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Two points on this. Firstly, one should be careful not to mix up the question over throughout with production. ' That website' fake or real, states throughout to the OBA, it does not state AMER Platanillo production. Whilst I do not take potential production losses lightly, nor do I jump to conclusions either. Until stated otherwise there is a potential throughout issue only.

Secondly, Indico-1 just delivered up to 1,350 bopd, which when added to Mariposa-1 achieves up to 2,300 bopd, which much more to come. Indico-1 effectively wiped out any perceived Platanillo issue generated by the existence of that website.

So worst case scenario Amer is producing what it last reported, circa 4,800-5,000 bopd which is more than enough to drive the necessary cash flows to allow the company to drive its exploration and production partnerships with OXY and ONGC. With such huge potential in both partnerships, that is what is key here. One more big well at the likes of Calao-1 and production will drive well beyond that 5,000 bopd even with said 'potential' issues at Platanillo.

All of that makes the current valuation very safe such that we should only be looking upwards and onwards, but the icing on the cake is the fact that OXY will finance up to 5 wells in the Putamayo basin, meaning AMER don't have to worry about costs unless commercial oil is found. At that stage Amer and its shareholders would be delighted to see the company's coffers drained a little more.

A question on existing production is relevant and requires official clarification but the issue should not be allowed to infest what is a seriously good investment, based on those two deals and thatworld class oil discovery at CP0-5.

@Endion given that vanadium prices are demonstrating they have bottomed out on this particular re-trace, coupled with the announcement of inspections in China, I find it hard to believe that everybody will be waiting for the affects of all that before making a move.

A confirmation of minimum $80 plus FeV coupled with supportive fundamental moves in vanadium's biggest market, is enough to demonstrate that profitability is going to outstrip the current market cap. So if the price moves it really shouldn't be much of a surprise because the triggers are already out there.

My take on your post it that you believe that dilution to enable new investment would have a short term negative impact on the SP.

If so then may I remind you that on 26th March the company diluted the shares in issue by 14.4%. The SP finsihed that day at 12.3p. By 26th April (day before Q1 Vametco production announcement) the SP was trading at 20.05p, so pushing 60% higher. However, the announcement brought very little immediate physical gains. The best item on the list was the paying off of the converted loan.

If dilution is to come again then given the size of the cash flows that are currently being generated, it must be for something a lot more substantial than that, such that it should involve a transformational deal of some kind.

That being the case, the announcement of that deal/dilution (becuase they will have to come together) may actually be the biggest trigger we have seen here for some time.

The dilution in March delivered a list of

Apologies, I made an error.

https://twitter.com/DragonEV_/status/1085421154276233217

"Quality Inspection Department of #China in the Guangdong & Jiangsu province are spot checking random rebar samples based on new standard.This is the first step towards implementing the new rebar standard across the country & will arrive in Sichuan soon."

I forgot that Jiangsu was included in the above tweet, so with Sichuan confirmed in the article on Vanadium Price earlier today, we are actually up to 3 provinces.

Jiangsu province is China's second largest steel manufacturing province producing 12.5% of total China crude steel output in 2017.

Wakey wakey world.

https://twitter.com/VanadiumWorld/status/1085543093250580480

We now have confirmation of another Chinese province being under inspection. Guangdong is the home of the 9m Zhanjiang steel base run by the Baowu Iron and Steel Group, the province produced circa 29m tons of steel in 2017.

That's now min 2 provinces under inspection both with sizeable steeel production bases. However, as I posted this morning this is about the ripple affect and the Chinese steel industry waking up to the fact that the government means business. As i wrote on twitter, i now expect fireworks.

Contributors here are wondering when the next major news will come when it has already arrived.

Price price price, that is what is key here and those inspections could be about to deliver it in a very big way. One may not see any SP movement through the realisation today, but this isn't about today, this is about a point in time in the future, when the market has a chance to understand sees this news in a form that it can comprehend.

This goes a long towards backing my own thoughts that 2019 will be a defining year in the life of energy storage and how it is perceived by the world at large.

Regulatory authority used to be one of the greatest hinderances to energy storage but within just a few years those barriers aren't just being removed but demolished by the surge in understanding, need and desire to support what is now a very clear enabler of carbon reduction.

And the whole thing is only just getting started.

@Alfacomp Thank you. It is good to know that the work was worth it.

Let's now see how close the reality turn out to be. It certainly looks very good from where I am sitting.

@AlastairMcGrift Good morning.

There is one key issue with that tie up and that is the competition. I cannot see such a move getting past the Competition Commission of SA and even then it may run into problems with other external commissions. The break up of Highveld when Evraz originally bought into it was not driven by the SA Commissionbut the European one. That was based on Evraz having other external mines that supplied European business.

The world has only 3 primary producing vanadium mines, so if 2 of them begin to do business together, it is in my humble opinion going to provoke interest from such organisations. The same cannot be said for BMN expanding in such a manner but I have always had a slight concern that the same could apply with any Vanchem purchase.

That said, Vanchem was active when the case came about, now it is in business rescue and needs must when your unemployment figure is over 27%.

@Daisan I repsect what you are saying and I thank you for the debate, which is after all what these BBs should be all about.

Whilst i have been posting calculations lately based on $80-85 FeV prices, they are merely a barometer to judge the expected performance of BMN as we begin 2019. I agree that prices will highly likely increase beyond this point, although I think Q1 is looking likely to be capped around the top end of that range given the drop off in prices in December 2018.

The key for me with vanadium as opposed to otehr elements such REE, is that China does not currently have control over the market, and so the ability to release vast reserves to suit its agenda. It used to and that is perhaps why prices were allowed to drop so low in 2015/16. But now we live in a different vanadium world, and it will be interesting how China approaches that world moving forward, because it government led large scale mandates for VRFB delivery in country, are going to place even greater pressure on the market. I cannot see the Chinese allowing that be sustained indefinitely.

@Alfacomp Thank you for that. Before I go any further I want to make clear that I have no lasting fear of substitution when investing in BMN. By the time it potentially became an issue, BMN would have reaped sizeable rewards from higher prices and be fully established as a fully integrated vaandium producer and VRFB manufacturer. So when lower prices did hit they would have far greater production, likely the lowest costs on the planet, and be making solid revenues from VRFBs. If that then comes with leasing then any sustained substitution that lowered prices would onyl help make that product even stronger. I recognise that we are an alysing from high here and so the reality is likely much more complex.

But the same can be said about substitution itself. I hear all of the things that are going against Niobium but the reality is that markets and business will find a way to overcome that problem if the incentive is high enough for long enough. How exactly I cannot say but in my experience that is the reality.

But as I say, in BMN's world I really don't see that as being a problem because they are going fully integrated, where the battery profits should dwarf the those of the mining.

One other thing I would like to add is that in all of these vanadium market dynamics, BMN is the stand out candidate because of the moves it made during the downturn. Those moves along with that of Largo have elevated those 2 businesses to envious levels. The key difference is that Largo had to take a lot more pain through the downturn because of its timing. This includes the off-take with Glencore, which I am sure they are counting down the days on.

Of those two giants, the BMN model is far more exciting along with its location, which delivers numerous attainable brownfield assets.

BMN not only has first mover advantage driven by its low cost production, but it also has the most advanced integrated model. A model we are all yet to the see the full potential of.

Therefore, discussions around supply expansion and the affect prices have on this really have nothing to do with BMN's story or their ability to expand, at this time. Other than doomsday scenarios which would affect on the whole market temporarily, the way is clear and BMN have their own destiny in their hands.

And that is only the mining and production element of the model.

The same first mover status now looks to be playing out on the energy side of the business, such that all the articles and graphs depicting VRFB's eternal fight against its nemesis lithium-ion, are of little relevance. The battery market is about what you have and where you want to sell it.

Nobody other than perhaps Rongke is doing what BMN is demonstrating it will be doing very soon. No other VRFB manufacturer controls their own vanadium supply, the process to produce the product that will become the electrolyte. Nor are they doing all of that on the doorstep of their potentially largest ever client, such that universal average delivery costs becomes obsolete. BMN aren't shipping electrolyte to America, they are running it down the road, they are delivering it in country.

The BMN energy storage play as a Southern African free trade led story, is groundbreaking and industry making. In South Africa the lithium-ion play is on the back foot because the vanadium is right there, along with the electrolyte plant and highly likely soon enough the battery assembly.

First mover status comes to the fore once more.

@Daisan, Sanchez599, You may well be right and I do try to take all opinions in the investing world with a pinch of salt, until such time they can be verified. We all owe ourselves and our hard earned that at least. However, Mastermines adds value to a vanadium world where information is very difficult to find, so pinch of salt granted, there is worth in what he shares, promtion led or not.

I must say though that the same production increases would be stimulated with prices holding in the $15-20 range over a lengthy period. How long this period must be is a question only the financers of these projects can truly answer. Thus far we have yet to see a pure play project tested finance wise because none of them are ready yet. But the likes of Blackrock and TNG are testament to how difficult the task remains even in an environment of better pricing. That's because the problem still comes back to risk and security for the money that is being lent. These mines are selling themselves on a 20-30 year mine life, and right now the long term average price(talking vanadium) remains below the profitable level of said mines, so finance is still difficult to achieve.

So we are talking a sustained period of healthy profitability. Yes that still comes from much higher prices but with those higher prices comes far more substitution, and therefore unknown risks and potential pricing volatility, which again undermines investment by adding to the risk.

Having said all of that, the likes of Mastermines are backing future vanadium plays, i am not. That is why as it currently stands, for me the correct play in vanadium right now is existing vanadium producers with the ability to expand into the supply void. Nobody is better placed than BMN to do that.

BMN is cash rich and therefore mainly reliant on its own success in order to expand. That is why it has the ability to bring (effectively) the next new vanadium mine into play.

The substitution card worries me in the medium term, which is why I don't like super high prices. BMN themselves stated in the Vanadium 101 presentation in May, that substitution becomes a worry when "sustained higher vanadium prices" are maintained.

It also has the potential to undermine the leasing model until such time I see figures and/or contract wins that counter this argument. However, these concerns do not undermine the medium term investment case for BMN because what we are debating here is prices above $15 per lb, which is heaven for existing vanadium producers with the ability to expand and thus corner increasing quantities of the available market.

Here is another snippet in relartion to our discussion on the rebar inspections.

https://www.vanadiumprice.com/new-standard-steel-quality-inspection-may-promote-vanadium-market/

Here is a government release on the province's approach to reform and regulation moving forward. That 350 billion Yuan industry is the equivalent of $52 billion in steel production.

http://www.sc.gov.cn/10462/10758/10760/10765/2018/3/1/10445884.shtml

Sichuan is also home to Panzhihua Iron and Steel, the largest steel manufsacturer in Western China but also the largest vanadium producer in China. If they are forced to start getting serious about their vanadium content then that in itself should have a sizeable impact on Chinese vanadium supply.

As I said earlier the inspections for me will have a ripple affect but even just the fact that they are commencing in Sichuan, means Chinese vanadium stocks are going to come under increased pressure in the coming months.

Yes Daisan I couldn't agree more. Some view points I would add.

Mastermines on Twitter has gone on record as stating that the build up in prices between beginning of Sept and end of November is highly likely due to stocking up for Winter. That period saw prices rise from $80 to $128.

Whilst I respect his opinion because of the contacts and many visits that he makes to China, I do question his findings because if we review the same period in 2017 we see that there was an extended period of prices dropping ($43 to $35), then a continuous rise that lasted beyond the period in question right through to the end of Jan and prices of circa $60. However, what is key is that by the end of November prices were around $41, so still lower than when the period began.

I appreciate that the market isn't regular in its transactions and activities, and I respect the fact that we are talking European prices and not Chinese but still, the overall market dynamics remain the same and Chinese activity still drives external markets to a degree. So I would expect at least some correlation. Instead we have prices reducing during this same 'stocking up' period in 2017, whilst in 2018 they added well over 50%.

The one key difference is the new rebar regulations. Now I have never worked in China so I cannot say exactly how the business mentality functions, but unless steel mills had a very good idea that the regulations would not be immediately enforced then logic says that a well run business would prepare itself for those regukations coming into affect and being enforced because that is the expectation, and business runs on facts not fiction.

Therefore, the purchase of additional vanadium stocks would have been the natural way to go, which is what the prices rises support.

The current price smallish rises are European led but what will be key here is when the Chinese steel mills really begin to come back into the market place. There are mentions of increased interest but i suspect that this isn't acrosss the board yet.

What these publicised inspections now do is sharpen up any minds that were thinking they had a stay of execution. The very same business mentality I have mentioned above will now play out against this news flow, such that it won't be about how many inspections or where they take place, but the fact that they have begun and could be coming to a factory door near your very soon.

The next 4-6 weeks will be interesting viewing but as buy signals go, those inspections are just as good as a progressive RNS in my view.

@Redleader147 from that same 9th May RNS ;

"In addition to its vanadium nitride product, for which demand is strong in the steel industry, Vametco also produces a Vanadium (III) Oxide product that is preferable in respect of environmental consideration (relative to vanadium pentoxide) and more importantly is also more suited to downstream vanadium chemicals production, which is aligned with our aspirations for local electrolyte manufacturing for the vanadium flow battery energy storage industry."

An example of the long term planning that this BOD are time and time again demonstrating that they are executing.

Makes one wonder what they have planned for 2.5 years from now.

@Ophidian Just to add that I posted that very quickly whilst concentrating on something entirely different. I did not wish to come across as solely dismissive. I recognise your superior processing knowledge and have no desire to counter or undermine it.

What is interesting is that the production reports don't seperate out the production, the table simply states "Vanadium (Nitrovan® plus FeV) produced" where as the wording above in the report says merely "NitrovanTM production of 537 mtV for Q3 2018."

The original 2016 SPA RNS dated 9th may 2016 stated this ;

"in 2015, Vametco Alloys produced 2,419 tonnes of vanadium from its own magnetite concentrate production in the form of vanadium nitride (Nitrovan, a patented vanadium product used in the steel industry) and vanadium oxide ("MVO" or V2O3)"

So the reality is perhaps cloudy at best. What's key is the vast majority of production looks to be Nitrovan which enables BMN to counter any discounts that FeV tsales naturally require.

@Ophidian If that is correct then the following statement from the Q4 Vametco RNS dated 22nd Jan 2018 needs to be challenged.

"Vanadium production of approximately 3,680 mtV consisting of 3,050 mtV Nitrovan® and 630 mtV Ferrovanadium (FeV) (converting modified vanadium oxide (MVO) to FeV) is expected in the 2018 calendar year"

In the interview (circa 1m 17s onwards) when discussing the Indico-1 discovery, JW states

"in that section we did not find a oil water contact, which means that the oil water contact is deeper and hence the oil column extends further beyond the depth than we have achieved already"

Oil is not my key speciality and thus I welcome views on this from other posters, but the confirmation of this from JW is surely significant in that it revises the size of the find higher (be it to date undefined) even higher than it is already.

I aslo likes this statement "a very large general regional play"

It also sounded very much to me that the 2nd rig is being driven by Amerisur as opposed to the other way around. That aside, the Calao drill looks like being a potentially very key one if it delivers the same combination trapping as Indico-1

Each 4,500 bopd well delivers cash netbacks of $10m a year to AMER after royalties at $57 Brent. $3m costs per well (which incidentally cannot be correct for any additional wells drilled from existing pads)

"Significant activity within the Putamayo with our partner OXY" in 2019.

A very positive interview and with all things considered, AMER looks set for a significant re-rate in 2019.

I would like to re-iterate that I am always keen to employ figures that are in my view safely achieveable. I do not like to talk about 3,750 mtv until there is evidence that the company is making considerable moves towards achieiving it because i don't believe it is appropriate as it contains too many ifs.

The 3,300 mtv figure is for me solid and highkly likely on the low side, but what i want is a target that backs my decision to invest but that delivers a high safety margin.

BMN as late as the end of November 2018 have stated that 2018 production will come in at circa 2,600 - 2,650 mtv. That's just 4 weeks shy of the end of the year. At that stage of the year the figure should be in the bag. That places Q4 at between 700-750 mtv. That is why i have always employed the 725 mtv figure, which sets 2019 up on a base production figure of 2,900 mtv. So I am only asking the facility to find another 400 mtv across the entire 12 month period. That's just a 14% improvement at a facility that is signposted as being able to achieve upto 29% more production, even without any further phase 3 efforts, which themselves should come in 2019.

So I feel good about my 3,300 mtv as a base figure.

The ZAR/US exchange rate for H2 2018 came in at circa 14.1. Right now it is holding very steady around ZAR 14.05, which is spot on my 14% margin. I see no reason not to trust this figure for the coming year. This 2 fundamentals should safely deliver the revised $28,000 per mtv.

So we are simply down to the vaandium price. I know many here feel that it will soar much higher than $83 and that is much to back that argument, but my point is that it does not need too, for everyone invested in BMN to be very successful going forward. That said the fundamentals in the vanadium market as they stand, support higher prices, which in turn heavily supports that $83 figure.

In addition, the strong drop in vanadium prices that have been witnessed in the latter part of 2018, never took prices any lower than $71 per kg. That is the bottom as things stand. With steel demand still strong and further support set to come from VRFB projects that are able to secure product at sensible prices, it is difficult to see a sceanrio where the $70 figure will be breached, because steel mill demand is returning and will only get stronger once the Chinese start back in post Chinese New Year. Things can change but right now $83 FeV has much going for it.

One good year of $83 prices and then BMN will have had the necessary time to bed in phase 3 and begin to offset any risks of falls in V prices through greater production and lower costs. Plus the energy arm will be stronger and more active.

So right now I feel very good about $83 FeV, which makes me very happy with the £75m profit figure, which in turns says to me that this is heavily dicounted and that things cannot stay that way when the performance of its key product and its key facility, are set to be so strong.

Afternoon everyone,

I note that the European FeV mid price came in at $78 last week, meaning prices rose some 4% in a week. We are now 6 weeks into the BMN Q1 13 week cycle and the average price is sitting at a very healthy $83 per kg. With prices set to continue their rise over the coming weeks, Q1 is looking very strong indeed.

However, I do get the distinct impression that the market has become somewhat immune to prices in this sort of $80-85 range. This is likely because prices have been so much higher at circa $130 per kg. This is perhaps leading some investors to feel that the valuation is too high given where the BMN SP price topped out at in comparison to top end FeV prices. But as I said the last time I wrote about vanadium prices here, the investor's focus should in my view be concentrated on the yearly average for 2018 plus of course anticipated production and cost to produce it.

Some of these facts are not yet known, but what we do know us that the 2018 (BMN achieved) average price will come in at a round $78 per kg. So $83 is significant because it sits healthily above that average and will be backed up by a strong lift in production too.

With the ZAR US dollar exchange rate set to come in at circa 14% cheaper than H1 2018,a return even to ZAR 248 production costs, would deliver a $2,500 per mtv saving on the Vametco operating cost. That production cost was achieved at productionof 2,800 mtv per annum. A move to my safe haven target of 3,300 mtv, would delvier even more savings as costs are spread across more production.

If I consider the reduced investment needed in 2019 due to phase 3 coming to completion (i.e. large items already paid for in advance), then I have justification in reducing the 2019 fully adjusted operating cost to circa $28,000 per mtv (previous $32,500).

What that would mean is that just 3,300 mtv in 2019 and $83 per kg, has every chance of delivering $182m EBITDA at 100% Vametco.

Run that through the normal 74% ownership, $1.30 US/pound exchange and 72% profit conveyor and we find that BMN will be knocking on the door of £75m profit for its 74% stake in Vametco in 2019.

Now it may well be that this figure is never reached because there is more than a heavy hint or two around that BMN are looking to capitalise on its market position and investment heavily this year in expanded processing. But that doesn't matter because it is the fact that the ability is there to achieve it and any further investment should only ever help expand on that success.

At circa £75m profit available, I have to be thinking that Vametco should be delivering a near doubling of the current valuation at an appropriate time in the future (i.e. facts on table), which means that everything else in their world is free carry on top.

So $83 per kg is very big news even if for some reason it isn't appreciated yet, such that any discussion about BMN being over valued at this time simply does not hold any water.