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I appreciate that the whole situation can look like a buying time exercise and possibly kicking the can down the road, but what if it isn't?
The funds raised on Friday are stated as described as follows ;
"Such proceeds will bolster the Company's cash resources as it enters the drilling of the A2 well at Liberator which, in conjunction with Dolphin Drilling's partial payment deferral as announced by i3 on 29 October 2019, gives the Company flexibility to extend its drilling programme."
Given we have now just seen a new drilling permit go in, I would say that the above statement points towards sufficient funds being raised to drill a 4th well. This is backed up by the fact it is Bybrook leading the charge, and they are unlikely to be happy, if I3E were intending to go and raise even more funds soon after.
The pure fact that it is Bybrook that have backed this deal, and it is they that are supposed to being paid their 8% per annum fee on the junior debt, says at the very least that the financial position, could well be under control, given they were a party to the extension to 30th April 2020.
Since the 10th Sept L2 result, there has been a constant stream of first to find the negative. A 'ah but what if' campaign if you will, with little or no respect being given to the deals (several of which have been arranged at very short notice but still on good terms), themselves.
These guys are attempting to balance the books during a time when they are trying to establish a development plan, for what is now 2 significant, 100% owned assets, close to established infrastructure.
That doesn't come with perfection, but to date this team has managed it very well, and to the point that they still have junior debt holders willing to pay 35p a share for additional funding, despite the concerns of investors and the recent sustained period of value well below that level. So why no discount?
When are investors going to give that some recognition i wonder? There may well be hurdles still to jump through and perhaps eventually even some more cash to be raised, but as I said earlier today, the pure fact they are willing to drill a 4th well, in Winter, at Liberator, says a lot about their forward planning, their confidence, their investors confidence, and their will to control their development costs, and thus potential dilution down the line. It also says to me that cash is under control.
They didn't work this hard to go and blow it all on a keep the lights on style cash raise.
As for the depressed share price, there appears to be a strong sentiment driven stance, that despite Serenity success, I3E still have to prove that their model for Liberator is correct, and I can actually understand that, but it is skewed given what they just hit, where it is, that it used the same model, and who is next door.
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@tonynorstrom1 My post wasn't designed to highlight general perceived risks, more risk that have been tabled as answers to why the valuation isn't higher, or why investors would be wise to place their money elsewhere. The main reason I started posting so often on this BB, was because from the moment I3E hit an issue with the L2 well, a cacophony of negative noise, hell bent on finding something wrong with I3E, came to the fore, and gave smaller less well armed shareholders, little chance to breathe.
The actual position in the accounts is that I3E spent £7.5m in the period of which £3.3m was on exploration and evaluation assets.
During the period in question the Borgland Dolphin contract was executed and the Gardline contract employing the Ocean Observer to survey the drilling locations for this year, was also signed off.
I cannot say that all of the £3.3m could be attached to the 2019 drilling campaign, or that it is all part of the reported $41m cost for the drilling campaign, but then nor can you either.
What is clear is that drilling campaigns don't just involve drilling and they don't just begin being paid for when the drilling starts.
As I have stated many times before, the $41m contract to this day, has never been stated as being for just 94 days of drilling. Nor can it be easily concluded that I3E raised money for a 94 day programme, knowing fine well the wells could take up to 121 days.
Given the $41m figure has been around since at least the end of last year, £3m of deferred payments agreed with BGHE, when thy went into contract on 2nd July, surely have to be removed from that figure. The campaign is still costing $41m but part of it is either deferred to first oil, or being paid in I3E shares. I make that about $3.75m.
So the starting figure is closer to $37m and not $41m.
What the company has said since, is this ;
" i3 Energy has secured a right of first refusal on the Borgland Dolphin semi-submersible rig to 31 January 2020 so that the Company can continue drilling operations at Serenity and Liberator. "
"Associated with this contract extension, Dolphin has agreed to defer certain payments for drilling costs beyond 30 September 2019 which the Company will be due to settle between January and August 2020. With this payment deferral in place, i3 Energy remains comfortable that it has the cash resources available to conclude its planned 2019 3-well drilling operations."
What nobody can conclude is that the deferred payment was required to ensure that I3E could meet their obligations. What it says is that a deal has been done to allow I3E to continue to drill at Serenity and Liberator.
Then came the £5m from Bybrook, and then we see a new drilling permit for Liberator, with a planned start on 8th December.
Whilst I respect your view point, the information to date does not in any way point to towards a process that cannot find a buyer, that is willing to pay more than the original offer.
The last update from the company was 'only' on 11th Oct and clearly stated that "multiple well-funded parties are engaged in the process." Furthermore, the pure fact that AMER also added that "the Company is seeking to conclude the FSP in Q4 2019," indicates that they have sufficient keen interest, at a level that would be acceptable to the directors. Hence why they say they at that point, they are "inviting firm proposals to acquire the entire issued and to be issued share capital of the Company."
If it wasn't going well with at least one of those multiple well funded parties, then they would have kept their options on the table, meaning partial sales too. They haven't. They have pushed for the full sale, which means they have that interest to a point they can conclude the sale.
Whilst some retail investors may have become impatient (perhaps because they likely spend a great deal of time watching and waiting, which is their prerogative, but can lead to over analyzing things), the actual process is nowhere near the point at which it should be worrisome.
My own personal view was that multiple parties would require circa 4 weeks to update their bids, if not done so already. Then AMER would need minimum 2 weeks to review. The time frame may alter within that, and there has been a rumour that the bids are in. However, the general time period is not uncommon, particularly when one considers that we are talking about multiple parties, which may mean longer analysis time needed by AMER, which may mean many more conversations being had, as the bidders are encouraged to adjust their offers, be it by make up or amount.
The fact that we haven't seen anything yet, indicates no binding offer has been made, because that would need to be declared. So the process continues to lend itself to one of AMER potentially pushing towards one preferred candidate, in order to achieve a result that can be recommended. Hence the "seeking to conclude the FSP in Q4 2019" statement.
Whatever, it turns out to be, the process is far younger in its development than the demands set in some investors minds. Selling a company to one party takes time, attempting to position oneself in the right place with multiple parties, can feasibly take far longer.
More patience is required as always.
@Bella6532 I would think the upfront money is to support the business full stop and ensure that all project pipelines are maintained, such that the company the least possible disruption during the transfer of ownership.
What that should do is allow the Enerox employees the confidence to continue with their business, as usual.
I think the key point about the Eskom BESS project, is that given it is a battery project, there will be several VRFB companies vying for its work. With deals now struck with 3 leading VRFB companies, BMN are positioned to play a part at a number of different levels. Not my words, Mikhail Nikomarov's words from the Energy Storage 101 webinar.
Now we can see where they are heading, we know what that many different levels means. It could be that Avalon, Redt, and Enerox all tender. If they win, then BMN can if it wants to, supply the vanadium into that contract.
The beauty is that now those 3 companies are in BMN's court, they have a renewed sense of purpose to tender for S.A. based projects, because that is where the vanadium is potentially at its most cost effective, be it that the electroyte plant is not yet built.
So if nothing else, that should force them to the tendering table. Any other VRFB company out there, has got to beat all 3 of those companies on price, local content, etc, to win those contracts. A tough task even in a low vanadium price environment, which is not a given when the batteries actually get built and deployed. However, for at least one of those 3 companies, it likely will be, in some shape of form.
Lets nor forget, that the battery tender is due any time soon, but the actual vanadium won't be needed until later next year, at best. At that point BMN will be a shareholder or part owner of those companies, so the deal can be done on the vanadium, if it gets that S.A. based project over the line, and Eskom in the bag.
That all said, the Eskom project is for me a must have for BE as a developer. Therefore, the deal perhaps will be done on the batteries themselves, as you say, and so could be across several manufacturers. That in itself could land all 3 manufacturers a lot of work, and also help deliver phase 1 faster for Eskom, given their tight deadlines.
What is clear from all of these thoughts is that the possibilities are numerous, and that one way or another, a BMN involved BESS tender, will highly likely, one way or another, be the best VRFB option on the table, such that it may well be about their option vs Lithium only.
I'll take that as a 1 on 1 contest, no problem at all.
PS Well done to you for pinning down that Cellcube move. I assure you my viewpoint was not plagiarized.
The world is perhaps still asleep to the fact a 4th well has been applied for, and what it means for the bigger picture here.
1. I3E do not have enough money to pay their bills post A2. A 4th well answers that. One does not push the budget even harder, even for a discounted well, if money is tight.
2. I3E are potentially taking a chance with their Liberator model and thus the COS for A2. A 4th well answers that. If the model was doubted by I3E management, then why would they logically conclude it is a good idea to drill it twice?
3. I3E do not have enough reserves around the A1 & A2 locations to secure an RBL big enough for Phase 1. A 4th well answers that. The 2017 CPR is clear that upto 2km, there is far more certainty about the reservoir. Drilling even just the A4 pilot well in this programme, brings the A3 well location well within that 2km zone (approx 1.2km from A4).
If they decide to bypass A4 because it too is well within range of the A2 drill site (1.5km), and go for the A3 well, which was the original step out planned for this Summer, then upon success, they open up what is now a much bigger Liberator West, because they will be 'only' 1.2km from the perceived connection point, between Liberator phase 1 and Liberator West.
All of which opens up the opportunity to establish more reserves/contingent resources, which in turn opens up greater options for the RBL, which itself can then potentially fund more drills, be it at Liberator or Serenity.
So whilst my first reaction was it is A4, there may be far more worth in it being A3, which would deliver the entire drill programme, as planned, be it more expensive, but potentially opening up, what will be a much bigger.
A successful A3 drill this Summer, should effectively transform Liberator West into an appraisal programme.
Now it could be that the lenders have forced this hand. However, I don't believe that its the case because the deal with Dolphin (deferred costs and strategic partnership), was made prior to the fund raise for the "flexibility to extend its drilling programme" being secured, and prior to the meeting with the RBL lenders. However, I recognise that it could be seen another way
It looks very much to me, that I3E have taken advantage of the gap in the Borgland's work programme, to strike a deal for a more cost effective 4th drill, and set up a chance to deliver what they said they would at the start. This is for me, supported by the fact that ByBrook are supporting the move, rather than I3E having to go to more common methods to obtain the cash required. My opinion only.
@1210 My position, post these announcements, and assuming said deals complete, is that the VRFB vanadium supply chain, top to bottom, have finally found one another, at a level where they can really take it to lithium-ion.
It will take time, and I am personally under no illusion, that the market currently, has not got a chance of understanding this. If it did, then twitter would be alive with gasps and whoops of delight. It isn't. Yet.
The share price, for me personally, does not mean a thing right now. It is a reflection of a lack of understanding that will be put right, when the time is appropriate, and I have time to wait.
The question is, will energy storage be successful? Which with the likes of the World Bank Group, has a more certain answer.
These moves being put together by BMN, create a landscape where by VRFBs can/will show themselves to be the dominant technology, be it they will continue to be the smaller market participant. However, that does not matter to me, because I am not here for the whole market share, I am here for BMN's market share, and post these successfully completed deals, that share is about to start to get a whole lot bigger, and those gasps and whoops, a whole lot closer to reality.
Nobody should underestimate just how far BMN shareholders are ahead of the curve. There's nothing wrong with that because its the most rewarding place to be, on so many different levels.
@Alfacomp Yes I did see that and it is most impressive, given that BMN support (rental contract, guaranteed prices etc) can certainly improve their conversion rates on that work. However, right now, just like with Redt, its a pipeline list, which needs more development.
I am just as happy to recognise actual contract wins and what they do for the relationship moving forward. In June 2019 Cellcube (Enerox) issued the following contract win ;
Its a confirmed $6m contract with Immersa, for delivery over the coming 24 months, so its very much alive.
The update came with the following rather interesting quote fromthe CEO & Director of Immersa Ltd. Robert Miles ;
“the combination of a best-in-class performance product at predictable price and delivery terms is key for our finance partners and customers. This allows Immersa not only to offer services at an attractive price but to deliver on multiple projects at the same time. The goal for many of our clients is to replace conventional generation and cover grid shortfalls with green energy thereby reducing CO2 emissions significantly and as soon as possible.”
This is pre-BMN input, pre a potential vanadium rental agreement or indeed guaranteed supply at guaranteed prices. So just imagine what that sort of security can add to the arsenal of a Enerox sales team, that is already able to secure a $6m contract without it.
Incidentally, and as an example, a circa 20% return on that project would deliver the BMN consortium around 10% of its total investment back, on just one project.
What I really like about this deal, is not just the energy storage ownership but the access these purchases give BMN/BE to the customers and contacts, that these companies have built up. Leads that were perhaps previously borderline, in terms of what Enerox, Redt, Avalon, could offer, given a little time, and it will take time, can be transformed by an injection of BMN willing, which will create a WIN/WIN scenario, across the board.
BMN talk about supporting the fledgling VRFB industry, but in one fell swoop, BMN just signed up 3 of the world's leading VRFB companies, to their vanadium, and their vanadium only, if it so suits.
So yes they are supporting that industry, but in reality, they are looking to dominate it.
What that means for the Bushveld vanadium resources, is simply unimaginable at this juncture.
Yes I have just had a look at the energy portal and seen it too.
Here is a link to the portal for those that do not have it. You need to type in 2019 and then scroll down.
It is stated as being an appraisal well, so I wonder if it is the indicated pilot well for the A3 or A4 location.
Well done to those that supported the 4th well theory, I wasn't convinced. With a little hindsight, one can see that there was a good deal to be done with Dolphin to keep the rig active through to the end of January, this ties in nicely with the delayed payments and strategic deal. If so then I3E may well be taking advantage of a market opportunity to really solidify their phase 1 development opportunities.
What this does is really put the cat among the pigeons, because it de-risks the outcome of A2, because its not the last drill, and it offers up the chance to push the reserves higher and thus strike a better/stronger RBL deal.
Lets not forget that I3E will be, one way or another, to appraise Serenity next Spring/Summer, so the better the RBL, the less the potential lean on investors.
Still needs some more thought but looks like a really positive development.
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That doesn't automatically place the IDC of S.A. as a partner in this buyout. Whilst they have some foreign investment interest, it tends to in neighbouring African countries. However, a subsidiary of Enerox could very easily set itself up as a partnership with the IDC. That would then satisfy all current communicated plans, and deliver BMN and their shareholders an local, active VRFB assembler and later manufacturer, that is automatically part owned (significant minority interest), that automatically takes its vanadium from BMN (1).
(1) Fm in the RNS says that "Bushveld will have the right to match commercial terms for the provision of vanadium products."
If Enerox is building VRFBs in S.A, then I cannot see how BMN could not match any one else's commercial terms, particularly if those batteries are destined for Eskom.
I am not writing off UET and I am absolutely sure that UET, still needs BMN more than BMN needs it. If that weren't the case then we would be seeing a far more active project pipeline from them. If that were so, then where is their rental product? Where are the projects?
For all their perceived Chinese backed might, they do not appear to be succeeding, and now 3 of their competitors just signed up with the largest high grade vanadium resource company in the world, owner of 2 of the world's primary processors, owner of an active vanadium rental contract, and the driver of lower cost VRFB inputs.
So if nothing else, UET Technologies just had a good number of their bargaining chips (if they truly had any in the first place), removed from the table, such that once again, if a deal is still to be done in S.A. then the power at the table, is BMN.
The Enerox transaction may complete post the Eskom BESS Project going to tender, but for me the message is clear ;
"An initial sale and purchase agreement (the "Initial SPA"), to be signed as soon as reasonably practicable after the signing of the term sheet, whereby the Bushveld Consortium would for a sum of €1.65 million (including the €300,000 referred to above) purchase 24.90 per cent of the share capital of Enerox (the "Initial Shares"), including shareholder capital contributions of €1.2 million for working capital purposes over the course of the coming four months."
This initial investment will be before the "technical, legal and financial due diligence" required for the actual sales and purchase agreement, which is a tad risky but it provides the necessary support for Enerox and their active contracts, for the 4 months leading up to the full buyout.
So if Enerox want to tender for the Eskom BESS Project, they can. If they want to employ the BMN rental product, they likely can, be it that the "as soon as reasonably practicable" could do with getting a bit of a move on.
All of that said, the Eskom project is just one project, it is not binary. It is merely a very nice to have, which I am sure BMN are all over. The question is are Enerox now too.
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Good morning all,
Well where do we begin?
With the potential purchase of Cellcube, I just wonder if Bushveld Energy and their partners, have just found the product and company that will form the basis for their South African based VRFB assembly and production.
Up until yesterday i was fairly convinced that it was merely a matter of time until UET sign up to a partnership of this sort, but the fact that we are talking a buyout of Cellcube's Enerox GmbH, has certainly stopped me in my tracks.
Enclosed below is a copy of Cellcube's March 2019 presentation. It is well worth a thorough review but I am particularly fond of slide 17, where the LCOE for the Cellcube FB250 series (one of those 4th Generation units I talked about yesterday), is offered up against the likes of Tesla, Lgchem, and most importantly, BYD.
It is BYD whose lithium-ion battery is currently installed at Eskom Rosherville. The LCOE calculation is always more complicated that it appears, but according to that slide, under the right circumstances, the FB series can be upto 40% cheaper than that of BYD.
That is before we start talking about vanadium rental, or indeed localised supply of beneficiated vanadium.
So in theory (and we do have a lot of wriggle room, particularly when I think that BYD are not S.A. based), a Cellcube offering for the Eskom BESS Project, should wipe the floor with BYD, and BYD are the only potential tenderer, who has a credible battery installed at Eskom.
There is of course the question of the UET battery at Eskom, but as Vsun have begun to demonstrate, a confidence can be built up in a VRFB supplier, even when they decide to employ an alternative battery supplier. This is particularly true when one considers that it is Enerox GmbH that has the 140 installations and 12 year track record. It is they that own the Generation 4 series, which is plugged as being "the most advanced (“VRFB”) on the market today as stated by independent industry experts."
I do not easily discard the merits or potential of a UET tie up but with their strong connections to Rongke Power and Balong New Materials (all effectively owned by Dalian Bolong Holding Group), they are potentially a more tricky partner with which to strike a favourable deal.
With the buyout of Enerox, if nothing else, BMN and potentially their partners, have another option. Opening a S.A. based subsidiary of Enerox, when you already control the company, is a lot easier to plan towards.
@Shakeypremis No argument from me I assure you, I am happy to take on knowledge and learning as it comes along.
I have always worked on the premise that SDX are 55% working interest operators at South Disouq.
In the Sept 2019 presentation, the company states "First gas in Q4’19, with gross plateau production of 50MMscfe/d/8,333 boed (27.5 MMscfe/d/4,583 boed net to SDX) in Q1’20."
The same slide however states ; "Gas price US$2.85/mcf, Opex estimated at < US$0.30/mcf, Government take c.51%." The 51% was not at that time, attached to the gross production figure.
Today's RNS stated ;
"All gas production will be sold to the Egyptian national gas company, EGAS, at a fixed price of US$2.85/Mcf, with the Government of Egypt's entitlement share of gross production equating to approximately 51%."
I appreciate it all essentially adds up to the same thing, but the wording is a tad misleading. I assume this is done this way to allow SDX to recover capex costs for the plant, which they are paying out upfront. So technically, the gross production figure is correct, its just that SDX would never see it.
It looks very much like I have failed to understand the entitlement properly, but this appears to have been compounded by Edison.
At full production of 50mmscf/d, the now better understood ownership, would have SDX entitlement at 13.75mmscf/d, which equates to circa $12.3m per annum gross net entitlement. I therefore wonder where Edison have derived their near $16m figure from, given they have used the same base case figures.
That aside, whilst I still very much like the now $12.3m in added income, I have certainly missed something here, which I will now need to review. So thank you for your help on that.
@shakeypremis I have more than happy to be corrected if I have missed something, but my post did not state that it was "25mmscf/d net to SDX at the moment."
I said "a circa 25mmscf/d net interest" at full production, hence why I employed Edisons figures.
Current production is "an average gross production rate of 23 MMscf/d of gas and 120 bbls/d of condensate, equivalent to approximately 24 MMscfe/d."
So its running at around "circa 50% of South Disouq production." That being the anticipated gross production figures expected in Q1 2020.
The "the Government of Egypt's entitlement share of gross production equating to approximately 51%." So SDX should therefore achieve 49% of gross production, which is "circa 50%."
So how can SDXs entitlement only be 6.7mmscfe/d?
I take on board your comment regarding North Gemsa, and will look further into that. I have not previously picked up in the various reports, that North Gemsa would become uneconomic in 2020. If you have a link to this I would gladly read through it.
Edison broker note for reference for those that have not seen it.
Note they stated a more reserved position on South Disouq ;
"We assume start-up in January 2020, with production ramping over the course of the year reaching a 50mmscfd plateau."
So their anticipated 2020 net entitlement figures could well improve, along with their target price, be it that I don't tend to read broker notes for their target prices.
Good morning everyone,
For my sins, i am a relatively long term holder, having taken my main position back in 2018 but have been fortunate to added further during the low points.
Despite being under water, I have held onto my shares because of the change of leadership through the elevation of Mark Reid to CEO:
Market trust has clearly been tested to its limits with SDX, but to date, Mr Reid has delivered exactly what has been asked of him.
In the 2019 Half Year results dated 22nd Aug 2019, SDX stated ;
"Construction of the South Disouq central processing facility ("CPF"), pipeline, and well tie-ins continued in H1 2019 with first gas expected in Q4 2019."
"Planning for the drilling of 12 wells in Morocco is at an advanced stage, with the campaign targeted to begin in Q4 2019 and complete in H1 2020."
Edison in their June 2019 note, went as far as stating mid November 2019, and that is exactly what has been achieved, if not a tad bit better.
Furthermore, the anticipated Morrocan drilling campaign, has also kicked off on 25th Oct, thus delivering it a good 9 weeks before the end of Q4.
It is early days but these achievements will start to repair the trust that has been lost and further support the grounds for appointing Mr Reid as CEO, an announcement I see was also released today.
According to that same Edison June note ;
"Gas prices remain fixed at US$2.85/mcf, but netbacks are expected to remain high based on unit operational costs of less than US$0.2/mcf at plateau production."
That's a really strong netback even in Egypt.
At what is stated in today's RNS as being, a circa 25mmscf/d net interest, Edison are reporting a pre-tax net entitlement income of circa $16m, post opex, capex, bonuses and royalties.
Post tax its around $9m. I do not see how that can possibly be priced in right now, given that SDX can deliver upto $26m in net cash from operating activities (based on H1 figures), even before South Disouq came on line.
So now we are talking potentially (on paper) over $35m in net cash generation per annum, and the company is already adding circa 50% of South Disouq production for the remaining 6 weeks of 2019, which is not to be sniffed at.
If this build up of trust can be continued and the first gas date hit or even bettered, then 2020 could be a very good year for SDX and its share price, which is why I am staying.
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In addition, under the V23 Resources section of that Cellcube update, the company states this ;
"Although the underlying business units of CellCube are well positioned to take advantage of growth in their respective industries, each division is suffering from a lack of working capital. In addition, CellCube does not have the necessary working capital to pay for its corporate overhead"
"the Company is reviewing strategic alternatives focused on maximizing shareholder value. The strategic alternatives expected to be considered include, but are not limited to, a sale or merger of the Company, continuing to pursue value-enhancing initiatives as a standalone company, capital structure changes, or the sale or other disposition of certain of the Company’s businesses or assets."
So its certainly not all rosey over at Cellcube and the risk profile may be too high for BMN right now.
I am clearly attempting to join a few dots together here but there are good grounds to believing that Cellcube could end up being a target for BMN investment, that the mini grid solution could well form a part of that support and introduction into the S.A. Market. Also, its worth noting that Vsun market Cellcube in Australia, among others of course.
I appreciate that UET are highly likely the main partner for S.A. Including the assembly of VRFB there. However, there is nothing wrong with a little healthy competition, especially when said competition comes with a potential portion of direct ownership.
We will need to wait and see, but I find it interesting that the procurement for the mini grid is under way, but we, the market, do not know which system they will be employing yet.
On the negative side, what was clearly stated by BMN management, was that good management was key to their investment in VRFB OEMs. I cannot vouch for Cellcube management capabilities but if nothing else, I noted Stefan Schauss' resignation as CEO of CellCube Energy Storage Systems Inc was included in that 22nd Oct Corporate Update.
In addition, the investment in Redt/Avalon was made because the merger itself creates a new scale of production capability, which in BMNs view, is key to the success of VRFB companies.
Cellcube do not have that yet, and so an investment there may be too early, but if nothing else they do have that project pipeline, a 136 project installation and 10 year track record. In this fledgling industry environment, that must hold considerable worth. So if nothing else, BMN must be having a good long look at Cellcube and maintaining a watching brief.
All food for thought if nothing else.
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They have not done that because they clearly aren't finished yet. So perhaps there are more struggling VRFB OEMs still to help.
This brings me to Cellcube.
Cellcube plans have recently been included in the Vametco Solar mini grid VRFB. I appreciate that words have been had between Alphacomp and their leadership, but I am not buying the fact that the inclusion of their plan, within the basic Environmental assessment (BEA), was purely because they required a sample plan. The basic environmental assessment requires more respect than that.
The BEA is dated late August. The latest RNS dated 7th Nov states "Commenced procurement for the project." It does not say initiated contract award. To procure one must have a contract in place. If its not decided, then you don't procure.
Recently Cellcube have had financial problems. They have just sold the majority stake in their EnerCube SwitchGear Systems company, but they have retained Enerox GMBH.
According to their latest press release (22nd Oct 2019), that particular company has "close to 140 project installations and a 12 -year operational track record," and "is now engaging to finalize its first major sales"
"Over the past year Enerox launched the Generation 4 product series, the most advanced (“VRFB”) on the market today as stated by independent industry experts.
"Product interest for its newest generation remains to be very strong. The company is nearing several large-scale contracts which will be executed once production capacity can be planned to adequate levels."
"It has taken a lot of time and capital to get to a position that Enerox is at today, but until the company can produce and execute projects with a consistent number of units, the company will continue to be in a monthly working capital deficit position."
So essentially the pipeline is there, a lot of investment has already been made, it is just that they need a capital injection and support, in order to deliver their projects and grow. What that means is that the right industry partner, who is willing to help this company out of its troubles, will receive a lot of capital investment for its money."
Furthermore, Cellcube in February this year, announced a 20MW deal with Immersa in the UK market.
So the project pipeline is significant enough to raise interest, given which market it is in.
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However, according to the latest AVL presentation dated Nov 2019, the "start up, commissioning and ramp up of the Gabanintha project, will at best, begin in Q3 2021. That is reliant on a financial close by late Q2, for which they have an MOU with a Chinese partner. Now they might make it but as I said yesterday, new pure play vanadium projects are in my opinion, even more up against it, because of the recent dramatic drop in vanadium prices. Furthermore, the law of averages is heavily against AVL, in terms of project deadlines being hit.
I therefore do not see that ramp up taking place until 2022, meaning they have a minimum 2 year gap before Gabanintha.
As I say, the clear barrier that I see to a BMN investment, is that Vsun are a marketer and developer, as opposed to a OEM, and the VIP platform is specific in that it is aimed at VRFB OEMs. However, that "and the industry" line does exist and the Australian market is potentially a very large one, that right now does not have a strong enough local player. Vsun could potentially fill that gap.
However, right now the fact that the Vsun website is lauding the fact that it has received 2 VRFB contracts in 2 months, says very clearly that it is stalling.
So if it suits BMN, the opportunity is there to stake a claim.
Points 3 and 4 from that same RNS are as follows ;
"Joint development of region or project specific business models for vanadium electrolyte rental. Bushveld enabled the successful deployment of a vanadium electrolyte product in industrial-scale batteries developed and sold by Avalon Battery"
"Joint development of large potential customers or projects well-suited for VRFBs. This includes the work showcasing the technology at the Eskom Research & Testing facility in South Africa."
Note that both have clear references to goals that have already been achieved in this pursuit. That's not to say that they are finished in this regard.
I have already posted my thoughts on the UET partnership, which for me is merely a matter of time.
The above reference to Eskom is for me is a direct reference to UET, given it is their battery that is in that test centre.
So we are back to the other major item that has not been fully covered in that 1st November RNS, which is item 2.
"Supply contracts for vanadium material, vanadium electrolyte and vanadium electrolyte rental. Bushveld has already been supplying sample materials to multiple OEMs."
Sample materials to multiple OEMs.
The above is directly linked to OEMs, so not the likes of Vsun, although the pilot electrolyte plant from C-Tech, could be classed as a OEM.
UET, Redt, and Avalon, must be on that list, which makes it multiple. However, if the list was completed, then why issue a VIP platform RNS or even establish one. Why not simply announce the partnerships and deals, and be done with it?
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Good morning all,
Further to the discussion regarding further potential VIP investments, I would off the following ;
In the VIP Platform RNS dated 1st Nov 2019, BMN laid out 4 key areas of investment assistance for VRFB OEMs under the title "Clear strategy to partner with VRFB companies."
The first of these covered the basics of the VIPs and included the following lines ;
"The VIP will leverage Bushveld Energy's expertise in the energy storage market, its capacity to ramp up vanadium supply and its capital investment to attract additional external funding into the VRFB OEMs and the industry. Bushveld's role would be that of a significant minority investor, with strategic involvement such as vanadium sourcing. . "
Now to be clear, the VIP is aimed at OEMs, but the above does talk about "vanadium supply!" and (BMN) "capital investment" to "attract external funding into VRFB OEMs" AND "the industry." So there is a small window of hope for Vsun Energy.
According to the Vsun website FAQ ;
"We sell batteries from a wide variety of manufacturers including redT Energy, Schmid, UET, Pu Neng and CellCube."
Then we have the article that I posted yesterday regarding the Vsun Apple farm project, employing an Avalon battery.
So as a minimum there is already a connection there with Redt and Avalon.
Vsun have partnered with several industry wide players, but their electrolyte production partner and thus capabilities, are still limited, despite the fact the agreement with C-Tech, was signed as far back as Oct 2016.
C-Tech have provided the pilot electrolyte plant, but they are not as far as I can see, a company that provides the vanadium. At the time of the initial delivery of the electrolyte plant, the following article was published ;
In that article, it was stated that ;
"AVL has commenced sourcing low-cost, high quality vanadium pentoxide for quality testing purposes from a wide variety of global sources including Brazil, China and Africa."
So as a minimum, Africa and potentially BMN, were already on their radar for supply. Whilst I recognise that Glencore also have a vanadium plant in Africa, for me the connection is far weaker and also, being that it is Glencore, there would have been little need to say Africa, because they are a global dealer in vanadium. So the inclusion of Africa is for me telling.
Naturally, the article goes on to say ;
"In the longer term the company aims to supply its own vanadium pentoxide from the high grade Gabanintha Project for use in the production of vanadium electrolyte."
I said it last week already but if I were BMN, and i believed in the Redt/Avalon proposition strongly enough to be the very first investor in the merger, then I would make absolutely sure that I kept my holding well above 5% now, such that any further investment in the business, by others, did not take away my right to do so.
"A right of first refusal to supply vanadium, vanadium electrolyte and vanadium as a rental to the merged entity for two years and thereafter subject inter alia to Bushveld continuing to beneficially own at least 5 per cent of the merged entity"
It is test amount to the situation that these VRFB OEMs find themselves in, that the first refusal deal is completely controlled by BMN.
In 2 years, Redt/Avalon could be quite some beast, and BMN would still have the right to maintain that supply contract. Such a deal means that BMN really need other partners to de-risk their supply chain, more than filling up their order book.
Its a remarkable agreement, which points to a WIN/WIN situation, likely driven by the details in the paperwork and a willingness to support and not suffocate, which itself points to a great deal of new ammo for those two companies, in their quest to convert their sizeable project pipelines.