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Apologies 1/2 published twice for some reason.

2/2
I have read recently that niobium in terms of material required, is currently selling for an equivalent of c. $52 a kg vanadium.

This is backed up in part by TPPs comment on slide 90, which states ;
"A secondary peak occurs at $15.00-$16.00/lb V2O5 representing a point of price stability in an environment where supply struggles to meet demand. At this price level we don’t see very much substitutional loss of demand and so in tight markets
there is support for prices in this range."

Every existing BMN sharholder would be very happy if that came to pass and right now, the prediction is that said "supply struggles to meet demand" scenario, starts to take hold in 2021.

Yes it potentially suffocates VRFB take up but the BMN value chain approach, still has the very best chance of delivering both, even in that elevated pricing environment. In fact as I have said previously, it would probably send even more work and VRFB producers their way.

Some analysts are making an argument that Chinese support finance will begin to fall away in 2021, so steel demand may weaken. I just cannot see how that is true. Its just too early and such investment takes long than 9 months to bear out. The world markets are just too fragile for it to be wise to remove such support just yet. Then we have the Ex-China market demand and infrastructure support, which are markets where vanadium content is at its highest. So their demand can be very influential in 2021/22. So other than a substantial credit crunch, I just don't buy it that demand will weaken in 2021.

If not then the deficit play is very much on and prices should continue to react accordingly, if said inventory truly is reflective, of what TPP Squared have stated.

Like I say, well worth dissecting the detail but it goes a long way to demonstrating that prices will rise this year and an expanding BMN, with +4,000 mtV production on the cards, would be in high demand, should it turn out to be the case.

1/2
Hi Uksteveg,

I would encourage you to have a very close look at the Terry Pearles presentation from the 8th Vanitec Energy Storage meeting. Its a great addition from Vanitec, which allows investors such as ourselves, to get much closer to what is actually happening in what is at times a very secretive vanadium market.

I would refer you in particular to slide 60.

There you will see that in 2020, China were predicted to produce c. 70,000 mtV of vanadium *Q4 outstanding at time of publishing). That's a c. 5,350 mtV rise on 2019, which itself was a year when stone coal was at its most rampant, post the 2018 price surge, which encouraged its producers so much.

As you will also see from slide 67, there was a small surplus in 2019 and a slightly bigger one in 2020 (c. 2,000 mtV)...

and yet as you have seen for yourself, Chinese vanadium prices held steady at around $30 per kg. So China was definitely using more vanadium in 2020.

This is compounded by 2 further facts ;

1. that European demand fell off a cliff in 2020, so the actual demand in China was even greater and ;
2. China became a net importer of vanadium in 2020...

and still we are talking about a Chinese market that managed to maintain a c. $30 per kg pricing level.

What we are now beginning to see is European and US demand coming back on line, as steel production and activity starts to rise again. If Chinese demand stays elevated, then we should start to see that bear out in rising Ex- China prices first of all. However, China stayed relatively stable because they were able to pull in supply, normally meant for other markets (BMN being the prime example with actual production of c. 24% going to China in H2).

As those markets return, suppliers may not be so keen to supply into China and then things may start to get really interesting.

Better still (and as I talked about earlier), if the TPP deficit forecast holds up, then there's a very strong chance that the inventory isn't there to cover it, this time around.

We are all abundantly aware, that 2018 was a massive trigger point for prices because it was the third year in a row of significant deficits (see slide 67 again). Since then the inventory recovery, as understood by TPP Squared, has been around c. 2,200 mtV.

With the 2021 prediction coming in at 5,400 mtV, there may well be nowhere to go for pricing but up but it is all about actual available inventory and China production/demand in 2021.

Slide 63 shows TPPs prediction for Chinese V production and usage. Rather remarkably, whilst production is expected to be up another c. 4,000 mtV, demand there is anticipated to reduce the Chinese overall surplus, from c. 5,700 mtV in 2020, to c. 3,500 mtV in 2021, driven by greater adherence to the very rebar standards, that helped drive the price shock in 2018.

That's a big change, if Chinsa demand stays firm because Ex-China will inevitably suffer.

1/2
Hi Uksteveg,

I would encourage you to have a very close look at the Terry Pearles presentation from the 8th Vanitec Energy Storage meeting. Its a great addition from Vanitec, which allows investors such as ourselves, to get much closer to what is actually happening in what is at times a very secretive vanadium market.

I would refer you in particular to slide 60.

There you will see that in 2020, China were predicted to produce c. 70,000 mtV of vanadium *Q4 outstanding at time of publishing). That's a c. 5,350 mtV rise on 2019, which itself was a year when stone coal was at its most rampant, post the 2018 price surge, which encouraged its producers so much.

As you will also see from slide 67, there was a small surplus in 2019 and a slightly bigger one in 2020 (c. 2,000 mtV)...

and yet as you have seen for yourself, Chinese vanadium prices held steady at around $30 per kg. So China was definitely using more vanadium in 2020.

This is compounded by 2 further facts ;

1. that European demand fell off a cliff in 2020, so the actual demand in China was even greater and ;
2. China became a net importer of vanadium in 2020...

and still we are talking about a Chinese market that managed to maintain a c. $30 per kg pricing level.

What we are now beginning to see is European and US demand coming back on line, as steel production and activity starts to rise again. If Chinese demand stays elevated, then we should start to see that bear out in rising Ex- China prices first of all. However, China stayed relatively stable because they were able to pull in supply, normally meant for other markets (BMN being the prime example with actual production of c. 24% going to China in H2).

As those markets return, suppliers may not be so keen to supply into China and then things may start to get really interesting.

Better still (and as I talked about earlier), if the TPP deficit forecast holds up, then there's a very strong chance that the inventory isn't there to cover it, this time around.

We are all abundantly aware, that 2018 was a massive trigger point for prices because it was the third year in a row of significant deficits (see slide 67 again). Since then the inventory recovery, as understood by TPP Squared, has been around c. 2,200 mtV.

With the 2021 prediction coming in at 5,400 mtV, there may well be nowhere to go for pricing but up but it is all about actual available inventory and China production/demand in 2021.

Slide 63 shows TPPs prediction for Chinese V production and usage. Rather remarkably, whilst production is expected to be up another c. 4,000 mtV, demand there is anticipated to reduce the Chinese overall surplus, from c. 5,700 mtV in 2020, to c. 3,500 mtV in 2021, driven by greater adherence to the very rebar standards, that helped drive the price shock in 2018.

That's a big change, if Chinsa demand stays firm because Ex-China will inevitably suffer.

3/3
The excitement of course starts to come, if prices push beyond that sort of level, which I think they will because demand is going to be high as economies invest to protect their growth prospects and jobs markets. I also do not believe that inventories have had enough time to recover from the 2018 rises and so the deficit, if realised this year, will likely drive prices sooner than it did in 2016/17, which is when the deficit started but failed to influence prices initially because of inventory levels. See Terry Perles slide 67 below.

http://vanitec.org/images/uploads/3_Vanadium_Market_-_Terry_Perles.pdf

A great example of this is 2017, which despite being prior to the big rise seen in 2018, still witnessed V205 price of c. $10-11 a lb because the market sufficiently tightened. That's a +80% uplift on what we have today.

If that begins to demonstrate itself this year and at the same time, BMN starts to demonstrate that it can meet its guidance and that its expansion plans are happening, then the combination could well deliver a valuation pushing the 2018 high (My view), in the 2nd half of this year, with or without significant energy storage progress and influence.

However, in my view, first and foremost, vanadium prices post Chinese New Year need to continue their rise and remove that production cost negative influence. Then as the year unfolds, production guidance needs to be met (i think they'll beat this year), then we could well see some exciting times, whilst all the while watching what developments come through on the storage side of things, both internal and external to the business because sentiment is going to play a big part here and that element is growing in influence by the day.

I still think that 2022 is the really big year here but there's plenty of opportunity in 2021 too but its going to need some more patience, as BMN moves from this initial production cost hike, to a demonstration of its reasoning and a future where output is far higher and with it, costs are far lower.

I hope that isn't too much to take in and I trust that I'm not ramming anything down anyone's neck. Its my take on things and I don't expect my opinion to rule. Everyone is of course entitled to believe what they wish and what their own research tells them.

Anything can happen at any time but I think as things stand, with some further help from vanadium prices, a few months from now, things should be looking a whole lot brighter in Bushveld's world.

2/3
Now again its very hard to pinpoint true value, when the market is being influenced by Covid and inflationary pressures, both rising and receding, which is what happened immediately after 12th Jan in many resource related stocks and so was not solely related to BMN performance.

Whats is key is that V prices at that point, couldn't push t through that 23.9p point.

However, what has since to come to pass, is that BMN have announced that rise in production costs, which I personally see as being c. $3-4 a kg, when an allowance for Vanchem is included.

That's new and so there's bound to be some adjustment, which is perhaps why the SP is sitting (for me temporarily) closer to 19p than the 23.9p mark.

That said, what we also perhaps should do is factor in some of that increased Vanchem 100% owned production contribution (50% increase targeted in 2021), the closing of finance for expansion and balance sheet shoring up, plus its actual implementation and potential visible target of up to 6,000 mtV in 2022.

However, for me, whilst those influences are potentially high impact, BMN has got to first and foremost start to demonstrate, that they are beginning to happen. The first of which is the 35 day shutdown at Vametco in Q1 and the outcomes from it.

I feel strongly that BMN are indeed under promising and planning to over achieve in 2021 but until its demonstrated in the numbers, limited acknowledgement is going to come. So we are temporarily back to the comparison of the 2020/2021 forecasts and vanadium price progress.

Of course in between all of that, is the potential excitement of what the more meaningful contributions from energy storage demand, will/can change the market perception of BMN and its future valuation. There have been clear developments since Feb 2020 on that front.

Invinity ownership is measurable. The vanadium off take agreement not so but it really could come at any time, as Invinity continue their expansion.

Enerox is another big one but it needs to be explained to the market to have any influence. The mini grid and the electrolyte plant are coming but again, perhaps not a significant influence on 2021.

Additional vanadium rental agreements are for me a better focus, depending on who they are with and how large of course. To this can be attached the potential of significant contracts wins with Eskom, the S.A. government and/or the World Bank, be it direct or more likely as a part in a JV of sorts. These have the ability to be a big influence in 2021, when/if they come, which I feel sure something will but we cannot expect a market that remains blind to VRFBs, to apply value prior to these events but it is coming.

Right now my eyes are on vanadium prices and closing that gap, generated by the added C1 production cost profile.

Its really not going to take very much to achieve it, maybe $2-3 and a demonstration that the move higher is real.

1/3
I would be a little careful employing vanadium prices alone as the only barometer for attempting to establish where BMN value should currently stand.

I also recently conducted an exercise on the 2020 Q4/FY update, in comparison to this year and it centred around the peak resistance point on the price chart (23.9p close on 19th Feb 2020). Its significant because it was the point at which Covid began to influence matters and its the key resistance going back to the Nov 2020 Vanchem acquisition close out.

Two main things to consider.

2020 guidance in the 30th Jan update was ave. 4,130 mtV
2021 guidance in the 4th Feb update was ave. 4,225 mtV.

FeV prices in Feb 2020 peaked at ave. c. $29.50 per kg, both in China and Europe.
FeV prices right now are about the same, at c. $29-30 per kg, depending on where you shop.

So there's little difference to had.

Where the big difference exists, is in the production cost guidance.

In 2020 BMN only gave Vametco in their update and that C1 cost was ave. $17.45 per kg. Vanchem on 1 kiln was always going to be higher but as I say no fig. was given at the time.

In 2021, on a one third Vanchem total production basis, the ave. C1 production cost is $22.60 per kg. So on first glance we are talking a c. $5 jump in production costs. However, an allowance for Vanchem in 2020 has to be included, be it that Vanchem's influence back then was predicted to be c. 25% of total production (1,030 from 4,130 mtV) and not 33% as it is this year.

Things are made all the more complicated by the fact that an expanding Vanchem production profile, brings with it 100% ownership and not the 74% that Vametco carries.

This year Vanchem should produce c. 50% more than the 2020 guidance, so a sizeable positive.

However, on a very simply like for like basis, with all other influences temporarily placed to one side, including general market sentiment, we should still be looking for a c. $3-4 further rise in vanadium prices, to establish parity with what was expected in February 2020 and so why 23.9p was achieved.

There are however further complications because 19th Feb 2020, is around the time that Covid was recognised by the markets and the vast majority of stocks, pulled back significantly. Just take a look at SLP, a neighbour of BMN, who had enjoyed a great price run all the way up until 21st Feb 2020, only to see its share price more than half in the month that followed.

So there's an argument to be had that BMN could/would have pushed though that resistance if it weren't for Covid.

More recently BMN has once again tested that 23.9p level (11th Jan 2021) but failed to hold above it. This was for me mainly influenced by the reflation trade that came from the $900m US stimulus package, agreed in mid Dec 2020.

@Faramog I think Mogwhy is correct in that it is actually lower at c. 57.6%. Whats key is that its high quality concentrate that better suited to Vanchem because its much closer to the Mopachs ore.

I don't see a great deal of processing going on at Mokopone for a very long time and so its all about what its turned into at the currently 100% owned Vanchem facility and not what the actual ownership of the actual ore/concentrate is. That is after all where the real value is extracted.

@Faramog I agree it was a very good conference call but it is a shame that the best details, were those divulged through the Q&A session. In addition, the analysts could have asked so many more questions, including pushing FM on what this 2nd kiln did indeed mean for 2022 and beyond.

For all my theorising, I could well be wrong, which is why some salesmanship on the business side would have been welcomed. If BMN are indeed going to hit 6,000 mtV in 2022, which whether its the start or nearer the end (highly unlikely), is going to happen, then why not explain that.

Better still now that the 3 phase plan has clearly changed, hwy not update their presentation with caveated guidance on the expected path to 8,400 mtV?

I am delighted with the speed with which they are now going to expand production and the fatct that Vanchem/we, gets much more of the pie

At 6,000 mtV, BMN can likely make $60m in pre-tax profits from its 2 operations at just $35 per kg. So its big news but that doesn't mean that they couldn't improve communication and remove some of the guesswork, concerns over over promising or not.

As for Mokpone, i'm afraid its 64% owned.

@Bassguy That's a very good point. It was clear from FM's feedback in yesterday's webinar, that the extra mileage is a factor in the production cost at Vanchem.

He made the point that Vametco is the furthest deposit from Vanchem. This along with the running costs of such a large plant, that is only oerating at c. 25% capacity, adds to the urgency of getting the 2nd kiln on line and ramping up capacity, whatever the wider market demands.

Put very simply, with the finance secured, it makes far greater sense to expand more quickly, into expected greater demand, than to carry a greater production cost indefinitely.

The calculated business decision being that they may have to adjust capacity, if the demand isn't there but that they wouldn't be much worse off, than they are today. With the upside being that if the demand is there, as they expect, then there is far more to be made from it.

Vanchem simply cannot operate for very long without at least a 2nd kiln and once its on line, the overheads reduce and additional costs such as transport from Vametco etc etc, are easier to bear.

2/2
The other worthwhile component here is the Phase 2 description, as they stood in those FY 2019 accounts (page 44) but more importantly dated 23rd June 2020. So dates were set with Covid interruptions in mind.

Phase 2
"Phase 2: includes the refurbishment of the first idle kiln and the construction of a new ammonium metavanadate
plant. This phase will result in the plant achieving a production of 3,100 mtVp.a. after ramp-up. This phase is expected to
require a capital expenditure of ZAR355 million (circa US$21 million) and to be carried out in 2021 and 2022."

Post 30th Nov 2020, we now have a phase 1 that includes a kiln 3 refurbishment and no metavanadate
plant, which I am going to assume delivered the extra 500 mtV, to take production from the now reported 2,600 mtV to 3,100 mtV and was included in a bigger programme, that was still due to complete in 2022. Thus making a kiln refurb on its own, all the more possible by end of 2021, especially when we now know that BMN have been in negotiation for the Orion finance for some time and said refurbishment of Vanchem, could not start without it. So that means an allowance in the timings for the conclusion of the finance because its clear from the affects of Covid in June 2020, that BMN wasn't commencing this programme without those funds.

Finally, back to yesterday's RNS and Vanchem "2021 production guidance."
"Certain maintenance has been identified for kiln-1 at Vanchem, however, this work is not expected to require any downtime as it is planned to be conducted once kiln-3 has been refurbished and brought online."

It doesn't say "conducted whilst kiln 1 is being refurbished," which indicates that it is purely a maintenance shut down, hence my 1 month (theoretical) window.

Also, the message is clear that kiln 3 will be brought on line. So not a staged ramp up of the kiln and with that being the case, its a brave BMN that refurbishes a kiln capable of adding 1,500 mtV and doesn't ensure that the associated works are there to handle it all.

With all of that said, it doesn't really truly matter if the ramp up of kiln 3 or associated infrastructure, does take a few months more. What I am merely offering is an argument (which really only started once I heard FM talk about under promising and over achieving + their concerns about missing targets to the downside in 2021), that this programme is going to be delivered far quicker than expected, such that starting production will certainly be substantially higher.

Personally, with improvements expected at Vametco, i still think they will be very close to that 6,000 mtV.

1/2
Afternoon everyone and firstly thanks for the initial engagement on my theory.

@BenAlder
I fully appreciate where you are coming from on bottlenecks and there perhaps being a "phase of upgrades to realise the potential flow rate."

That is why I recognised the "Scoping of the refurbishment of other areas of the plant to cater for the kiln-3 refurbishment is in progress" section, included in yesterday's RNS.

However, if we revisit the BMN presentation following the Vanchem acquisition (May 2019), then we see that "Vanchem
historically produced in excess of 4,300 mtVp.a before it was forced into Business Rescue." (slide 12).

and from slide 8 ;

"The refurbishment programme comprises three phases designed to:
- Progressively bring the other 2 kilns and all associated production units into full production; and
- Invest in appropriate environmental management infrastructure."

Given these units were likely mothballed some 5 years ago, there is certainly going to be some additional refurbishment required, to ensure the full plant can support each kiln as it comes on line. However, from my understanding it won't be about bottlenecks because the kilns ran at a higher capacity prior to closing down but indeed possible.

In addition, page 44 of the 2019 FY report, describes the works involved in refurbishing Vanchem.

Firstly (original ) phase 1.
"Phase 1: critical refurbishment requirements, including extending the calcine dump facility, replacement of heavy moving equipment, upgrade of the electrical reticulation system and construction of a storm water treatment facility. This phase is expected to require a capital expenditure of ZAR234 million (circa US$14 million) and be carried out in 2020 and 2021, with production estimated at approximately 1,100 mtVp.a."

So at that point in time, no further production was/is expected from the critical refurbishment works. (Macanman point).

If the phase 1 critical works don't add further production (be it i recognise that 294 mtV in Q3 = FY 1,180 mtV but I see that as unsustainable and therefore unlikely to be included in conservative guidance), then to produce even the lower guidance of 1,400 mtV outcome (which again i reiterate, is the conservative lower end guidance and FM was clear with the analysts on yesterday, that they want to demonstrate they are trustworthy at hitting because they've missed every year to date on the downside), then both kilns have to be operating side by side, at full capacity, for at least 3 months of this year.

Again, knowing that BMN are conscious of under performing and disappointing the market (FM was very clear about this), its highly unlikely that they would give guidance, that involves running 2 kilns for 3 months, if there were bottleneck problems down the line.

http://www.bushveldminerals.com/wp-content/uploads/2019/05/Acquisition-of-the-Vanchem-Plant-SAJV-Business-and-Ivanti-Shares-1.pdf

PS if there is interest in debating this theory, then I will be around a little later to discuss. So if I don't answer straight away, the its for that reason.

2/2
There's an argument to be had that kiln 3 could be pushed beyond its advertised steady production rate for a few months, in order to accommodate a longer kiln 1 refurb. However, the clear message in yesterday's Q4 webinar was that even potential additional production, however possible to achieve, wasn't being added to the guidance. So would BMN really give a Vanchem guidance that involved their new kiln being pushed beyond its capacity, even for a short while. I don't believe so.

If anything they will have toned down the potential to be achieved and allowed some buffer.

All of which says to me several things.

1. The end of August date is a long stop date and should be beaten.
2. Whilst the update yesterday also talked about "Scoping of the refurbishment of other areas of the plant to cater for the kiln-3 refurbishment is in progress," which means other external plant, may influence the ability of both kilns to operate together, the point still stands, that both kilns have to be in operation, in 2021, in order to meet that 1,500 mtV "conservative" guidance.

If all of this is true and I really do welcome some thoughtful challenges on anything that i may have missed, then BMN is set to start 2022 with both kilns in full operation, be it that they are clearly still working through concentrate feed challenges, as they look to move from Mopachs ore to Vametco.

That means minimum 5,700 mtV at the start of 2022, with the strong possibility that works on the Vametco leeching plant, also bears additional fruit, even before the phase 3 refurb kicks off in H2 2021 and begins to add even more as 2022 unfolds.

That's a very big operation.

All of which is clearly supported by the Vametco resource update, which didn't appear yesterday for its own health but was designed to send the message that the resource is there, to handle that sort of output demand.

I hope i didn't make that too complicated. If not then over to you guys for testing.

https://webcasting.brrmedia.co.uk/broadcast/60117c87c4904929abd82a91/601c0c96e463db2612a609e9

1/2
Morning everyone,

Here's a little theory I have, which I thought was best suited to the BMN BB. Mainly shared for fun and not absolutely critical to the investment case but if analysis here holds up, then perhaps I'll share outside of here.

Vanchem in 2020 ; "12M 2020 production of 990 mtV, in line with 2020 guidance of 960 mtV to 1,100 mtV."

Thats what Vanchem is on 1 kiln, without further expansion, no more no less.

From yesterdays update ;

"2021 production guidance and capital expenditure

Production guidance of between 1,400 mtV and 1,500 mtV 2021, an increase of between 41 per cent and 52 per cent relative to 2020 production."

From the 30th Nov 2020 Orion finance update ;

"Refurbishment of the third kiln for modular production increase leading to 2,600mtv per annum."

Firstly, lets assume that the emphasis was placed on kiln 1 meeting its 1,100 mtV upper limitations, meaning that it is purely the 3rd kiln that delivers the additional c. 1,500 mtV of production (because kiln 1 refurb wan't mentioned at that time, as those 'critical works,' have always been described as regulatory in their necessity and not designed to add production).

We know that kiln 3 will be commissioned in H2 2021 and that process runs as follows ;
"Kiln-3 is expected to be commissioned in H2 2021, resulting in a modular production increase, subsequent to which, kiln-1 will be taken offline for refurbishment. Scoping of the refurbishment of other areas of the plant to cater for the kiln-3 refurbishment is in progress."

If kiln 1 is planned to run at normal output up until at least the end of H1, then Vanchem at that advertised rate (1,100 mtV FY), at maximum rate, produces 550 mtV in H1.

Thus leaving 950 mtV for H2.

To hit that 950 mtV fig, knowing that kiln 3 has a maximum output of 125 mtV per month (1,500/12 =), then both kilns have to complete the year in production.

That's because Kiln 3 at 6 x 125mtV = 750 mtV + 550 mtV = (just) 1,300 mtV.

Lets now go further down the rabbit hole.

A completion of the commissioning of kiln 3 by close of August and a 1 month shutdown on kiln 1, would deliver the following.

H1 = 550 mtV
Kiln 1 H2 = 5 x 92 mtV (1,100/12 =) = 458 mtV
Kiln 3 H2 full output from Sept = 4 x 125 mtV = 500 mtV

Total = 1,508 mtV

Almost bang on upper guidance.

For kiln 3 to replace kiln 1, it has to deliver full capacity or they fall short of that 1,500 mtV. Simple as that.

If kiln 1 is off line longer than 1 month, then they fall short of 1,500 mtV.

If kiln 3 comes on line later than end of August, then they fall short of 1,500 mtV.

Yes there is a guidance range but I would suspect this is more associated with standard production fluctuations on kiln 1 and not dates moving on kiln 3.

If the theory holds water, then what that says is that the plan is that kiln 3 hits the ground running in Sept at full capacity and that both kilns are back on line shortly afterwards.

2/2
This is why I believe the finance had to be achieved this year, so that a roll out plan could be instigated asap because 2022, isn't all that far away and BMN has made a commitment to these VRFB manufacturers, that they will/can expand into a market, based on two known constants ;

1. Security of supply
2. Stability of vanadium input costs

If BMN cannot keep up with the pace of those VRFB manufacturers and indeed their own value chain ambitions, then the model could begin to fail.

This in my opinion is why the finance from Orion was so important, why it was drawn down immediately and why Duferco and their 37m shares is a means to an end, that really does not matter in the grand scheme of things

Right now, BMN are carrying out the phase 1 works at Vanchem and the study on the 3rd phase expansion of Vametco.

Since the launch of the Orion funding, the goalposts have changed slightly, in that the following line was introduced ;

"Refurbishment of the third kiln for modular production increase leading to 2,600mtv per annum."

That for me demonstrates intent and would go a long way to covering that 2022 demand profile.

However, we should not forget that Vametco phase 3, whilst more expensive, delivers a de-bottlenecking approach with incremental increases in production.

The big advantage of Vanchem of course, is that its 100% owned and not 74% like Vametco. I had always thought they would need to establish a BEE partner there but there's been no mention of it to date, so clearly for us investors, the Vanchem route is the most preferable, particularly because of the variety it offers on the product front...

and as Mr Mojapelo said in the November 2020 Crux interview (14m 40s);

"you don't buy Vanchem at the price we bought it, to keep operating it as a single kiln,"

which certainly puts even more emphasis on that expansion to 2,600 mtV at Vanchem and reinforces just how important the whole finance deal truly was.

Combine that with the above 2 "hurdles" that must be overcome and we see that these plans are needed now, which is why I expect details on them in the Q4 FY update.

After so much time waiting and suffering through 2020, its easy to to forget where this ultimately is all heading towards.

The above demonstrates that BMN cannot afford to sit on its hands. It has more incentive than any Largo of this world, to commence expanding, ahead of any notable need for its future product. So one way or another its coming and whether they state 3-5 years or not, it'll need to happen, as the demand calls for it, which as we've seen from the latest TPP Squared analysis at Vanitec (+5,000 mtV deficit in 2021), could well be very immediate on the steel side of things.

The market won't price this in until it has a better view of it but that doesn't make it any more real. For me its clear, Next 2 years, BMN is heading to min. 6,000 mtV and all the trimmings that come with it.

1/2
Afternoon all,

In terms of the Duferco deal, I believe its important to appreciate it within the greater context of what BMN achieved, across the whole of 2020.

It was clearly a difficult year to achieve profitability, sales, deliveries, everything. That meant a lot of treading water for investors, as BMN adjusted its plans to ensure that they not only met their previous significant commitment to close out the Vanchem deal but also found room to set themselves up, for the attack on a plan that they had already set in motion, well before Covid came along and attempted to derail it.

Post the worst that Covid could throw at them, they have emerged with not only a stronger balance sheet but also their Duferco payments in tact and a war chest to drive to the sort of production, that can properly support what should be minimum 2 significant VRFB players (Invinity and Enerox), going forward.

The Cellcube 'about us' plan lays down the gauntlet at 30MW in 2022 and the introduction of their "going large scale" Gen 5 unit in 2023.

https://www.cellcube.com/about-us

That 30MW alone could be demanding c. +600 mtV of vanadium from BMN in 2022.

Right now Invinity are heading towards c. 60 MWh of production by 2022 (see slide 20), as a minimum. Adding another potential 300 mtV on the demand side.

https://invinity.com/wp-content/uploads/2020/12/Invinity-Corporate-Presentation-Nov20_WEB.pdf

So there is a path to 900 mtV of demand by 2022 and as it takes hold, its highly likely going to expand exponentially and BMN, with a much slower turn around, even when employing brownfield expansion, have to ensure that those vanadium products are there, when they are needed.

To that we need to add the electrolyte plant, which may or may not service Invinity/Enerox projects, depending on where they are won.

From the Invinity Placing RNS, dated 3rd Dec 2020 ;

"final assembly (including addition of electrolyte) is conducted in the jurisdiction best suited to the customer, being: Canada for North America; Scotland for Europe; and China for the rest of the world."

So whilst BMN may supply the vanadium, they may not go as far as shipping electrolyte, if other facilities are better placed to conduct that. What that means is potentially even greater demand for BMN vanadium, as up to 1,000 mtV of demand through the electrolyte plant, also starts to come on line in 2022.

Meaning we are talking a possible 1,900 mtV of battery led demand for BMN, starting in 2022.

This for me, is what Fortune Mojapelo talked about in the Nov 2020 Crux interview, when he said (9 mins 50s);

"when you've re-checked your investment thesis, when you've rechecked that your business case holds up, that you should have the courage of your convictions, to ensure that when the upturn comes, you are ready."

https://www.youtube.com/watch?v=fX4pIRRzB9Q

For those that perhaps may be a little less informed as to the workings and strength of Vanitec, here's the link to the current members list.

Interesting that Wogen are now members and Duferco are still there. Gives insight to what they should know about the industry opportunities out there today.

Despite the names, BMN are a big player in that court.

http://vanitec.org/about-vanitec/member-list-locator-map

Sorry I would just like to add something further.

The moves being made by Largo, is a clear signal that the next phase of this market is now starting. It is part of a wider awakening with which I would place the likes of the Orion deal. Wider market acceptance that a VRFB market is feasible.

This is why I spend time looking at the Invinity contract wins because it success by these sort of entities, that will light the way for the miners that feed them.

Proof of concept, demand and an expanding (skys the limit) market, can be the spark that everyone is waiting for and the foundations, the roots that BMN have planted, will make them the bigger of those two successes, when the general market understanding and appreciation is finally there.

Investors have got to get past that superficial V price fundamental and then things can really get going for BMN.

@Snott If I may I will challenge/adapt the analogy a tad.

My opinion is that Largo are in no way late for the party as you call it because the party hasn't even got going yet. BMN on the other hand are effectively part of the party organising committee.

It is this that the general market has yet to grasp. BMN is still seen as solely a market participant who would do well, if and when VRFBs gain sufficient success, which the market is still unclear on, so it chooses to continue to measure BMN by the V price, for now.

BMN key staff have chaired Vanitec during key years when energy storage was introduced to that group. Mikhail Nikomarov was (perhaps still is) Chairman of Vanitec’s Energy Storage Committee, which BMN helped drive the formation of.

Here's VanadiumCorps take on its importance, when they joined it back in 2017.

https://investorintel.com/markets/technology-metals/technology-metals-news/vanadiumcorp-joins-vanitec-energy-storage-committee-esc-provides-schematic-diagram-integrated-technologies/?print=pdf

As I say, BMN drove the formation of that committee but you would have to look very closely to see it.

Mr Nikomarov is also chairman of the S.A. Energy Storage Association, which is why he can share a webinar platform with Frederick Verdol, who leads the World Banks investment team for the Eskom BESS Project. Connected.

What does that say about insight into the Eskom BESS Project and opportunity there?

Vanitec members are encouraged to assist one another on VRFB uptake and partnership, so it would come of no surprise to hear that BMN have consulted for/with Largo because VRFB uptake is a game changer for all V market participants.

This is what 5 years of ground work delivers. Now its about the party itself, which as I say is in the very early stages still but the music is definitely on.