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The key question for me would be the Brits permits. They are spending money on Brits prior to having a section 11 approval despite saying something different in the Annual Report. I suspect a change of plan and risk based on time constraints and greater free cash flows, which allow a tad bit more speculative activity.

However, the plan has changed and with a trailing mining right application, I would be keen to understand how they can exploit given the regulatory approvals are yet there.

I'm not one for normally getting involved in price fluctuation discussions, I'm more a fundamentals, facts and logic based investor, but even I know that when 20p breaks, then she won't be hanging around there very long.

@sanchez599 Yes that is the key take away which I am certainly focusing in upon. A Q1 average achieved prices of circa $85 would be a very sound start to a year that also promises additional production because it would demonstrate that prices are running at a higher average than in 2018.

The figure that distracts the mind the most is the top end $128 plus figures seen during Q4, which led to a Q4 $112 average and of course that is very exciting, but that isn't where the mind should be focused because it is all part of a system of averages. The true picture is one of sustainable and better still progressive profits.

Vametco full year figures will deliver a big headline number but what Q1 will do is demonstrate that it wasn't a one off, that things to date are getting even better. That's the news. That's the story.

@Sanchez599 That may very well be so but i am choosing to play it safe until more information is available. In the meantime I am calculating what safe means in comparison to the current valuation, and $85 per kg supports a Vametco valuation substantially north of where we are now.

At $85 per kg, I have EBITDA at $58,000 per mtv (so all in costs of $27,000 reduced from $32,500 due to improved exchange rate and increased production).

Maintaining a $1.30 exchange rate would see Vametco producing £147m in EBITDA at 3,300 mtv, which i equate to circa £78.5m profit for BMN at 74% (without deductions for capital investments of course).

It is important to remember that whilst the Vametco figures for 2018 will be very good, they include a H1 average achieved FeV price of $60,800. So although Q4 brought home the bacon the average 2018 FeV price should be around $78 per kg.

Therefore, $85 per kg with circa 25% more production is a very big deal.

Good morning everyone.

Ok so some actual recent pricing is now visible and I have seen that European FeV mid price for w/e 4th January was $75 per kg, and this was reported as having risen "slightly" on the previous week. So as suspected prices did begin to creep back up in Europe during the first week of January.

If we assume that slight means circa $1 then that places w/e 28th Dec at around $74.

All of that has a healthy impact on the opening 5 week average for BMN with the adjusted European mid price coming in at circa $84 per kg.

With further increases from what is now a $75 base already signposted this week, with 8 weeks of pricing to go in the quarter, it looks very much like an average Q1 figure around $85 is definitely within reach. Anything higher than that will depend on how fast prices move though the Chinese New Year last year did temper the rise slightly. However, last year there weren't any new rebar standards in play or inspectors on the hunt for thos that weren't complying.

A result around $85 with increasing production would offer very robust support for the Q4 and Vametco full year figures indeed.

@pb940 If that report is true and in particular the last paragraph then the vanadium pricing market may start to go crazy again post Chinese New Year.

I'm all for making a profit and maximising my advantage but there is more money to be made long term here with stable healthy prices. Even a sniff of a strong clamp down on steel mills that haven't stocked up enough vanadium is going to create a significant stir.

Incidentally Fastmarkets called this last month.

Just to re-assert my own barometer on things. An $80 average for 2019 and 3,300 mtv should comfortably achieve total (100%) EBITDA for Vametco of £135m.

I feel the 100% is of relevance given the company's indications that there is a possible $100m investment to be made in a new kiln there. If it turns out to be mis-information then perhapa I will go another way. But if there is a strong possibility then all partners will be liable for its costs one way or another, so 100% it remains.

A turn in pricing at or aroudn the $70 point and an existing $82 plus average price makes me feel confident that Q1 can set BMN strongly on its way to that $80 target of mine.

Eyes open and focus because the busy times are just around the corner again.

I stated in my 16th December post that I thought European buyers would start to re-enter the market around about the first week of January with prices bottoming out around $70-80. The following report would appear to support that view point although prices in Europe may have hit the bottom end of that range.

https://www.vanadiumprice.com/export-market-of-ferrovanadium-gradually-activates/

I expect a good few weeks now untiol Chinese New Year, then a pause and then we will see.

I feel fairly confident that worst case scenario BMN's average Q1 pricing for Q1 (5 weeks from 13 weeks) is averaging around $82.50 per kg.

If price rises can be confirmed over the next few days then things should start to get interesting, particularly if they continue to rise into the a strong Q4 update and 2018 resulst for Vametco.

Here's another little gem for those that may not know the business and its BOD so well.

CEO Fortune Mojapelo and Chairman Ian Watson earns less today than he did on 28th February 2013, the first full accounting date after the business was floated.

They will both receive shares as part of the renumeration framework set out in Q4 of 2017, which was independantly advised by Pricewaterhouse Coopers but with the greatest respect they earned those shares considering they have never placed any additional financial burden on the business until it could deal with it.

Pricewaterhouse Coopers's role was to "provide external advisory services on global best practice, trends and related governance matters including advising on the CEO’s compensation."

Continuing fact based events that demonstrate and support the belief that this BOD are working towards their shareholders best interests.

Sorry i have made an error. I have got myself mixed up with the 2014 Darwin deal. The 2015 Darwin deal was never converted, it was paid off in full, thus Darwin only ever received their 4m warrants, so they did not foward sell anything.

@Kevingrimmley Indeed.

It is very easy to lose sight of these things and indeed never be able to comprehend when its all wrapped up in files and files of paper.

On 29th May 2015 BMN entered into a loan agreement with the dreaded Darwin. The loan was for £2.6m and was to be used to support BMN's takeover of Lemur. t the time there was uproar because it was understood that Darwin would as they did, forward sell the shares and hurt the SP.

The trouble was who else was goling to lend money to a junuor miner in the middle of a downturn that wasn't generating any cashflows.

What BMN did with that cash was pay off the Lemur shareholders in order to acquire sufficient enough shares to take Lemur off the market and get their hands on the substantial cash pile it held. Why because they didn't have any cash of their own.

They then used the cash pile to pay off Darwin, which is why in part, they ended up with £5.7m at the end rather than £10m. Means to an end.

Sound familiar to anyone? Yes because it is exactly what they did when they acquired Vametco. They somehow persuaded Evraz to sell them everything including the inventory and then effectively used Evraz's own hard work alomg with ever increasing vaandium prices secureddue to the length of the regulatory approval process, to pay off all the temporary debt generated in order to make the deal happen. Whilst once again having next to no cash of their own other than a deposit.

Simply genius.

With such a history behind them of making deals, as it stands, investors should be drooling over what they are going to do with the next cash rasie, not fearing what they perceive they are losing.

Lest we forget.

The beauty of it all Alfacomp is that they didn't need to bother themselves. They could have justifiably diluted their stock because their main assets of iron ore, tin and a very young vanadium business were on their knees. But they didn't.

Instead they worked their backsides off to secure Lemur for a time when prices wouldn't be on their knees, which is now.

(2 of 2)

However, BMN was also strapped for cash and so through the agressive takeover of the Lemur board and its large cashpile BMN issued a loan to Sable Minerals that eventually secured the Brits project ahead of any other potential suitors and effectively cornered the Vametco asset when prices were at a low point. Why? because at such low V prices the Vametco mine as it stood was losing money. Evraz had for many years been mixing its own ore with vanadium slag from Evraz Highveld in order to make Vametco more profitable.

That move helped deliver Vametco at a price that still has the market scratching its head today and delivered a near surface high grade vanadium deposit that will go on to make Vametco and its potential 10,000 mtv expansion, the lowest cost vanadium producer in the world.

And we haven't even spoken about the $200m Lemur Coal project that came with it.

That strategy was born in 2013 and is being played out in 2018 and beyond. It demonstrates not only the lengths this BOD are willing to go to to protect investors from dilution but also the thinking that is going on behind each decision that is being made. This BOD is many years ahead of the information we know, it has been ever since 2013.

Therefore, as a long LTH who has lived it, breathed it and seen it all unfold, if this BOD decides now is the time to dilute my holding for the betterment of the business, then they have my full support and trust because they have more than earned it.

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Excellent post Daisan and recommended.

There may well be a conflict of ideas and stances on this because there is a good mix shareholders taking part here that run from long LTHs to recent additions. Therefore, there is always going to be different levels of experience of the company and that is healthy for us all.

Personally I have been invested here since 2013 and so have seen the full scope of how the team that runs this business does said business. That does not mean for one second that I am a disciple. I am an investor who tries to be as consistent and open minded as possible but would be kidding myself if I did not admit that i hold FM and the team in very high regard at this juncture because they have made me a very good return on my investment.

However, in my view facts and logic should always reign supreme and it is they that I try to stay focused upon.

For those that have not been here quite so long i would offer this ;

To date this company has demonstrated that it is conscious of investor dilution and thus considers all options available to it. A prime example of this was the lengthy takeover of Lemur, which delivered £5.7m in cash, the Brits vanadium project, and the Lemur Coal Project. At the time there was concern over the dilution involved also.

The Lemur takeover was a lot of work for the small group of people that run this company, taking over 2 years to complete. As a process it saved shareholders what would have been around minimum 250-300m new shares to achieve the same goals. At the time that would have amounted to around 75% of the total shares in issue.

It should also be understood that this takeover was conducted by a non producing junior miner at the bottom of the downturn in mining between circa May 2013 and August 2015, on a target that held at the start of the process almost as much cash as BMN's market cap by the end of it.

What the success of those actions meant was that between 28th Feb 2015 and 28th 2016 (BMNs previous accounting dates), BMN as a non producing junior miner did not issue a single new share.

As part of the process BMN as the majority shareholder instructed Lemur to purchase the farms that make up the Brits vanadium project. In doing so they cut off any option Evraz had to buy it. In 2015 the previous owner of Brits, Sable Minerals, had already pencilled an off-take deal with Evraz Highveld who had tested drill cores on Uitvolgrond portion 3. Due to the downturn Sable Minerals was a distressed business looking for a faster means of getting into production by mining a different mineral but they needed a cash injection. The problems at Evraz Highveld compounded those problems and thus gave BMN the opportunity to step in.

https://twitter.com/ReutersGMF/status/1082897749283139584

CHINA'S FOREIGN MINISTRY SAYS TRADE TALKS WITH THE UNITED STATES HAVE CONCLUDED, RESULTS TO BE RELEASED SOON - Rtrs

The results of these discussions could well set the tone for 2019. Given they are well within the deadline, I am leaning towards a positive outcome at this juncture.

But there is something else that i really like about this move if indeed it pans out, and I repeat we are speculating here based on limited information.

Right now there are beliefs as to what the vanadium market will offer up in the next 2-3 years.A great many believe that stronger prices are here to stay for perhaps 3-4 years. Personally I seek assurances and risk aversive measures. My window for stronger prices to prevail, and by that I mean the $70 range, is 2 years at best. Not because I have solid evidence of additional supply but because I like my bets to be safe.

By delivering a path to 10,000 mtv inside the next 2 years or so, what BMN will do is demonstrate an ability to deliver the same profits it is making now at far lower prices. At 3,300 mtv and $80 per kg, BMN should deliver £95m in EBITDA, £7om in profits.

At 10,000 mtv they can do the same at under $40 per kg. Thus any fear of receding vanadium prices begins to dissipate allowing current prices to be enjoyed with reduced concerns over VRFB uptake because even limited success should help maintain that £70m or so base case profitability. In so doing the entire energy storage driven side of the business can be allowed to attack the market with added vanadium production support and still be considered a free carry to the investment case until that £70m starts gaining the respect it deserves in the valuation of the business.

That's why Chika Edeh said "we have had a number of institutional investors wanting to take a position in Bushveld but to do so we have to be listed on the JSE.”

I'll bet you have.

Last from me today, I've got a long book that needs reading

There are a set of developments shaping up here that are worthy of being listed, because they are all looking like they are going to be achievable in 2019. By that I mean there will be sufficient information given for the market to judge them and apply a value to them.

Firstly, it very much looks like a funding raise is coming driven by a JSE listing and the help of BMO, that will deliver a strategy (much as it did in March 2018), that will place BMN on a firm path to 10,000 mtv of production within the next 2 years. How they will physically achieve it is secondary to the costs being defined and demonstrating the method for achieving the task.

If as has been talked about the dilution comes in at circa 15%, so 165m or so shares ( and I stress we don't know that it will happen or how much it will be, so its purely speculative at this juncture), then that should see the company raise sufficient funds to enable all works associated with moving this company to 10,000 mtv. That knowledge will give the market the ability to measure the cost over the achievement, and for me it will be very pleased with what it sees.

However, if we then add in substantial 'large scale battery mandates' from Eskom backed by a valid and demonstrable and implemented electrolyte leasing model (a development that FM highlights in his Christmas message as being on for 2019), and add the initial 200MWh electrolyte plant, then the sum of achievable parts for 2019 begins to looks like a substantial step change.

If the vanadium market then delivers even just a circa $75-80 per kg average pricing to accompany that 3,300 mtv Vametco goal I set in my post here yesterday, then we start to see something that has the ability to drive a valuation substantially beyond what we witness today.

In terms of any placing we can see by the March placing that the discount was set by the fact that the 5 day moving average volume calculated 1 full week prior to the placement announcement date. The issue there was that the SP moved from 8p to 11.6p in that period, which when measured against the 13.1p on the announcement date, made the 10.3p achieved look like a sizeable discount (21%).

However, over the course of the next 4 weeks the SP then added 61%.

That raise represented approximately 14.4% of the company's issued share capital on admission. I expect something along the same lines. This will be done once only in order to demonstrate that all medium term goals can be achieved.

The same rule applied at circa 40p would mean around £64m or $84m. That to me feels about right if the company is going to act fairly quickly and back up the investment with ongoing cash flows.

If I am being asked to sacrifice 14.4% of my holdings value for the peace of mind that 10,000 mtv will be achieved inside 2 years, then i am a player.

AVL won't see production before 2022 at best. BMN will beat that by at least a year. 10,000 mtv makes BMN the next big move in vanadium supply and thats n

@Niles To a degree I share your concerns regarding the throughout to the OBA for no other reason than it remains an unanswered question and risk. However, it should be placed within the context of the greater picture because current production figures news has been completely swamped by the combination of the news at CP0-5 and the OXY deal.

Even if total throughout plus Mariposa-1 is coming in at 3,000 -3,500 bopd for the last 4 months, that is still more than enough to enable cash flows to tick over through that period. With the cash reserves the company has plus the fact that th costs for the developments with OXY are carried plus the low drill costs at CPO-5 (under $2m per drill as it stands with 6 weels planned), then the company has more than enough avenues to support production expansion without eating into its cash reserves too much.

That's not to say that the security of knowing the Platanillo assets are performing as expected is not needed, its more appreciating the issue for what it is in the context of the bigger picture.

We should also all remember that the issue signals (until confirmed otherwise) that there is a throughput issue not a production issue. I note in the September update that the company did not include throughput figures as usual, but that production remained in line with the previous few months. That adds fuel to that particular fire but it is a fire of throughput not production until we know more.

2 months ago the throughput question was a worry because Platanillo was the AMER story. Today it is something far bigger and whilst that production should never be disrespected, at the very same it should not be overplayed. If CP0-5 lands 4-5 of those 6 wells at anything near Mariposa-1 levels, then we are talking a very big story indeed here and no fall off in Platanilo throughput is going to hold it back.

@UKsteveg The statement in the Chika Edeh interview is as follows ;

"It has completed its phase two expansion plan at Vametco, and Bushveld has now begun phase three. To get to 10,000 metric tonnes a year, the company is looking at either building a new USD100 million kiln at Vametco or buying brownfield sites nearby, or even both."

In take that to be completely separate hence my inclusion of the $12m or so phase 3 costs in the $170m total figure.

Hope that helps.

A couple of points I would like to add.

The title of the article with the interview with Chika Edeh is centred around the pending dividend policy. The interview build up as follows ;

Chika
“We are committed on explaining to shareholders when they can expect a dividend, however, our dividend structure will take into account that Bushveld is still a growth story.”

Author
"She did not give a timeline for when dividends might be paid, but an announcement is expected to be made by Bushveld in the next few months."

"This dividend plan comes as Bushveld looks to complete a listing on the JSE, something that has been already announced but is now a “priority”."

Chika
“What we’ve said is first of all we are planning to list on the JSE." “The work has commenced. That’s something we will be progressing and planning to do soon. We haven’t provided any dates but this is a priority for us.”

Since that date we have had the Christmas message from FM where by it was stated that the dividend policy would be announced in Q1 2019.

My take on that is that the JSE listing will come first, which makes sense as no dividend payment would be made before the Annual accounts are released in June anyway, so releasing that first could put unfair pressure on the SP ahead of a placement associated with the listing. That's my thoughts but I would encourage others to re-read the article once more.

Furthermore, something I missed out from my last set of posts was this statement from Chika ;

“South Africa is the natural territory we are looking at. It is the region with the largest deposits in terms of resources and there are so many idle facilities around Vametco”.

If Chika is to be believed and as I say it was the very last interview a BMN representative made, then local brownfield acquisitions is very much on the cards, and my loose calculation of minimum $30m plus cash availability should more than cover buying and repairing any idle plant.

My only query is now Vanchem. Whilst I supported the 1a and 1b from Alphacomp, I am now dubious as to it being part of the plans if Vametco is going to receive up to $100m of investment, because it would be too big to meet the communicated 10,000 mtv. So perhaps the plant will be smaller or indeed be something that can help feed the new proposed kiln at Vametco. So for instance the mills at Highveld. Its hard to say but the true focus should be on the fact that it looks very much like Q1 2019 is when it will all come to fruition.

https://alliancenews.com/in-depth-bushveld-minerals-planning-dividends-alongside-jse-float/