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There is a key message running through the Q3 update that there is a strong focus on reducing operating costs, but there is defintely more going on.

In the update FM states such things as; "underscores the importance of focusing on operational improvement initiatives, production expansion initiatives"

He then goes on to say ;

"with the Company expected to generate healthy cash flows, Bushveld intends to use this opportunity to sustainably maximise production volumes and drive operating costs down. Accordingly, we are pleased to have commenced with Phase 3 of our expansion plan, which will increase capacity at Vametco to 5,000 mtV per annum. Phase 3 will also benefit from advancement of the Brits Vanadium Project"

Later on in the update we see the words ;

"As part of the operational improvement initiative, designed to enhance Vametco's productivity, the Company is reviewing the timing and required investment to expand production capacity to 5,000 mtV."

With the removal of any wording associated with 2019, at first pass i took this to mean that phase 3 had been moved back. However, it has already started so delaying it would now look rather foolish, particularly given the shortfalls in production this year, and the company's repeated message about taking advantage of the structural deficit in the market.

More importantly the use of the words "healthy cash flows" and "driving operating costs down" lend themselves to an operation that is producing far more mtv, across which said operating costs of the facility can be spread.

But it gets better.

"Completion of the expansion project will enhance Vametco's existing competitive position in a structurally challenged market."

The competitve position is in part driven by reducing those operating costs. Therefore, my belief when i think back to all the previous "by 2019", "end of 2019" etc mixed mesages, is that the wording "reviewing the timing and required investment" take with the "healthy cahsflows" means things are as i have long suspected, being sped up.

Whats more the company ends with this ;

"In addition, the presence of an integrated platform will allow the development of downstream operations whilst achieving product diversification."

which to me says loud and clear "Hello world here comes Bushveld Energy"

What was it the company PR man said, Q3 update will be first followed by Bushveld Energy in November?. . .

Good morning all, I am going to offer some detailed thoughts on the update later, but first and foremost i wanted to share this.

The Q3 update was always going to be about what it said about Q4 and beyond.

By committing to a revised production guidance figure so late in the year, the company was alway going to be giving the game away regarding Q4, which enables a rough figure to be calculated.

Taking the revised mean average 2018 guidance of 2,625 mtv and deducting the production to date, we see that in Q4 Vametco should produce 728 mtv.

Now it is important at this stage to repeat the message that is once again printed in the Q3 update but this time reinforced as being 1 month ;

"Vametco realised price is based on the prior month's average price."

That means my current $108.70 per kg running figure for Q4 is in my view near enough to calculate some figures from.

Thus a hold at that level will enable Vametco to achieve circa $79m in revenues if sales match the figure produced. For the last 2 quarters the company has sold more product per quarter than produced.

Now if we refer to the Q2 update then we see that at 713 mtv sold (so not far off the Q4 expected figure of 728 mtv), the total Vametco operating cost per mtv was circa $32,500.

At this stage one should bear in mind the affectsb of the revised unit cost guidance (That's production cost NOT operating cost).

For Q4 the company has stated it will be top end ZAR 255 and at the very least ZAR 14.1 exchange = around $18,000 per mtv
For Q2 it was ZAR 268 and ZAR 12.6 = $21,300

So we are talking about a $3,300 saving per mtv between Q2 and Q4.

But if we ignore that for now and accept that the $32,500 is definitely achievable given the more favourable exchange rates and production costs, then at $108,700 per mtv, Q4 EBITDA should be running at $76,200 per mtv.

At 728 mtv produced and sold, that equates to $55.5m in EBITDA for Q4.

BMNs share at $1.30 exchange and 74% ownership would be £31.6m.

To place that in context, Vametco in H1 achieved a total of £32.6m in EBITDA, but on a 100% basis.

BMN will as near as damn it achieve that at just 74% ownership and in just 1 quarter.

So whilst I carry a little disappointment because of what could have been achieved without the strike, the figures are still oustanding with more to come from Q1 onwards.

As much as it is none of my business what investors do with their hard earned, I do feel compelled to express my concerns over the frenzied like atmosphere that has taken over this BB.

There is no doubt in my mind that the fundamentals as they stand, create a very unique growth opportunity for investors in this company, which should they come to pass will make a great many people here very wealthy, if they aren't already. But its just my opinion.

It should be understood that there is no golden ticket when it comes to investing, risk is apparent in all investment choices and nobody, no matter how compelling the story is, can guarantee anybody that pay day. There is no easy money in investing and it will bite you the moment you turn your back on it and think you have won the day.

So for those truly amateur investors out there in particular, and without wishing for one second to offer any financial advice whatsoever, think hard about what you want to achieve, think hard about what you have already achieved, investigate and research as far and as much as you can, and then decide for yourselves, because an investing life is and should be a long one, so make sure you are still around to enjoy all of it.

Again this is only my opinion, my thoughts shared on an anonymous BB, read it, appreciate it or move on to the next post, the choice is yours, which in many ways is exactly my point.

A great big thank you to everyone who helped bring some added professional to my LSE forum posts. It’s nice to know that after the many hours put in, right or wrong, they will no longer be lost in the many pages that have come to pass here. Especially when LSE can’t even keep your full posting history ssfe.

Shame because there were some real gems in there.

@Brad29 'Early' is always dependant on where one lives.

Morning everyone,

Apologies, we have had an unexpected family drama today so I cannot give as full an answer as i perhaps would like.

Firstly, the European mid price I have quoted today is from Ferro-Alloys. I don't post information that cannot be substantiated.

To say that we have had no news for me does a complete disservice to the pricing levels that we are seeing. To assume that these prices are continuing to be ignored is for me in danger of living in the past. The market is evolving and with it the knowledge of vanadium pricing and where investors can gain exposure. That is not to say that the market fully understands just that i believe that more awareness now exists.

The $108.70 per kg figure is significant. With 3 weeks to go in the quarter and FeV prices now not only rising but rising at a pace ($4 thus far this week), the chances of that $108.70 average being achieved are very high indeed.

I now see a disclosure that Vametco produced 262 mtv in October. Again, with all due respect, i am at a loss as to why contributors here would so readily dismiss that figure. This isn't about the annualised figure this is about Q4 demonstrating that phase 2 is very much kicking in, which means significantly higher return in Q4 but more importantly an even stronger start to 2019.

The company has made it clear in the Q2 Update dated 22nd Aug that ;

"the Company expects to see production rates increasing towards the annualised production rate of 3,750mtV in the coming months."

At 262 mtv, that equates to 786 mtv for Q4 with further increases to come. I wrote the other day that my target for Q4 was 850 mtv. With such knowledge now on the table (assuming we can trust it, and I mean no offence when I say that), that 850 mtv target is looking very good.

If we can therefore assume that the company achieves 850 mtv, that they can sell that 850 mtv at $108.70 per kg (so $108,700 per mtv), then employing the previous percentage calculations that I have posted here numerous times, then EBITDA would be circa $58m, which is £45m.

At 70% profit conversion and BMN's 74% ownership, we are talking about over £23m profit in Q4 alone.

Note - It is also very important to remember that this is based on a EBITDA figure per mtv of just $68,300 per mtv, meaning I am assigning some $40,000 to operating costs including expansion etc. That's a very healthy figure and highly likely too high.

Plus there needs to be an allowance for the %16 drop in the rand, which would can therefore be deducted from the $20,200 per mtv production costs.

Thus the £23m figure is in my view very secure.

At £440m MC, that profit figure demonstrates that on Vametco alone, we still have a way to go to realise a fair valuation, and it isn't pie in the sky, it's near as damn already achieved.

European FeV Mid Price now reached $122.50 per Kg as of Weds 7th November.

That's a $4 increase in just 3 trading days. Looks like the tea break is over.

A hold at that price to the end of the week and after 10 weeks , the BMN Q4 average price will be circa $108.70.

But will it stay still?

I agree with daisan, the fully integrated platform is the story and as i wrote earlier, it is that combination that offers the greatest protection to the business in good times and bad.

Once the market understands that concept and appreciates that elevated vanadium prices are here to stay and that the VRFB industry potential is realisable, then for me that is when the interest in the whole business will start to build. The concept coupled with the potential is just too good for it to stay independant for too long.

I believe that the set of investors that joined the ranks during the March fund raise came on board to help build the business to the point that maximum returns from a sale could be achieved. Incidentally, it is also they that were instrumental in the appointment of Michael Kirkwood.

My previous view was that such interest would start to appear in H2 2019, but the reality is it will be all about the necessary market factors coming to the fore. Price looks locked in, next it is the VRFB side of the business and building up value in that side of the business. That may well take things into 2020, but i cannot personally see it going much further than that.

Let's remember that this business has the largest high grade vanadium resources in the world.

When phase 3 of Vametco is complete, it will highly likely have the lowest cost base vandium production in the world.

It will soon have the only electrolyte facility in the Southern Hemisphere and ;

It may well soon have the most successful battery development business in the industry outside of China with long term contracts at Eskom.

With vanadium the best performing mineral of the last 3 years by a country mile, that isn't going to be going unnoticed, and if SA politics and its regulatory climate truly do demonstrate themselves to be once again free from corruption and investor friendly, then the last puzzle ipiece may well be in place.

Just my opinion, but with the recession proof earnings available, I do feel that is where this is ultimately heading.

You don't need to take my word for it, here's the man himself ;

"If you look at our current production base, you look at our numbers, you look at our growth in terms of the level at which we want to be producing vanadium. If we can achieve that at a low cost of production and if we are successful with all of the initiatives on the energy storage side, all of that taken together we think that they speak forth of a company value that is significantly north of where we are today"

The price on 17th October was 29p

Full integrated, fully charged.

https://www.youtube.com/watch?v=Igrntos3t1Q

Well faramog I trust it will be a file that is of good use as the BMN integrated story now takes centre stage.

(5 of 5)

What I have discussed here may not be directly communicated by the company but it is the reality of the situation. BMN have been visionary beyond their ability to see a deficit in the vanadium market, with the fully integrated model offering an investment play that is, in my opinion, as good as it gets. The fact that it is based in SA is actually, believe it or not, all the better, because it enables the company to fast track its plans and realise its dominant position in the market through those brown field opportunities, an advantage no other vanadium region can currently boast and! it allows localised access to the largest utility in Africa. Furthermore, the driver of this energy storage market is not money that will be curtailed by cycular trends because it is sourced from world bodies dedicated to answering the pressures brought about by climate change. The World Bank’s recent $1 billion targeted commitment towards battery storage is a fine example of this, and it certainly won’t be the last.

It may well be that all of the above market predictions come true, that the vanadium market goes on to answer the VRFB call and it flourishes. If so then great because nothing cements the BMN investment case more than that. BMN highly likely have the ability to bring online more vanadium resource at greater speed, than any other source in the whole world. What I am communicating here is that BMN aren’t reliant on that success, that they have everything they need in house once the VRFB development arm demonstrates its ability to deliver large scale mandates.

It is for those reasons that a project such as the Eskom BESS project is so relevant. A great many market observers will likely see it for what it looks like on paper, a large contract that establishes the BMN energy storage subsidiary as a serious player in the market, and quite right. But as I have explained, that project is more than just a contract win, it is the key to demonstrating that the fully integrated model has truly arrived, and with it Bushveld Minerals in a way all other market participants could only ever dream of.

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

Please note this and all my posts, are my opinion and my views only. Investors should always do their own research.

(4 of 5)

The world can hold back VRFBs through its inability to supply the market with vanadium, but it shouldn’t ever really matter to BMN. Such a scenario will mean robust vanadium pricing driven by a lack of new vanadium supplies, thus driving BMN’s core business forward and supporting its profitability. However, with a fully integrated model, BMN can drive its own VRFB business by choosing to dedicate vanadium production to its electrolyte manufacturing and VRFB development business, as appropriate. Doing that, gives BMN the security to introduce expansion that can be pushed either into a robust vanadium pricing market or into an ever expanding VRFB business, with or without global market support. All BMN needs is its own customer base, which given that it can control its own pricing mechanisms through control of the entire value chain, means they has every chance of realising.

The majority of the vanadium market is talking about the pending VRFB market growth driving and expanding future vanadium demand, but it doesn’t yet appreciate how that will all work. Some are discussing the merits of the VRFB industry supporting long term prices by increasing demand at times when demand in the steel sector falls away through cycular changes in the market. The theory being that lower vanadium prices will drive greater VRFB take up, thus increasing demand for vanadium and pushing up prices once more. Great.

What BMN are implementing and they are currently the only ones outside of China really doing so, is they are fundamentally protecting themselves and their assets, from that market. With a fully integrated model they are effectively the producer and the customer all in one basket. They can tailor their production to whichever need is greatest, be it for profit or for greater market share. They can bring on new production through their early mover status, which right now is delivering market advantage and thus significant cash flows anyway, but is supported by BMN’s geographical location and thus their ability to tap available local brown field processing capacity. For a company with access to over 55 million tons of vanadium reserves with a sizeable increase due to come from Vametco’s neighbour, the Brits project, their ability to expand their horizons is as good as assured.

(3 of 5)

But if VRFBs are going to truly express themselves in this early growth cycle (and that is what it is after all, 10 years does not save the world from its problems), then the world has got to go out and find more than 17 new Vametcos in the same 9 year period.

Failure to do so could lead to other problems for the vanadium industry, such as substitution but worse still the second scenario kicks in and the VRFB industry becomes crippled by its inability to source enough material. Thus, the door is left open for poorer performing but more readily available battery solutions to take their market share.

At this point it is important to appreciate that BMN as a fully integrated vanadium producer, has decoupled itself from that set of scenarios, from those statistics, because it is now very close to being in charge of its own future. By being in control of the full process, all BMN has needed is the chance to establish itself by demonstrating that it can produce large scale mandates for a price or by employing a method that enables or encourages the market to accept VRFBs, not just as a viable alternative to lithium-ion, but as the most appropriate battery technology at utility scale. Now it won’t really matter if the rest of the world is slow on the uptake, nor if other VRFB manufacturers fail to gain the market penetration that is described in the above slides. Nor will it matter if the world cannot find those new mines, be it 8 or 17.

The BMN investment case is not about the VRFB market realising its potential on the world stage, nor is it even really about the steel market delivering the minimal growth that is required to increase overall vanadium demand and support prices. This is about BMN and their ability to carve out a market for their fully integrated model that is scalable, thus allowing BMN scope to further exploit its own vanadium resources, to service its own VRFB development needs. That is what being fully integrated does, that is the true advantage that a market that still hasn’t even understood the global potential for VRFBs, has no chance of ever understanding at this stage.

(2 of 5)

Slide 19 presents the expected rates of energy storage demand with average annual deployment expected to reach 15GWh by 2025 of which VRFBs are expected to capture between 15- 25%. That means that by 2025 VRFBs deployment could average (20%) around 3GWh per year (possibly rising to 3.75GWh if the 25% uptake is realised). In terms of vanadium, according to BMN, that would mean an average of 16,500 mtv per annum by 2025, so more than 3 fully expanded (phase 3 at 5,073 mtv) Vametcos.

Slides 20 to 24 deal with the technology of the VRFB and include many of the slides that I discussed in my last piece entitled ‘BE Your Time is Now.’ However, they are well worth your time to review because they make it abundantly clear that the global VRFB has everything it needs to usurp its lithium-ion competitor, never mind an SA based VRFB that is seeking SA based projects, it’s just the chance to shine that it has been waiting for.

Slide 25 is interesting because it demonstrates much of what I have been talking about and reinforces the message in slides 20-24, that VRFBs aren’t just a fad. They have real worth, when as I have already said they are given the chance to prove themselves.

Slide 27 demonstrates the potential uplift in vanadium demand when VRFBs are in play. Roskill offer a number of scenarios based on their own research, with their base case coming in at 8,000 mtv and their best case scenario coming in at circa 16,000 mtv by 2027. Under the VRFB 25% market share rule, there would be over 50,000 mtv required for the VRFB market alone.

Slide 28 demonstrates that even using the Roskill base case scenario, coupled with the expanding steel market, by 2027 world vanadium demand will be at circa 129,000 mtv. That compares to total consumption of 85,800 mtv in 2017. Thus as a minimum the market needs to find over 43,000 mtv of new material in the next 9 years. If the 25% market share scenario comes to pass, then that figure jumps to over 86,000 mtv, so more than double the 2017 output for the industry.

If we assume that the energy storage market growth rate is real, be it that the battery technology share is still to be decided, then what that all points to is one of two scenarios happening. Either price will remain elevated to a point that sufficient new mines have the ability to secure the finance to be built, or VRFB uptake will be curtailed by the vanadium market’s inability to supply sufficient material.

If it is the former, then as a minimum, the world has got to find the equivalent of more than 8 fully expanded Vametcos in the next 9 years, just to meet the Roskill base case scenario. If not then VRFB uptake remains muted but vanadium prices to a certain extent should remain, at the very least, elevated above their long term average. If they don’t then it will be because steel demand has reduced, which in turn should free up more material for VRFBs, thus further supporting future prices.

(1 of 5)

BMN the miner is a great story which is still to be fully appreciated by the market, but some of that appreciation can at least now be felt. Continuing strength in vanadium prices coupled with a successful expansion of Vametco, will help establish Bushveld Minerals (BMN) as a significant dividend paying vanadium producer. However, the energy arm of this story is still to be realised and at present has no demonstrable worth showing in the company’s valuation. Given the size of the opportunity and the fact it dwarfs that of the mining arm, it is well worth taking the time to understand BMN’s true place and therefore opportunity within this once in a lifetime sector.

Over the last few weeks I have spent a great deal of my time investigating and communicating where and how I feel Bushveld Energy (BE) will make its initial mark on the energy storage sector. The Eskom BESS project offers BE and its partners the very best opportunity to establish itself as a serious player in VRFBs, but as big a project as it is in the still fledgling VRFB industry, it is but a key that can open a door to much greater things.

In May 2018 BMN presented their vanadium 101 webinar, which gave a detailed assessment of the two key markets (steel and energy storage) for vanadium moving forward. Slide 18 onwards deals with the energy storage and that is where I will direct my thoughts.

Now before I go any further it is important to appreciate that we are dealing with forecasts in a market that has never been seen before. Comparisons are made with solar uptake, which I do believe is as close as anyone could likely get, but in my opinion we are dealing with an industry that has the potential to completely disrupt the energy sector, removing control from the established sources of power; an industry that has a place not only on the existing and ever expanding renewable stage but also within the heart of future energy transmission and distribution. Once battery storage technology is established as a market, once they are able to apply true scale to reduce their costs, the forecasts may well all be torn up and placed in the recycling because they simply won’t be bold enough. However, we have to start somewhere, so lets.

Warning Warning warning. . .

5 post monster coming to a sewing conference near you, real soon. . .

To further enhance the message that I have communicated in my posts of earlier today, here is the actual paper that the EE publisher article was taken from.

It is important to reiterate that this is a paper written by Prince Moyo, the General Manager for Power Delivery Engineering at Eskom, not a news article or an interview, a paper.

So the words have serious worth and the direction the paper demonstrates, for me acts as the preamble to the BESS tender itself.

The paper's conclusion is most interesting and worded as follows :

"BESS has clear business value at a local and network level. Various use cases have been
presented to indicate this."

"South Africa is increasing the share of variable RE to 25% in the draft IRP. This will result in steep ramp rates for
traditional plants and to mitigate this impact, BESS solutions could be utilised."

"South Africa must develop an ancillary market in order to stimulate investment in solutions that will support grid
flexibility."

A very compact but succinct explanation and insight into the future role of BESS in SA, but the most telling line is that last sentence.

There is no shortage of investment in lithium-ion based solutions driven mainly by the popularity of EVs, but there is currently a shortage of investment in VRFBs and other fledgling battery solutions.

More fuel for the BE bonfire in November.

Have a lovely evening everyone.

@Razorschultz My own view is that one should not oversimplify the situation too much.

I am not questioning the validity of the tender nor expecting favouritism. This is about competitive advantage in a SA market of which the BE led VRFB is demonstrating best in class status through being best prepared.

Eskom will consider local job creation when deciding on the winner of this tender, they have to because SA SOE policy dictates it.

Eskom must consider and score high local content in their tenders, of which local beneficiation will be high on the agenda.

An SA SA vanadium and electrolyte supplied battery will have cost advantages that have likely never been seen before in sucha tender. My belief is they will be good enough to beat off the competition, because BE has had over 4 years to prepare.

That just leaves the technology, which has never really been what thsi is all about. The VRFB for these types of application, is the best technology. It is about convincing a Utility such as Eskom to judge them at a level that is fair and represents what the battery will do through it's entire lifecycle.

Hope that helps, but please understand all of this is just my opinion based on what i have read and understood.

@Coffeecups To be honest I haven't even tried. The key for me isn't proving who but the realisation that it will happen and what it means for BMN/BE's ability to grab global market share.

This is not just about the Eskom battery alone, although a 800MWh project (the enormity of which i am still grappling with) win if achieved, would send a major ripple through the energy storage market as a whole.

This is about VRFBs staking a claim to the expected 20-25% of the far greater utility scale battery market. The Eskom project by design or by default, rather conveniently opens the door to that market, because it delivers SA delivered large scale mandates.

Something that should not escape contributors here is that The IDC is driving new industries that can open up new export markets for SA. Eskom is almost desperate in it's need to open up new markets for it's electricity that help return it to better sturdier times and deliver efficiencies to its systems that reduce the cost of it's electricity and it's debt pile. Plus it has EU clean technology fund money burning a hole in it's pocket and those that gave it so graciously, are beginning to ask questions.

The VRFB as an industry, as a technology, give both those stakeholders an answer. It is therefore in their interest to promote and drive VRFB take up.

Hasn't anyone asked themselves how easily Eskom have delivered such a sizeable BESS project to the market. It is 1,440 MWh in size for goodness sake. Why not start at 10MWh or even 100MWh?

Why so big then?

Eskom prices are outgrowing their consumers ability to pay for them and that is being driven by poor system management, as well as state capture of course. their new management team need a quick fix and with it the ability to offset major distribution investment. But in addition, they want to be able to export their technology and electricity to neighbouring countries.

Systems sold with local battery technology attached, that is proven at a scale in SA, does exactly that and at far lower costs.

So whilst the 800MWh and indeed 1,440MWh project are a wonderful prize to win, we have to think bigger, because it is what that project delivers that is the true prize here.

And if that hasn't got your attention then note the last 2 statements made by BE in that very same presentation I have quotd today.

• Integration over the entire vanadium value chain, positions the Bushveld group of companies uniquely to
create value from vanadium resources all the way through VRFB projects

• The model also allows for greater beneficiation potential in South Africa for vanadium than nearly any other
mineral resource

The competitve advantage that BMN has built up by starting that fight so early, has led to this day and this opportunity.

And it gets better.

The Eskom Article states the following under the 'Eskom Project Scope Process Flow' ;

"Concept layout designs for successful sites have been conducted. These are based on standard BESS yard and substation yard layouts but are to be finalised at detail design by the successful EPC contractor."

It says contractor, not contractors. Just like the same article refers to the tender and not tenders.

The 800MWh phase 1 Eskom BESS is going to go to 1 successful EPC.

What was it that BMN stated in their Junior Indaba presentation as recently as June 2018 this year. .

Ah yes that was it, "Targeting 1000 MWh by 2020."

Now I get you BMN, now I understand.