@Ophidian Agreed and timing will,be key, but also they must avoid being too greedy, which I think they will.
Whats certain in my view is that the East London facility will not stay at 200MWh capacity for very long.
What we might also start to see is partnerships being formed with OEM electrolyte producers in other areas, or at the very least vanadium supply.
But at the end of the day a scaled up sold out 8,400 mtV business, supplying a variety of customers, with a variety of value chain based products, would be more than enough to create a truly significant business here, even in a 'low' vanadium price climate.
I of course welcome more, but it really wouldn't be needed to make me a very happy investor indeed.
We should perhaps all be aware of that greed and overstretching ourselves too much.
Bella6532 At this stage i am throwing out one or two theories of my own, I am sure others have many others that they can think of. I think the key right now, and what is so beautiful about all this, is that there are so many potential layers to, that the opportunity is there to theorize across the board.
From the interview, the message for me is very clear. If its on the continent of Africa and especially S.A. then BE will/is very active indeed, and looking for maximum participation where it is achievable.
If its outside of Africa, then the role is more supportive of others, with the ultimate goal of gaining inclusion in as many opportunities as possible, at a vanadium supply level.
I am certainly hearing a connection to discretionary funding, which for me right now is WBG led, and that funding is aimed at lower to middle income countries, of which Africa has many members. Whether that is with Avalon/redr, UET, Cellcube, or someone else, for me doesn't really matter (though I accept that it is fun trying to find out), it is more the case that BE feel capable of accessing it, that they have something of interest, and that they can play a part on the outcome at various levels, in order to satisfy the needs of themselves, their partner and the client in question.
Give me ;
1. A Redt/Avalon partnership and full offtake accessing "North America, Europe and Asia."
2. A UET partnership at VRFB assembly/manufacture scale covering S.A and Africa and ;
3. A Vsun Energy investment and support in Australia ;
and those doors will likely never see the back of that van ever again because that'll be all 5 continents entered, covered and likely delivered.
I think that Vsun and AVL, are a perfect example of a fledgling VRFB participant that has a very good idea, but that cannot compete in this current market, due to a lack of finance. I do not know what Vsuns project pipeline is but without AVL progressing their mine, I would think they have limited options to move Vsun forward.
So a supportive role that does not take away the opportunity for AVL completely, must surely be worthy of consideration, given the potential that Australia offers as a market.
It would certainly help get AVL on track to its ultimate goals as an integrated Australian play. I cannot see the worth in investing in the mine because it needs too much capital. But investing in the Vsun business and providing a rental product with Avalon (RedT) in toe, surely has a lot going for it if! the Vsun projects/ potential is there.
If it did happen, we would be talking about a former competitor/rival (just like Redt supposedly was), as a partner and a means for BMN shareholders to improve their returns, which would be quite something.
Agreed Sanchez599. At what level is still to be determined, but it is more the fact it very much looks like it can happen, and that it takes BMN into wider markets, opening up even more potential for the company.
It is interesting that Vsun have employed a Avalon battery for their recent contract win at "Priest Bros orchard in Pakenham."
"The VRFB solution for the orchard project is being supplied by battery manufacturer Avalon Battery"
Not only that but the article makes a point of mentioning that ;
"Avalon Battery recently entered into an agreement with South African vanadium producer Bushveld Minerals to provide a leasing option for vanadium electrolyte."
One must be careful not to over assume, but we all know how well these guys know each other through Vanitec, so its interesting that Avalon were able to secure this project. Whats the chances that the project goes on to secure a vanadium rental contract, and that said vanadium comes from BMN?
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"The ability to source external capital for clean energy projects, for clean energy products, for sustainability in the circular economy. That money is out there, some of it is actually discretionary finance, where it is actually cheaper than what you could ever get, if you were trying to borrow money to build a mine."
We all talk about the $1 billion World Bank battery storage fund and its connection to Eskom, but I wonder if BE are looking to access that funding in a more direct manner. I am absolutely sure that the IDC levers helped secure that funding for Eskom, and they may well be working hard again to directly access investment from the WBG. After all the whole purpose of the fund, is to create opportunities for battery storage companies and their technologies, to scale up and deliver more projects on a much greater and more cost effective way. Can anyone say that any battery storage company out there. is doing more to promote the battery storage market, and deliver that scale?
The direct reference above, certainly points to a direct link into that WBG led discretionary funding, because right now they are the only one BMN management is highlighting, and as we all know from Vametco and Vanchem, BMN do not tend to mention these things unless they have something in the pipeline.
So I am definitely keeping an open mind on Be's ability, be it directly or indirectly, to access more of that funding, and at a scale that is meaningful.
Just a couple of ideas I though worthy of posting on.
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There are a couple of theories/beliefs forming in my head after watching the Crux Investors interview. I will lay them out and shareholders can test them or challenge them as they see fit.
Firstly, another quote.
"We will continue to look out for other VRFB companies, that we can partner with, support. The more there are that are successful, that have got scale, the better for the entire industry."
This ties in in part with my earlier posts on the Crux interview. However, coupled with other wording from the interview, including ;
"Now i want to be honest, we are not going to develop every single vanadium battery project in the world, but if it is in Africa, then its extremely active."
That quote was stated shortly after the "4-6 activities on just one single project" statement.
What that says to me very loud and clear, is that the Eskom BESS Project is a big focal point for BMN. If they are extremely active in Africa, then how active are they when the project is on their doorstep?
The beauty of the Redt/Avalon deal is that it should effectively take them temporarily out of the loop, at exactly the time when the BESS tender is being activated and decided upon. However, even if they are not, and assuming that they complete their merger and indeed tender, then at the very least, they would have to be employing BMN vanadium products to fulfill for the project, because that's exactly what the contract says they must do. So that's one active S.A. VRFB OEM under control.
However, with their desire to be a recognised developer and VRFB assembler, I just cannot see how BMN would want to let this BESS project escape them. So for me its about those 4-6 activities.
The partnering element of the above quote, for me, signals the partnership with UET (and IDC) to assemble VRFBs in S.A.
I don't see a direct investment in UET, due to their Rongke/Balong New Materials connections. What I do see is UET wanting access to those S.A. based levers, and those Eskom contracts. Things have been very quote for a very long time with UET, but the pure fact that it is a UET battery at Rosherville, that BE achieved and sort a grant from the USTDA, for help with that battery, means UET are very much in the picture, when it comes to S.A. and likely the wider Africa market.
Here is a quote from the interview that really hit home to me as an investor, not just here but in the markets in general ;
"each time you have to face some level of scepticism, it is a blessing because it makes you re-think your assumptions. . . I think every single time we have done it, we have got even more conviction that it is absolutely the right time for this and the opportunity is that real."
Conviction is not always easy to hold onto, particularly in this modern world of social media and the bombardments that come with it.
However, we thrive most when the doubters theories can be tested and disproved, not simply because we want them to be wrong but because we can prove that they are, or that it is not core to the investment case. There is no better conviction driver than that, and so we should all welcome that input and the continuous test that they create.
That process is no different for any company and its directors, whoever they are and whatever they choose to do.
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What I am basically attempting to convey here, is that BMN has the ability to step into any potential vanadium market it wishes to, at basically any level it chooses is appropriate. Hence the 2, 4 and even 6 "activities on just one single project" statement.
Hence why they could both so readily talk about Australia and how as an example ;
"we are probably not involved in the development but we will (could) be supplying vanadium, electrolyte, possibly having an equity stake into the company that is invested there, possibly having a stake into the rental company that is supplying electrolyte through rental there"
As Mikhail and Fortune both make clear, it is still early days even for the Redt/Avalon deal, and more importantly it is still very early days for the VIP investment platform, but what is clear, is that the investment does not stop there. What is clear is that they will reach out much further into the market and take advantage of this first mover status, this first mover understanding, and the competitive advantage they have as a vanadium supplier, to strike the first deal, but effectively create the necessary snowball affect, as other funders become more willing to come on board, because they see a very clear de-risking of the venture because it has been able to secure guaranteed cost effective vanadium supplier and finance.
So for me the Australia move is on. Who would bet against it? And it shouldn't be alone.
Mikhail is very clear ;
"because we actually think the market is large enough for a few different companies to be successful"
If so, then right now those companies are as accessible as they will ever be, so why would BMN not take advantage of that.
By doing so BMN spreads its risk and takes advantage of a market can can thrive in low vanadium prices, and that's before we even start to discuss the things BMN are and want to be doing directly.
All of which leads FM to say ;
"when we talk about the natural hedge that energy storage provides, the power of that is not appreciated yet, but it is incredible."
We all know it is incredible because of the potential size of the energy storage market. What we perhaps haven't previously appreciated is that by the time BMN are finished, they may well have signed up all necessary/worthwhile OEMs to "first refusal to supply vanadium" deals, and with it, provided future partners/financiers, the necessary proof of their ability and right, to exploit their resources, on a scale that has never been imagined before.
In the early days of a mining venture, off-takes provide a solid basis for finance to be agreed. Why would it be any different for BMN in their downstream phase?
In the last 4-5 years that I have followed pretty much everything that FM has ever said. I cannot remember him ever saying "incredible" before. In understand completely why he has chosen now as the time to finally introduce it because the opportunity is truly that.
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However, this time around its not about low vanadium prices, but higher ones. Said higher prices in 2018, have helped stall the development of what are still fledgling companies, such that they need further support to continue to develop their hard won project schedules.
As Mikhail says ;
"we think there are some that have good management teams because they have actually executed pretty well to date, the issue why they are not larger, is they have only been around for a few years and they need capital to grow."
Isn't that just beautiful? This is not about investing in companies or partnerships that are saying give us capital and then we will show you something. They are saying, look what we have in the pipeline, but cannot get over the line.
For an investor with an open mind and capital to support it, that could be an interesting investment. However, with BMN we have the capital and access to a supply chain of vanadium products that can further support the OEMs plans to grow, by giving them competitive advantage in their market place, which immediately de-risks the investment further than other more conventional capital sources, could achieve.
Higher vanadium prices have contributed to that need and availability, substantially.
Now we see a lower vanadium price environment but it is one that is coupled with fear over volatility, which makes OEMs all the more willing to make a favourable deal, particularly to anyone who is willing to move first.
What this should effectively do, is give BMN through their VIP, the ability to handpick not only the best VRFB companies, but also seal very strong deals. That's because the likes of BMN are very rare. There aren't 20 pure play vanadium producers to compete with. Infact there are effectively no pure play vanadium producers to compete with, and there aren't going to be many new ones soon, because if nothing else, the recent volatility of vanadium prices, will surely have put the wind up any potential investors.
So once again we find ourselves in the inner circle looking out, but this time around its not just a vanadium producer circle but a VRFB, energy storage, fully integrated model circle, and to date, its a very small one with not many other members.
So low vanadium prices delivered Vametco. Higher vanadium prices delivered the capital but cut off OEMs from their revenue generating work. Lower vanadium prices deliver the opportunity for those OEMs to now thrive, but they are short of capital, fearful of volatility, and desperately in need of guaranteed vanadium supply.
Talk about riding the vanadium wave to perfection.
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The Crux Investors interview takes some digesting and so I would like to offer my own thoughts on it as and when I can collate them, and tie them back where possible, to what we already know and have discussed.
It is incredibly rewarding to see the actual realities of the plans BMN has, being relayed and executed in a manner that ties in so closely to those that have been discussed here at length, by so many BMN shareholders.
For all the endless discussion and dissection, that takes place on this BB, for me the wider market still has little chance of fully appreciating what BMN is putting together here. However, the efforts and commitment of so many participants here, are for me, going to pay handsome dividends in the years to come, so the wait should be more than worth it.
The Bushveld Minerals fully integrated model, from the mouth of Mikhail Nikomarov ;
"In some ways we are in direct control. Lets take an example of a project like our mini grid. There we are the developer, so we get a development fee when that project reaches financial close. We are an investor, co-investor, so we get the return on equity or dividends from the PPA, that is signed to pay for the energy that that mini grid produces. By the way we are supplying a battery into it, so if we want to, we can charge a mark up on somebody else's battery. If we are invested in that company, we get an additional benefit, because our investment has now appreciated in value, because that company now has more deployments. We're supplying electrolyte, so we get a fee for manufacturing the electrolyte into that project. By the way we have mined the vanadium, so now we've got a sale on the vanadium."
"So this integration allows us to capture value, sometimes from 4-6 activities on just one single project."
There we have it, the to date, currently being executed methods for delivering added revenue streams to the overall business, by allowing BE to participate in the downstream battery storage opportunity, as and where it sees fit, depending on how it is invested and with whom.
Right now the opportunity is limited by scale. BE are changing that by investing, partnering, or supporting OEMs of VRFBs, in order to drive those multiple revenue streams, over a much wider project base.
What is so beautiful about all of this, is the fact that BMN's first mover status, is once again allowing them (in much the same manner that it is working for their early investors), first mover status on the downstream battery supply chain, just like it did earlier with the very brownfield that is now paying for all of this and the low vanadium price environment it was achieved in.
Now those vanadium prices are once again working to BMN's advantage at just the right point in the cycle.
@Knighthood Agreed. My own window is set at 2 year intervals, as it normally always is, then it will be reviewed and adjusted as I see fit.
I would, at the very least, want to see LIB phase 1 in production and Serenity appraised. 2 events that, if successful, will add significant value, even with limited dilution in play.
@Ophidian I see now possible, sensible way or even necessity, that Serenity could or should be drilled again in this campaign.
I don't actually see any benefit to drilling beyond A2.
The I3E management team will want to get the RBL over the line, and as far as their words go, that does not involve drilling A4 or A3 this campaign ;
Serenity RNS 29th Oct 2019 ;
"The LA-03 well, originally planned to be drilled in i3's 2019 campaign, is now likely to be drilled as a pilot during Phase I development execution to optimize the placement of a production well, as will the LA-04 well."
What that statement implies is that I3E may drill a pilot well in the LA-04 location, prior to drilling the horizontal well, which will mean some added cost. However, by that point I3E will be financed for phase 1, which is the critical point.
So as it stands, I see now reason to extend the drill. What they will want to do is get on with defining the development drill locations, adjusting their FDP, possibly updating the CPR, and closing out the RBL.
The key question now is how will they fund the Serenity appraisal programme? If they are still at 100% by next 'Summer,' then that will likely need an equity portion. However, said dilution will be being applied to establishing additional resources, and so should be worth it, if indeed it is required in the end.
@Sankeys If your comments are focused upon me, then I like to think that I am not the preaching sort and that the wording I employ tends to demonstrate that. However, you clearly read it differently, so I will take on board your comments.
I don't believe I have spent very much time concentrating on the SP. That's because the SP tends not my primary concern in shares where I feel the chances of substantial dilution are limited. My focus is, as you have pointed out, is centred around the fundamentals. My belief is that longer term investors, of which I am one, are best focusing on the fundamentals and any changes that developments make to them, than they are on the daily share price, and the countless rumours that circulate social media, but are normally based on limited facts, or perhaps facts that are core to the investment case.
I have not dismissed conversation on warrants or placings, I have analysed and argued, that the wording from I3E post L2 pilot well result, did not lend themselves to the need to place new shares.
Today's outcome is not a bad one. The affect of the amount of shares placed is limited by their price and their number. Their impact on stabilizing the business, in preparation for the final drill and the subsequent RBL discussions, is far more far reaching.
In my humble opinion, and it is just that, an opinion, that I share without want of retribution, the bigger picture gets lost far too easily, as AIM investors focus in on shorter term outcomes, which do not define the company or its final outcome.
This placement is testament to that. The new shares and new warrants, do not matter in the long run. What matters is first oil, and the opportunities the cash flows from that achievement, open up I3E.
All in my humble opinion of course.
With all due respect, even after all warrants are factor in, I3E would have 'just' 167m shares in issue.
For this they would have all debt cleared (assuming junior warrant holders cash in debt for the shares), have a further £5m in the bank this year, and a further £3.2m to come from Bybrook for the 8m warrants issued today.
As I have just discussed at length on Twitter, even if the company, post A2, said to me that they needed to issue another 25% of total shares in issue to get the RBL over the line, and perhaps increase it to expedite Serenity appraisal next Summer, that will still 'only' be c.210m shares in issue.
For that we get LIB phase 1 development at upto c.20k bopd (although even 15k would be splendid).
With that production, we would see Serenity the c. 200m STOIIP appraised and likely increased in size. In addition, the company, at a convenient point in the future, could explore/appraise the 400m STOIIP in LIB West.
All of that will take time to come to fruition but talk of 100% upside is purely a short term outcome, which given time, will look very limited in its outlook.
It all starts with A2, which of course needs to come in to trigger that future, but if it does then in my opinion, this is a long term hold, that can deliver many multiples of today's share price, because the assets are that good.
Right now we are very much in the establish the business phase. Post A2 and RBl/funding conclusion, this moves into a growth phase, and that will be the most rewarding part of all this. All in my opinion of course.
Excellent news this morning on the finance side of things but also the A2 spud.
The rig only arrived on site late Weds and now the spud has been notified. To place that in context, the Borgland Dolphin arrived at the original L2 drill site at lunchtime 19th August, and the spud was announced on 22nd August. So circa 2.5 days.
For the Serenity drill, the rig arrived late 29th Sept and was spud late afternoon 4th Oct, so circa 4 days.
For this well (be that they have no doubt learnt from previous experiences), the spud has been announced after just 1 day. Mightily impressive.
My just for fun revised key dates are below. I must say, Inever expected to be shortening it.
5th November anchor handlers set sail. (Achieved)
7th November anchor handlers complete move. (Achieved)
10th November spud 11th (Actual 8th Nov)
27th November preliminary result if duster.
1st December if oil found.
8th December Borgland Dolphin sets sail for home (dependant on testing of course)
I wouldn't put it past them to gain more time on this second LIB well. Lets see.
Its all about whether or not one trust these 'sources' but if one does, then it indicates that at least 3 bidders are keen.
One private equity backed bidder
We shall find out soon enough.
For all those that do not have access to Twitter, here is an update on the strategic process. Whether shareholders believe the authenticity of the content or not, is for them alone to decide.
If its true and one of the offers is good enough, then the next couple of weeks should be very telling.
Offers being the key word in all of this, as more than one creates competition, which is good for business.
@Bella6532 I read Lemur the way I used to read the Mokopone iron ore project in 2014 but didn't fully appreciate at that time. Lemur is a dead project, which will come good when it comes good because it has been replaced by a much bigger story, just like the iron ore project was back then.
My only hope for the Lemur project is that it finds a home that allows it to be built in order to help the people of Madagascar, who have such limited opportunity and access to electricity. I hold not wish or desire to profit from a coal project, particularly one that my investment does not need, in order to be successful, which given Lemur's size and progress, says much about just how far BMN have come and will indeed end up travelling.