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Failed to do so or the market failed to be there?

Larger producers are scaling back production right now due to pricing pressures.

Lithium prices at this point in time, are not supportive of widespread investment in new mines. Sorona is well advanced, well financed and is well inside the 1st quartile on the cost curve. That's attractive and will pay well when demand picks up but investment lags.

The Deutsche Lithium project looks like a solid future project but in this pricing environment, it is simply not worthy of pouring substantial time and resource into, be it from BCN or those 3rd party investors, who may or may not exist right now.

My simple view on this development and the plan as a whole, is that right now the German Lithium project is a distraction and a further $30m investment would be far too dilutive, for what would be gained.

The key to success here, front end, is Sonora and all resources and capital should be focused on getting its finance over the line and production started.

Once that has been achieved, then the German project can be revisited with funding that is far less punitive. There is plenty of money to be made here from simply driving Sorona through its 2 stages of development.

So I am delighted to see this investment parked, for now.

Shareholders in BMN could not have asked for a better result than that Ramaphosa has delivered tonight in his SONAS address. That the words now need to turn into actions is clear but the sheer fact he has even gone there, speaks volumes for the state Eskom and more importantly the economy, now find themselves.

Serious implications afoot for Eskom and more importantly Bushveld Minerals.

@Ronaldtrump The directors are not selling. Their holdings have been adjusted to take into account the new placing shares, which entered the market today.

This is something I would have thought you would be aware of, given your desire to focus on placings in general.

@Bella6532 We are likely several months away from any contract being awarded for the BESS project.

What I have been discussing is the tender release, which starts the whole ball officially rolling.

The previous timelines were circa 5 months from tender release to contract award.

In my opinion, Eskom will have to better that if they want the batteries for phase 1, all installed by 30th June 2021. Hence why i stated yesterday that the front end time frames will need to be shortened.

At present, the tender period is 6 weeks. I assume that the S.A. government and Eskom will not pass up on the chance to announce this tender, being that it is worth over ZAR 7 billion in value but I am not in their shoes.

If the timings don't fit very well, then I would not expect BMN to say a word about tendering until the bids are all in. No point giving one's game away just yet.

So an update on their involvement may not come in the Q1 update.

However, right now this is not about knowing those things. This is about the tender going live and BMN's chances and the format they intend approaching the tender with.

Whilst it is a UET battery at Eskom, there is no guarantee that they will be the technical partner on the tender.

The vast majority of PIs operating out there in the world, don't get the energy storage angle at all.

They get the vanadium market, they get the mining business and its expansion plans but not the fully integrated model.

If investors are well read on the pending energy storage revolution and they believe it and buy into it, then they are ahead of the curve. What they then unfortunately have to do is wait for the curve to catch up.

There was a day once when nobody believed BMN could/would buy Vametco. 3 years later everyone was talking about it because vanadium prices were booming and that was fairly easy for investors to work out.

Investors are only now starting to get their heads around the EV battery revolution. Even then there is a failure to appreciate what future demand will entails and to take early positions ahead of its arrival. Energy storage is still another rung or two further down the ladder.

Milestones like the Eskom BESS Project, will help change that.

If BMN win big on that BESS Project, then all discussions on price action, shortage of love, shorting itself, economic cycles, downturns, whatever, effectively go out of the window.

The BESS project is the key that opens the fully integrated platform chest and it is for me just too damn coincidental, that such a significant project, should arrive right on the doorstep of BMN, just as they are prepared enough to handle it.

I could of course be wrong. It could be that BMN bid and fail. Its just that I don't see that happening for all of the reasons posted earlier. They aren't just in with a chance, they are in the driving seat because they have been preparing for this opportunity in S.A, longer than anyone else out there, wishing to beat them to it.

My opinion only of course.

Key Takeaways ;

1. The wording points to 1 successful bidder taking on an EPC role for a rolling programme across 8 sites.

2. At $485m in concessional funding, the phase 1 project has a total price tag of ZAR 7 billion. That's a great piece of investment PR for a president that is so keen to demonstrate investment in S.A. is strong. Even if it does come from the World Bank and the IBRD.

3. A lithium-ion manufacturer has the ability to come in and build a value chain based on some S.A. minerals and the import of additional ones, such as Lithium. It is possible. However, why were BMN presenting full value chain investment to the ESP 2nd Stakeholder Consultation, that is directly in line with the wording employed by the World Bank, Eskom and the S.A. governing party, when Tesla, the only lithium-ion battery producer at that meeting, were merely talking about their footprint in Africa and a working example of what they can do?

4. The battery specification calls for 20 years minimum service guarantee and Eskom themselves point out that current Lithium-ion batteries cannot achieve such a life span. So how can they currently accept a lithium-ion battery bid?

5. BMN is partnered 50/50, bwith the IDC, the S.A. governments investment arm. Nobody else in the battery space currently is.

6. The VRFB is already cheaper than lithium-ion when judged on a levelised cost basis and when the battery is called upon to cycle more than once per day. The Eskom specification states that "total cost of ownership " and the fact that it will essentially be about the life cycle costs or levelised costs" are key to any bid being successful.

That's another perfect match. However, now with a June 2021 completion date, we have a potential BMN bid, that will involve not only S.A. mined vanadium but electrolyte as well. That then pulls down the front end costs of production and install, making the BMN offering highly likely, the most cost effective VRFB in the hat.

If the rental product can be deployed as well, then the pendulum swings even further their way.

They have to demonstrate that their experience is sufficient enough. They have to prove that they have what it takes to deliver on their winning bid.

I struggle with the notion that this contract could have just one winner and that it could be BMN but I am lacking evidence to tell me that it is set up in any other way.

Personally, it is not about the size of the cash prize but about achieving sufficient large scale mandates to drive the investment decision, to expand on their energy storage offering, through VRFB assembly, more electrolyte production and expedited mining and processing expansion. That is what I want and that is what BMN have indicated strongly will come, when they achieve those mandates.

Right now I am looking for reasons to not believe that the BESS Project is there's to lose because the implications of success are so very great.

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Now what does that say about how close the IDC are to this government and how much BMN have pulled their levers to help get this project done?

In the Q&A session Mr Moyo (around 50 mins 20s) says "if we complete the market evaluations early next year, you've got 6-9 months to deliver on the different packages, and we are hopeful that it can still be done."

I disagree but we will have to wait and see. I trust if BE are successful then any extension of time will only help them with their localised procurement options but would trust that it would not be detrimental to their future chances to tender.

Then at 51 mins he talks about safety. "I am worried about safety because some technologies (lithium-ion) are facing problems around the world, and I would like to learn from that and not repeat those mistakes."

That's an easy one. Simply don't allow a lithium-ion bid to win.

In conclusion, i have jumped around a bit as the webinar encouraged me to do so but despite the comment about the "award to successful bidder for the first site," everything else including the tight deadlines post market evaluation awards, points towards one EPC delivering on the whole 200MW in phase 1.

Furthermore, there is certainly plenty tom be encouraged about in terms of a VRFB solution winning the day here, with enough headwinds clearly already in place for lithium-ion bids and that's before it has to start competing with a localised supply chain in Bushveld Energy.

Then we have the added advantages of the IDC backing and partnering with BE, which when all brought together, points to a very strong case for BE.

The only slight concern i have is the experience of building these projects but that is as I say, countered by the IDCs support, countered by BE's clear costs competitiveness, and supported by UET's experience in the market.

I have had a lot of belief in what Bushveld Energy can achieve with this project ever since I discovered that it existed last year. This update and the words from both Mr Moyo and Mr Verdol, not only reinforce that but help drive that belief home.

This project is not the only battery storage opportunity out there, nor is it absolutely necessary for BE to build projects in order to succeed. It is however, the very best opportunity they could hope to cement their place in this industry and to drive their fully integrated ambitions.

Its local and they have very senior people in very high places, helping them towards their goal.

I like BMN the vanadium miner but I am here for BMN the fully integrated vanadium energy storage play, and this project as far as I can see. Is their golden ticket to that club, and its really not very far away now.

(2 of 3)

(20 mins onwards)

Mr Moyo goes on to talk about the minimum performance guarantee needing to be at least 20 years.

Slide 20 of the webinar discusses the performance benefits of VRFBs and Lithium-ion, with the Lithium-ion battery being noted as having a calendar life of 3-10 years, and the VRFB circa 20-25 years. If a performance guarantee is given and it fails then Eskom is currently considering financial penalties for this.

I struggle to see right now how a lithium-ion battery solution can give that sort of guarantee and remain at a competitive advantage to a VRFB, let alone a locally supplied one with locally manufactured electrolyte in it. Although 200MW of batteries require a lot more electrolyte than the current scope for the East London plant can deliver.

Now up until the 23 mins mark it looks very much like Eskom are looking for 1 bidder to take all 200MW in a staggered approach over 8 sites.

However, the next slide (23 mins) states "contract award to successful bidder for the first site," which counters that view point at least a little.

From what I can see BE's biggest hinderance could be its experience but with UET and the IDC on board, they should be able to alleviate this concern considerably.

Frederick Verdol from the World Bank.

(35 mins) He talks about the opportunity that South Africa has to start a new energy storage industry and that ; "South Africa has a lot of potential in terms of minerals, and some potential in terms of mineralisation."

Furthermore, "so definitely, the different entities in the government saw an interest in looking at the battery storage, not only as a technology of change but also a new market for South Africa."

Practically the same words fell out of Bertie Styrdom's mouth back in 2017 and were used by Christo Fourie in his comments in the BMN RNS dated 13th June 2016, when he said ;

"The IDC and Bushveld Energy share a common vision for the development of a new industry that will ultimately benefit all South Africans through increased local minerals beneficiation, the creation of jobs across the value chain, the increased availability of power and the overall stimulation of growth in the economy."

As I keep saying the IDCis at the heart of this and is side by side with Bushveld Energy going into this tender.

However, it gets even better on the next slide.

(37 mins onwards) He refers to comments made by the president Ramaphosa "where he basically said the minerals are there, the labour force is there, the market is there, so lets do all the value chain integration in South Africa."

I never heard Ramaphosa say that but when the man from the World Bank says its true, and he's driving a large scale battery project of this scale, then I believe him.

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Having again reviewed the recent articles on the Eskom BESS project, I began to doubt that the authors were truly understanding what they had witnessed. So I decided to go in search of the source.

Below is the webinar from which those articles were actually written.

https://atainsights.com/recording-and-presentations-new-tender-large-scale-battery-storage-opportunity-in-south-africa/

Key takeaways for me (12 mins 30s) BESS Scope calls for the bidder to provide a solution that not only meets the use case of Eskom but most importantly can "integrate with Eskom control and monitor infrastructure."

The BE battery at Rosherville has and is continuing to do that as we speak. Only the BYD China battery is doing the same right now.

At around 15 mins 10s Prince Moyo states that "the EPC or supplier as we call them" and then goes on to talk about their responsibilities under the project.

On the next slide Prince Moyo confirms that Phase 2 site selection and bid documents, will be completed within the next 2 months.

(17 mins 30s onwards) After the tender process will be amongst other things "the selection of the successful bidder."

Phase 1 is 200MW split into 4 packages over 8 sites and the bid documents are ready to be issued subject to "1 or 2 approvals." This could be staggered but that isn't decided yet.

He then gives some indication as to the requirements for 20% local content. From what he says about the use of local contractors, local components, such as transformers, steel etc, it does not look too over bearing for those that bid. That said, if a company can demonstrate a far greater amount of local content, then that will clearly assist their bid because the requirement is minimum 20% not just 20%.

(19 mins onwards) On the next slide Mr Moyo talks about the evaluation of the bids.

The key elements for me here is the "total cost of ownership " and the fact that it will essentially be about the life cycle costs or levelised costs, which BE and Mr Nikomarov in particular, are always so keen to stress upon. To witness the significance of this decision by Eskom, I would encourage a review of slide 15 of the Energy Storage Webinar 101.

By ensuring that the levelised costs will be considered, the VRFB becomes more advantageous, and that's before we start talking about cycles per day.

Having now established that the Eskom BESS Project has gained full ministerial approval, it is an appropriate time to revisit the Eskom Webinar that focused on the tender.

Available here but lacking sound for some unknown reason.

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

I will now follow this post up with some key notes I posted on this BB, back on 3rd Oct 2019.

@horsetrader2 I too was concerned that supply issues might affect the current run of planned installations and in particular the Mandaly Bay project, which based on its revenue share concept, is worth so much more than a standard 36 seat partnership install.

So I was pleased to see IMMO tweeting on this last night and strongly indicating that all is well.

My investigations to date tell me that IMMO employ the HTC Vive headsets, which are produced in Taiwan, a country that has only had 18 confirmed Coronavirus cases to date. I do have reservations over components parts but HTC are big and one would assume that they were/are well stocked.

The reality is IMMO is no Apple. Their demand is fairly light. They will have required circa 100 headsets for the next phase of installs through to end of Q1, which really shouldn't be a major burden on HTC.

Its one to monitor along with the spread of the virus outside China, which is minimal. warmer weather should remove any major concerns of further outbreaks in the Northern hemisphere, which is where the bulk of IMMO operations are/will be installed.

There will always be market caution and it will normally play out on the safe side, but the confirmation of Mandalay Bay going live in March, prior to the Easter holidays, is for me most significant.

https://twitter.com/Immotion_Group/status/1227262849258528768?s=20

It is always prudent to continually assess why and what for, a company raises capital in the markets.

To simply list 3 fund raises in 12 months as a core concerns without assessing the progress made by the company in the same period, is for me simply wrong.

When IMMO conducted a placing on 5th Feb 2019, they also issued a trading update. There they reported the following ;

"As at 31 December 2018, the Group had 106 ImmotionVR headsets (10 locations in the UK) and 46 Concession headsets in operation at 7 locations"

When they issued the latest trading update and proposed placing, they had this to say ;

"The Company ended 2019 with 302 installed headsets of which 117 were ImmotionVR ("IVR") and 185 were Partners."

"We have sight of an installed base of 431 headsets by the end of Q1 2020 (including our pipeline and Mandalay Bay). This positions us well to achieve positive monthly EBITDA by or around the end of Q1, based on our forecasted costs base."

Lastly and in my opinion most importantly ;

"We expect this additional capital expenditure to enable us to build an installed base of circa 625 headsets, at which stage we believe the business should be able to fund further capital expenditure from both operational cash flow as well as debt facilities, which we believe should become available.

So we have a situation where by this company has indeed raised 3 times in 12 months but those 3 raises will deliver a minimum 180% (431) increase in installed headsets, with line of sight to a total 310% (625) increase in installations.

I take the point regarding perceived "high running costs of the company" but right now the growth is substantial enough to warrant higher front end spending. Furthermore, the company now has a target that they say will enable them to be self sustaining.

As far as I can see, there is nothing in their approach to date that would lead me to feel that they are not trustworthy, so the target is there, the cash is there, so it is about space to breathe in order to execute.

If they hit 625 headsets and are able to demonstrate they are self sustainable, then the valuation is very cheap at these levels.

What doesn't break you makes you stronger. Being a long term investor is a commitment and often comes with a lot of questioning and self doubt.

My view is if one wants to make a lot of money in this game, then it really should come with a lot of pain. Money shouldn't be made too easy. In the long run its not healthy.

Staring at the daily movements of the stock and its markets, day in day out, also doesn't help. In my humble opinion.

BMN is in good hands and has come a very long way in its short life.

They have gone from just owning a load of dirt to being one of the largest vanadium producers in the world. They aren't a small child anymore. They have grown up and investors need to come to terms with that fact.

That all said, the BESS Project and its potential outcomes, is very exciting prospect and potential game changing moment in this story.

@Jimbo66 In a word No.

BMN have been building up to this moment ever since they introduced BE back in 2016. I suspect it goes back even further than that.

They partnered with the IDC for a reason and it wasn't simply because they wanted to give 50% of their ideas and efforts away, for next to nothing. The move was tactical. They have taken the very core of the desire that pushes back against entrepreneurs in S.A. and used it to open up the necessary doors, to bring this opportunity to the table.

As far as I am concerned, the Eskom BESS Project exists because BMN and their partners made it happen.

So the idea that they need Tesla to make this happen is for me completely wrong.

BMN are in the driving seat here and the OEMs of the world know it, and will be fighting hard to be a part of this tender.

Another interesting quote from the following article ;

"“We do not have a specific date regarding when the tender will be released but it will be after Eskom has received all statutory approvals from authorities and support from our funding partners. This is imminent,” it said."

https://businesstech.co.za/news/energy/343147/eskom-is-working-on-a-massive-new-battery-project-heres-what-you-need-to-know/

From the latest World Bank report ;

"the delay in obtaining Government’s approval for the Public Financial Management Act (PFMA), required to tender the first phase of the BSP, have forced the Borrower to request yet another extension of the project to be able to fulfil the PDO, and move the project out of a Moderately Unsatisfactory (MU) rating for Implementation Progress (IP), before project’s closing."

"The request for PFMA approval was submitted by Eskom to the government in April 2019 and was approved by Minister of Finance on August 7, 2019, and on November 21, 2019 by the DPE (Eskom’s line ministry) for Phase I of the program which amounts to R7.2 billion (˜ US$485 million)."

The process has clearly taken a lot longer than planned for but it is now clear that the hold ups have now been removed.

As I said earlier, the World Bank are being most accommodating with changes to the financial make up of the project. They also do not mention any requirements from their side that need to be closed out, prior to the project moving ahead.

So it is essentially now down to Eskom hitting the send button, which could come any day now.

Try this ;

http://documents.worldbank.org/curated/en/945661577445675366/pdf/Disclosable-Restructuring-Paper-Eskom-Investment-Support-Project-P116410.pdf

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However, as I have demonstrated time and time again, whilst BMN will no doubt have heavy competition for this project, I cannot see how any other VRFB based tender, can beat what BMN will put forward. Be it price, local content, or method based.

If they decide to bring the vanadium rental model to the table, then its game over completely, for everyone.

So as far as I see, BMN is the VRFB contender for this project. Then its about "bids will be evaluated on a total cost of ownership basis. Eskom is also looking for performance guarantees over 20 years and will be imposing penalties for noncompliance."

According to the Energy Storage 101 webinar, the lithium-ion battery has a calendar life of 3-10 years. If still true, how is a lithium-ion battery going to meet the tender specification?

How are lithium-ion batteries tendering for this particular project, which is now upon us, meet even the 20% local content requirement?

However, before we even get to that, BMN has existing local industry, local beneficiation, a test battery at Eskom, a vanadium rental product, an electrolyte plant under construction, local vanadium availability and the IDC as its partner.

They say the only things in life that are certain are death and taxes. Well BMN#s involvement in this BESS project cannot be all that far behind.

Securing that opens up BMN's plans for a local fully integrated VRFB industry, which is for me the real prize in all of this and today's report just brought the whole thing a lot closer to being a reality.

(1 of 2)

This development takes away what was for me an immediate threat, that Eskom would try to rush this project through, by keeping to the previous deadline.

Furthermore, it demonstrates the World Bank and its consortium are willing to extend the project and the finance remains in place. Infact the document very much reads like the Wolrd Bank is a very willing and flexible finance partner.

" Phase I will be financed with the IBRD loan (US$245 million) and Eskom is considering financing the remaining works of this phase with the CTF loan (ERSP P122329)."

That's not to say that there might not be a need to revisit the timelines once more, because right now they don't fit into the same deadlines, as the last restructuring paper set out.

It truly remains to be seen, how any successful bidder (and the wording is bidder and not bidders) will deliver 200MW of battery installations in what will likely be just 9-10 months.

However, that isn't what is important. What is important is that with this revised deadline, the electrolyte plant is in play. That's not to say that BMN can deliver all of this tender alone or that the electrolyte plant can get anywhere near it on its own. The important thing is that it will be involved, which strengthens the local content case and helps cement the business case for awarding a large Eskom battery mandate to Bushveld Minerals.

As i said earlier today, it isn't how BMN start the roll out, it is how they finish it. Plus thanks to the 21st Jan ESP presentation, we now know that BMN have an external source, who can produce electrolyte from BMN vanadium. What that does is maintain a healthy portion of local content , even when pushing as far (yes we dare dream) 800MWh of batteries in less than a year.

I am still reluctant to believe that BMN could land the whole $485m contract. However, Price Moyo was quoted in the last article as saying ;

"The winning bidder will be expected to verify Eskom’s technical studies and provide detailed designs before implementing the battery plant"

So it is right there in black and white.

My personal view is that BMN will come at this project as a developer in partnership with the IDC, whose presence alone will provide extra validity to their tender.

Any one of all the OEMs currently connected to BMN, in some shape or other, will be falling over each other to be involved in this project. It is one of the biggest projects ever to be announced and it is being backed by concessional finance, that is not basing its decision on profit or value for money. This is about testing the technology and supporting a fledgling industry, to help it grow and expand.

Every VRFB manufacturer on the planet needs a project like this one right now.