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Good morning all. Here is a very interesting video demonstrating what will happen when those that can influence finally cotton on to what we have all known for a very long time. In this case it is Largo Resources. What Mr Cooperman is saying is clear as the day is long, but when he says it the market takes note. Just watch the Largo share price movements as he is talking. And don’t forget BMN’s proposition is far more compelling given the debt position, warrants, product, expansion etc etc That same reaction is coming this way too. https://m.youtube.com/watch?v=bQ6lg2UvCDw

For a country that is supposedly a poor investment destination, it’s doing a good job of hiding it. That takes Ramaphosa’s July total to nearly $35 billion and he’s still got a week left. https://www.timeslive.co.za/amp/politics/2018-07-24-ramaphosa-makes-it-rain-as-he-secures-147-billion-from-china/?__twitter_impression=true

@pb940 indeed. It is in my opinion looking like BMN/BE are closing in on delivering something the VRFB sector has never seen before. Let us remind ourselves once more what the company stated in their latest financial report were the 2018 targets ; “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.” Since that report it has been clearly stated that the plan and affect there of on the BMN business, would be delivered in H2 2018. When we then add in the release of a new IRP that directly requests the inclusion of energy storage, be it a percentage, then what we have is a clear path to a fully intergrated VRFB producer with a clear path to multiple MW projects from the biggest utility in Africa. That event when combined and communicated will send a very large ripple through the entire energy storage industry, because VRFBs will have arrived, they will have shown that they can carve out a big market, that they can beat lithium, and they will be led by little old Bushveld Minerals.

Thanks pb940. The following extract was for me the most poignant. “government expected the current leadership to begin crafting a new business model for the utility that took account of technology changes under way in the energy industry.” I have for some time had the feeling that BMN know that energy storage was going to be added to the IRP. They have if nothing else certainly demonstrated that they were making every effort to lobby the government to do so. More and more evidence is coming to the fore, to demonstrate that this is the case. That’s Gordhan saying that, the Public Enterprises Minister chosen by Ramahosa. The Eskom board was also chosen by Ramaphosa, as one of his very first acts as president. Gordhan is effectively signaling the party line and the way he expects (knows) the Eskom board is operating, which at the end of the day is nothing more than the right way, when the BOD is clean. Energy storage makes perfect sense and when backed by Eskom contracts, can deliver the ANC government a shot in the arm in terms of beneficiation, new industry, new jobs, revenues and thus a success story. Bigger news than perhaps many realise.

Yes Faramog I have now had a chance to listen to the interview and it is of note, that much of the chat here today remains focused on the core element of the business, the mining. That itself says a lot because if far travelled existing shareholders give the BE achievements such little air time, then it is a given that the wider market does not have a clue what that update truly means. A fully functioning VRFB in SA attached to the biggest single generator of electricity in Africa, with access available to all potential customers. An electrolyte plant that is going to be built with a clear intention of supplying BE’s pipeline of projects and the needs of said utility. The story perhaps needs more meat on its bones for the market to appreciate, but those bones are certainly already very tasty. Existing shareholders should think long and hard as to what MN has just relayed in that interview. BE isn’t a dream it’s a plan that coming and it’s coming fast.

It’s Mikhail‘s turn to update the market. http://www.bushveldminerals.com/brr-media/

@Faramog Firstly, my point was not designed to portray a scenario that I believed would be the reality, but more a case of analysing what can happen and whether I can live with it as a BMN shareholder.

If I find that the likeliest worst case scenario doesn't undermine my investment or even the level of profit being realised this year, then the doomsayers are far easier to live with and answer.

There are those that would have us believe that the vanadium market is in a bubble generated by energy storage hype and nothing else. They are of course wrong.

Prices may take much longer to return to $35,000 per ton but my point was that they could sooner under the right circumstances and that those circumstances, however unlikely one may perceive them to be, are still nothing for a BMN shareholder to worry about, because BMN has first mover status and will by that point be enjoying far greater economies of scale, which will mean that these very large 2018 profits, could and should remain the norm.

I will however point out that limited take up of VRFBs will in my view lead to a return to lower prices, because a sustained period of high prices will drive new mines. We can talk about 3 years or 5 years or more, but it will eventually happen.

BMN themselves demonstrate in their Vanadium 101 webinar a scenario whereby VRFB take up remains at 8,000 mtv per annum. Under that scenario the market will reportedly reach a surplus by 2020, be it very small. But it will remain there through to 2027 at least because new supply will come on line.

Now the recognition of this may be by the by because as far as I can see VRFBs are going to penetrate the market by far more than that number. This is mainly because the Chinese are so strongly behind their development but also because over the last 3-4 years that I have follwed it, the energy storage story has gained tangiable momentum.

When I think back to what I could find on the subject in 2016, compared to what is available in 2018, it is some jump. Furthermore, even just last year the number of bandwagon vanadium projects out there was still a relative small number. In 2018 it's gone completely crazy.

Under all known scenarios BMN will come out on top. There are many catalysts to driving BMN's MC but one i feel is particularly strong is the one that demonstrates that BMN can move to 10,000 mtv within a time frame that allows them to enjoy higher end prices. Its highly likely a 2 year window and a very makeable one at that.

@Faramog indeed and that is purely BMN the miner enjoying being part of a mineral deficit, not a battery in sight. The other thing that’s important to remember is that if batteries fail to take off fully, there is a very good chance that 2-3 years down the line those prices will be around the $35,000 mark. If so there won’t be any new mines coming on line because if prices drop to that level there will be no finance available. Batteries have to be successful for greenfield mines to make it and if they do then BMN will be there to reap the price rewards. And then of course there is BE and what it can deliver. . .

@raffym picking up on your Vanadium price holding comment, consider this. Vanadium currently averages about $65 per year for BMN sales. It looks though capable of hitting $70 per kg. All in costs (ignoring major investments/expansion costs and such things as rehabilitation etc) about $22,000. Note : the reality is at an operational cost of ZAR 250 and a current 2018 average of ZAR 12.48 to the dollar, the operational cost could be as low as $20,000. But let’s play it safe because then we have exchange rate fluctuations covered. That generates EBITDA of circa $177m for 2018 at 3,680 mtv produced and sold. Jump forward to 2020 and production post phase 3. The capacity is expected to be 5,073 mtv. However for ease let’s say the facility only produces/sells 5,000 mtv. To achieve the same EBITDA the average FeV would need to be $57,000 per kg. However, with greater production cones greater cost savings. Thus one should expect at least 10% less costs per ton. So we are actually down to about $55,000 per ton. The medium term plan is to drive production to 10,000 mtv, a plan that isn’t all that far away from being demonstrated to the market. At that level of production and $20,000 operational costs (maintained with precaution because we are likely talking two separate facilities although they could perhaps shared mining costs), the same level of EBITDA could be achieved at prices as low as $37,000 per kg. I am certain that as time goes on the operational costs would be lowered further, because the introduction of Brits bear surface ore will do wonders for the mining costs, plus other efficiencies, plus reduced investment costs also. But all of that aside, once the plan for expansion to 10,009 mtv is known and can be measured, the market has the ability to see that BMN can deliver big consistent profits for the long term, even if the Vanadium price drops back all the way to $37,000 and lower. That’s the key to being a first mover who can self finance it’s expansion. Greenfield doesn’t have that. It needs finance based on confidence in the the price of its commodity. BMN will hit those 10,000 mtv without the need to call upon such help and this will deliver those profits without a care as to what the price of V does. But of course the price looks to have much stronger legs and thus those profits don’t just hold but multiply. Strong buy anyone?

@Pennypusher there is a certain amount of inevitability about what is about to take place here. Investors can spend a lot time fighting and chasing 10-20% gains, without success, which makes the inevitability all the more surreal. Enjoy.

Further to the point made yesterday regarding BMN having effectively announced it is planning to become the largest producer of FeV in the world. A point that really shouldn’t be taken too lightly. Additionally, they are not only going to become the very first distributor of electrolyte in the Southern Hemisphere, but I believe they are making it very clear that they will be the cheapest producer of electrolyte in the world too, and by some way. That proposition at this stage of VRFB development is quite something to have and will be desired on many levels by many sources.

So to speak. https://www.economist.com/business/2018/07/21/vanadium-is-the-latest-beneficiary-of-the-battery-craze

@Daisan short term perhaps but I wasnt talking short term. The talk here this week is about crossing chasms. Well a shift in regulatory recognition of battery storage is really what is needed to bring it into the mainstream. VRFBs can be as cost effective as they like but if they aren’t backed by the regulators then they cannot truly win out. A green light in the IRP attaching battery storage to the REIPPP Programme will open up thousands of MW in business for a locally beneficiated VRFB Developer backed by a government fund, of which there is only one right now.

@Daitom thank you for that. I am more and more getting the very distinct feeling that battery energy storage is going to be included in the IRP. If it is then that is the green light for BE and would be an unimaginably important day in the world of BMN and it’s shareholders. We talk here about Mokopone being important but regulatory approval and backing of battery storage in SA would gazump any mining license by some distance.

I have just doubled checked, pages 11 and 12 deal with ownership levels with the target being 25% if the entity is to score maximum points in this category. They could reach level 4 compliance with a reduced ownership and equity score but I have a feeling that Eskom will demand a higher level than that, plus there is the black ownership factor that FM is keen to push. Like I say it’s nothing to be afraid of but be aware of, because that BEE ownership will create far more opportunities than it takes away.

Here’s a good document that helps explain BEE https://www.standardbank.co.za/standimg/Standard%20Bank/StandardBank/static%20files/Business/StdBank_BEE_Guide.pdf

@BeingPatient that is not my understanding. BEE affects nearly every business in SA except micro businesses of less than R5 million. The Mining Charter is merely the BEE required for the mining sector, but that does not mean that BEE does not apply to other businesses. I admit I may have made an error by stating the 26% because BE can score a great deal of points against BEE with its procurement processes, which have been heavily indicated as being localized and thus likely black owned to some extent.

@Coffeecups BMN has nothing to do with it because it personally conducts no business in SA. The BEE compliance falls upon all companies that do business in SA and on particular want to do business with SOEs. Vametco is therefore BEE compliant. BE will have to find a way to become compliant and I suspect it will do the same as BMN by founding individual companies that carry the assets and therefore the BEE portion. As I say the IDC makes it more complicated. There are what’s around it as the BEE compliance isn’t mandatory but with Esk it goes a long way to getting those VRFB contracts, plus FM and his team are not ones for ignoring the needs of SA and it’s citizens.

On the electrolyte plant I would like to share another thought I have been chewing over. For BE to be compliant and to achieve contracts from Eskom, an SOE, they must be BEE compliant. That means currently 26% must sit in the hands of a BEE compliant entity. With the IDC involved there are several ways this could play out. For instance the IDC could take a stake in a new company (owner of the electrolyte plant) and then sell it on to a BEE partner, or it could just be debt finance with BEE attached. Taking that one step further, a new company may be formed for all the planned value chains i.e. electrolyte, VRFB assembly and so on. Whatever happens, BEE has to be accounted for and the percentage of had business sold at an appropriate valuation to the overall entity. It’s nothing to be afraid of but it’s certainly something that should not be forgotten.

@martyboy with the Bushveld Vanadium platforms I feel I have a very good understanding of where it is and where it is going. Lemur not so much, so please, your position could well be very true also. But I would caution against thinking that a sell down would or could happen because it would give far too much of the value away. The project still needs circa $20 of investment so it wouldn’t raise that high a price compared to a free carry on a power plant and mine that gets built. Just my opinion. As for the dividend, I very much believe it will start next year, because it will likely 20% or so of the cash generated. That leaves some 80% for investment and other things. See my posts from yesterday and my views on how far BMN are with their investment plans. They know what they need because they highly likely already have it all agreed. Remember the electrolyte will be circa $10m, right now that is well within the cash flows currently being generated. They already have £4m for Brits expansion and definition. That leaves just the brownfield which for me will come partly with equity on request rather than necessity, so no great draw on cash flows. My gut feel is that when Sojitz is taken out, it will be this achievement that drives the dividend, and that will happen this year.