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@Margaret365 I don't believe hope has anything to do with it. This is about when not if. Investing can be very hard at times and surprises can come along and bite you where it hurts, just when you least expect it. But there are also times when it is very easy, when you find a stock at the right time and the right place. That is exactly where AMER is right now.

A simple hold of this stock until 2020/21 will see a multi bagger. The problem most investors have is that even though they can see that, they still cannot wait.

I will wait gladly.

Apologies 'since' should have read Zinc.

@Alfacomp thank you once again, most interesting.

Two observations.

1. I note the commissioning of the battery isn't yet complete. Given the timings you mention in the report I am not concerned by this but would appreciate a clarification. When you say "currently electrolyte is being run in," do you actually mean at the time of the visit or a point since then?

2. Most importantly I see the since battery has failed to materialize along with battery No. 5.

Meaning their are only two technologies in it, given the World Banks statement that the financed technology is currently being tested at Eskom. That doesn't write everything off completely but it sure puts those 2 batteries and their creators ahead of the chasing pack.

@RichKen With all due respect my own concerns were not about a lack of effort or purpose. It absolutely clear that the BMN team is driving hard to make the Vametco asset a leaner more efficient processor and cash generator, and in doing so are producing a story I certainly will never forget.

I applaud the game plan that has been communicated in the Q4 update and I recognise that it wouldn't take a great deal of improvement on the 2018 numbers, to add significant EBITDA above the $107.8m achieved that year at today's prices.

I also take it as a positive that the 2019 guidance will not be released until Q1 because the next one needs to be right, and this move demonstrates that BMN are at least aware of this.

However, whether investors want to admit it or not, Vametco has missed every production target that the management set in 2018. Some of it may not have been their fault, some of it may be down to being over positive or unforeseen circumstances, but that isn't really what is important. The targets were set by the BMN management with the help of their existing Vametco management team, that being the team that combined has over 100 years experience in SA vanadium mining. Nobody forced them to set a target of 3,680 mtv, nor any of those that followed.

The end result was 2,560 mtv, which is 30% down on that original guidance.

I appreciate that the plant is old that it was neglected by the previous owners, but the management team is the same and BMN knew what they were buying when they carried out their due diligence.

A good manager can only manage what he knows about and what he/she makes their business to find out. It is the finding out element where I have a slight concern right now. I suspect that the BMN team has had the wool pulled over its eyes somewhat in 2018 and by October they had simply had enough, hence what looks like the removal of Mr Curror from the picture. But it isn't Mr Curror who is CEO of this public company it is Fortune Mojapelo.

To be clear, in my view this stock remains undervalued, if for nothing else other than what is to come through brownfield expansions and the very exciting energy storage developments. I would also make very clear that I applaud everything that this team has delivered and the opportunities they have set up for BMN and its shareholders, and my faith in FM and his team remains strong. But that does not mean free rein or that I won't delve into concerns that need to be addressed nor brush things under the carpet.

We owe it to ourselves to challenge even the very best investments and take nothing for granted, because we are responsible for our investments nobody else.

@Endion Sorry but again that I feel that is incorrect. Q4 is based on achieved sales 1 month prior to the actual production.

Q4 sold its product right through that price surge from $84 to $127 per kg over a 3 month period. Therefore, demand was at its highest point in the cycle. Yes that could be true towards the end of the cycle, so late November, but it wouldn't have had a huge impact given sales are spread over 13 weeks. What you appear to be leaning towards is the December pull back but that is part of Q1 not Q4.

It is also important to remember that Wogen are responsible for the sales and highly likely have various options for securing sales when the more regular customers reduce their orders. The pricing surge supports the theory that there were still ample customers out there in the world, otherwise the price would have been in retreat, which it wasn't until the very last week of November (week 13 of Q4).

@Daisan With all due respect your comment is far too flippant given you clearly understand how business works.

Good businesses protect their sources of income. It is no good having an expensive product if nobody can afford to buy it, and it is a clear sign of a market becoming lazy and expectant when such comments begin to be made.

BMN are on record as stating that sustained prices above $100 per kg encourage substitution. Nobody should take it for granted that they or their product is not replaceable.

The data as it stands points to a 8.9% discount, which is well within a range that is tolerable. Give a little get a lot back.

Lastly, in my own line of work I have seen expamples of the customer giving support to suppliers in times of difficulty because it made good business long term sense for the customer. That aside, we all should know that generally sellers look after buyers because they are their customers. That si how it works.

If a group of long standing trusted customers who pay their bills on time, came to me and said they simply can't live with prices as they stand, then I would have a duty as a good business to review that and try to help them where i made sense for me in the long term.

Just because there is a supply/demand deficit does not mean that such practices are cast aside. That is poor business sense and in the end will only ever lead to ruin.

@Knuttie I welcome other explanations because what I have written is theory and really needs more data to be able to say it is 100% correct.

The strike took place in Q3 and the company is clear that production was affected in that quarter only.

Also, whilst Q3 production was just 537 mtv, sales were higher at 584 mtv, so at the very least the company was able to satisfy more orders than product it made.

Q4 managed 657 mtv but only sold 586 mtv, which is roughly what the company sold in Q3. If there was an overhang from Q3 then I would expect more product to have been sold in Q4 because the company clearly produced enough to at least achieve this in part. At circa 2 weeks lost time for the strike we are talking upto 100 mtv of 'delayed' deliveries. However, the figures show sales matching Q3 with effectively no gain whatsoever.

Remember Q2 saw sales of 713 mtv so the customer base is out there.

If despite that your theory is correct and some production was still pushed into Q4, then that makes the Q4 sales even weaker than Q3, which would raise more questions. I don't believe that is the case, so I am back to my previous position.

I am happy to be proven wrong but right now the data as i see it does not in my view support that theory.

(2 of 2)

Given the evidence regarding the Q4 mid FeV price running consistently above the Vametco realised price for 11 weeks out of 13, I can only conclude that Vametco offered its customers a greater discount in some shape or form, as protection against the price surge in Q4. Remember it was during this period that prices pushed from roughly $85 to their peak at $127 per kg.

It is a move that makes perfect sense. Customers feeling the pinch through their input costs simply being too high is not good for business.

What that tells me is that the Q1 average price is likely to be fully realised (give or take that 1.14%) because in the 3 quarters upto Q3, the FeV mid price stayed near as damn it within the range we see now bar the first 2 weeks.

w/e 07.12.2018 - $106.50
w/e 14.12.2018 - $92.50

So for me we will see a return to the 'norm' in Q1 because there is no evidence that Vametco offers greater discount when FeV trades around $80. Thus a $82 per kg Q1 average should support a Vametco average realised FeV price of circa $81 per kg.

To be clear I don't see any of the above to be a problem. If my theory is true then I see it as healthy that Vametco is supporting its customer base during such price surges. There is a need to protect the longevity of the industry and Vametco is no doubt looking for sustained profits from a sustained customer base, just as much as it is looking for sustained production.

Despite the discount Vametco still achieved $102,400 per mtv in Q4, which is a fantastic result. This exercise was more about understanding the actual profitability of Vametco in order to calculate what the future should look like. It is all very well taking the nameplate capacity and multiplying it by the current price of FeV, but it isn't real nor achievable, so it is misleading.

I have been deliberately conservative during most of 2018, and I was still too high. So for me it is important to test the numbers we are being given, both price and production based, in order to understand the capabilities of Vametco moving forward. This is particularly relevant given the issues that have been experienced at Vametco in 2018.

Lastly, I would be delighted if Vametco hit that $81 per kg for 2019. It is a very solid and sustainable result. I appreciate the market expects a strong surge post Chinese New Year, but perhaps the Q4 figures are demonstrating that even BMN don't want that too be too high for too long.

It just needs to be backed up by better production and cost control performance going forward, and that is where I am going to focus next.

(1of 2)

Good morning.

After 9 weeks of the BMN stated Q1 pricing period, the average FeV price is running at $81.70 per kg. Despite there being 4 weeks still to run in this quarter, it is looking likely that this average will not move very much. I expect another steady week this week due to the Chinese Spring festival, so it would take a very large shift in pricing to alter the average substantially, which is unlikely.

So as far as I am concerned $82 is about the range we can expect for Q1.

I would like to point out that the Q4 update did mess up the integrity of the calculation I have been employing because the numbers shifted further away from the average. H1 was very consistent at just 1.14% less than my running total ($61,500 v $60,800 - See previous posts for verification).

For Q4 I had the average FeV price at $112.40 per kg but it came in at just $102.40, which is 8.9% difference.

The pricing period for Q4 ran from w/e 7th Sept to w/e 30th November. During that period the mid price of FeV fluctuated from around $85 to $117 per kg with a peak of $127 per kg on 16th November.

I currently have 2 assumed reasonings for this outcome. Either Vametco sold more product during the earlier part of the period when prices were lower or, it capped prices for its customers.

The mid price only stayed below the realised price of $102.40 per kg for the first 2 weeks of the period, so Vametco would have had to have sold a lot of material front end, which given this was roughly when the strike took place (7th to 21st Sept), would surely have been difficult to guarantee. Possible but in my view unlikely, thus leaving the price cap.

To be clear, the average FeV price stated in all of the updates (Q4 $108 per kg) is irrelevant because note 2 states clearly states that the "Vametco realised price is based on the prior month's average price." I therefore question why it is even included.

To emphasise my point I offer this ;

Q3 Numbers
By deducting the Q4 and H1 revenue of ZAR 858.8m and ZAR 1,050m from the 2018 total of ZAR 2,545.4m, we get ZAR 636.6m for Q3.

The average $/ZAR exchange for 2018 was 13.2. H1 contributed 12.3. A very quick calculation allows us to conclude that Q3 was therefore circa ZAR 13.9.

Q3 saw 584 mtv sold. If we run the numbers then that gives an average realised price of $78,40 per kg If readers here review my previous posts on the average Q3 mid price, they will see that my figure was $78,70 per kg. That is just 0.4%.

So we have a 1.14% difference in H1 and a 0.4% difference in Q3, yet in Q4 the difference increased to 8.9%. Why?

@Alfacomp I look forward to it and appreciate your willingness to share.

The more I think about it the clearer it is. Lyndon Williams now appears on the Leadership Team slide, which was never the case before, and one doesn't remove the CEO from that slide unless one has very good reason.

I support the BMN team fully and remain in wonder at the progress not only achieved but that will be achieved. However, I would be doing myself a misservice if I did not declare my disappointment with the production results, given what could have been and what was guided by the company.

Whilst in hindsight the 3,680 mtv was far too bold, all other targets for whatever reason were missed, and that cannot be ignored. I have always felt I knew more often than not, where BMN were and where they were heading, but the performance at Vametco coupled with the reporting, has at the very least undermined that a little and has left me feeling a little embarrassed.

So if the CEO's actions are indeed responsible then I support that move. It shows a willingness to rectify the problems quickly and decisively, enabling faith to be restored that a much better year lies ahead.

NOTE - It did not escape me that William Steinberg the Vametco Works Manager is leading the 'Transformation Programme.' Another sign that Mr Curror is no longer there.

Please do not get me wrong, even the production that was achieved is more than enough to support a higher valuation than we see today. This is more about what could have and should have been. It is an opportunity lost with substantial financial consequences.

BMN remains a strong buy for me because they so many opportunities to push this business to that 10,000 mtv and they can afford to do it without much being asked of me, the shareholder. But most of all this is remains a strong buy for me because the energy arm is yet to receive any recognition (understandably) of what it is in my view, about to achieve, starting with that Eskom BESS Project.

This is still a wonderful investment but failings such as those that have taken place at Vametco in 2018 cannot be ignored just because the bigger picture looks so good. I look forward to a much improved performance in Q1 and beyond.

Moan over.

One initial observation I have from the presentations is that Malcolm Curror no longer appears on the 'Leadership Team' slide, which given one of the presentations was the site visit makes it all the more relevant.

Without putting too many 2s together, could it be that the fall guy for the poor implementation of the expansion plans and thus the reduced production results, was the CEO of Vametco.

If so then it is debatable whether this should have been officially declared, given he is/was running the company's only operating asset.

Sorry but this is a bonafide winner from these levels. One need only take a look at the multiple new prospects that have already been identified on CP0-5 to see that.

I did wonder why it was taking so long for a presentation to come out.

In the presentation we now see why with the NE area and the inclusion of N-1X through to N-4X and the SE area depicting another 4 further prospects.

Slide 15 states ;
"Tigana and associated fields are trapped by relatively small and subtle synthetic (down to the basin) faults.

"The Company believes this synthetic Guadalupe trap may extend into CPO-5. Guadalupe, Mirador and Carbonera prospects have been identified in the SE of the block"

It was reported that the ONGC Viddesh update stated that "The Company plans to drill more exploratory wells for further evaluation. OVL also plans to acquire additional 3D Seismic data to map more drillable prospects in the other sectors of the block."

With that being the case it is interesting to see these prospects already appearing on the CP0-5 map.

I am under no illusion that this will take time to develop with those further prospects most likely being carried out in 2020. My excitement for this investment is driven by the fact that not only is CP0-5 demonstrating signs of things clearly moving very quickly, such that the drilling programme will clearly expand greatly as we move into 2020, but that it is not the only valuation driver as the OXY campaign heats up later in the year. Itself no doubt bringing even greater expanded drilling in the Putamayo.

2-3 years from now this is a multi-bagger, all one need do is sit tight and be patient.

https://economictimes.indiatimes.com/industry/energy/oil-gas/ongc-videsh-discovers-oil-in-columbia/articleshow/67395862.cms

Thank you, now officially caught up.

As you say Tyfoon.

"Bushveld beleives because it has a battery on an Eskom site that is linked into the grid proving to be a safe, reliable and long-life source of stored power, it has to come under serious consideration by Eskom."

You know fine well just how under consideration that BE offering will be Mr Fortune.

JSE Listng planned for end of June/early 3rd quarter.

The current planned date for the award of the contracts for the 1st Phase of the Eskom BESS Project is 21st August 2019. A contract win of the sort of size being hinted at by Eskom and The World Bank, would offer a strong boost to any recently achieved listing prices in SA.

I do love it when a plan comes together. . .

@Sanchez599 May I enquire as to why you believe there is no intention of dilution during the JSE listing. Do you have a source or article?

Thank you in advance.

JW Interview quote ;

"The scale of the Indico-1 discovery is still not understood by the market but when an independant reserves assessor gives you 18m 1P on the basis of 1 well, and that well is epxected to recover juts under 6m barrels on its own, the quality of the reservoir is simply marvellous"

After the combination of the interview and the new presentation, what is there not to like.

They have already identified 9 more potential prospects within CP0-5, and that does not include the 4 to the SE area, shown on slide 15.

4 of the targets are an extension of the Llanos 34 field, which has with "over 50 MMBO produced to date, approximately 55,000 bopd."

It looks very much like plans are a foot to expand the drilling across the whole block, which if it comes in will open up the vast majority of the 55,000 acres on offer (5 times bigger than Llanos 34) for even greater drilling.

No wonder JW said CP0-5 is "very much looking like a multi rig drilling programme," which JW states is currently being discussed with both ONGC and the government. Secure the government approvals and its all systems go at what is looking like a bigger oil play than Llanos 34, and that was the biggest oil discovery in Columbia in the last 30 years.

Wow.

https://twitter.com/mgrahamwood/status/1092386064071839744

"The bulls are going to love this"

@bigsmoke and BumblingFool

Having looked in greater detail at the tender for the original 3 drill programme, the following is the only wording available dealing with 'modification' and 'amendments' to the contract.

Clause 6.4 (page 38)
"All modifications leading to changes in the CONTRACT with respect to technical and/or commercial aspects, including terms of delivery, shall be considered valid only when accepted in writing by ONGC-VL by issuing amendment to the CONTRACT."

Clause 6.6b (page 38)
"Amendments: - It is agreed that CONTRACTOR shall carry out work in accordance with the completion program to be furnished by the ONGC-VL which may be amended from time to time by reasonable modifications as ONGC-VL sees fit."

There is ample scope within those 2 clauses for ONGC Videsh to amend the contract with Estrella. A 2nd rig could also be agreed between the 2 parties under roughly the same terms for Sol-1 and Aguila because the criteria is already set out in the original contract, including locations, mobilisation costs, and all rates. This is backed up by the fact that the contracted rig is already carrying out what I would call a 'variation' to the contract, by changing its location but more importantly the number of drills it is contracted to carry out.

The fact that Sol-1 and Aguila are part of that original scope of works, makes the argument all the more compelling.

As far as I am concerned the contract has already demonstrated that it can be amended to allow for a 2nd rig, so it should be about a suitable rig being available and when it can be mobilised only.

According to the Estrella website (see below), they have 19 rigs at capacity of 250t or above. The E-2029 rig that drilled Indico-1 is the 2nd to last rig on the list under '2000 HP.' There are 2 more of them somewhere in Columbia.

Sol-1 has been set up for rig E-2029 but how much influence that would have on things is debatable as everything comes down to cost and any modifcations would surely be considered against mobilisation time periods and the time lost waiting for E-2029 to complete what is looking like 7-8 momths of work minimum.

So having found all of that out, I now firmly believe that the 2nd rig is very much on and any wait to find out will be centred around rig availability and not strategy or cost.

http://www.estrellaies.com/es/services.php

Furthermore, clause 1.5 states the following ;

"The first well to be drilled is Indico-1 for which tentative date of spudding is June 2018. Tentative days for drilling and testing / completion of Indico-1 are 39 & 43 and for rest two wells Sol and Aguila are 32 & 24 days each."

So when a rig does commence the drills at Sol and Aguila the the drill periods are not that long compared to the work around Indico-1. Sol-1 being drill ready means a reasonbaly quick mobilisation could see it come in not long after Calao-1.

@BumblingFool I understand your concerns and I deliberately didn't talk about timings. What we know factually is that the tender for the 3 drill campaign was dated 27.04.2018, the bid closure date was 31.05.2018 and the stated spud date was June 2018.

So if ONGC Videsh do indeed tender for another rig, which is not a given, then their processes demonstrate the ability to mobilise very quickly.

The June 2018 spud date clearly didn't happen but then the enabling works weren't completed. Sol-1 is now drill ready so a tender process in line with the above dates, could potentially see an available rig mobilised within 5-6 weeks.

That said I offer this.

It should also be noted that the contract with Estrella for the Indico, Sol-1 and Aquila drill must have been re-negotiated. The tender allowed for a 3 drill programme at the named drill sites with the option to add a 4th. Indico-1 has been drilled and now we have a new 4 drill campaign, so that makes 5 drills and the locations have been altered.

The rig for Indico-1, Sol-1 and Aquila was contracted for 1 year from award of contract but

"The contract shall stand automatically extended, in such a case, on same rates, terms and conditions to cover the time necessary to complete the drilling, testing and completion of the three wells." (Clause 1.4)

It isn't possible to enforce that clause when the drilling campaign has been extended past the original number of drills. So it is by definition a new contract that we are seeing being executed starting with Calao-1.

That means that in theory, the original contract remains in tact, it has merely been placed on hold pending a decision. The contracted rig is being utilised at the Indico-1 pad so (again in theory) there would be a need to utilise a new rig from Estrella, which would of course come with additional costs but not the need for a new contract.

What the latest updated drilling campaign shows is that ONGC Videsh systems allow for a contract to be altered because that's exactly what they have done. Therefore, delaying the Sol-1 and Aquila drilling campaign and contracting a new rig under the same terms is no different. But even then we are simply talking about engaging a new rig, which given what B.1.1.4 item b (page 97) states, may already have been listed by Estrella as the;

"bidder may like to offer the technical detail for an alternate rig so as to both the rig will be evaluated for technical suitability. Both the rigs will be techno-commercially evaluated."

So perhaps there won't be a new tender and the announcement is merely awaiting an updated contract agreement and an available rig from Estrella.

http://www.ongcvidesh.com/wp-content/uploads/2018/04/Tenderdoc-Drilling-Rig-Indico-sol.pdf

@BumblingFool Your opinion is your right but I disagree. If anything the evidence points towards a 2nd rig being more likely than not. The 2nd rig option was only mentioend 1 month ago and since then the 22nd Jan update said this;

"Sol-1 is drill-ready and the Company is considering with its partner whether to drill this well following the above programme or to take up the option for a second drilling rig in the short term.

In addition, the partners are evaluating a further increase in drilling activity for 2019, targeting an accelerated appraisal/development of the Indico field, the NE structures and other prospects associated with Indico down-dip and Mariposa offsets. This may involve the contracting of a third drilling rig."

I may well be reading it wrong but talking about a third rig just 3 weeks after the original 2nd rig announcement, says to me that the work going on behind the scenes since that initial announcement, is concentrating on scaling up operations even further. So the talk of a 3rd rig pretty much certifies the 2nd rig.

Nobody truly knows why it has taken so long for ONGC to drill Indico-1 after the success of Mariposa but ONGC themselves have reported that they believe Indico-1 "is a continuation of the same play," and their senior management has made a point of highlighting the discovery in interviews. If we then add in the Columbian energy ministry's announcements on Indico-1, we see that this is no longer an oil play that can be ignored, even by a company that is perceived to be slow on the uptake. So the idea that we will see just 1 rig working on the announced 4 drill programme for the next 8 months or so, just doesn't fit the size of what has been found and announced.

It is a highly significant oil play for everyone involved and in my view investors should be giving it the credit it deserves. Therefore, it is the correct expectation that it will be exploited at a quicker rate than currently planned.

JW will perhaps give more details on this in his interview with Mr Grahan-Wood later today, but I suspect the team are busy sourcing a rig as opposed to still contemplating it because with such a significant find, it would be criminal not to at the very least, short termish, drill Sol-1 and Aquila in order to establish the true extent of the fairway. To wait potentially 8 months or so more to do that just doesn't make sense to me, given the discovery has enough confidence and cash flow in it to warrant the minimal additional costs of the rig. After all Sol-1 is drill ready.

I hear the arguments already that the form book says otherwise, but I repeat once more, they didn't have Indico-1 back then and its 209ft net oil column.