Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Excellent post Floyd81 and thank you for sharing.
In all this noise it is being lost.
All 3 BESS tenders now on their system, with deadlines for bids set at just 1 week apart.
Total size = 827MWh
Package 1 has the first deadline at 4th May and according to the World Bank is due to be awarded by 8th July. Its not unreasonable to expect would the other to follow suit shortly afterwards.
So July is shaping up to be a big month in S.A. and perhaps even in BMNs world.
c. 3 months and counting.
The tender document states ;
"cumulative capacity of not less than 60MW and each contract of not less than 20MW substantially completed within the last 7 (seven) years, and that are similar to the proposed Plant and installation."
I simply can't see how Enerox can be included. Plus if they were, then why ask Rongke Power to step in and build a replacement battery at Eskom Rosherville and not Enerox?
Horse for courses in my view and it surely makes sense to partner with the biggest known player to date, when chasing Eskom and their grid scale projects.
My view only.
services."
Hi Alfacomp,
You are absolutely right the document was written in 2019 and so may not 100% apply to developments achieved by BMN since then.
The key reason I highlighted it was because it demonstrates clear BMN interest in the project and a link to their partners. Since then Unienergy have fallen away and been replaced by Rongke Power, so one does have to make a small leap of faith, over to that new relationship. Given they are installing an updated battery at Eskom, this involvement was heavily indicated towards, so shouldn't be an entire new surprise.
As explained in this updated set of tweets, BMn really has to partner with Rongke because Enerox simply cannot meet the criteria for JV members and without a big player like Rongke, BMN/BE would also be struggling to meet, what are stringent suitability criteria. Infact BMN themselves potentially still are but i suspect they will find a way around this. I accept that other plans or approaches may be afoot but right now, I cannot see that Enerox are big enough or experienced enough, to take part in this tender with BMN.
Where I believe they come in is on the mini-grid roll out and future contracts of this sort, which is another potentially very strong contract source for BMN and their products.
https://twitter.com/BigBiteNow/status/1376845501019140102?s=20
I assume the link between the MUST RNS and BMN, has already made to this BB but if not, then here it is.
https://twitter.com/BigBiteNow/status/1370378258567593986?s=20
Hi everyone,
Here's a further update to my earlier analysis, which was a work in progress but which was cemented, by FM's explanation about where BMN felt Chinese co-production output currently stood.
Whilst the Terry Perles information for Vanitec is very thorough, I am sure that BMN invest and are party to, a great deal more detail than we are able to see. Hence why any discussions on recent prices at the Vanitec webinar, were quickly curtailed by the chair of the meeting.
So its significant that FM not only repeated the message about structural shortages, which itself is interesting, given that Chinese production is up 30% since that 2018 Vanadium 101 webinar but also that he talked about Chinese co-production operating at near full capacity already, due to the move away from blending ores.
If that's really true then it highly likely removes their ability to expand into the supply gap, that will be felt not only outside of their own market but possibly also within it, this time around. So essentially minimum everyone else, including BMN's two biggest markets, US and Europe, with China the icing on the cake.
In essence what he is saying is that the Chinese have thrown their full capacity at that 30% of rising demand at home and it still wasn't enough because they still went net importer...
and they could only do that because ex-China demand, was wiped out due to Covid and so prices were low enough to incentivise importing it into China.
Now that demand is returning and pressure on prices is mounting. However, the incentive to add supply simply doesn't come at $7-8 per lb V205. Its far closer to $15-16 per lb and even then, time is required to implement, hence the overshoot potential, witnessed in 2018.
Nothing is a given but all the ingredients are there, which FM clearly knows because he talked about an expectation that vanadium prices strengthening throughout this year. I would think that he is far more confident about this than he is willing to let on.
It may not be to every investors taste, to see vanadium prices surge one more. In the past it has had a short term feel about it because it suffocates VRFB take up. However, this time around, if prices are going to surge, then at the very least, BMN has its guaranteed supply contracts to Invinity/Enerox and can choose to shelter those longer term, non-cyclical demand drivers, a choice they didn't have back in 2018.
Additionally, significant revenues now, enable significant plans to come to fruition, be they expansion, mine development or VRFB investment.
The share price may not be ready to react just yet and that may be dragging some investors energy levels down but these are genuinely exciting times to be invested in BMN, especially if the above theory/ view point, comes through.
https://twitter.com/BigBiteNow/status/1367442783464804355?s=20
Morning everyone,
Here's some recent research that I have produced on vanadium pricing and what I believe to be, a critical juncture in V205 pricing, which we are now either very close to or about to pass.
If we do then history tells us that we go significantly higher. The slides are taken from the recent Terry Perles presentation at the Vanitec 8th Energy Storage Committee meeting. If you haven't reviewed them in detail yet, then I encourage you to spend some time doing so, as they contain are a wealth of vanadium data, which doesn't come along very often.
https://twitter.com/BigBiteNow/status/1367405410215464964?s=20
http://vanitec.org/images/uploads/3_Vanadium_Market_-_Terry_Perles.pdf
Apologies, I got interrupted before I could add/reiterate, what are for me, a couple of important points.
Whether we like it or not, BMN has got to start delivering on their guidance. As i stated earlier, I got a clear message from FM in the Q4 analysts webinar, that this was something he was acutely aware of, given it was he that brought it up.
There was also a clear indication (when encouraged), that Vametco may well deliver additional output, post the 35 day shutdown.
Despite attempting to make a comparison, no 2 companies are the same, especially when traded on different exchanges. Each has its history, its geography etc etc and we are only talking about a share price moment in time, which alters day by day.
What is absolutely an advantage for BMN, is if they can start to demonstrate their ability to meet guidance, then the next phase of expansion, can be far more readily accepted.
In addition, Largo, whilst expanding again this year, is running out of leg room on their plant, without adding more capacity elsewhere.
BMN don't have that problem. They have a number of stages still to come, which can eventually double their production capacity. A belief that they can achieve it + a clear path towards it, can also add greatly to the valuation.
In addition to all of the above, are the various VRFB/energy storage angles, that BMN potentially has ahead of it. None of that is priced into my very crude comparison. Right now they carry next to zero value but have the ability to act as substantial triggers, by demonstrating BMN is a green tech/transition company.
Finally, what Largo demonstrates, is that an expanded trustworthy vanadium production profile, can allow investors to include much of the future value, in the share price, well before it becomes a reality.
So that (very crude) 45p like for like comparison, at c. $40 FeV, should really be a base case, based purely on a mining business, reacting to an improving vanadium price market and being loved just as much as Largo.
Have a lovely weekend everyone.
@Jvetch
I've recently had an extensive look at Largo Resources and as always, its a very complicated exercise, attempting to define what Largo is and what ultimately, BMN is, can and will be.
In a nutshell, I have Largo at EV valuation of c. £600m, whilst BMN is running at c. £260m, when the Orion CLNs are fully included.
So for me that's c. 130% difference in valuation, not 200% as you have stated.
A review of the accounts for Largo demonstrates, that in the first 9 months of 2020, despite what Largo advertise in their quarterly updates, their break even was around $5.40 per lb V205.
In 2021, Largo is signalling a 20% increase in production, to 12,250t V205.
At the current c. $7 per lb V205 price, that should deliver Largo c. $54m (£38m) in pre-tax profits, when one takes into accounts reduced costs from the larger production profile. (12,250t v 10,260t sales in 2020).
In very simplistic terms, I have BMN achieving roughly the same, when/if the V price hits $40 per kg.
This is based on my estimate of $27.50 per kg total cash cost and 4,225 mtV produced/sold.
However, what we mustn't lose sight of, is the fact that Largo have regularly hit their production guidance, where as BMN, are yet to do so.
In their defense, BMN bought ageing brownfield assets, which have required lengthy refurbishment, whilst Largo built a far more reliable new plant from scratch.
That said, this is the year that BMN needs to start demonstrating that they can do what they say they can.
This is why FM's recognition of this fact and explanation that in 2021, the BOD want to under promise and over achieve, was a critical point in proceedings and something I highlighted at the time.
Personally, I genuinely believe that BMN are finally playing it safe in 2021 and that said guidance is the minimum that we should expect. If true, then the first sign we should of this, is through the Vametco 35 day maintenance programme, which FM has indicated, may well bring additional production from Vametco.
That aside, if FeV hits $40 (which I must stress, is very simplistic, given the complicated mature of BMN product range these days, which itself has additional value, be it that it needs to be demonstrated more clearly), then in my view, BMN should justifiably be matching that current Largo valuation.
So at £600m valuation and c. 1,35BN shares in issue (Orion CLNs fully included), we should be looking at c. 45p
If we are being super accurate, then an allowance has to be made for the reduction in cash, due to the investment in the expanded 4,225 mtV, which affects the enterprise value but in very simple terms, like for like, that's where we should be.
Importantly, this very simple valuation, allows nothing for anything else that BMN owns (Invinity etc) or that it may achieve (VRFB contracts, electrolyte plant, better production etc).
Also, if prices hold into 2022 and 4,225 mtV becomes 6,000 mtV, well then...
2/2
Instead, what FM did at that point in time (Feb 2014), as CEO of the company, was pay himself a base salary of just c. £108,000 and continue to implement a maximum total directors salary cap of £500,000.
His wage and that policy remained the same, until the 2018 financial accounts were released. So well after Vametco came on board and during a year when Vametco delivered its largest ever revenue streams.
All of which should be considered in the following context.
BMN on 28th Feb 2014 had a total of 402m shares in issue, which means that post full Orion draw down, total shares in issue will have climbed by just 237%.
That's against 7 years of operation, of which for 3 years, the company had no operating mine and even when they did, they didn't own very much of it, because Yellow Dragon carried them for most of it, until BMN bought them out in late 2017.
For that 237% of additional shares, long term investors in BMN will receive as a minimum, the following ;
1. 74% ownership of Vametco and 100% ownership of Vanchem, giving them control of 2 of the world's 4 pure play vanadium production facilities.
2. A minimum 6,000mtV production run rate, with the strong possibility of expanding to c. 8,400mtV through future cash flows.
3. A 55% ownership of a minimum 200MWh electrolyte facility.
4. Equity stakes in both Invinity and Enerox, two of the world's leading VRFB players, with a confirmed first refusal off-take agreement to supply all of their vanadium needs.
5. An operational Mokopone mine, feeding into the Vanchem processing facility.
6. Ownership of Brits.
7. A significant foothold and standing, both in the S.A. renewable energy and the wider vanadium/energy storage market.
With the strong possibility of even greater things to come through Eskom, local VRFB manufacturing and the larger VRFB grid/mini grid markets.
Go find me the BOD of an AIM junior, that can deliver even just two fully operational vanadium processors, inside 6 years, for just 237% dilution and I will gladly back it. Never mind everything else.
Past performance doesn't guarantee anyone a permanent future but whatever investors may think about more recent performance, there is no doubting the commitment that FM and his team have, to the people of S.A. and their shareholders.
Those attributes are rare and worthy of some respect. They are also the reason why I let communication failings slide, why i don't allow 'investors' (that BMN have chosen), selling, bother me too much, because that past performance, at the very least, allows me to trust, that the BOD is working hard for my investment.
1/2
Good morning all,
Picking up on the vibe from shareholders, venting some frustration at the BOD on progress, communication and this constant feel of 'investors,' flipping their holdings.
First of all it is not for me to tell shareholders how to feel about their investment or indeed the people that run it for them.
I also agree that there is room for improvement on the communication side of things. The recent Arbengoa development is a prime example, which really should be reported upon, once BMN have details on its affect or a plan of action, to avoid it impacting their mini grid and perhaps wider S.A. based plans.
As a side note, I don't see that having any influence on the current valuation because nothing is factored in for it, given that first and foremost, it is a energy saving exercise for the plant and its wider uses as a demonstration project, simply aren't advanced enough yet, to be exciting the market at all.
What I will offer in their defence is this.
Late last year BMN closed a long fought, long term deal, with Orion finance. Anyone who knows HZM well, knows they are a top mining finance company, that backs projects/businesses, not only with compelling business cases but also because of their ethical leadership.
The one thing that longer term BMN investors will surely have learnt by now, is that FM is building a S.A. mining business, that caters for the needs of the people who work there and those that live on and around its land. This message is repeated many times, through their approach to the BEE policy through Bill Chicane. Their focus on developing a clear fund and open for locals and the upping of the BEE ownership to 26%, immediately after taking control of the full Vametco mine, back in 2018, to name just a few.
It is that sort of leadership that attracts the likes of Orion, who are a long term investor and a significant shift in quality.
Something more.
When Orion convert their $35m CLNs, which for me is inevitable, then there will be a total c. 1.35BN shares in issue and BMN will finally have a significant cornerstone investor, at c. 12-13%.
If I may, I will now take you back to 28th Feb 2014, the closing date of the original BMN financial year, prior to Vametco ownership and also prior to dare I say it Darwin, Lemur cash, Yellow Dragon, Duferco, Vanchem, BE, Orion and certainly Covid.
In Feb 2014 there was essentially no vanadium asset, a vanadium platform yes but . There was tin and there was iron ore, and the bottom was about to fall out of that. Meaning that BMN was going to need to find something else to do, or it was going to go out of business. Or worse still, its directors could strong everyone along for a few years, collect their pay checks and live the AIM high life. After all, thats what a great many others have done and done so well.
Apologies 1/2 published twice for some reason.
2/2
I have read recently that niobium in terms of material required, is currently selling for an equivalent of c. $52 a kg vanadium.
This is backed up in part by TPPs comment on slide 90, which states ;
"A secondary peak occurs at $15.00-$16.00/lb V2O5 representing a point of price stability in an environment where supply struggles to meet demand. At this price level we don’t see very much substitutional loss of demand and so in tight markets
there is support for prices in this range."
Every existing BMN sharholder would be very happy if that came to pass and right now, the prediction is that said "supply struggles to meet demand" scenario, starts to take hold in 2021.
Yes it potentially suffocates VRFB take up but the BMN value chain approach, still has the very best chance of delivering both, even in that elevated pricing environment. In fact as I have said previously, it would probably send even more work and VRFB producers their way.
Some analysts are making an argument that Chinese support finance will begin to fall away in 2021, so steel demand may weaken. I just cannot see how that is true. Its just too early and such investment takes long than 9 months to bear out. The world markets are just too fragile for it to be wise to remove such support just yet. Then we have the Ex-China market demand and infrastructure support, which are markets where vanadium content is at its highest. So their demand can be very influential in 2021/22. So other than a substantial credit crunch, I just don't buy it that demand will weaken in 2021.
If not then the deficit play is very much on and prices should continue to react accordingly, if said inventory truly is reflective, of what TPP Squared have stated.
Like I say, well worth dissecting the detail but it goes a long way to demonstrating that prices will rise this year and an expanding BMN, with +4,000 mtV production on the cards, would be in high demand, should it turn out to be the case.
1/2
Hi Uksteveg,
I would encourage you to have a very close look at the Terry Pearles presentation from the 8th Vanitec Energy Storage meeting. Its a great addition from Vanitec, which allows investors such as ourselves, to get much closer to what is actually happening in what is at times a very secretive vanadium market.
I would refer you in particular to slide 60.
There you will see that in 2020, China were predicted to produce c. 70,000 mtV of vanadium *Q4 outstanding at time of publishing). That's a c. 5,350 mtV rise on 2019, which itself was a year when stone coal was at its most rampant, post the 2018 price surge, which encouraged its producers so much.
As you will also see from slide 67, there was a small surplus in 2019 and a slightly bigger one in 2020 (c. 2,000 mtV)...
and yet as you have seen for yourself, Chinese vanadium prices held steady at around $30 per kg. So China was definitely using more vanadium in 2020.
This is compounded by 2 further facts ;
1. that European demand fell off a cliff in 2020, so the actual demand in China was even greater and ;
2. China became a net importer of vanadium in 2020...
and still we are talking about a Chinese market that managed to maintain a c. $30 per kg pricing level.
What we are now beginning to see is European and US demand coming back on line, as steel production and activity starts to rise again. If Chinese demand stays elevated, then we should start to see that bear out in rising Ex- China prices first of all. However, China stayed relatively stable because they were able to pull in supply, normally meant for other markets (BMN being the prime example with actual production of c. 24% going to China in H2).
As those markets return, suppliers may not be so keen to supply into China and then things may start to get really interesting.
Better still (and as I talked about earlier), if the TPP deficit forecast holds up, then there's a very strong chance that the inventory isn't there to cover it, this time around.
We are all abundantly aware, that 2018 was a massive trigger point for prices because it was the third year in a row of significant deficits (see slide 67 again). Since then the inventory recovery, as understood by TPP Squared, has been around c. 2,200 mtV.
With the 2021 prediction coming in at 5,400 mtV, there may well be nowhere to go for pricing but up but it is all about actual available inventory and China production/demand in 2021.
Slide 63 shows TPPs prediction for Chinese V production and usage. Rather remarkably, whilst production is expected to be up another c. 4,000 mtV, demand there is anticipated to reduce the Chinese overall surplus, from c. 5,700 mtV in 2020, to c. 3,500 mtV in 2021, driven by greater adherence to the very rebar standards, that helped drive the price shock in 2018.
That's a big change, if Chinsa demand stays firm because Ex-China will inevitably suffer.
1/2
Hi Uksteveg,
I would encourage you to have a very close look at the Terry Pearles presentation from the 8th Vanitec Energy Storage meeting. Its a great addition from Vanitec, which allows investors such as ourselves, to get much closer to what is actually happening in what is at times a very secretive vanadium market.
I would refer you in particular to slide 60.
There you will see that in 2020, China were predicted to produce c. 70,000 mtV of vanadium *Q4 outstanding at time of publishing). That's a c. 5,350 mtV rise on 2019, which itself was a year when stone coal was at its most rampant, post the 2018 price surge, which encouraged its producers so much.
As you will also see from slide 67, there was a small surplus in 2019 and a slightly bigger one in 2020 (c. 2,000 mtV)...
and yet as you have seen for yourself, Chinese vanadium prices held steady at around $30 per kg. So China was definitely using more vanadium in 2020.
This is compounded by 2 further facts ;
1. that European demand fell off a cliff in 2020, so the actual demand in China was even greater and ;
2. China became a net importer of vanadium in 2020...
and still we are talking about a Chinese market that managed to maintain a c. $30 per kg pricing level.
What we are now beginning to see is European and US demand coming back on line, as steel production and activity starts to rise again. If Chinese demand stays elevated, then we should start to see that bear out in rising Ex- China prices first of all. However, China stayed relatively stable because they were able to pull in supply, normally meant for other markets (BMN being the prime example with actual production of c. 24% going to China in H2).
As those markets return, suppliers may not be so keen to supply into China and then things may start to get really interesting.
Better still (and as I talked about earlier), if the TPP deficit forecast holds up, then there's a very strong chance that the inventory isn't there to cover it, this time around.
We are all abundantly aware, that 2018 was a massive trigger point for prices because it was the third year in a row of significant deficits (see slide 67 again). Since then the inventory recovery, as understood by TPP Squared, has been around c. 2,200 mtV.
With the 2021 prediction coming in at 5,400 mtV, there may well be nowhere to go for pricing but up but it is all about actual available inventory and China production/demand in 2021.
Slide 63 shows TPPs prediction for Chinese V production and usage. Rather remarkably, whilst production is expected to be up another c. 4,000 mtV, demand there is anticipated to reduce the Chinese overall surplus, from c. 5,700 mtV in 2020, to c. 3,500 mtV in 2021, driven by greater adherence to the very rebar standards, that helped drive the price shock in 2018.
That's a big change, if Chinsa demand stays firm because Ex-China will inevitably suffer.
3/3
The excitement of course starts to come, if prices push beyond that sort of level, which I think they will because demand is going to be high as economies invest to protect their growth prospects and jobs markets. I also do not believe that inventories have had enough time to recover from the 2018 rises and so the deficit, if realised this year, will likely drive prices sooner than it did in 2016/17, which is when the deficit started but failed to influence prices initially because of inventory levels. See Terry Perles slide 67 below.
http://vanitec.org/images/uploads/3_Vanadium_Market_-_Terry_Perles.pdf
A great example of this is 2017, which despite being prior to the big rise seen in 2018, still witnessed V205 price of c. $10-11 a lb because the market sufficiently tightened. That's a +80% uplift on what we have today.
If that begins to demonstrate itself this year and at the same time, BMN starts to demonstrate that it can meet its guidance and that its expansion plans are happening, then the combination could well deliver a valuation pushing the 2018 high (My view), in the 2nd half of this year, with or without significant energy storage progress and influence.
However, in my view, first and foremost, vanadium prices post Chinese New Year need to continue their rise and remove that production cost negative influence. Then as the year unfolds, production guidance needs to be met (i think they'll beat this year), then we could well see some exciting times, whilst all the while watching what developments come through on the storage side of things, both internal and external to the business because sentiment is going to play a big part here and that element is growing in influence by the day.
I still think that 2022 is the really big year here but there's plenty of opportunity in 2021 too but its going to need some more patience, as BMN moves from this initial production cost hike, to a demonstration of its reasoning and a future where output is far higher and with it, costs are far lower.
I hope that isn't too much to take in and I trust that I'm not ramming anything down anyone's neck. Its my take on things and I don't expect my opinion to rule. Everyone is of course entitled to believe what they wish and what their own research tells them.
Anything can happen at any time but I think as things stand, with some further help from vanadium prices, a few months from now, things should be looking a whole lot brighter in Bushveld's world.
2/3
Now again its very hard to pinpoint true value, when the market is being influenced by Covid and inflationary pressures, both rising and receding, which is what happened immediately after 12th Jan in many resource related stocks and so was not solely related to BMN performance.
Whats is key is that V prices at that point, couldn't push t through that 23.9p point.
However, what has since to come to pass, is that BMN have announced that rise in production costs, which I personally see as being c. $3-4 a kg, when an allowance for Vanchem is included.
That's new and so there's bound to be some adjustment, which is perhaps why the SP is sitting (for me temporarily) closer to 19p than the 23.9p mark.
That said, what we also perhaps should do is factor in some of that increased Vanchem 100% owned production contribution (50% increase targeted in 2021), the closing of finance for expansion and balance sheet shoring up, plus its actual implementation and potential visible target of up to 6,000 mtV in 2022.
However, for me, whilst those influences are potentially high impact, BMN has got to first and foremost start to demonstrate, that they are beginning to happen. The first of which is the 35 day shutdown at Vametco in Q1 and the outcomes from it.
I feel strongly that BMN are indeed under promising and planning to over achieve in 2021 but until its demonstrated in the numbers, limited acknowledgement is going to come. So we are temporarily back to the comparison of the 2020/2021 forecasts and vanadium price progress.
Of course in between all of that, is the potential excitement of what the more meaningful contributions from energy storage demand, will/can change the market perception of BMN and its future valuation. There have been clear developments since Feb 2020 on that front.
Invinity ownership is measurable. The vanadium off take agreement not so but it really could come at any time, as Invinity continue their expansion.
Enerox is another big one but it needs to be explained to the market to have any influence. The mini grid and the electrolyte plant are coming but again, perhaps not a significant influence on 2021.
Additional vanadium rental agreements are for me a better focus, depending on who they are with and how large of course. To this can be attached the potential of significant contracts wins with Eskom, the S.A. government and/or the World Bank, be it direct or more likely as a part in a JV of sorts. These have the ability to be a big influence in 2021, when/if they come, which I feel sure something will but we cannot expect a market that remains blind to VRFBs, to apply value prior to these events but it is coming.
Right now my eyes are on vanadium prices and closing that gap, generated by the added C1 production cost profile.
Its really not going to take very much to achieve it, maybe $2-3 and a demonstration that the move higher is real.
1/3
I would be a little careful employing vanadium prices alone as the only barometer for attempting to establish where BMN value should currently stand.
I also recently conducted an exercise on the 2020 Q4/FY update, in comparison to this year and it centred around the peak resistance point on the price chart (23.9p close on 19th Feb 2020). Its significant because it was the point at which Covid began to influence matters and its the key resistance going back to the Nov 2020 Vanchem acquisition close out.
Two main things to consider.
2020 guidance in the 30th Jan update was ave. 4,130 mtV
2021 guidance in the 4th Feb update was ave. 4,225 mtV.
FeV prices in Feb 2020 peaked at ave. c. $29.50 per kg, both in China and Europe.
FeV prices right now are about the same, at c. $29-30 per kg, depending on where you shop.
So there's little difference to had.
Where the big difference exists, is in the production cost guidance.
In 2020 BMN only gave Vametco in their update and that C1 cost was ave. $17.45 per kg. Vanchem on 1 kiln was always going to be higher but as I say no fig. was given at the time.
In 2021, on a one third Vanchem total production basis, the ave. C1 production cost is $22.60 per kg. So on first glance we are talking a c. $5 jump in production costs. However, an allowance for Vanchem in 2020 has to be included, be it that Vanchem's influence back then was predicted to be c. 25% of total production (1,030 from 4,130 mtV) and not 33% as it is this year.
Things are made all the more complicated by the fact that an expanding Vanchem production profile, brings with it 100% ownership and not the 74% that Vametco carries.
This year Vanchem should produce c. 50% more than the 2020 guidance, so a sizeable positive.
However, on a very simply like for like basis, with all other influences temporarily placed to one side, including general market sentiment, we should still be looking for a c. $3-4 further rise in vanadium prices, to establish parity with what was expected in February 2020 and so why 23.9p was achieved.
There are however further complications because 19th Feb 2020, is around the time that Covid was recognised by the markets and the vast majority of stocks, pulled back significantly. Just take a look at SLP, a neighbour of BMN, who had enjoyed a great price run all the way up until 21st Feb 2020, only to see its share price more than half in the month that followed.
So there's an argument to be had that BMN could/would have pushed though that resistance if it weren't for Covid.
More recently BMN has once again tested that 23.9p level (11th Jan 2021) but failed to hold above it. This was for me mainly influenced by the reflation trade that came from the $900m US stimulus package, agreed in mid Dec 2020.
@Faramog I think Mogwhy is correct in that it is actually lower at c. 57.6%. Whats key is that its high quality concentrate that better suited to Vanchem because its much closer to the Mopachs ore.
I don't see a great deal of processing going on at Mokopone for a very long time and so its all about what its turned into at the currently 100% owned Vanchem facility and not what the actual ownership of the actual ore/concentrate is. That is after all where the real value is extracted.
@Faramog I agree it was a very good conference call but it is a shame that the best details, were those divulged through the Q&A session. In addition, the analysts could have asked so many more questions, including pushing FM on what this 2nd kiln did indeed mean for 2022 and beyond.
For all my theorising, I could well be wrong, which is why some salesmanship on the business side would have been welcomed. If BMN are indeed going to hit 6,000 mtV in 2022, which whether its the start or nearer the end (highly unlikely), is going to happen, then why not explain that.
Better still now that the 3 phase plan has clearly changed, hwy not update their presentation with caveated guidance on the expected path to 8,400 mtV?
I am delighted with the speed with which they are now going to expand production and the fatct that Vanchem/we, gets much more of the pie
At 6,000 mtV, BMN can likely make $60m in pre-tax profits from its 2 operations at just $35 per kg. So its big news but that doesn't mean that they couldn't improve communication and remove some of the guesswork, concerns over over promising or not.
As for Mokpone, i'm afraid its 64% owned.
@Bassguy That's a very good point. It was clear from FM's feedback in yesterday's webinar, that the extra mileage is a factor in the production cost at Vanchem.
He made the point that Vametco is the furthest deposit from Vanchem. This along with the running costs of such a large plant, that is only oerating at c. 25% capacity, adds to the urgency of getting the 2nd kiln on line and ramping up capacity, whatever the wider market demands.
Put very simply, with the finance secured, it makes far greater sense to expand more quickly, into expected greater demand, than to carry a greater production cost indefinitely.
The calculated business decision being that they may have to adjust capacity, if the demand isn't there but that they wouldn't be much worse off, than they are today. With the upside being that if the demand is there, as they expect, then there is far more to be made from it.
Vanchem simply cannot operate for very long without at least a 2nd kiln and once its on line, the overheads reduce and additional costs such as transport from Vametco etc etc, are easier to bear.