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@Mitchoftheday sorry but the pdf from Deloitte is the July version of the Mining Charter, not therefore the latest revised version that the cabinet reviewed and approved this week. That version has yet to see the light of day but press articles already state amendments have been made.

Sorry but it is listed on AIM and so must follow AIM rules.

See Schedule 3 in page 21

Yes unfortunately the company beat me to it but the only reason I could ever think an admission document would be needed is for a reverse takeover. Meaning under the class tests set out by AIM, the asset being purchased is larger than 100% of the SDX equivalent level.

Well worth a look at the AIM rules on criteria for a reverse takeover.

https://www.londonstockexchange.com/companies-and-advisors/aim/advisers/aim-notices/aim-rules-for-companies-march-2018-clean.pdf

@Alfacomp would love to help but have a project to finish so time is currently against me. But in a weekor so I will be back at this full time. Last time I went full time we uncovered Vametco, let’s see what we can achieve this time around shall we.

Bushveld Energy is buying site A not BE and The IDC. They are building the facility together but BE will as a minimum own the land.

“EOH CES (EIA Project Leaders) has been involved in numerous large and complex Environmental Impact Assessment (EIA) projects in South Africa over the past 25 years. This experience was initially gained during the undertaking of integrated environmental management studies, as well as the management of large and complex Environmental & Social Impact Assessments. EOH CES has managed numerous large EIAs from pre- feasibility through to operation for international clients in 18 African countries. These have been rigorously reviewed by parties such as the World Bank, MIGA, European Investment Bank, IFC, German Investment, Bank (KFW), African Development Bank, BHP Billiton international peer review team, FMO and we have yet to have any major corrections or addendums made to any EAIA undertaken, and have a reputation of producing quality products within tight deadlines and within budget.”

Impressive credentials.

There is an array of information in those reports. Ophidian in particular will no doubt have a frenzy.

I have read that as of 22nd Sept the public consultation period will be over and the project will be ready to the enter the EIA phase.

The full EIA from what I can see covers not only electrolyte expansion but also the VRFB production facility as well. The photos show all 4 sites being considered with Site A already in the process of being purchased, which is by far the largest site of the 4.

This site will house both electrolyte and VRFB manufacturing. It is happening ladies and gentlemen, VRFBs are coming. They must be very confident of getting large scale mandates.

@NickyP that is a simply wonderful find, thank you.

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So I have no worries about VRFBs as far as BMN are concerned, nor do I have any worries about the demand for their electrolyte because it will be at very competitive rates and there are plenty of projects out there ready to go into production, once that electrolyte is secured. The same can be said for those Eskom projects, because BMN will pitch it at the necessary level to gain the greatest amount of market penetration.
In fact, what these price rises do is actually play straight into BMN’s hands, because as a willing supporter of VRFB take up, their attitude to electrolyte production and supply, will actually drive far greater demand for their end product, as VRFB manufacturers become more desperate to source cost effective materials.
All in all, BMN are in an incredibly strong position in a world that is still not fully understood. Yes VRFBs are being spoken about far more now, but the reality is if the vanadium market really understood where things were heading, then there would be far more electrolyte plants being announced. That demonstrates to me that BMN is still well ahead of the game, and once the full integrated pictured is demonstrated, with projects, the market is going to have a lot of catching up to do, as it realizes that BMN has all the ingredients needed to secure a big piece of that multi-billion dollar energy storage industry.

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@Kevkan The way I approach it is that as a BMN shareholder, what can and will BMN do to counter this.
Even if a solution to the question of leasing cannot fully be found, I expect BMN to make strategic sacrifices for the good of future supply gains. They have a huge resource, which they no doubt want to substantially exploit, therefore it is in their longer term interests to support VRFB uptake. I would even go as far as saying that BMN needs VRFB uptake to maintain its long term profits margins.
With the buyout of Sojitz they have taken control of the 20% of Vametco production that was being marketed solely by Sojitz in Asia. If we then add in the substantial price rises that have been seen in H2 this year, then BMN has more than enough additional revenues and material to at the very least achieve large enough profits margins to allow for dividends.
It should never be forgotten that being a shareholder of BMN is not simply about being an investor in a productive vanadium miner. BMN have the arguably the world’s largest highest grade resources. They also have an active energy arm that is already well on the way to producing electrolyte for the world market, and VRFB mandates from one of the world’s largest utilities.
If that electrolyte is competitively priced, then it is going to be in very high demand. That in turn should lead to an aggressive expansion plan. In addition, with those large scale mandates from Eskom and possibly from other sources too, they can build a track record, which in turn will drive scalability through expansion. Thus the long term goal becomes about less profit per unit but many more units sold, be it vanadium, electrolyte, VRFBs, whatever.
Therefore, for me thoughts should be focused on the benefits of relinquishing that short term profit, by stimulating the market and gaining the recognition needed to drive far greater take up of VRFBs. What is more, the pricing environment we are now seeing gives BMN the perfect backdrop to make those sacrifices because the effect on the overall results will be far less visible.
Nobody is better placed right now than BMN to stimulate the market. The likes of AV are heading that way, others are simply headlining the fact that VRFBs will drive greater vanadium demand, but they aren’t actively supporting their uptake at a time when they need the most help. Largo is a fine example of misunderstanding the opportunity.
BMN is and will, and because of their strong head start, they will for me go on to be a major force in the world of electrolyte, VRFBs and the history of the redox battery as a whole.

@Loudspeaker yes I agree. I am being conservative with my suggested end of week price. We have now seen nearly $20 added in just 2.5 weeks. That demonstrates a great deal of desperation in the market. So Ali wouldn’t be surprised to see that $102.50 figure reached by Friday.

The exact mid price figure is $99.75 per kg. So very very close,

The above pricing level is the mid point for the week, so $100 is something of a given for the week end.

That would mean that after 3 weeks of Q4 pricing (but not production of course), the average Q4 mid price is $93 and certainly rising.

Prices need 'only' rise to a circa $102.50 average price for the next 10 weeks, and the Q4 average of $100 will be achieved, thus pushing the BMN year average to $75.

Crazy crazy numbers being discussed here.

@Faramog well perhaps yes but let us not forget that the project is at PFS stage, so a BFS of some sort needs to be completed, be it in my view only, at a mine and compressor level. That will need a time period to be completed. It will of course depend on what further work has been conducted at Mokopone in the period since the PFS was released. That includes of course any further work with the consultants such as the MSA Group.

A hint that this process is well on, comes from thaw very China ore offtake that you refer to. That was never included in the PFS, so further work must have been carried out. What was always included was a mine and processor with a separate processor under a different company name.

Remember this from the PFS? :

“The Project will be developed under a “two operating company model”. The Mine/Concentrator will be owned by Pamish, the company which is the current holder of the Prospecting Rights for the Project and which has submitted the Mining Right Application to the Department of Mineral Resources (DMR). The Salt Roast Plant will be owned by a company still to be formed (SaltCo).”

SaltCo could just as easily now be Vanchem, because those words were written well before even Vametco was on the cards. The key though is the two separate companies, which given that Pamish were not planned to be part of the processor, always said very clearly to me, that the processor would be housed off site. One cannot carry out the most profitable part of the mining on someone else’s land, and expect them to play no part in it.

Jump forward 2.5 years and with money in the bank and brownfield still available, the processor has moved on but the principal is the same.

However, if we assume that the brownfield is Vanchem, then there will be a great deal of work required to bring the plant back into production. It is documented that the plant needed considerable upgrade works even before it shutdown for 3 years. Then there are the staff to find and re-train.

We should also not forget the Competition Commissions and the Section 11 process, both of which were conducted for Vametco. The fact that Vanchem is in business rescue will help but it does not eradicate the need for this process to take place.

I would hope that if Vanchem and Mokopone are the play, that the company has explored as many avenues as possible to reduce the planning, financing and construction phases. However, this is mining and it takes time to action things, particularly in SA. That said if the announcement comes inside the next few months, then I still expect them to beat AV into production. I am simply being cautionary over what, if I am right, will be a game changer for BMN and it’s shareholders.

@Leafie the Annual Report clearly ties the expansion from 5,000 mtv to 10,000 mtv into further brownfield.

The Mokopone mining right still being defined as central to the 2018 strategic goals named in that same report,

Then there is the fact that brownfield processing is clearly defined as central to all expansion plans, due to its cost effective and fast track capabilities.

Therefore, it is for me very clear that the two go hand in hand together, and it is they that will drive the exact timing of the JSE listing, because it is they that require a capital raise of some sort.

It will come with a burden of sorts, but we could very see Mokopone on a path to production inside 2 years, with little or no debt on the books. That would mean a 10,000 mtv plus operation, with no or very little debt. That would be some achievement.

Perhaps. My own view on the strike is that I don’t believe BMN are overly concerned to the point that they feel they need to achieve a quick solution. They are not a team that focuses on short term fluctuations in the SP, be they severe or not. They have always played the long game and to date it has paid off.

I believe therefore that their focus is on making sure that whatever conclusion is reached, it is a permanent one, which will allow the market to trust that this won’t happen again soon.

I am all for ensuring that the workers at Vametco receive fair compensation and a share of the burgeoning profits, but one must be careful not to allow a strike to demonstrate that it is an easy way to make some additional money. The strike needs a solution but it needs the right solution for all.

Current prices and the Sojitz buyout have given the company more than enough room to breathe. All plans are as far as I can see well covered by the cash flows Vametco will make and/or other measures that we are likely soon to see.
So the company has time to demonstrate to the workers that they won’t be pushed into an agreement that isn’t their own will.

That’s important here because without that they are in my view exposed to further strike action, which will create a bad name and do more long term damage than a few weeks lost production ever will.

Of course it still all remains a balancing act, but for me I would rather see a 3-4 week halt and the right solution, because the company can afford to commit that sort of time and still be well short of losing anything in the long run.

This about position, strength and outcome right now, not time lost on the shop floor. That all said I can’t see it going on much longer.

@SOTRR good post. Current mining right application timelines in the States are between 7-10 years, so nothing is getting speedied up any time soon.

I stand by my previous position. I expect to start hearing offers around about H2 2019. The investors that cane in with the March raise, are here to get the most out of their investment, but their MO is build up and sell it. Vanadium prices are going to be strong next year, and for me it will be enough of a run by that point to see major interest in both BMN and Largo. By that point BMN should be well over £1 billion in MC.

Just my opinion of course of where I think things are heading.

In very simple terms, as of the end of Q3, the average (BMN 4 week lag) mid price after 39 weeks was circa $67 per kg.

If Q4 achieves $100 per kg average, that would increase the yearly average to $75 (Broker targets are currently at $68).

At just 2,806 mtv sold, so H1 repeated (current guidance is 2,850 - 3,000 mtv), that would equate to $19.65m more in revenues. At the Q2 stated 78.5% conversion rate (Revenues to EBITDA), that would mean $15.4m more in EBITDA for the year.

At $75 per kg, the EBITDA rate would be circa $41,300 per mtv.

Therefore Q4 pricing levels would add the equivalent of 372 mtv in EBITDA at $75 per kg.

The strike as of Wednesday night will have, in theory, removed circa 108 mtv.

So based on those two live fundamentals, BMN’s profitability at Q4 $100, is rising considerably despite the strike, because the price shift is so strong.

And I am ignoring the fact that Q4 highly likely will see production far higher than Q3, despite the current strike, because phase 2 will be far more relevant.

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So for me its local brownfield and its connected to Mokopone. Given the timescales and uncertainty around mining licenses, it is possible that the brownfield deal is waiting on the certainty of the mining right, before being signed off.

However, the use of words such ‘targeted’ and ‘intend’ means that the brownfield is somehow in place.
So for me when the Mokopone Mining Right is declared, then it will be a mine and concentrator, with that brownfield processor option in toe.

And all of that for me is tied into the JSE listing. Whilst I buy the need to give South Africans a chance to buy into the story, the first and foremost reasoning for the listing is capital. The BE upfront and proposed plans do not come with a great deal of financial burden and, The IDC are involved too.

For me the capital is for Mokopone and the associated costs of the brownfield. If that is the case, if I am right, then the Mokopone Mining Right must be expected this year, because the JSE listing is connected to it, and it and the Mining Right have been set as strategic goals for this year.

But to be clear, it is not about if, it is about when, and that is what is key. Mokopone sign off will happen, the brownfield will happen and the expansion to 10,000 mtv is coming.

If they can put it together before year end, then with brownfield attached the cost will add many multiples of value, but also more importantly they will highly likely beat even the most advanced primary vanadium producers such as TNG and AV into production.

All just my views of course but let’s see how it pans out.

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Now that the Sojitz buy out is confirmed and it’s effect on the SP is beginning to be realised, then it is time to concentrate on the next piece of the development story.

The next move by the company could very well be the letting loose of BE, but in this post I would focus more on the mining side of things.

Reading back through the Dec 2017 Annual Report, it is for me clear what the plan will be.
Page 6 of the report states that “Processing capacity of 3,750 mtv, growing to 5,000 mtv on the back of ongoing expansion programme. Brownfield facilities in close proximity to deposits offer further processing capacity expansion opportunities.”

Then on page 14 the message is clearly communicated when they say “Through its expansion initiatives as well as targeted brownfield opportunities, the company is looking to expand production to 5,000 mtv by the end of 2019 and to more than 10,000 mtv in the medium term.”

So put the two together and we have the plan. Vametco delivers the first 5,000 mtv, brownfield delivers the next 5,000 mtv.

Now one could argue that the company is still defining what exactly the brownfield target is, but for me it was decided many months ago. This message is running through this documentation as it was in the past for Vametco and Sojitz.
So when it states on page 22 of the Report that “Bushveld intend to build it 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 times to achieve production.” Then it is true, and we need to be looking at which project will be involved, and for me not thinking about greenfield processing, because the company cannot make that sort of statement and then go and build a greenfield processor.

For me the speed, or lack of, with which Brits is being development, means that Brits is a medium term development associated solely with offering Vametco ore that is easier to mine, and thus reducing long term costs at Vametco. I don’t now believe that it is connected to further brownfield.

Mokopone on the other hand is another story. Mokopone is continuously reported as being an important part of the company’s strategy moving forward. Furthermore, under the options for its development (page 14), it is stated “supplying ore to. . . other brownfield processing plants.”

The same has not been said by the company about Brits.