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Back in 2013 when BMN were up against it project wise (iron ore prices going south very quickly and vanadium platform recently launched), they produced a full Mokopone Scoping Study in just 7 months and stated therein (Scoping Study RNS 21st July 2014) ;

"The metallurgical test work and the geological work already completed on the Project are sufficient for a Pre-feasibility Study"

The testing they refer to was relating to the MML zone only and it is that zone that was declared as an ore reserve in the 2015 pre-feasability study, a zone the company conducted no further work on after the scoping study release date, meaning an ore reserve is proven to be achievable in 7 months when they put their mind to it and need those results quickly.

The Mokopone vanadium project is 44km west of nowhere. Brits is 800m east of Vametco, an owned active mine with labour, drilling equipment, testing facilities and hot coffee. 10-12 months needed?

What that screams very loud at me is that Brits isn't going to simply be a maiden resource, its going to be a mineable resource.

In the same interview FM goes on to say "that (brits maiden resource) together with our resource base at Vametco and the resource base at the Mokopone project, gives us a really solid base from which to build from"

He later adds “Once we complete phase 3 at 5,000 mtv per annum, only speaks to a small portion of that total resource base, to do it justice we will need to increase our production capacity significantly north of that, which is why we have talked about a target of 10,000 mtv per annum. To do that, brownfield assets become an important part of our strategy”

Now I cannot say that Brits is first in line to the throne when it comes to that "targeted brownfield" but what is very clear from all of this, is that brownfield is the answer and will take ore from one of those 3 that FM mentions. Vametco for me is out because Brits ore is considerably cheaper ore. Even Evraz didn't mine vametco ore unless they had to and it was on their doorstep.

Mokopone may well be in play, but Brits has access to everything Mokopone doesn't have, including a willing and well prepared neighbour in Vametco. But now in addition, we have this Brits resource launch in Q1 2019, a signpost if you will, which for me tips the balance once more in its favour and with it likely signals the declaration of that illusive targeted brownfield.

Whatever it eventually turns out to be, be it Mokopone or Brits, the key point is that BMN know exactly where they are going with this, they will hit 10,000 mtv, they will make electrolyte and highly likely everything else they say they will, and they now have the cash to execute it.

Vametco is the leverage and the start position was the removal of Sojitz. Job done.

So now it's time for the "remainder of the year and into 2019"

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In my view FM deliberately raises that point regarding Sojitz in the interview because their removal is so significant in that it allows the company to implement all of the plans he then goes onto talk about. The significance of which we investors will come to truly understand in due course.

Sojitz was announced on 13th Sept 2018. The long planned and communicated updated BEE ownership came on 27th Sept. FM then sits down for a detailed interview with Proactive on 17th Oct. Two weeks later came the invites for the Energy Storage 101 webinar. Nect comes the spend.

After his Sojitz comment, FM reels off the list of actions in answer to Mr Scott's question;

1. Demonstration battery at Eskom
2. Phase 3 expansion at Vametco "commencing in earnest"
3. The work at Brits
4. Brownfield assets
5. Dividend policy that is not "adhoc"
6. Framework for value attributable to Bushveld Energy (including electrolyte production aprtially based at Vametco)

All of those above items need cash investment and thus far the company has not indicated that said cash will be a problem but have have told the president of SA that the next 3 years worth of plans (so medium term) will cost up to $170m. So they have a very good feel for their capital costs right now.

Let's also not forget that with additional brownfield assets on the cards, I am absolutely sure that Jaxson640 will be in line to purchase any BEE entrepreneur elements that may become available.Thus once again alligning BMN's partners with its integrated vision.

All of those above items are intrinsically linked to Vametco. All of those above items add value to Vametco when their intended plan is made public prior to the purchase of Sojitz's percentage. All of the above items need cash of which Vametco has oodles of the stuff.

There is simply too much indicated and not explained for there not to be a strategy in play. My view has always been that the company is effecting a 5 year plan very effectively, and it is a plan that started 2 years ago with Vametco. The next 3 years were always planned, thus the brownfield that goes with it was always known.

BMN in its stable has the greatest SA vanadium processing knowledge pool at Vametco, a pool that has worked on every processor in SA. Combined with the professors Viljoen, arguably the most experienced and knowledgeable geologists on the Bushveld Complex.

They knew which brownfield processing would work with Mokopone and Brits a very long time ago.

Therefore, I am back to my statement that "it is simply about timing the events and the release of the information to the market."

In that very same October interview FM says this about Brits

"we have completed a drilling campaign there" and "we expect to declare a maiden resource. . .sometime in Q1(2019)"

Really? It takes nearly 10-12 months to define a maiden resource?

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@Ophidian Appreciate your words and your thoughts on this.

I am absolutely clear that BMN know exactly how they are going to get to 10,000 mtv, it is simply about timing the events and the release of the information to the market.

BMN are for me well beyond the point of waving a strategy in the air without truly knowing if it is going to stick and when they repeatedly include a message, it is a message that will come to fruition. 1000MWh by 2020 being a very good example.

The 2017 Annual Report had 2 key statements in it.

(Page 14)

“Through its expansion initiatives at Vametco, as well as targeted brownfield opportunities, the Company is looking to expand its production to 5,000 mtV by the end of 2019 and to more than 10,000 mtV in the medium term.”

(Page 22)

“Bushveld Minerals intends to build its core processing capacity around brownfield processing infrastructure close in proximity to its primary vanadium resources. The attraction of brownfield processing facilities lies in the potential for significant reductions in capital expenditure and lead-time to achieve production.”

Those statements were made in June 2018 but the message can be seen at least as early as 121Mining in Cape Town in February 2018.

It says intends. . .

In the Proactive interview on 17th October FM on the subject of looking for brownfield FM says "we are encouraged by what we see." You and me both know how FM ticks, such noises are merely holding messages designed to buy time from the market until the company is ready to go.

In that same interview FM in answer to the question of "what are you working on for the rest of this year and into 2019?"

FM's response starts with "so there are a few things we are busy with, I think that we indicated that simplifying our structure and our access to the cash flows at Vametco was an important part"

A point that was posted here sometime ago by a regular poster (sorry the name escapes me) has stuck in my mind ever since. When questioned about Vametvo cash flows, FM raised frustrations regarding the company's ability to access the cash flows at Vametco due to the complicated operating structures and layers that existed. The removal of Sojitz under the banner "simplify corporate structure" combined with the introduction of Jaxson640 eliminated that problem.

Furthermore, we all know very well that BMN have always tried to minimise dilution where they were able to and it normally meant a need for time and patience from investors. Lemur and YD being the greatest examples. Lemur brought among other things much needed cash into the business, YD massively reduced the upfront dilution needed to buy Vametco.

Given the company hasn't yet hit its initial 5,000 mtv expansion plans and that we are talking about low cost additional fast tracked brownfield processing, the company could afford to wait, so long as the opportunities still exist.

On 17th Oct FM made it very clear that they do.

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That being the case I cannot help but conclude that the company has been building up to a majopr launch. I appreciate that they like to be secretive and only ever release news when there is something to say, but there are now more than enough hints to demonstrate that the company has worked towards a set of goals.

One good example being the electrolyte plant which in the webinar was indicated as costing circa $10m and being shared with the IDC, with some debt instruments. That's never going to be enough information at this stage, particularly when one appreciates that the EIA is under way, the location is being purchased, and the company is working towards first electrolyte in 2019.

The company isn't stupid and through the years has conducted this process several times over. If they repeatedly say they are going to do something then they do it. FM repeated this message in his 17th Oct interview with Proactive, so its current.

We are fast approaching the end of 2018 and 2019 is going to be a truly transformational year for BMN, centred around supporting the company's efforts to successfully tender the Eskom BESS project. It si the year that BE truly comes on line.

It is therefore appropriate to give the market more details on how each of these elements will come together. My own theory is that everything is tied together, the JSE listing, the dividend policy, the lot. That's because the company cannot really release a dividend policy without at least explaining its capital needs for the coming year.

So I really do believe there is major announcement still to come which puts far more meat on the BE bones, explains the capital costs for the BE elements and BMN itself, delivers the above actions from the Annual report, so partnerships, electrolyte offtakes, etc, and will be detailed enough for the market to measure.

I believe the ability to do this stems from the point that Sojitz were bought out and what that gave BMN in terms of capital firepower and the ability to drive its own agenda much harder. That is for me why the company is "reviewing the timing and required investment to expand production capacity to 5,000 mtV."

Sojitz is done, Vametco is safely on its way to maximum capacity. It is now time for the next chapter.

Remember remember November? Yes I do.

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One could be forgiven for concluding that the Energy Storage Webinar 101 was the moment when BMN communicated the business plan for BE. After all there are "five 5 clear opportunities for revenues" commmuicated on slide 59, many of which have never been touched upon publicly before.

These were ;

1. Manufacture electrolyte
2. Sell and install VRFB systems
3. Develop and invest in projects
4. Rent vanadium electrolyte
5. VRFB assembly

However, whilst one can certainly better understand the business plan there isn't enough detail to fulfil the declarations made in the December 2017 Annual Report.

There on page 16 FM stated in his CEO report under Bushveld Energy Strategy ;

"We see 2018 as a transformational year for Bushveld Energy. Development work to date is expected to yield results in the form of:

1) Proving the Company’s capabilities and securing its position as a developer and integrator of utility scale energy storage projects by delivering its initial projects and securing large scale energy storage mandates in Africa;

2) Positioning itself as a key electrolyte supplier, by supporting the global industry through the low cost production of electrolyte while securing offtake agreements; and

3) Securing additional strategic relationships with downstream stakeholders in the global vanadium battery supply chain and electrical power developers and producers operating in Africa"

"With these developments, the company will be in a position to outline its business model, cash flow capabilities and valuation contribution within Bushveld Minerals"

The Energy Storage Webinar certainly outlined the business model but it did not introduce the results of the above actions, nor did it explain the cash flow capabilities or the valuatioon contribution to BMN. For that we need to be told what things are actually going to cost, we need to know how the electrolyte plant costs and ownership will be shared out, and the leasing model for the electrolyte needs to be launched.

The 2017 Report is clear in that there needs to be ;

a. Delivery of the initial (utility scale) projects
b. Secure large scale energy storage mandates
c. Positioning itself as a key electrolyte supplier
d. Offtake agreements for the electrolyte
e. Securing additional strategic relationships - global vanadium battery supliers, electricity developers/producers operating in Africa.

With these things the company can deliver BE and those "cash flow capabilities and valuation contribution."

There has been little or no evidence of what any of these items mean, what they contain, and who is involved, which is a little strange don't you think. Furthermore, after regularly updating the market on BE's progress for the last 2 quarters, everything goes even more silent, and we find ourselves almost out of November and still unable to value the BE model.

@Serenus you would be doing yourself a disservice by choosing not to post when you have something to say and something you wish to know. Only you are responsible for you investment and knowledge is power.

If it takes making mistakes to get to the answer you want, then I suggest keep making them because it is those answers that will help bring success, not the guarding of one's reputation.

@jjhbev I think in terms of supply coming on line there is more than enough evidence to support the belief that the next couple of yearsv are going to see sustained higher prices. Whetehr they will be $130 or not is not what is important because as BMN expand their production they will require lower and lower prices to achieve the same financial result.

As I said earlier, my goal is $70-80 per kg forn the next 2-3 years. Deliver that and I will be more than satisfied. A Vametco delivering 5,000 mtv, clear of expansion costs and starting to enjoy cheaper near surface Brits ore, is easily capable of achieving EBITDA of $50 per kg.

That's attributable EBITDA of $185m (£140m). If its higher (and 2019 has every chance of being much higher at least) then all well and good but $70 provides a strong safety net against marco events, and with it sizeable valuation growth from these levels and funds to allow the company to do pretty much whatever they wish within the expanded vanadium space.

That said I am with you on the current production shortfalls. Fortunately the price of vanadium has given the company breathing space to solve the problem. However, I was disappointed with the revised production capacity for this year.

By dropping it to 2,650 mtv, the company is essentially stating that it has now achieved Phase 1 expansion capacity of 3,000 mtv. That is why i expect the top end figure to be reached.

Moving into the new year I would hope that the company will issue a 2019 production guidance figure that at the very least strives to achieve the 2018 guidance of 3,680 mtv, and reinstates confidence in the Vametco facility's ability to expand as planned.

That said even at 3,300 mtv and even $70 per kg (purely an example) should see Vametco deliver BMN attributable EBITDA of £85m, which is very healthy and provides a very healthy investment safety net. However, it is more about demonstraing that the management team can successfully do what they told the market they can do, and that they can the bring this to bear on phase 3 and the move to 10,000 mtv, because we can be sure that the Vametco team will be involved. That's the beauty of having 74% ownership, it brings with it all the logistics that vametco can offer.

@patientvulture all good well thought through points but I have been around the block enough times in the mining game to know that, even if Neometals has gone through these processes already, 4 months for a government department, with their backlogs etc etc, is a very tall order. If they pull it off then good luck to them, and the Australians do like to build mines, but I am dubious.

Furthermore, from what I can see they are a junior that likes to bend the data in their favour, hence their rather unfavourable use of the Vametco 28m ton 'reserve' and Mokopone resources against their own resource in their recent update (Figure 3).

That's not to ay it sin't a worthwhile project, I am no vanadium operatingsnob, its just that such things lead me to believe they are stretching the truth in order to maximise their share price. It's common and some could argue that BMn could have 'played the game' a little more in the past too, but on the othe rside of the coin, one pretty much always knew where one stood with BMN at all times.

Good luck with your neometals investment, I trust it will work out for you.

@pb940 My original post was trying to be generous by saying that with a good tailwind they may be able to start production by H1 2021. Your little snippet demonstrates that that is perhaps just about achievable but I would think they have a 18 months build minimum.

But as I say, I am focused on 2019-20 because after that VRFB demand should really pick up and then we should see sustained higher vaandium prices.

I would add that for me higher prices does not mean $130 per kg. I am talking $70-80 per kg. Not because I think that is the level we will see but more that it is a level that is achievable and would deliver truly significant profits for BMN at 10,000 mtv.

For me this story isn't about what BMN could achieve at $130 per kg, its about what they can achieve at $70 per kg. A sustained pricing environment such as that would deliver BMN at 74% ownership, EBITDA easily north of $330m (£256m).

Who could possibly wish for anything more than that, and its very much on.

Windimurra is different and I agree it has the very best chance of being the next pure producer online.

The current scope os for 7,750t V205 for US $90m outlay.

I haven't heard anything new on the project since the last study was completed, but even if they started the renovation at the start of 2019, they are still looking at 2020 for production.

However, this isn't about dismissing every new project, infact the longevity of the market is better supported with some production coming on line. Demand wise expected to increase at 2.5% CAGR per annum from a standing start of circa 100,000 mtv. 2017 production was just 92,000 mtv, so the market needs 9,000-10,000 mtv just to balance itself and that is without VRFB demand.

So one or two projects making it over the line is not the concern, it's about measuring the markets ability to push supply beyond demand, and from what we are seeing that simply isn't going to happen inside the next 2-3 years, and that is what is most significant in all of this.

If we refer to slide 48 of the Energy Storage webinar we can see that significant VRFB vanadium demand is expected to kick in from 2020 and then drive sharply higher. Thus by 2021-22 the market can take the Blackrocks and TNGs of this world and still offer strogn vanadium prices.

The key is proving that 2019-20 are the years when demand will comfortably continue to outstrip supply. Thus enabling BMN to expand into the supply gap, all the way to 10,000 mtv without affecting prices too strongly.

That was the point I was making in my 'BMN Team Goes A-Team' posts of yesterday. There FM is quoted as saying ;

“we see only primary producers who have existing production platforms that can be scaled up on a brown field basis, as really the only parties that can respond to the current vanadium shortfall or deficit that we see today, and this is a deficit we see only growing stronger, especially as the VRFBs adoption gain momentum, in addition to the strong applications of vanadium in the steel sector”

If he were like a great many more desperate vandium junior CEOs, he would actually say that the only pure play producer that can truly respond to this supply shortage is Bushveld Minerals.

Concentrate on the ripples not where the stone landed, because BMN has opened up through Vametco and pending brownfield options, is tidal.

@Patientvulture firstly good post and recommended.

I have had my eye on Neometals for a while, they have just released the following update stating the DFS is being revisited and is expected to be completed by June 2019. The 2009 DFS declared a 6,300t (FeV80) and a US $460m build cost.

Even with a speedy financing process I cannot see them being in production before 2022.

To secure said finance they will need a mining right, of which they also make a very bold statement.

"A Mining Proposal for an initial open pit mining operation producing 1Mtpa of ROM ore is materially complete and will be lodged this month with the Western Australian Department of Mines, Industry Regulation and Safety (DMIRS) and is expected to be received in the March Q 2019."

I am not expect on Australian mining timescales but 4 months for a mining right is sporty to say the least.

For me any mine coming on line after 2022 holds little sway on BMN because by then they will in my view, be producing over 10,000 mtv and enjoying considerable revenues from 5,000 plus mtv production.

https://www.neometals.com.au/reports/848-20181116BarrambieProjectCommencesUpdateofDFS.pdf

@Cindercone BMN is located in the very best vanadium complex in the world. A complex where they have brownfield capacity available to expand their production to 10,000 mtv. What that will then allow them to do is organically grow the business further by commnecing the same process that was conducted with Vametco. Thus maximising their revenue streams prior to (perhaps) finally driving greenfield expansion.

With Brits working towards a reserve, likely the same as that declared for Vametco and Mokopone, BMN will have access to circa 90m tons of high grade vanadium reserves. Even if they process 3m tons a year they will still need 30 years to get through that amount of ore, and they will have at least an other 450m tons of ore to go at.

They are South Africans, with South African contacts and leverage, and they can create easily the world's largest vanadium miner, without ever having to step foot out of SA.

So its a no for me.

Another entrant on the Supply Outlook list is TNG Ltd (See position 5 on the list).

As of the end of last year they were proposing to produce 14,000 tons of V205 per annum, so circa 7,840 mtv equivalent.

They are amrked as going into production in 2020, but they still haven't raised the necessary funds to build their project despite several years of trying.

At AUD $853m (US $643m) they require more than twice the amount Mokopone needed in its original format to build stage 1. Stage 2 is another US $730m. In the Vanadium 101 presnetaiton FM stated that even at grossly inflated V prices, $300m was difficult to raise because of the lack of understanding by the capital markets of the structural issues within the V space. Many are still employinglong term pricing trends and thus shying away from such large investments.

In addition, TNG is a co-producer project reliant on Titanium and pig-iron markets as well. That said they have n innovative process in TIVAN and they have m,ultiple offtake agreements, but still the finance is dragging on.

Right now one could safely predict a H1 2021 start at best and more likely later, if the finance comes through.

According to BMNs list there are projects totalling 31,000 mtv planning to enter production in the next 2 years. The two projects I have just described total nearly half of that figure and neither is likely to make that 2 year timeframe.

Better still BMN with brown field capacity available and extremely strong cash flows, driven by the fact they catapulted themselves into production through earlier access to brown field capacity, have all the tools to exploit their resources faster and cheaper than Blackrock or TNG could ever dream of.

@jjhbev firstly I am delighted that you have taken such an interest in future production possibilities. If you would care to dive a little deeper then I would encourage you to look at some of the more sizeable projects, which were listed by BMN in the Vanadium 101 presentation on slide 44.

I would gently point out that it isn't just about the production that will come online, it is also about demand growth.

But staying with supply and in particular slide 44, the production start dates are from what I have researched those proposed by the indivdual owners of the projects. None of the projects I have thus far identified have any chance of meeting their proposed start date.

One significant one is Blackrock Metals(Position 2 on the list) a private company that had planned to commence operations at their co-producer mine in Quebec in 2019. Considering they have only recently (Aug 2018) raised a significant portion of the CAD $1.3 billion needed to fund the construction, they have little chance of being ready in 2019. Plus I can find no evidence that they have completed said financing or indeed yet started said construction.

Where one must be a little careful is with the numbers BMN have employed. Blackrock plan to produce 5,800 mtv (FeV) not the 4,000 mtv stated in the presentation.

Whilst Blackrock claim they will be the lowest-cost producer of high-purity pig iron, ferrovanadium steel additives and high-quality titanium feedstocks, they still need to raise CAD $1.3 billion and then get the mine built, which incidentally includes not 1 but 2 processing plants, in 2 locations.

So even though it is a very good project, it is a co-producer that relys on somebody lending them a lot of money to get started, and even then if all goes well, they will struggle to make 2020 as a start date.

http://www.bushveldminerals.com/wp-content/uploads/2018/05/Bushveld-Minerals_-Vanadium-101-final...pdf

I should of course add that these views are purely my own and each and every investor should check their facts and do their own research.

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It should not be lost on anyone that the IDC hold a stake in the electrolyte plant, the first major value chain element of the fully integrated model and the easiest to share out. At $10m BE through BMN could easily finance the deal themselves, but it isn’t about that it’s about business, about sharing the spoils of a job well done and maintaining that leverage.

With the above now known, we are closer than ever to confirming that BMN will in the medium term deliver on its goals, to deliver 10,000 mtv and 200MWh electrolyte production, but more importantly play a significant role in delivering up to 1,440MWh of battery deployments.

What that will then mean is a share in the full value chain but far more importantly (See Slide 58);

“Reduced volatility of revenues and profitability, as energy storage features lower market volatility than commodity markets”

BMN the miner is going recession proof.

So people of the VRFB industry, if you have a problem and nobody else can solve it, then call the BMN team, because no other vanadium producer right now is achieving more to support and drive your market. A realisation that many still cannot see but is in some quarters at least, now clearer than it has ever been.

And as for me, well I love it when a plan comes together.

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On the influence that leasing can bring he says;

“even in this high vanadium price environment, we will be able to accelerate VRFB deployments and create new revenue streams for the group.”

With that last sentence FM delivers the killer blow. That high vanadium prices may affect some VRFB manufacturers, but it won’t affect those backed by BMN.

For me there can no longer be any doubt that that list is centred fully around the Eskom BESS Project. That the BESS project at 1,440MWh is and has always been the main focus point of BE, for the same reasons I have shared above. The BESS project is BE’s very best chance of convincing a major utility to give the little known BE a major chance in the VRFB market space. A chance that will give BE and its partners the necessary support to take their product forward with confidence into the Southern African Development Community. A chance that will allow BE and its partners to drive electrolyte production expansion and commence SA based VRFB assembly. Thus answering the IDC’s call to deliver beneficiated minerals but more importantly deliver a sizeable number of jobs and a new industry to SA.

What was it that Christie Fourie of the IDC in signing the co-operation agreement with BE back in June 2016 ;

"The signing of the Agreement with Bushveld Energy marks an important milestone for the IDC's initiative towards the development of a sustainable Energy Storage Industry for South Africa. The IDC and Bushveld Energy share a common vision for the development of a new industry that will ultimately benefit all South Africans through increased local minerals beneficiation, the creation of jobs across the value chain, the increased availability of power and the overall stimulation of growth in the economy.

That’s why BMN in their tweeted response to the news of the BESS project said ;

“Large scale battery energy storage is here. Been working towards being ready for this since launching Bushveld Energy in 2014.”

Everything has been centred on Eskom, and that is why BMN entered into their agreement with the IDC because they needed to that lever. As FM himself said in the 5th Oct 2016 BE update ;

“The IDC also has important stakeholder linkages with the South African government, regulators and utilities and other key players that are necessary to provide a catalytic stimulus for the energy storage industry”

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FM goes on to say;

“the impact overall is that you move from not only just operating in a $7 billion market but also playing in a potentially more than $70 billion market all in all”

“we also have scalable processing platform with scope for additional brown field expansions, and it is precisely these brown field opportunities that give us the confidence that we will be able to meet the challenge of supporting the VRFB battery industry in terms of both vanadium supply but not only vanadium supply but low cost vanadium supply”

In presenting slide 54, FM makes it very clear that the assembly of the VRFBs involves low capex to set up and will be in place by 2020. However, what he is also clearly telling his listeners is that brown field expansion is going to happen, that it is identified and is coming to the market, and that will take help this company organically expand to 10,000 mtv.

That is why FM could stand in front of the president of South Africa and state very clearly that BMN would invest circa $170m in the next 3 years. He said it because he knows where and how it is going to be spent.

This is further supported by the comments made against Slide 56 – “Organic growth”

Expansion “Principally driven by organic growth at Vametco where we are looking to grow our production capacity to 5,000 mtv per annum, but we also have communicated that we continue to look at targeted brown field opportunities, which we believe will see us grow beyond the 5,000 mtv that we envisaged for Vametco.”

“We are confident that now the stage is set to really unlock the opportunity for the downstream integration through BE and the energy storage sector”

This is where FM increases the emphasis, this is the point at which FM is telling his audience that BE is ready to be released to the market.

Where and how it is coming, is in the actions that sits on the right hand side of that same slide. Below are FMs key words on this;

“Partnership with UET with which we are looking to deploy VRFBs in the African market.”

“Working with the IDC to build a vanadium electrolyte production facility in east London, which has a minimum capital expenditure and will be sufficient to supply 200MWh per annum, as a start”

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Under developing mandates FM goes on to say ;

“If you implement your strategy correctly, and target those structural levers, you can open up this market at large large scale. We have seen this in Africa recently with Eskom announcing recently that it is looking to acquire as much as 1,400MWh of battery energy storage . . . in the near future”

“We have also seen that with the IRP that SA has released recently, the government committing itself to as much as 13,000MW of renewable energy and also 9,000MW of gas peaking capacity, which the government itself also acknowledged can be met with energy storage solutions”

“This is the kind of scale that can be unlocked when you work on the right levers”

“as you do that you create upstream the opportunity for supplying into that the electrolyte as well as the VRFBs”

“in respect of this we are targeting 1,000MWH opportunity by 2020. 4 years ago when we put out that number out it might have seemed like a far fetched number but I think today with the all the developments we see in the market, one can appreciate exactly how significant this opportunity is and perhaps why we were so bold as to do that”

I need not remind anyone that it is November 2018. So 13 months until the start of the year that BMN expects to deliver 1,000MWh of energy storage solutions, and with it reap the full benefits of involvement in the entire value chain, both at company and stock market level. A time period beautifully aligned with that of the Eskom BESS project.

BMN has never wavered from that figure and it has been challenged many times. What that reflects is the scale and the depth of the plan that BMN instigated and is now executing with some style. By partnering with the IDC BMN has found exactly the right lever to open up that opportunity. It may cost all shareholders part of the spoils but in having the IDC as a partner on the electrolyte plant, BMN have secured leverage that opens up 9GWh of South African business that can be approached with arguably the most cost effective energy storage solution that has ever been seen.

Employing the earlier figure from slide 39 of the presentation, that’s $4.5 billion in potential business over the next 12 years and that’s just in South Africa. Why would a fully integrated South African vanadium miner start anywhere else?

BE SA Energy Storage Conference presentation slide 8 states very clearly that deliver and installation costs are 13% of the battery. Couple that with an assured vanadium supply and large scale localised assembly, and the competitive advantage becomes clearer and clearer.

http://www.bushveldminerals.com/wp-content/uploads/2018/10/Bushveld-Energy_SA-energy-storage-presentation_October-2018.pdf

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In a nutshell, what FM is clearly stating there is that the vanadium shortfall is here to stay to such a point that the only producer who can truly react to it in the medium term is BMN. Thus the company with the aid of increased demand from the VRFB space, fully expect to expand to 10,000 mtv and that high prices will, at the very least, be present through to that time. Great.

The beauty of all that is that BMN will deliver the first major new supply in the sector, but much of thehat supply will be focused on VRFBs, thus limiting the impact on vanadium prices driven by steel demand. And if the VRFB story falls flat on its face, then at 2.5% CAGR, those 10,000 mtv will always find a home in the vanadium hungry steel market, thus nothing is lost.

Now at this juncture one has every right to challenge the findings of BMN because at the end of the day, this webinar is based on self interest and the betterment of the company on the stock market. However, think hard before taking that stand because in the 4 years the BMN vanadium platform has been running, the company has barely put a foot wrong. They predicted high vanadium prices when nobody else was seeing it and they predicted substantial energy storage take up when most had never even heard of it. That doesn’t make them always right but it does give them a strong standing in the vanadium community.

But it gets better still.

Under the VRFB assembly item on slide 54 FM says this ;

“leveraging mandates that we expect to develop within the markets that we operate, we see an opportunity to establish assembly manufacturing platform, which will carry with it substantial local content and in so doing, giving us a significant advantage in those markets”

BMN markets could be defined as Africa, but the reality is their main market and their start market is South Africa. That’s where the vanadium is, that’s where the electrolyte will be, and it is where the IDC carries the greatest influence. To break this market it makes perfect sense to start where they hold the greatest competitive advantages, and that is in South Africa. Break that market, demonstrate your product and your ability to get these projects built and you open up the wider African market and beyond.

In South Africa they expect to develop energy storage mandates sufficient to claim at least 1,000MWh of deployments by 2020, which will spur the establishment of VRFB assembling to maximise local content thus further cementing their localised competitive advantage and increasing the likelihood of exploiting that market even further.