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I have been looking back at my notes on vanadium prices and can offer the following ;

Since the end of the first week of BMN’s Q2 (so 4 week lag), there has only 1 week where the mid price jumped more than $2 in a week.

On Friday 06.07.18 the price recorded a $4 weekly jump. It was around about that time that the new environmental inspections began in China. However, despite this jump, there was no further significant follow up, with the following week seeing just a $2 rise, which then held fairly steady until Q4 started.

At the start of Q4 we had the same $4 jump, but this time it was followed with a $10 jump in prices.

So despite the continuously reported shortage of raw materials this year, despite the ban on V slag imports to China, despite the continued impact of those environmental inspections, and the clear supply shortages, the price rise has always remained steady and within a range. This is epitomized by the fact that the mid price has moved from $69.50 per kg at the start of said Q2 upto $82 and then $80.70 at the end of Q3. Therefore the range has held never moved more than $12.50 from the start position.

Fast forward to Q4 and just those first 2 weeks, and we see a $14 shift in price growth, with a never before seen weekly uplift of $10, which itself followed the biggest weekly rise within the analyses range.

Something has changed in the market, be it supply or demand side. The movements of the last 2 weeks have demonstrated not only a move north but also a far more severe move, which for me will go on to demonstrate it was just the start of something rather than the main event itself.

$94.50 is very impressive and more than enough for BMN, but it may be someway short of the final destination in this particular phase of the pricing chart.

As I posted last week, the end of the strike will certainly give the positive sentiment here a boost, but if the company can also declare that the full revised guidance is unaffected by the strike, then that coupled with Sojitz buyout, should see a far stronger move north take place.

Whilst during what is to date an undefined strike period, it eis easy to concentrate on what negatives this could bring, it is also important to remember that we do not currently know how much inventory is available, nor how far on the phase 2 ramp up is. If either are available to support any sort of drop off caused by the strike, then its show time.

@Daisan whilst nobody can say for certain if the Vametco shutdown is directly affecting prices, personally I cannot see how it can be the case.

Firstly, the fact that FeV prices remain so static throughout August, despite the lack of traders due to the holiday season, spoke volumes about where the market was and how little support it would need on the demand side to affect things further.

Secondly, the strike began on the evening of Wednesday 5th Sept. At that point FeV prices had already risen by $4 that week. a move which itself signalled that something major was already happening.

Thirdly, with over 50% of BMN product going to the US, one would expect that the US would be where the really significant price rises would be seen, but that hasn't been the case.

I have no doubt that the there will be some sort of psychological affect on the market because Vametco is a key mine for the market, but the size of the rises are just too big, meaning there is something else going on.

What I do know for certain, is that trying to predict the top is very difficult and right now the all time high cannot be ruled out, be it in Q4 or even Q1 next year.

@Loudspeaker given the strength of the rise these last 2 weeks, i believe there is an inevitability that prices will break $100 this week. That then sets up a very attainable $100 average for Q4, a result beyond any BMN’s investors dreams.

That is an absolutely remarkable headline to end one of the most compelling weeks of this company’s brief history.

In early 2016 the price of FeV was hovering around $14 per kg. It was this pricing level that allowed BMN to negotiate the initial $17.5m purchase price.

Fast forward to today and a mid price of $94.50 per kg, which means prices effectively just surged by that very same margin, and they did it in just two weeks of trading.

What this means for the weeks ahead quite frankly leaves me rather speechless, because i know things are only just kicking into gear.

This is an unprecedented period in the history of this company and as it’s witness, this BB.

Something extraordinary is taking place here and one would be wise to take the time to breathe as much of it in as one can, because there are many distractions out there that can prevent one appreciating the enormity of the achievement and the scale of what is still to come.

@Headancer I appreciate fully what you have so willing ly shared and you must ultimately make your own decisions about what you do with what must be very hard earned money.

What I would say is that right now the only thing managing to keep this share price on the reigns right now, is the strike. So long as there is a suitable outcome, with no lasting affects, which for me is far more likely than not, then those reigns will be released and the initial BB driven 30p target surpassed.
So whilst your delight at reaching 26p is yours to fee and appreciatedl, I personally feel very confident that (should you stay invested) you will soon enough look back and smile about that 26p thought.

For me, as exciting as this adventure already is, the news flow hasn’t even got going yet. For many companies the increase in ownership announced yesterday would be a year maker, whilst for BMN it is but a cog in a very large company making wheel, and it’s a wheel the market and press, simply do not have the time to appreciate. But it is fully appreciated here.

As I wrote last night, it is clear to me that Vametco is the foundation from which BMN wants to make its true mark in the world. It is and will go on to be a highly successful foundation in its own right, but in time it will show itself to be just the start of what would come to pass.

First and foremost, on the mining side of things, the acquisition of further brownfield, which for me will be Vanchem, is now since yesterday, no longer about the payment method, nor was it ever about the availability, it is about timing and potentially associated milestones. With Vametco making so much cash, BMN shareholders have nothing to fear from such a transaction but much to gain with the doubling of production in the medium term.

The BE business has been discussed to death so I won’t dive back into it, but its story is coming, along with the JSE listing and the dividend policy, which given the latest news, just got a 25% shot in the arm. Thus the company could by right now issue 20% of profits to a dividend and they would still be in exactly the same position cash wise, that they were just two days ago.

There is so much happening here that many have forgotten that there is a pending BFS for the Lemur project, which once published, will be the final piece in that particular puzzle before the project is set loose on its own. That is a very large and profitable project in its own right, which has quietly advanced with limited credit being given, and that is because the Vanadium platform is so damn big.
So much to come such that for me, once the strike and the 30p pig is off our backs, the SP has room to work those reigns and pick up a speed that will still catch many out, despite the focus given here every day.

Good luck to you whatever you do.

So here are some thoughts that I have regarding the medium term plans for BMN and their newly opened bank vault.

1. Brits currently is made up of 3 companies. The front end drilling campaign is associated with Uitvolgrund Portion 2 and 3.

Caber Trade and Invest 1 owns portion 2, which is immediately next to Vametco, and BMN hold 51% at this time with the rest being held by the BEE partner. I simply cannot see BMN allowing that to stand, so I expect them to take at least another 29% in that company. This is also the farm where the mining right was applied for but had stalled due to litigation. As they are drilling now, it may be resolved, so either the mining right is live again or the litigation will be resolved with some sort of settlement.

Great Line 1Invest owns the rights to Uitvolgrond portion 3, which is further along the strike from Vametco but again part of the current drilling campaign. BMN holds 70% of this company and the BEE partner the other 30%, so I do not expect any change on that front.

The focus is therefore on the Caber Trade and Invest share.

The announcement of further brownfield must now be firmly be on the cards with both cash flows and integrated resources available.

Let's remind ourselves of what the Annual Report (page 14) stated :

"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."

The 5,000 mtv is coming through Vametco but the rise to 10,000 mtv is still open for debate.

What we do know is that the Strategic Objectives for 2018 do not specifically mention more brownfield but they do mention the Mokopone Mining Right. and its development alongside the company's broader vanadium portfolio.

What the Annula Report also says is that ;

"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."

For me its clear that Mokopone will be developed as amine with a brownfield processor attached. The company would be undermining its whole startegy by suddenly announcing a greenefield project with processing and a $300m spend, especially when its simply not required.

So for me the brownfield comes with Mokopone and is at least in part reliant on the Mining Right, although I don't for 1 second believe it is in doubt. Both are now backed at least in part, by Vametco cash flows, meaning enormous potential from these levels.

Some food thought if nothing else.

So whilst the initial reaction to today’s news is clearly centred around what this will do to the revenues and profits of the company, the real news here is what this now means for the business as a whole. What plans will this new level of ownership allow BMN to now unleash. That is where the true value is going to show itself.

I am reminded of an AIMChaos post from around the time of the funding raise in March, where he reported on a meeting with FM. He stated that the company was frustrated by the fact that the current share structure prevented access to the Vametco cash flows. Well the removal of Sojitz just took that problem away.

The only other shareholder in Vametco now (workers aside of course) is the BEE partner, and that partner is led by a long term consultant to BMN, Bill Chipane.

In the RNS from the 5th June 2017 BMN state that Jaxson 640 are their “BEE partner of choice.” Post this announcement FM then went on record as saying that Jaxson 640 are a like minded partner that supports BMN’s vision moving forward. At the time, the help given to this partner was met with some resistance her, but the reasoning should now be far more clear.

Note - It should also be noted that Jaxson 640 have put themselves forward as a willing BEE partner on one of the disputed Brits farms.

What this all means is that BMN have full control and backing of the entire share ownership of Vametco and with it full access to the cash flows that creates.

What this also now means is that any deal between Brits and Vametco is far easier to conclude because any compensations to parties outside of BMN, are solely to do with BEE partners.

It also means that any designated resources deemed required for the development of Brits and Mokopone, are also now purely BEE partner related. Therefore, all resources (when working) at Vametco can, if required, be put to work to develop either Brits and/or Mokopone moving forward.

Remember Vametco is already running the analysis on the Brits drilling programme.

Furthermore, any vanadium that is deemed required for the electrolyte plant can now be designated and signed off as so, without resistance.

Finally, BMN have just demonstrated what they are capable of with today’s $11m cash contribution from Vametco. If they can do it once, then they can do it again with brownfield, because now the cash flow is immediately available.

The market may not appreciate this to begin with but it will soon enough, when BMN start’s demonstrating how it is going to put these resources and significant cash flows to such use.

We spend much time calculating the perceived profits that Vametco will make, but the reality is it is what the actual cash flows will deliver in terms of growth, to take this business from mid tier to top tier, that will really drive the value here, and it all starts with today’s announcement.

So as expected, the Sojitz buyout has come to pass. Given BMN’s clear desire to expand their ownership within the vanadium space, it was, after a gentle nudge from the company, clearly the first move to make.

The hard work at Vametco was completed when the company convinced Evraz to part with their share and the SA authorities hat they were a worthy successor.

By buying out Sojitz BMN avoid the lengthy section 11 process with the DMR, and approval of the SA competition commission. So once the signal came that BMN wanted to ‘simplify its corporate structure,’ it was only a matter of when and at what cost.

The price paid and the method used, are quite remarkable. As already stated here, BMN have once again managed to employ Vametco cash flows (55% at least of the Sojitz share) to buy another chunk of the asset.

To demonstrate this one need only review the figures I have posted over the last few days or so.
Q4 production of 702 mtv, current average FeV price for Q4 is $87,100. At $6,400 per kg, Vametco produces $36,900. Above this level they are converting at least 78.5% of further revenues into EBITDA.
That means $13,900 more EBITDA per mtv, meaning a total of $50,800 per mtv produced.
At 702 mtv, that equates to $35.7m in EBITDA just in Q4.

Before today the company would have been allocated $21m, now that allocation is $26.8m, a jump of $5.8m in just one quarter. Total outstanding balance for Sojitz share was $11m.
And that FeV price is only just getting going. If the FeV price for Q4 averages $100 for Q4, which for me is now within range, then EBITDA should rise to $42.8m and BMN’s share will be circa $32m.

That means the acquisition will have effectively been covered in just one strike interrupted quarter. To be clear, I did not simply make that $100 price fit, it directly correlates with the doubling of sales in H2 and the EBITDA already clearly demonstrated by the company in the Q2 update.
Hit $100 average mid price for Q4 and Sojitz is covered from the cash flows it creates.
An amazing deal that takes full advantage of a vanadium price pushing towards its very best levels.

Take a bow BMN.

European mid price FeV is at $89.50 per kg. A surge of nearly $5 in just 3 trading days, with the top end price now standing at $92 per kg.

That’s a 11.5% rise in the first week and a half of Q4.

The title says it all.

The doors have been blown well and truly off

I wonder too Mitchoftheday. From the look of a couple of comments I saw on FB this morning, the road to Vametco is open again. Let’s see shall we.

Anybody else wondering why SP Angel were able to state :

“The stoppage is not expected to affect the company’s recently revised year-end production guidance. We expect Fortune Mojapelo, Bill Chipane and the team to work to resolve this action relatively quickly.”

Note they specifically mention Bill Chipane the leader of the current BEE partner, plus they feel able to state that year end guidance is not expected to be affected. That note came out today, day 6 of the shutdown.

Anyone would think they had been talking to the company, which given that they are the House broker and nomad, and their client just announced a shutdown at their mine, via an RNS they would have been involved in, is really to be expected. Thus what SP Angel are actually doing is relaying a message to the market.

All just my opinion of course.

To affirm the points raised in my last few posts, note the following report from on Asian Metal.

The quoted trader in North China was selling FeV at $84.50 last Friday (that’s effectively the level European prices reached last week), he’s currently pricing it at $87.50, and he predicts : “that Chinese ferrovanadium prices would move up sharply in the coming week.”

Bearing in mind he also states ;

“We used to be a ferrovanadium producer, but the production line was shut down because we could not get the raw material vanadium pentoxide.”

This is only one example but the picture looks very clear, FeV prices are going to push on, and that will protect BMN from ‘perceived’ lost production.

https://www.vanadiumprice.com/chinese-ferrovanadium-prices-soar-up-2/

@Daisan I am not looking at this from the point of the view of the reaction to the strike, nor am i focusing on the perceived front end risk. The market is, some investors here are too, but I am not. I am looking to analyse the actual risk against the perceived risk.

Right now I have rising FeV and consistent headwinds against the rand. Thus any actual lost production (a position that is itself only perceived at this time), is being more than countered by those two factors. If FeV prices were static or even falling, then I would most likely come to another conclusion. But they aren't.

There is clear evidence that last week's rise is going to be added to substantially this week. as my post stated, each dollar adds the equivalent of 11 mtv in EBITDA. Thus a further $5 rise adds 55 mtv, or a week's (perceived) lost production at Vametco.

Thus, the very worst case scenario to date, Vametco loses 2 full week's production (i.e. it cannot introduce counter measures, not can it ramp up through Q4), then at the very worst, the status quo is maintained. That's because the FeV price and the Rand are balancing the books.

One can talk about extended strikes, but the percentage play is that the strike ends inside those 2 weeks, because it's an unprotected action.

If it does then Vametco is in a better place than when it started. If however the strike does go longer, it's still all about the difference between the weekly FeV price rise and the length of the strike. Given the strong mesages coming out of Cgina right now, given the rebar regs are about to kick in, given the supply constraints, the percentage play says that the losses will be ****ered to the point that today's price is well within tolerance levels.

And all of that excludes the company's ability to exceed 2,800 mtv. If they are capable of the top end guidance 3,000 mtv, then the first 4 weeks of the strike have absolutely no imapct at all, and teh FeV price rises and Rand gains are not priced in.

So everywhere I look, the percentages are well in my favour. The market may see otherwise b ut the figures demonstrate that it is wrong.

(2 of 2)

So since the close of H1, 3 major things have taken place, a strike (calculated at 1 week), an easing of the Rand, and a rise in FeV prices. The combined affect is an additional 50 mtv in production at Vametco. However, the market thus far only sees the strike.

As it stands, the FeV price and the average Rand exchange rate continue to rise, thus the above impact is increased. Every dollar rise in FeV adds around 11 mtv to the yearly production figure. Every strike day in theory, reduces production by between 11 (5 days) and 8 mtv (7 days), depending on the days worked. Right now the FeV price is going up quicker than $1 a week, so Vametco is actually currently increasing revenues, despite the strike.

And let’s not forget that the basis of this calculation is H2 production of 1,403 mtv, not the mean average 1,565 mtv (revised mid guidance 2,925 mtv – H1 1,360 mtv production). So, one could argue a far stronger case for the affects of those FeV prices, and that softening Rand rate.

All of the above figures are provable by simply analysing the Q2 Production report figures. At the same time, since the Q2 report, there is no visible evidence that the market respects any of the gains made above, only the losses.

The above clearly demonstrates to me that the current SP is a steal, because if anything Vametco has improved its performance rather than reduced it. Thus is in a healthier position than it was even a week ago, meaning all pending news items carry even less weighting at the current SP levels.

The market can’t and won’t see this until the figures demonstrate it, But for those willing to get ahead of the pack, there is in my view a very clear opportunity here, and I have thus taken full advantage of it.

(1 of 2)

In order to assess the true impact of the strike at Vametco one must take into account further fundamentals that have also shifted in the last few weeks.

The strike thus far has lasted 5 days, but for ease of discussion lets say it lasts a week. I have recently posted my thoughts on profitability at Vametco based on H2 achieving the same sales as H1 (1,403 mtv).

Employing that figure would mean that a 1 week shutdown at Vametco will in theory (without counter measures) reduce output by 54 mtv.

However, in that same week we have witnessed FeV prices increasing by $4 per mtv with evidence that prices are going to add yet more this week. So it is easily justifiable to state that in and around the strike period, FeV has added $5 per mtv. As Q3 has already come to pass, this boost should really only affect Q4. If we very crudely half the 1,403 mtv, that equates to an additional $3.5m of which a minimum of 78.5% (this is clearly demonstrated in the H1 figures) will be turned into EBITDA.

At the revised $85.70 per kg, Vametco is making circa $49,700 EBITDA per mtv. (Again, this figure can easily be calculated from the difference between the Q1 and Q2 figures).

That means at an additional $2.75m (78.5% conversion remember), that $5 boost effectively delivered Vametco 55 additional mtv of production.

But it gets better. The current H2 rand/Dollar exchange rate sits at around ZAR 13.80 (10 weeks in). If Vametco does nothing more than achieve the same H1 production cost of ZAR 248 (Remember guidance is ZAR 240-250), then costs reduce from $20,160 to $17,970 (Remember the current rate is ZAR 15.20). That’s a saving of $2,250 per mtv produced.

That saving can be applied to the entire H2 production, thus we see a gain of $3.16m in the period. If we apply the same EBITDA conversion rate, because this saving is effectively acts as a rise in FeV prices, then that means at $2.48m (78.5% conversion again), that exchange rate delivers Vametco an additional 50 mtv of production.

@Nickd agreed Nick but as I posted at the weekend, it’s the size of the weekly move that is key for me.

In my posts about the profits that Vametco can deliver, i have tried to build in some slack by lowering my expectations for Q4 average FeV. However, I have already upped it in my post this morning to $90 given the rise last week, and even that will be looking conservative if we see the same percentage rise again this week.

But separate to all of that, if these prices continue for even half of Q4, then what that will then do for Q1 will be the real deal here. That’s because whatever issues infect Q3 and perhaps even Q4, they are highly likely to be cleared by that point and the possibility of 900 plus mtv will be very real. Thus giving 2019 a very strong start indeed.

And as if by magic the confirmation arrives.

The European FeV mid price jumped to $84,85 last week, so nearly a dollar above my quoted figure in my post this morning. That’s a 5% jump in prices in a week.

So week 1 Q4 has delivered a very strong base from which to fire north from. Thus that $90 Q4 average is looking very achievable indeed.

That’s the true story here ladies and gentlemen.

https://www.metalbulletin.com/Article/3831708/Vanadium/MB-NON-FERROUS-PRICE-CHANGES-0709-Noble-alloys-bulk-alloys-and-ores.html

(2 of 2)

If the £13m is to be believed, then at 60% uplift, BMN is capable of a minimum of £20.8m in H2, giving a combined total of circa £35m for the year, even with a fair time allowance for the industrial action to be resolved.
So Vametco can highly likely spend up to 2.5 weeks negotiating with its employees and suffer no reduction in what should be a circa minimum £35m profit for BMN in 2018.
That H2 is on course for a minimum 60% increase in EBITDA despite the total number of days of industrial action seen at Vametco this year.

And all because FeV prices are rising at a rate that counters any current losses of production on the ground, which is the real story here, and one that the market is currently giving no credit for, but it will. . .