procurement is tiered upon, will clearly understand what that means for the company's chances of securing large scale mandates from Eskom. If the local assembly and manufacturing is sold as part of the tender. If it is demonstrated that a solid tender win delivers a localised industry with such high local content, then BE has a very big chance of winning significant number of contracts from Eskom, bv it stage 1, 2 or further expanded projects down the line. I strongly suspect that BE believes it has all it requires to secure a significant enough package to allow the local content to be realised. At that point BE truly comes into its own.

@Girdz Valuations are tricky and I do try to avoid going public with them.

What I will say is that I am very surprised to come back to a valuation that is still barely above cash on hand.

The combination of the Anchois discovery and and the Anchois N satellite has the ability to deliver the phase 2 plan as it is known to be at this time. That`s very loosely a 90mmscf/d field with a circa 22 year life span.

That is a very desirable asset given it will only take 1 appraisal well and an exploration well with 43% COS to achieve it.

Even before that the appraisal well is capable of delivering the first 10 year plus 90mmmscf/d development on its own. That`s just 1 appraisal well.

SO it will all be about capex and how much of the 75% CHAR has to sell to achieve first gas. Their position is certainly strong enough to warrant holding onto at least half of that 75%. If so then even with substantial dilution to achieve their share of whatever costs are left, the valuation should still be substantially north of where we sit today.

The size of the asset when added to the lifespan of the field (and we are talking minimal further development of the many opportunities that Lixus holds), is sufficient to make any large front end capex relatively insignificant in the long run, in my opinion.

So however the deal ends up there is a very good return to be made from these levels, in my view. If the deal is very good then that return naturally grows even greater, and further supports even greater expansion/inclusion of Kenitra and Mohammedia, which act as a natural enticement for any partners given they are demonstrating the same characteristics as Anchois.

It should not be forgotten that the Anchois data will be providing far more than just opportunities related to Lixus.

(3 of 3)

It is for me inevitable because the battery energy storage market is real, it is here, it is just about time to bed in and multiply. Therefore, it is down to the technology. VRFB is a stronger better solution than its nearest rival lithium-ion at utility scale, and is already cheaper when cycled more than once. Add in lower V prices and the cup flows over.

The analysis is basic but for me it doesn`t need to be any more complicated than that. The market is there, the fear is there, the cost is there, it is now about take up and time to deliver.

So we have a company with a growing mining business that is expanding into a vanadium market that is already going to demonstrate future shortage because of a price pull back that is currently deemed to be a negative fundamental but is in fact a very strong medium term positive.

We have an inevitable and substantial enough secondary market that thrives at lower vanadium prices and will at the very least place a bottom on those vanadium prices, that will see BMN maintain good profitability going forward.

At the same time the business is going about it true development and transformation into a multi faceted fully integrated business that will be set up to reap the maximum rewards from its resources through being the lowest cost producer that controls its value chain in full. That in turn allows it to extract value from each step of the process. In a market that accepts that the VRFB energy storage offering is a valid, that is potentially a very powerful corporate beast.

There are no costs that are insurmountable on this journey. The energy storage business is considerably cheaper to set up than the mining/processing business and that has recently demonstrated an ability to become one of the largest producers in the world through business contained expense.

So it is merely about time and having the patience to wait and watch it all take place. No poor attempts at disruption or deceit should allow oneself to be separated from this story and should be seen for what they are, a short term cycle designed to make a short term buck or two.

Nothing to date has changed, Everything is on track and the story is there ready to be told in all its glory. When it is, then I feel strongly that the timing will once again be impeccable with BMN, the market will finally be ready for what should be a very mouth watering experience, so long as one is still here to enjoy it.

Just my thoughts as usual. One's own research is always key to this investment world so please always DYOR.

(2 of 3)

Despite the participation of a number of more bearish posters, I don`t believe there are truly that many contributors out there who don`t appreciate the longer term investment case for BMN or its potential. Even without the energy storage angle, which itself has seen far greater realisation over the last 12 months or so, there is no getting away from the fact that BMN is clearly demonstrating a strong and attainable growth path that will see the need for higher end V prices dissipate as it comes together. Much of the negative disruption that we have seen here these past few months is just that, disruption designed to play on shorter terms outcomes and realities. A great many of those minds will change be it discreetly, as the case for supporting the growth of the SP becomes too strong not too. A great many of the negative voices are clearly intelligent people who will go on to be long on this stock when the time is right. To believe that they are simply all disbelievers is far too simplistic and a little naive.

The very reasons why the SP has receded from its highs are the very basis for the investment case moving forward if we accept that vanadium will remain in demand through the medium to long term. A position that right now is very difficult to argue against. The new rebar regs will take affect at some point. They didn't disappear they just got a stay of execution. Steel strength and demand will continue to grow. Countries aren't going to suddenly start backing away from this, they are going to push on further. The same can be said for alloys.

On the supply side, whatever the leading contenders may say about their deposits and their chances they are all already going to experience further prolonged issues with finance merely because of the volatility that has been seen over the course of the last 12 months. None of them can avoid this, whatever they may say.

In the meantime, those in the inner circle looking out, they being the existing producers driven mainly by the 2-3 pure plays, are going to be able to make hay whilst the sun shines, and that is without any affect being felt from VRFB, which has the very best chance of success whilst prices remain low.

A great many contributors here know this but it is nevertheless worthy of repeating because long term investing is a journey with a great many twists and turns, and it is easy to be blown off course in the short term and forget why one is even here for the longer term. Can it really all be true? Can these predictions and this market really materialise? Well the answer right now remains yes it can because with BMN and vanadium we have a situation where the lower prices support a future market where by demand rises but the supply cannot answer it for reasons stated above. A market where by those lower prices support a second far larger market in VRFB, which itself will act as a secondary demand driver, even when the steel market sees a temporary downturn.

TRY AGAIN

(1 of 3)

Morning everyone.

A few thoughts from me today.

I have on several occasions stated that I felt that the BMN story will really pick up again in 2020. That said there are an ample number of near term developments that are expected in 2019 and they should bring with them strong support for the current valuation if not solid further growth. It is more that I really see this as a transformation and preparation year in more ways than one, as investors become more and more accustomed to BMN being known as a fully integrated energy storage related play rather than a miner that is fully attached to its mineral`s performance. For me 2020 will deliver the plans that have been implemented in 2019 and will push BMN into a new sphere of understanding and acceptance, that will adjust the way the stock is perceived and valued. I believe this will be timed with a wider market understanding of what energy storage is as a market and more concrete acceptance of what it is capable of. That for me is the key development and greatest driver of the BMN valuation. In the meantime, all BMN need do is continue to pull together its integrated model and demonstrate to the market its potential, which takes time but I am patient.

Those 2 things combined is where the real value is in all of this and will in my opinion go on to make all of the conversations that we see today regarding BMN the miner, look like the small talk that it really is. FM continues to drive the message of a story half told because the story thus far is the preparation that I am talking about. The model is still a work in progress, which takes time.

MINING - PROCESSING - ELECTROLYTE - LEASING - PROJECT DEVELOPMENT

That is the goal and we are barely half way. But the rest is coming and for me 2020 will be the point at which it will all be far more clear, and it will be perfectly timed for a market that will finally be ready to understand it.

I believe investors would do themselves a good service by reviewing why it is they are invested here. Are they looking for a quick return or are they here for that greater and far richer story. If the desire is to see a short term gain or to quickly return to the heady heights of 2018, then for me I feel not only is more patience needed but also more understanding of what one is dealing with here.

(3 of 3)

It is for me inevitable because the battery energy storage market is real, it is here, it is just about time to bed in and multiply. Therefore, it is down to the technology. VRFB is a stronger better solution than its nearest rival lithium-ion at utility scale, and is already cheaper when cycled more than once. Add in lower V prices and the cup flows over.

The analysis is basic but for me it doesn`t need to be any more complicated than that. The market is there, the fear is there, the cost is there, it is now about take up and time to deliver.

So we have a company with a growing mining business that is expanding into a vanadium market that is already going to demonstrate future shortage because of a price pull back that is currently deemed to be a negative fundamental but is in fact a very strong medium term positive.

We have an inevitable and substantial enough secondary market that thrives at lower vanadium prices and will at the very least place a bottom on those vanadium prices, that will see BMN maintain good profitability going forward.

At the same time the business is going about it true development and transformation into a multi faceted fully integrated business that will be set up to reap the maximum rewards from its resources through being the lowest cost producer that controls its value chain in full. That in turn allows it to extract value from each step of the process. In a market that accepts that the VRFB energy storage offering is a valid, that is potentially a very powerful corporate beast.

There are no costs that are insurmountable on this journey. The energy storage business is considerably cheaper to set up than the mining/processing business and that has recently demonstrated an ability to become one of the largest producers in the world through business contained expense.

So it is merely about time and having the patience to wait and watch it all take place. No poor attempts at disruption or deceit should allow oneself to be separated from this story and should be seen for what they are, a short term cycle designed to make a short term buck or two.

Nothing to date has changed, Everything is on track and the story is there ready to be told in all its glory. When it is, then I feel strongly that the timing will once again be impeccable with BMN, the market will finally be ready for what should be a very mouth watering experience, so long as one is still here to enjoy it.

Just my thoughts as usual. One's own research is always key to this investment world so please always DYOR.

(1 of 3)

Morning everyone.

A few thoughts from me today.

I have on several occasions stated that I felt that the BMN story will really pick up again in 2020. That said there are an ample number of near term developments that are expected in 2019 and they should bring with them strong support for the current valuation if not solid further growth. It is more that I really see this as a transformation and preparation year in more ways than one, as investors become more and more accustomed to BMN being known as a fully integrated energy storage related play rather than a miner that is fully attached to its mineral`s performance. For me 2020 will deliver the plans that have been implemented in 2019 and will push BMN into a new sphere of understanding and acceptance, that will adjust the way the stock is perceived and valued. I believe this will be timed with a wider market understanding of what energy storage is as a market and more concrete acceptance of what it is capable of. That for me is the key development and greatest driver of the BMN valuation. In the meantime, all BMN need do is continue to pull together its integrated model and demonstrate to the market its potential, which takes time but I am patient.

Those 2 things combined is where the real value is in all of this and will in my opinion go on to make all of the conversations that we see today regarding BMN the miner, look like the small talk that it really is. FM continues to drive the message of a story half told because the story thus far is the preparation that I am talking about. The model is still a work in progress, which takes time.

MINING - PROCESSING - ELECTROLYTE - LEASING - PROJECT DEVELOPMENT

That is the goal and we are barely half way. But the rest is coming and for me 2020 will be the point at which it will all be far more clear, and it will be perfectly timed for a market that will finally be ready to understand it.

I believe investors would do themselves a good service by reviewing why it is they are invested here. Are they looking for a quick return or are they here for that greater and far richer story. If the desire is to see a short term gain or to quickly return to the heady heights of 2018, then for me I feel not only is more patience needed but also more understanding of what one is dealing with here.

Good morning everyone.

Just starting back from an extended holiday and given the state of play and the developments seen here at CHAR, I thought I would post a few thoughts.

Despite the cautious tone from some quarters, I am confident that the market is not giving this Lixus led play enough credit. It appears to be in wait and see mode, likely driven by perceived failings on previous drills/deals and that whilst understandable to a degree, for me creates substantial risk reward here. The main reason being that the company never ever had such a large discovery with which to negotiate from such a large percentage (75%) of ownership.

Previous performance here is measured on what the BOD could or could not negotiate on a wildcat drill. It was not based on the gift that is Lixus.

The latest presentation is clear when it describes what is clearly now a very advanced feasibility study, that at the base case 70mmscf/d development, is achievable merely by expanding the production wells on the Anchois discovery by 1-2 wells. Add in the clearly shown 4th well into Gas Sands C and it becomes 90mmscf/d. However, as low risk as that appraisal well would be it is not required to achieve the mid case phase 1 development plan.

Hence why the company has gone out into the market and hired strong experience in the form of newly appointed NED Andrew Hockey, who is ex-Sound Energy and ex Lasmo North Africa asset manager, both of which included Morocco.

That is not the move of a company that isn't sure of what it has.

As suspected and posted here on 10th and 30th April, the Anchois North satellite is looking like a very substantial and attainable add on with 308 bcf and a 43% chance of success.

So we have a situation where by 1 further appraisal well at the Anchois discovery plus an exploration drill at Anchois N, which has an elevated 43% chance of success, will deliver 731 bcf and the anticipated phase 2 development plan (see slide 8 of new presentation) of 90mmscf/d.

That plan delivers 90mmscf/d for around 22 years in a market that is currently capable of achieving an average of $8.75/mcf.

It is no wonder that the company is quoted as saying :

“We are confident that the commercial viability, which will be fully laid out in the feasibility study being commissioned immediately, will be highly attractive to a wide range of strategic partners across the energy value chain."

BOD confidence perhaps needs to demonstrate itself through progressing this license but they have a far stronger bargaining position than they ever had, and the low risk basis of this play really deserves far more credit than the current circa cash + £4m we are seeing.

I am surprised it is sitting so low and would expect near terms triggers to change that in due course.

The reality is that when vanadium prices truly turn then today’s BMN is far stronger than that which was witnessed prior to the ‘downturn’ in prices.

The market isn’t stupid it knows this and any green shoots will surely be acted upon. That’s what happens in popular well followed stocks. If those green shoots turn into something more substantial then the reaction here could well follow suit.

However, the true story here now is the considerable momentum that’s building in the energy storage sector, which although still difficult to value, is set to create a very exciting period in BMNs near term future. At some point the market is going to start respecting that for the very same reasons described above, and the trigger point may just be far more simplistic and more unexpected than we all perhaps expect.

@abd1991 With all due respect I don’t understand how/why you are able make such a simple conclusion. The quotes in the RNS are very clear ;

“subject to Ganfeng exercising its option to increase its interest in the Sonora Project to 50%, our share of the capital costs required to construct an initial 17,500 tpa Li2CO3 operation at Sonora would be halved”

So at the current $420m project costs BCN just sold 22.5% of Sonora for around $102m. For that sort of capital injection many other mining companies would have achieved no additional cash payment.

The deal values Sonora at circa $450m and rising (second 27.5% will be valued from a higher base).

Ganfeng clearly see opportunity to improve the capex thus making the deal better for them and BCN.

So the £7.5m is simply not appropriate given the facts laid out in the RNS.

634m in issue at $1.25 billion NPV = $1.97 per share (134m + 500m allowance).

200m (actual 192m) in issue at $612m NPV = $3.06 per share with further potential improvement to come through Ganfeng capex savings, commissioning assistance etc.

Plus they are talking about expediting first production as an added bonus.

That looks very favorable to me. I believe as the market starts to understand and appreciate this deal it will start to be reflected in the valuation, starting tomorrow with the conference call.

However, there is enough detail in the RNS to support what I am saying.

I do feel that investors on both sides of the debate should take time to chew over the details, including what is indicated still to be communicated.

At this stage the way I am reading it is that Ganfeng are building up to take 50% of the Sonora project sometime over the next 6 months or so, with the project review being the key milestone and driver. For that Bacanora will effectively receive 50% of the project finance costs, thus reducing their own commitment to circa $210m (plus working capital). Of this circa $150m is currently still being stated as secured at company level.

Today’s deal brings in a further $25m or so, which places Bacanora at $175m with circa $35m + working capital to go.

Hanwa is supposed to invest $25m in equity upon project finance close but with the conflicting off takes now that might be up in the air, so i await more information and thus would park this for now.

However, there is a key statement in the RNS regarding the further purchase by Ganfeng up to 50% of Sonora.

“The valuation of any additional investment in the Project Level Company by GFL would be based on the share price of Bacanora at the time of the additional purchase.”

So Bacanora will receive a further potentially substantial sum from Ganfeng for the other 27.5% of Sonora, which could potentially deliver the remaining $35m and perhaps even help with working capital.

Then we have the potential project capex savings that Ganfeng clearly feel they can achieve, plus their infrastructure and workforce to “provide a plant and process commissioning team to assist Bacanora in commissioning the Sonora Project.” So potentially further cost savings there.

We have much still to learn but from where I am currently sitting it is beginning to look like Bacanora are going to effectively secure this project for somewhere close to the dilution we are seeing today but will need to sell 50% of the project to do it.

At under 200m shares in issue that makes this a very good deal indeed. Previous hopes were associated with keeping dilution under 500m. It’s now looking like they will keep it to under 20% of that.

Yes 50% has gone but the saving on dilution for me far outweighs the loss of equity.

I will continue to mull it over but it looks right now like being a very good deal indeed.

I disagree. They have secured investment at project level meaning they just reduced their/our capex commitment by 22.5%. Then add in the strong indication that Ganfeng have found capex cost savings. They can’t say it yet but with what has highly likely been a lengthy due diligence I would say savings are definitely on the cards.

So the perceived bargain perhaps isn’t such a bargain or a give away after all. So my initial thoughts are a very good deal be it that we need more detail. I would suggest it is well worth allowing this one to breathe a little before making any final conclusions.

Bushveld Energy Q1 2018 Update.

Market Status

“In South Africa, demand continues to rise, evidenced both by greater enquiries for provision of single-acid vanadium electrolyte or direct projects that require energy storage for at least four hours per day. This has allowed Bushveld Energy to continue growing its regional project pipeline.”

“However, conversion of potential projects is currently low due to regulatory uncertainty over the treatment of energy storage, the lack of progress of South Africa's renewable energy programme and opaque official guidance on the direction of the country's energy policy as published in the Department of Energy's Integrated Resource Plan.”

Developments since this update ;

1. April 2018 Radebe signs off outstanding REIPPPs.
2. October 2018 Eskom announces 1440MWh BESS Project.
2. March 2019 Draft IRP includes battery energy storage allowance of over 2,000MW.
3. May 2019 Radebe instructs NERSA to grant licenses to SSEG projects with a combined capacity of 500MW.

Let the conversion begin.

Thank you SloppyGuiseppe.

The most telling section for me was this one ;

"Mojapelo says that should Bushveld Minerals be awarded a portion of the tender, the company plans to deliver on it through a combination of systems that are imported and locally sourced and assembled. The more time that is permitted between order placement and delivery by Eskom, the greater the amount of components that could be sourced from South Africa."

Bit by bit, step by step, the plan is being uncovered and it is all starting to look rather familiar. BMN clearly know exactly how they are going to approach this tender even before the documents have even been released.

Within the World Bank Restructuring Paper there are guide dates as to when each step of the tender process will take place. However, they are just that, a guide. It is Eskom that is in charge of the process and the timings.

BMN can tender for this project on the basis that they can deliver good local content against the current guide dates. However, what I am reading is if Eskom are prepared to allow them a longer period to deliver then they can push their local content element even higher and deliver Eskom and the S.A. government an even better outcome centred around substantial local content. How does FM even think that is possible in a competitive tender?

In the BusinessLive article from 24th April the BMN said this ;

"To take the value addition of vanadium to the next step would be orders from Eskom and other big users that would justify the construction of the batteries in SA"

"Bushveld would need critical mass in orders of about 50MWh a year."

FM said "You need a solid pipeline that's sustainable and not just a single order from Eskom. But if we get 10MW with four to five hours of storage then you have a business case"

So despite what FM states on 24th April, the reality is that an Eskom order of 10MW or more would be enough to encourage localised component assembly or! BMN actually know that they will have combined (those other big users) or dare I say rolling orders from Eskom, that will enable the business case to be secured for locally assembled components.

The Eskom tender is expected to be decided upon around Dec 2019. That would then signal a 2020 roll out of localised assembly be it perhaps scaled at first, coupled with locally manufactured electrolyte coming on stream.

However, 50MWh of work secures the localised assembly but it does not answer the 1,000MWh of energy storage mandates that the company continues to advertise even whilst being quoted in this manner but perhaps those rolling contracts do.

It all points towards something sizeable but more importantly a sense of confidence within the BMN ranks that Eskom mandates are going to be secured, but then we all knew that already didn't we.

Thank you Sloppy Guiseppe for your regular and often very informative offerings they are much appreciated.

Time for a holiday this end. See you June everyon

@ColonelDrake

Whilst you talk about the 3rd party oil being talked about last year, the Chiritza station wasn't announced as being completed until 21st November 2019, and the company needed to establish how they wanted to exploit this 4,000 bopd gain. To do that they needed to understand where Platanillo was heading.

It was only 6-7 weeks prior to that that we were told that the company had discovered oil in the T sands at Pintadillo. It would have taken at least the time inbetween those two announcements to establish if they could/should push on with Platanillo drilling to the north. Bear in mind they had planned 3 drills there.

Clearly, they didn't feel they could get the required growth from Pintadillo, which bears out in the 2,000 bopd now committed to 3rd party oil transport. However, they now only have 3,000 bopd head room with an improving Platanillo.

The decision to conclude a 2,000 bopd deal says more to me about their thoughts on future Platanillo and Putamayo production than it does about their 'inability' to exploit this further capacity.

The company is pushing to drill Put 8 and Put 9/12 later in the year (I suspect Put 8 has the bigger chance). Any level of decent success on any one of those licenses and the circa 2-3,000 bopd of spare capacity comes under pressure, given that OXY signed up to their licenses because of what OBA enables them to do.

There is certainly room to criticise but we are arguing over limited uplift in my view. I would dearly love to have seen 4-5,000 bopd, but for reasons i explained earlier, how can a local oil company cancel its contracts in order to rely on the OBA, if it has a break clause that says the moment AMER find oil they are out? That doesn't work. The deal has to be medium to long term.

So with drilling due to pick up substantially in 2020 in the Putamayo, AMER needs to start planning for the future and levels above 9,000 bopd, and that from what we are told in the reports, will have to come from a more captial intensive programme along the lines of what I posted earlier.

They can only utilise the OBA as quickly as they can improve the RODA. The next capital investment will be a big one and that will need capex, and that capex will come from greater utilisation of the OBA. Yes its slow but it isn't all down to AMER.

Beating guidance by 2 months is significant when the BOD is constantly being accused of not hitting its targets. This BOD is accused of being overzealous with dates but when they issue a conservative one and beat it, they are criticised anyway. Your 'conditioned' statment assumes you know me and I assure you, you certainly do not.

One key point I feel you are missing by concentrating on the numbers is the fact that AMER is now an authorised transporter of oil and it is that which is key here not the physical barrels that will be initially achieved in 2019.

This is about OXY, 2020, and what comes from this development.

I am slightly confised reading the reactions this morning. This RNS is positive revenue generating news. Yes the exact vlumes will need to be clarified as this development unfolds, but first and foremost the company has achieved the self imposed deadline of H1 and beaten it by nearly 2 months.

To me it look s like they have signed up one initial local producer with a view to testing the concept. Onc e they are comfortable with this they will look to add numbers be it through the first signed contract or others.

I would think that once they have agreed to take 3rd pary oil they are committed to the purchase over a contracted period, otherwise the seller would perhaps face issues with alternatives arragements, which they are perhaps looking to cancel 9i.e. trucking contracts), and therefore must be careful not to over step their position. Since this deal was introduced earlier in the year Platanillo has begun to show signs of improved production. Therefore, the size of the 3rd party deal may well be affected by this development also.

All of that aside it is a good deal and from where I am sitting it is a deal that will generate steady cash flows even if oil prices fall back because the profit is made from the transport cost savings, which are fairly static, and not the oil price itself.

Lastly, I would think that this now opens up the possibility of a further development of the transport network in and around the RODA system. Hence the indication regarding OXY ;

"the ability to transport additional volumes, including third party oil through the Ecuadorian network was a significant factor in securing the Occidental farm-in deal."

They cannot possibly be talking about the initial 9,000 bopd because they already had that and as the Anardarko deal has demonstrated, OXY aren't in this for the 4-5,000 bopd that is available through the system. They are here for the 50,000 bopd capacity that OBA can achieve when the RODA system is taken out of the equation.

That quote is for me a direct indication that there is a plan to either twin the RODA or run an additional pipeline that perhaps bypasses the RODA altogether. The available capacity (limitations) is tied solely to the RODA system and not the SOTE or OCP.

For me this deal signals the start of the process to prove that 3rd party oil is viable and can act as a driver to invest larger capital in the export system.

If not then why would the OXY comment be included? 3rdparty oil through the OBA has nothing to do with OXY, yet.

So the initial deal and its details may not be as wished for but it isn't about that, it is about what this starts because either OXY want large scale success on their shared licenses or they want to take AMER out completely, either way it will be at a premium that grows each time AMER adds further production or 3rd party oil to that pipeline.