Member Info for BigBiteNow

@Tyfoon excellent thank you. I believe what we are seeing is a game of chess being played out with the question being who blinks first. Mantashe is renowned as a tough negotiator but he still has to be careful. He has to avoid a court case because it will make Ramaphosa’s message look very hollow if he doesn’t. That said whilst I have no desire to see 4% lost, the key is the regulatory certainty and that the charter drives investment, because that will deliver far more long term returns for BMN than that 4% ever could. One other point to consider is the fact that the BEE for Vametco currently stands at 25% with plans to increase it to 26%. The question is why hasn’t it already been raised given they have owned the plant for over a year now? I would suggest that the intention is to take this 1% out of the 16% that Sojitz holds. Thus reducing the impact through an overall 14.9% rise in total ownership. The same rule could be applied to any further requirements, such that whilst it will cost something, even at 30% BEE, BMN would own 70% of Vametco, which is ample enough and would justify outside investment. Bearing in mind it would still be 6% higher than Mokopone and nobody is complaining about that. Finally even if the 4% is accepted, it would come with a period of time to implement and would likely have caveats that allowed companies to offset ownership against other items such as local supplier content, black management etc. Personally I am not worried about it because it feels like a deal is coming that is good enough to attract investment and drive greater interest in BMN.

For clarity Mokopone is 36% BEE compliant. I know because it was always a bug bear for me why so much had been given away.

I would be very careful here with assumptions and mixing up the various elements of the contested mining charter. The uplift to 30% was not as far as I have read a contested element. That’s not to say that it was accepted either, more that other more pressing content were in the firing line. The main issue was Zwanes desire to see the once empowered always empowered included. Meaning it didn’t matter who the BEE sold too, the mining company had to replace the BEE ownership. That is simply not workable and would always be challenged by the chamber of mines and thus for me will not be seen in the new charter. Otherwise it goes straight to litigation and uncertainty, which is exactly what they are trumpeting they wish to avoid. I am very confident it will be a fair deal because they need investment, and that only comes with guaranteed worthwhile returns for those investors. The key message is that certainty because it will lift BMNs profile and open up more institutional investment both at share level and project level.

Sorry the link was lost. http://m.miningweekly.com/article/prepare-for-greater-power-generation-competition-radebe-tells-eskom-2018-06-04/rep_id:3861

@Daitom thank you for posting the mining weekly article. I have reposted an alternative version below because I believe we are about to enter a period of great significance in terms of SA policy decisions. From what both the Mining Minister and the Energy Minister are strongly indicating, both the Mining Charter and the IRP will be released for public review within the next 6 weeks or so. I am certain that the Mining Charter will be good for business and investment because that is what Ramaphosa has built his presidency on, and Mantashe is his man. However, i also expect a little pain because the transformation and equality question has to be answered and criticism tamed. So I would not be surprised to see an increase in BEE percentages, be it perhaps staggered. But it cannot be too onerous because the need for investment is central to Mantashe being placed in the department. The release of a pro-business Mining Charter will open SA Mining up to further investment and BMN will inevitably benefit from that. The IRP is even more interesting. The following quote from Radebe is significant. He directly quotes non grid generation. “I believe that is what is going to be happening. So Eskom, prepare for the good times ahead when our people will be enjoying competition from the State, via Eskom, the private sector . . . as well as from nongrid generation.” I have thought it through and I cannot see how such a long term energy plan can be gazetted without the inclusion of energy storage, if non grid generation is a key consideration. For me he has as good as said it will be included, which is something BE has been lobbying. Note the BMN’s unprecedented RNS from 29th Nov 2016 and MN’s interview, commenting on the then latest proposed IRP. If the IRP includes energy storage then the path is open to the regulatory green light for IPP developers to include energy storage and/or the ability to develop off grid proposals independent to the IPP programme. That’s very big news. That makes that demonstration battery a much bigger deal than it already is, because with all due respect the IPap developers visiting that battery are only going to include it in their schemes if SA says they have too. But something tells me BMN are more heavily involved in all of this than we currently perceive. The IDC are the key and they have direct links to the regulators and the government. So the abilities BE are beginning to demonstrate are highly likely known about. There are enough hints from both the New governance and BMN/BE to demonstrate that they are preparing for this change in policy, that it will happen. There is much to come from BMN over these next few months, but the outcome of these regulatory processes could prove to be the true driver of BMN’s worth in the long run, and it has the chance to be very significant indeed. http://m.miningweekly.com/article/prepare-for-greater-power-genera

Now that is what I like to read, Vanadium tenders are like a raging fire. Need I say more. https://www.vanadiumprice.com/chinese-fev-and-vn-alloy-prices-go-up/

@Alfacomp et al I get the very solid feeling that prices are now on the rise once more. From what I have witnessed these last couple of years, Vanadium prices don’t act like base metal markets, in that they don’t go up one day and down the next. Once they begin to move in a direction they stay that way for a sustained period. However, as we have witnessed this last year the uptrend is far stronger than the downtrend. So the fact that Asianmetal and Ferroalloy are both reporting price rises, says the uptrend ha ms once again begun and it’s from a very high starting base. http://www.asianmetal.com/VanadiumPrice/Vanadium.html

@LadyJennifer that’s fine you may re-print my posts as you see fit.

@Gambitxjs I don’t know about Ian Watson but Malcolm Curror the CEO of Vametco is certainly in the Largo picture. The intrigue that Vanchem’s membership brings aside, what i also really like reading is the fact that Balong New Materials has joined Vanitec. They being currently the biggest supplier of electrolyte in the world. Given the big Chinese Vanadium companies are also members, it really helps drive the belief that when BMN say there are problems with Chinese supply, then one should sit up and listen. As strange as it may sound I am right now the most excited I have ever been about this investment’s prospects, and the consolidation currently taking place only adds to that feeling. I say this because listening to FMs Cape Town speech again, I was reminded that with Vametco BMN has access to a team that has worked on every significant Vanadium mine/processor in SA. Therefore when FM clearly states in that same presentation, that they are actively seeking additional brownfield processing to compliment Vametco, then we know they have that knowledge guiding both their decision making and their negotiations. They also have the contacts to reach the right people to run that processing, given a great many are now out of work. Brownfield has taken something of a backseat here of late, but it’s clear from that presentation, that it is very much happening, and there is more than enough knowledge in the business this last year or so, to conclude that the decision on which particular brownfield it was, was far easier to make than the timescales since perhaps show. I still fancy Vanchem and I am very excited about that and everything else that is about to unfold here this year.

@Daisan I agree with the vast majority of what you have just said, only the giving up of a substantial amount of current profits am I not so sure on, given the comments by both FMand MN in the webinar. That’s not to say I don’t believe it may happen, more that I remain open minded on the subject until further details are released. The $150m EBITDA is this year, 2018. It is happening right now and is already 50% realised on the price side, which is the toughest and most important part. We just need to see the uplift in production to prove that the 3,680 mtv is going to happen. However, BMN simply do not offer targets that they cannot achieve, so I feel it is secure. That is the advantage of following a company that is selective on detail, the detail that is given is often conservative and therefore trustworthy. Those that have been here a long time know what they have here. This company is the leading Vanadium producer with an involvement in the VRFB value chain. No other active producer is building an electrolyte plant or developing VRFBs, never mind that they are doing it with the largest utility provider in Africa. This story is so good that sometimes that is perhaps it’s biggest downfall, it’s too good for some to believe. But those that doubt will come around soon enough, it’s just that it will cost them more to play.

No matter how much how strong the fundamentals of a company are it is always difficult to watch an SP decrease. That’s because it often brings into question why did i invest, did I make the right decision, have I missed something? These questions will always be there and are more often than not what are used by the unscrupulous investors who would take advantage of these periods to part investors from their shares. I very much enjoy investing but I am not a fool to believe that it is a world that comes with many demons attached. For me these questions are healthy reminders to keep as close an eye as one can on the fundamental drivers of my investment decision. That way I have the best possible control of my position and am far less likely to be spooked by the scaremongering. In the case of BMN the key fundamental that should not be forgotten and is a message I have repeated and repeated here for years, is price. I have enclosed the link to the presentation from BMN at 121mining in Cape Town last February. At current price ($60) and current production costs, Vametco in 2018 is capable of producing $150m in EBITDA. For those with weak dispositions I would recommend revisiting such news items as these, because perhaps there are those out there that right now would have you believe these facts aren’t true. https://m.youtube.com/watch?v=ybnq1MvejKA

@Fastmoney my first investment in BMN was for £20k back in 2013/14. Just at the point when the iron ore boom went pop. Fortunately in finding all that iron ore, BMN and their Bushveld bled geologists also found a truly world class Vanadium deposit, so I decided to stick around. In doing so I decided to learn all I could about a mineral I had never heard about. Whilst I did, I watched that £20k slowly turn into £5k. But as the Vanadium story here developed I grew to realize that this company perhaps had a unique position. That when prices turned they would turn with some force. The story was improved greatly by the message that this company was going to leverage local distressed brownfield processing in order to fast track their goal of being a significant Vanadium player. An angle I was so keen to understand that I and several others here worked overtime to try to identify its source and thus steal a march on the investment field. If that were not enough the company then began its assault on the energy storage market with the launch of BE. Many of us at that time had limited understanding of what that all meant, how big an opportunity it could be. But again, we didn’t sit on our hands, we got busy learning and digesting and seeing what this company had already seen, several years before it’s would be competitors. Fast forward a little while and that £20k is now worth close to £80k, and fortunately for me it is on no way alone. But none of it has gone anywhere, none of it has moved an inch. That’s because this story is barely out of the traps. All that research, that time, that waiting, was not just to see BMN crawl out of the gutters or get back onto it’s hands and knees. I stayed here to see BMN walk talk and deliver on the potential it set out so long ago, and whilst that story has barely begun it has actually got a whole lot more real and achievable. I have seen the tough times here. I know what it’s like to be staring at a heavy loss. This retrace, this sell off, this what ever it is, is nothing. It’s the market being the market and nothing else. The really big story is still to come and it may well take more time than I have already waited, but wait I will because energy storage is a once in a lifetime economy altering bonanza. It’s the computer and internet of the right now, and believe me BMN are right at the front of its roll out. You don’t know me and I don’t know you. Your investments are your choice and your choice alone. But from where I stand with a good 5 years in this company behind me, I see and I know this is something very special indeed, and nothing other than a significant change in the fundamentals is going to shake me from my course.

@Gambit you heard it as I did during FM’s mining121 presentation in Cape Town in February. A presentation I must say that is well worth a revisit. In this presentation FM said he expected the mining right in the first half of this year. Its not healthy to hold onto this too tightly because the granting of the right is outside of BMNs hands. That said one should bear in mind that this presentation was held at a mining conference in SA and, FM doesn’t give timeframes out easily. https://m.youtube.com/watch?v=ybnq1MvejKA

Another snippet adding to the case for higher prices. It looks like the high V205 prices are hurting Chinese ferrovanadum producers so much they are stopping production. That is only going to mean one thing in a market where supply is already very tight, whatever the buyers short term achievement in keeping prices temporarily in check. https://www.vanadiumprice.com/may-ferrovanadium-50-operating-rate-and-output-analysis/

The reality is this company is about to enter the most exciting period of its development to date, driven in the main by the strength of Vanadium prices. The next 2 months are especially critical and they do not require anything other than what the company has clearly signposted. All other things are purely a bonus at this time. As stated, H1 average prices are confirmed at over $61 per kg (mid price Europe only). However, it should not be forgotten that Q2 is about to realize an average price of nearly $69 per kg. I say this because the expectation is that Q2 will deliver higher production and thus greater revenue, so the figures will actually be better than merely the H1 average and the total achieved production/sales. However, if V prices are bouncing from their current position, which for me they clearly are, then the story gets even more exciting because with the company still declaring a 2018 production target of 3,680 mtv, Q3 and Q4 have got to be producing well in excess of 1,000 mtv each. So with a starting base of $65 and rising Q3 has every chance of going on and dwarfing Q2, which given how successful Q2 will be, is quite a statement. Furthermore it is clear that even new co-production is struggling to make 2020 and even 2021 looks thin on the ground compared to even mild demand growth. What that then does is bring the fully expanded Vametco into sharp focus and the reality that at full capacity, BMN could be seeing $60 plus sales figures in 2020. That’s big. It’s all now simply about waiting for the news to reach the market. I expect substantial growth in the share price during H2.

I see that Prophecy have released their PEA for the Gibllini Project in Nevada. It has a current NPV if a whopping $338m be it at only a 7% discount (Mokopone PFS employed 10%) with a IRR of over 50%. This valuation does require an arguably very bold average pricing of $12.73 per lb V205 over its 13 year life span. Remember Mokopone employed $7.50 per lb over 30 years. The key figure is their current expected break even price, which stands at $7.76 per lb. That’s higher than the average long term price employed for the Mokopone project. The main issue they have is their grades are 0.26% and the recoveries 62%. Thus it’s much more expensive to process the ore. I very much like how Prophecy have tried to educate the market by opening up the limited Vanadium news flow to the main market. But they are another example of creative accounting and the desire to make a very average Vanadium resource look very profitable. If Gibllini gets into production then BMN and their shareholders will already have made an absolute fortune, because prices would have to be very high for a very long time.

The evidence continues to show what was always suspected. The buyers are returning to the market and prices are therefore beginning to move north again. I will be bold and predict that this is the point from which prices strike north of their recent highs. It is also important to remember that the US market has barely receded from its highs with current mid price still sitting at $70 per kg. Remember the US currently imports all but a very small fraction of its Vanadium because it has no active mines. Therefore a strengthening of prices in China and Europe will bring those US prices under renewed pressure, and $70 is a very strong starting position. The same could equally be said for Europe where $65 is an incredibly strong base. If very strong buy was available as an option it would have been selected. http://www.ferroalloynet.com/analysis/chinese_vanadium_prices_begin_to_rise_on_increasing_procurement_demand.html

@Alfacomp that is exactly my point. If BMN are quoting the Barrambie project then the figure stated is V205 and not FeV, which means it’s far too high. As a reference, the BlackRock Project is there or thereabouts in FeV, with the company itself quoting 4,200 mtv Ferrovanadium. So either it isn’t Barrambie or BMN have an error in their figures.

@Sanchez you may well be right, but if so then something in the calculations from BMN does not add up. The Mokopone project is listed as 5,800 mtv and not 9,525 tons V205. Therefore the Barrambie project should also be recorded the same and not in V205. So the figure should be less unless I am missing something.

@Alfacomp et al. I have been having a look at the list of projects listed on slide 44 of the 101 Webinar presentation from BMN. If you remember Roskill expect that only 54% of these new projects will make it into production. The combined total output for these projects is 46.2k tons of Ferrovanadium. So at 54% we are talking 25k new tons of production. What I would like to do is identify these projects so that their progress can be monitored, because the production date given by BMN is purely based on the known date from the origin, and as we know that date often slips. Taking the projects in date order, i.e first to enter production, then thus far I have identified the following : South Africa co-producer 191t = Iron veld (2018) Canada co-producer 4,000t = Blackrock Metals (2019) Australia co-producer 5,600t = TNG (2020) Australia co-producer 11,200t = Balla Balla? (2020) The last 3 I am ignoring simply because they either haven’t completed their feasibility studies and thus 2020 for me is simply not achievable or as per the last project the date is 5 years from now and so not relevant at this time. From the list above TNG are yet to achieve project sign off so 2020 is likely tight but achievable. Blackrock expect to have their environmental assessments signed off by the end of 2018 so again 2020 is tight. If the last project is Balla Balla then 2020 for me is not achievable at this time because they have to build a new port hub, which hasn’t even started. So I would be marking 2022 down as an intermediate date to be be revisited. Of the other two projects Blackrock looks best placed to advance because it’s backed by investment from the Quebec government and it’s privately owned. But TNG for me still has a lot of convincing to do to move forward. But even if it does succeed this year and starts construction then we are still only talking circa 10k new tons of supply in the next minimum 3 but possibly 4 years. Compare that to the graphs supplied in the 4 scenarios and the picture for prices looks very strong right through to Vametco at 5,000 mtv. It’s looking very rosy out there in the world of active Ferro-vanadium production. I welcome any input and research from the board on this as it is good to define these projects and monitor their progress.