II think what is important to remember is that AMER reported the Indico-1 discovery on 10th Dec due to "press speculation," which I was not able to find at the time.
Reports from India state that Indico-1 was drilled between 7th Nov and 15th Dec. However, ONGC Videsh did not release their official statement until 5th Jan. Yes we had Christmas (Does that affect ONGC overseas arm) but still the 'delay' was palpable.
Of course given ONGC Videsh size, they are not the sort of operation that needs to update the market the moment they strike oil. They operate in 40 countries after all.
It may be that AMER will follow the same route as before, finding good reason to announce the results well before ONGC. Or they could have had their hand slapped for jumping the gun and will instead follow the lead of the operator this time around.
Furthermore, if Sol-1 isn't a duster and it is instead a very solid oil discovery then surely AMER would be wise keeping this separated from a general operations update, so that it can have the impact it deserves. They area BOD on the back foot and have already demonstrated a desire to prove to the market their worth by exploiting the good news as far as they are able.
Who knows? What all of that says is there is at least enough doubt out there to allow one to keep an open mind about Sol-1 be it a cautious one at that.
One thought I had about this particular update was the timing that it took to achieve ANH approval on the OXY deal and what that could potentially mean for Put 8. The deal was signed off on 23rd Nov so the change of ownership took circa 6 months.
The Put 8 buyout was announced on 20th March, which would give us a rough estimate of end of Sept for the approvals. Of course AMER is also looking for approval to drill within the block also, which may complicate things further but at the very least there is a workable target there for commencement and achieving the first drill towards the end of this year.
The 14th May presentation (slide 12) highlights very well just how close Bienparado is to the OBA pipeline and infrastructure and I remain convinced that this will be the first drill location, whatever the company says about first come first served on the approvals from ANH.
I have read talk of an expectation that Put 8 will be farmed out but if we are indeed seeking greater ambition from the BOD then surely with Platanillo ageing Put 8 is a ready made replacement field. AMER are clearly demonstrating that cash flow isn't a problem particularly with the Indico-2 drill to come, which I am sure we all have great expectation for. Therefore, it makes sense to push on with production through maintaining full ownership of Put 8, which for me is an exciting field at 100% ownership and the OBA right on its doorstep.
Other than that the RNS was very solid. Given the general sentiment demonstrated on this BB I do think they need to maintain this level of success for at least the remainder of the year before investors perhaps start to trust their intentions and achievements more. Whatever happens in the remainder of this year I have no doubt that 2020 is going to be much busier around here as Put 8, OXY and CP0-5 really kick in.
In my view it is misguided to continually compare the actions of the past (wildcat drills in deep water) with the potential actions of the future (significant gas discovery in shallow waters with substantial appraisal driven upside) when the two situations could not be more different.
Furthermore, it is inevitable that this company will have to fund raise in order to get into production, even if they sell off a sizeable portion of the Lixus license. That is thr stage they are at so with all due respect it is stating the obvious.
The key here is defining the probabilities. I have over the last few months attempted to de-construct the Lixus opportunity. What is clear is that 1 further appraisal well delivers Phase 1 90mmmscf/d in full. 1 further exploration well on a drill with 43% COS delivers phase 2 in full. So from that perspective the risk is minimal and the rewards high, thus the bargaining position a very strong one. To automatically disregard that position due to past deals being perceived (perhaps quite rightly) as poor, even though they never had anything like the same economics and risk profiles, for me makes no sense at all.
That aside, I have been further reviewing the costs of the phase 1 development and the headline figure I employed of circa $350m. I doing so I came across the enclosed document, which includes information on the standardisation of subsea components. What it points to is the fact that a good many components have seen their costs reduce by 50% in the last few years alone (article is dated 2017). My case study was from 2007 and I had included a 15% reduction in overall costs due to cost savings. The view point however in this article points towards costs being even lower such that the off shore element of the costs could even now be below $300m.
Given that ONYM are responsible for their own costs at development level, which is what we are talking about here, then CHAR could be selling a share of circa $225m in total costs (drills included) to enjoy a 22 year continuous supply of gas to the very profitable Moroccan market with the knowledge that the revenues could then go on to pay for a more extensive exploration programme that could more than double that gas supply.
On Namibia CHAR couldn't sell that cost because it wasn't realistic, nor could they claim that their government partner would pay their costs because they were negotiating exploration drills, which even on RSD-1 off Morocco would have meant being covered by any incoming partner.
It is these differences that should be studied and measured against as opposed to simply taking any previous situation and assuming it will always apply.
The $300m figure does not include the CPF at landfall because I think they will loom to outsource this just like SOU have. But lets see. FS study is imminent.
Afternoon everyone, haven't posted here for a while. Still very much committed to my end of 2020 plan. Whilst i had hoped for stronger drilling by this point in time, I am not as disappointed with the progress here as many are. For me 2020 will constitute the true measure of the potential here as ONGC and OXY kick on with their drilling commitments and Put 8 really coems into its own. in the meantime there is certainly room for some front end growth in the valuation, particularly if Sol delivers a good result. Another 3,000 plus bopd well would mean 3 on shore wells each delivering substantial flow and all far in excess of any individual well at Llanos 34.
Then of course there is Indico 2 and 3 to come, which will test the depth of the Indico structure and for me, add significant further reserves at CP0-5.
I have read much here regarding the possibility of a takeover. nobody really knows what will happen but I cannot see ONGC keeping AMER on board at CP0-5 forever. Technical and local expertise aside, they are for me too big to want to carry such a junior partner. Strong further success on that license in my opinion will lead to an offer there at the very least.
With regards to Sol-1, according to the ONGC tender documentation for the 3 drill programme that started with Indico-1, the drill and test phases are anticipated as follows ;
Indico 1 - 39 days
Sol and Aguila - Each 32 days
(see page 70 of the enclosed document).
There are various reports that discuss the timelines for the Indico drill. This one here states 7th November for the spud and 15th dec for the completion. AMER have it closer to the start of Nov and reported on 10th Dec. Either way the total number of days is near as damn it 39 days.
Sol-1 isn't Indico but the estmiate thus far has been correct, which would point towards an announcement from Wednesday this week
Thank you pb940 as always.
2 points of significant interest in that SP Angel Update.
1. It is interesting that the BMN house broker feels able to point out that "we expect ESKOM to discover further grid-scale applications for VFRB batteries as the trial progresses."
I have been a key driver of the message regarding the significance Eskom BESS Project but SP Angel are correct, the battery is being tested at Rosherville in order to establish its potential to fit into the Eskom business and operational models as a whole, it is not there purely to establish whether it is suitable for the BESS project alone. The BESS Project as big as it is is a pilot programme only.
There is absolutely nothing stopping Eskom procuring further battery supplies outside of this programme for completely different uses or even seeking solutions for export to other SADC countries. After all Eskom is an importer of energy and an exporter of technology for the transmission and distribution of power, so it already has a significant foothold in the SADC.
2. This is the very first time that a broker has commenced to measure a value for what Bushveld Energy means to the overall BMN business. It is a watershed moment that will trigger further and for me speedy upgrades as the rest of the platform comes together and the contracts are announced to go with it. Big big moment in the short life of Bushveld Energy.
BMN generated first mover status on the vanadium market and associated energy storage opportunity with their move for Vametco.
The have continued that approach with their fully integrated energy storage platform. All through this period the majority of the market has continued to doubt the ability of energy storage to make its mark in energy supply. Then when it became apparent that energy storage was going to be a significant addition to the renewable revolution, those doubting eyes turned to VRFBs and their ability to carve out a place in a lithium-ion dominated market. They can keep on doubting but they are running out of excuses.
In the meantime BMN quietly continues to go about its business, setting up demonstration projects and assembling its full value chain in anticipation of an event that has always been clear to them and a great many of us here.
By the time the market and industry wake up to the size of the opportunity available in a business model as strong as that which BMN is setting up, BMN will highly likely be several years ahead of their competition and truly enjoying their first mover status like never before.
What that means for BMN's ability to expand is almost beyond comprehension. Right now we talk about their ability to grow into the vanadium mining void left by their junior competitors inability to get their projects financed. But the same rule will apply to the energy storage business based on the need to gain regulatory approvals, put together contracts and build business relationships, something BE has already been doing for years.
They say if you want to talk about vanadium then you better come to the Bushveld. Well the very same may now be said about electrolyte supply and rental but in a market that is far more exciting than vanadium mining ever was.
@Jonnygunit That's a very valid question, which only the company can truly answer. I suspect the renting model itself has taken far longer than the actual project did with perhaps agreements in place that this is where everyone was ultimately heading. The reality is that any potential profits that this project may have offered BE are of limited significance in comparison to actually getting the product off the ground, getting it into a live project and proving its future worth.
As the blog clearly states "Avalon, for its part, is thrilled to have delivered the world’s first flow battery project where the vanadium electrolyte is rented, not sold as part of the battery."
Little old BE is helping create world firsts. Hence my walking the walk comment. They aren't laying down pipe dreams they are laying out a path towards achieving them. This is why I was so keen to point out the other day how important the words are that are written in the Annual Report and all other official releases from the company. BMN aren't market sales people they are doers that get the big items over the line.
The blog also records that ;
“One of the biggest hesitations our customers have about adding batteries to new or existing solar arrays is that they don’t understand their value, and they are legitimately concerned about the technology and commercial risk from what can be a significant up-front investment. By deferring a large portion of the battery cost we not only help our customers afford storage, it also gives them comfort that the battery is going to work, as expected, over its design life.”
Well not anymore.
So whilst there has potentially been a 'delay' in communicating BE's role in all of this, it really isn't what we should all be focused upon. This is about the achievement and what it means for future contracts and market potential. That's what the future valuations will be based upon,
Or as the company states, $70 billion instead of $7 billion.
Anyone still doubting that statement?
I would think that this deal now concludes the preparatory phase of the Bushveld Energy business model.
They now have 3 demonstration projects based around the 3 key elements of the business they are trying to build.
1. Utility scale VRFB development project with the largest utility in Africa to tap into utility scale projects with the Eskom BESS contract the front end major prize.
2. Solar +PV project at industrial scale to tap into the energy deprived S.A. commercial market.
3. Electrolyte rental product deployed into the field in California to demonstrate and open up US/world wide opportunities in a market that is demanding energy storage but has thus far struggled to afford it.
Those 3 combined give BE a basis from which to sell their offerings in whichever format it is desired through owning and operating the highest grade vanadium resources in the world.
Whilst we should all expect solid progress in the value of this company this year, this update once again compounds my argument that 2020 is setting up to be quite a year in the world of BMN, as it climbs out of it transforms from an exciting and very desirable mining play into a completely different beast all together.
How long will it take for the market to finally catch on that this is happening. That BMN aren't just talking the talk they are walking it
The key to the potential scale of this development lies for me in the carefully scripted words accompanying the RNS.
The battery developer Avalon " Avalon's mission is to deliver battery solutions that are dependable, safe and economical, each a critical attribute for energy storage that will drive our electrical future."
"Renting electrolyte is a massive leap forward."
The solar PV installer "the upfront cost of high-quality energy storage batteries like Avalon's has kept some of our customers from making the investment. Renting electrolyte makes energy storage truly economical."
which is why MN states that "vanadium takes its place alongside gold, silver, and platinum, as a metal that can be leased, opening up immense future opportunities for this model."
Each player in the value chain of what is now a solar PV plus VRFB battery model is clearly stating that it is this model that delivers the key to a very valuable energy storage door.
As far as I know it is the only known electrolyte leasing model of its kind. If so then who could possibly bet against a future Bushveld Energy - Avalon + Sandbar co-operation agreement and multiple future projects coming out of this one California based source. That alone has huge potential never mind the rest of the world.
What that little gem of a piece of news also means is that when vanadium prices spike again, the excuse that VRFB projects related to Bushveld Energy will be adversely affected no longer holds the same amount of water.
In the blink of an eye BE has a fully operational electrolyte rental product that is on site and can be demonstrated as proven. A timely conclusion to the electrolyte facility EIA and a Q1 2020 first production, will further compound that argument and the BE proposition.
The energy game is afoot.
Anybody remember this article from February this year.
At the time it was interesting to read that another flow battery company was seeing the benefits of electrolyte rental and with it attempting to break into the US market and in particular California, arguably the most forward thinking of all the US states fighting back against Trump led policies. It now turns out that Bushveld Energy were involved in this project after all.
In one fell swoop BE has delivered its innovative electrolyte rental model, partnered with another flow battery developer, secured a further partnership with a Solar PV installation company based in California, all of which essentially opens up the US market and beyond.
Much like the Eskom demonstration battery this project acts as a beacon to potential customers who may be interested in such a product but have no knowledge or confidence that it would work. The enormity of this development is likely beyond comprehension but in terms of opening up the market it is very big indeed.
Good morning everyone,
I posted last Tuesday some thoughts under the title "Is It Time For Another Bull Run" It feels like a lot has happened in the 4 or so working days that we have had since then.
The discovery that the Chinese intend carrying out inspections on their steel producers during the re-licensing that is due to take place in June and July, is quite something.
What makes it all the more significant is the fact that vanadium prices have already started to demonstrate a clear turn in sentiment. Anyone that has followed this commodity closely will appreciate that it is the actual change in direction of pricing that is key rather than the physical price that has been achieved to date. Since last Tuesday the data has continued its support of these changes such that it very much looks like a sustained period of price recovery is due to take place.
To be absolutely clear here, if as is strongly suspected these inspections are indeed true then they come at a time when the vanadium market in China is least able to cope with it.
Blast furnace utilization rates there are higher than at any point in 2018.
FeV inventory levels are substantially lower than at this time last year and have been throughout the course of 2019.
For all the drops we have seen in prices producers there simply haven't had enough time to build up their inventory compared to 2017, so any substantial pending event such as the new rebar standard isn't going to end well for steel producers.
Along the way there has been no physical evidence that raw materials production has ever recovered. In fact there has been a continuous message within all of the vanadium news flow, that says that raw materials have remained tight and it has been a drop in demand that has enabled prices to recede. Those re-bar inspections will surely put an end to that. More importantly what that truly means is that the FeV producers simply will not be able to ramp up their normally under utilised production (this has been true even when prices are strong) because the raw material simply isn't there to allow it.
So its not just about the fact that the new re-bar standard appears to have had its final stay of execution, it is much more about the vanadium market's ability to absorb this change at this particular moment in its cycle.
Time will tell just how many steel producers have held off on the new re-bar standard. Logic says the majority. After all what sensible operation implements a new standard unnecessarily at times of high prices when they know they have an extended period of implementation with which to play with?
Whatever the case, in this market with inventories so low and raw materials it seems so hard to secure, it really won't take that many to tip things fully over the edge.
So in my view the bounce is most definitely in and the bull run is most definitely on.
I very much enjoyed today's interview although I do feel the interviewer could have spent less time re-directing FM so soon after he had began answering a question.
What came across abundantly clear is the confidence that FM has in the plans that are currently in play. How solid a chance he feels the company has with the Eskom tender based on the combination of technological advantage and local content. It would be difficult for investors new to the story to appreciate this but those that have followed the story closely will have seen it.
There was also a very strong air of confidence about the BMN story over the medium to long term. We often busy ourselves here with day to day movements and attitudes to the SP but a simple step back combined with a willingness to be patient, demonstrates that given enough time, this investment will deliver substantial further returns based on the steel market alone, never mind the exciting developments that VRFBs should help deliver. Whilst the interviewer had done some homework it was clear he was not up to speed on the company's full story and so clearly wasn't able to grasp or understand the magnitude of what FM was explaining nor appreciate the in roads that have already been made by the company.
What his approach and position demonstrated is perhaps how far the general market has to go to fully understand what is being built here and, how far a sizeable large scale mandate such as that being offered by Eskom, will go towards convincing that market that the VRFB proposition in S.A. and Africa is real. When that happens then in my opinion the integrated platform and its potential will really start to show its worth. In the meantime the skepticism will remain and lithium will continue to be brought up because the general market is still not prepared to see past it.
But that will change and then things will really start to get interesting.
To reiterate what I mean when I talk about future plans and growth, it is well worth investors re-reading page 33 of the Annual Report (See below).
Firstly of all, in my view it important to appreciate how BMN goes about its business in relation to the words it puts out in the public domain compared to what it goes on to achieve and how far it is likely down the road to achieving them already. Having lived and breathed Vametco and Vanchem, I great appreciation for this already.
Criticism can of course be leveled for some of their plans not turning out the way they were perceived, though to be clear it is investor driven perception we are talking about here when we discuss for example such things as the dividend policy. BMN is far from perfect but as the same could be said for 99.9% of all AIM listed companies, is it really that relevant.
For me what is most important are the big items and the manner in which the company delivers them. Production, brownfield, electrolyte, penetration into Eskom. It is these deals and strategies that will deliver the true value for me. The other items would be good to have but as I am dealing with imperfection across the board, what is being done well by BMN is more than enough to gently place these failings to one side.
BMN has consistently told the market what it is looking to do and then gone on to achieve it. Vametco, and Vanchem being the most prominent examples of this. On the energy side over the years, they have continually stated that they will build a 200MWh electrolyte facility and that their aim is 1,000MWh of energy storage solutions by 2020.
However, through the words on page 33 of the Annual Report there is clearly much more going on. Some contributors here continue to doubt their ability to achieve this despite the track record of the BOD since 2015. For me that demonstrates a lack of understanding of the company, the people who run it and the sector they are marching towards. Yes failure is possible but I am an investor looking for the greatest gains for the smallest risk, and right now the BMN track record shouts winner to someone who fully appreciates the market they are heading towards. Its no longer a pipe dream or an airy fairy billion dollar number plucked from the chronicles of AIM. The opportunity is as real as it has ever been such that those plans explained on page 33 hold more solid worth than they ever did and are clear in their purpose and existence.
If I believe that the prize is there to be had and i know what the words mean for the distance those plans have already travelled, then the last piece of the puzzle is can they be reached without my investment being partially taken away from me? From what I have discussed and demonstrated this morning the answer points towards an equally solid yes.
So all I need do is wait. Easy right?
Thank you ND. If indeed true then that is another positive shock that will shine through in time.
The key point for me is not the exact level of profit that BMN is making but the fact that they are managing to still have a strong 2019. This year for me is key in preparing the ground for the integrated platform, which will come into its own in 2020. A demonstration that all costs can be covered through the achievements of 2018-19, leaves me feeling very comfortable.
The growth plans when enacted will deliver a substantial enterprise with access to various new revenue streams that are not all linked to the same markets or trends. Thus the business will be stringer and the risks involved lower than they are today. It is looking like that can be delivered without the need to call on more resources from existing shareholders, meaning those shareholders get to watch all of that growth take place against the same level of ownership that they hold today. That's very exciting and the key takeaway from all of this for me.
We can continue to discuss how many millions the company is making and try to link it in with perceived PE ratios etc but in reality that isn't what this is all about. This is about how achievable are their plans, how real is the future market in VRFVBs, and can the company afford them? The downturn in V prices perhaps brought that into question because the headline European prices on face value paint a negative picture. The reality is far different. A strong start to the year pricing wise coupled with a robust US market and further (expected) substantial uplifts in production, mean BMN is in far stronger shape than the market is currently willing to accept. However, in my opinion it very much feels like the belief is starting to creep in, that any doomsday scenarios, however weak in their arguments, have certainly dissipated and blue skies are once gain beginning to open up.
The market certainly needs more evidence before it is certain, be it prices or production related, but the mood definitely feels different to me and that change when confirmed opens up a far stronger and more advanced story than that which entered this downturn in December. So at some point I expect a reaction built from far stronger foundations such that the next more higher will be a permanent one that sets a far higher base than we have seen before. I trust that makes sense.
Whilst we must be careful with generalisation, I do expect (see earlier post on Intermediate mergers) the Vanchem deal to close out close to its front end deadline (31st July), with August looking very good.
Therefore, the total BMN production figure should increase by minimum 320 mtV (Vanchem Sept to Dec included), which is currently 100% owned by BMN.
So full year guidance should jump to a mid level of 3,170 mtV. I have attempted to analyse the Vanchem figures previously and at the very least concluded that it is at least as profitable as Vametco, be it a simplified and factually limited call.
That means BMN would need to achieve $33,750 per mtV in EBITDA to achieve 2018 results of $107.5m in EBITDA.
Given the cost savings from additional production and efficiencies and the current ZAR 14.1 average exchange rate (2018 13.2), plus lower royalties payments, the business 'only' needs to achieve a circa $6,000 per mtV saving on 2018 average costs to ensure that $60 per kg achieves that sames result.
As I said before we are currently already at $64 per kg and the US market is running at a $6 per kg premium today, and as far as I can see has never receded below the current level. Thus the sub $38 per kg pricing of the last 4 weeks in Europe can be to a certain degree disregarded.
The price reverse is a little calmer this time but the green shoots certainly look to be extending and it is not about the size of the rise but the fact that it has actually begun. In my experience once the market chooses a direction it tends to stay that way for an extended period.
So all in all there is much to be positive about as it wouldn't take too much of a push or indeed success from BMN, to achieve last year's figures, which given the now far greater potential that Vanchem and the resources of Vametco and Brits will now offer, simply cannot be priced in.
It is the start of the Dragon Boat holiday today so there won't have been any updates on prices.
There has been some interesting data released over the last few days and despite the pending China public holiday, prices there have definitely turned more positive.
The following is a good example with producers there expecting a further 4% rise over the coming week driven by rises in raw material prices.
More interestingly is the following report, which tells us two things.
1. That the domestic price of CNY 128,000/t is "the same as the highest price of international market," which is circa $37 per kg.
As prices are expected to increase to CNY 130,000/t then we are talking about prices in China beginning to push beyond the upper levels in Europe. Whilst its not a big move in terms price shift, that is not what is key, it is the fact that the Chinese market having clearly run up stocks of inventory for the pending new rebar regulations, is showing clear signs that it has run those stocks down and is now seeking new material.
History tells us that when the Chinese market moves then the other markets tend to then follow be it sometimes with a bit of a time lag.
Prices in Europe are deemed to have "fluctuated" somewhat after an initial rise but this has been put down to the bank holiday season that has been seen in Europe over that period and is expected to change in the coming week (W/C 03.06.2019).
However, better still the enclosed report gives a current standing for the US market, which at mid price of $19 per lb, means FeV there is still trading at nearly $42 per kg.
That is some $6.50 per kg more than Europe, which given that this is BMN's largest market by far (60% of sales in 2018), is a significant piece of news indeed. This is particularly true when one considers that the bottom in the European and Chinese markets now looks to be in. Further pressure on prices in those two markets will only place more pressure on the US, which imports the vast majority of its material.
To place that $42 per kg in context of the world market, my own analysis of the European prices based on the 4 week pricing/sales lag, shows a circa $80 per kg average price in Q1 and $48 per kg in Q2 (week 13 was 31st May).
That equates to a yearly average to date of $64 per kg, although with a year guidance of 2,850 mtV, sales are currently skewed to lower end prices. Nevertheless it is still a very healthy average, which is only further improved when one appreciates that at the very least we have a $6 per kg difference in US, which isn't currently being considered in that average.
@faramog Its business days, which from the 1st May announcement date gives them around 84 business days to conclude.
That is of course if the Competition Commission take the extension. I have a feeling from the BMN statement regarding "if required" that they perhaps feel it will be easier than the documentation points to.
A close out by 31st July will be a strong statement of intent and will mean that the ramp up programme etc will be with a lot sooner than perhaps currently thoughts.
What I will say just to finish off is that in my opinion and with all due respect your statement is too broad brushed and reflects an understanding of previous cycles, which never witnessed such a major shift in the way battery based minerals are being employed.
We are under going a major macro event in the way we use vehicles we drive, how we power them and how we generate and source the power and electricity that we use every day. Existing utilities and energy companies are on the cusp of a major change in the way they interact and do business with their customer base.
It is a revolution on a scale as big as the internet and mobile phone and compute technology. Big words I know but from what I have seen it is true and positioning oneself in the right minerals and good companies that own them, is an essential part of any portfolio today.
All just my opinion of course DYOR etc etc