Member Info for Daisan

People should note the 'inc VAT' here. Chinese standard rate of VAT is 16%.

I think that everyone is agreed on Lemur - it must be separated from the Vanadium side of the business. Whilst I think that this is more likely to happen as a spin off in the same way as Afritin, I for one would much rather this be a trade sale, even if 'full value' (whatever that is or even means) is not achieved. Despite what BMN are clearly earning at the moment, I suspect that their plans are a lot larger than is currently envisaged (I recall suggesting that BMN will be producing between 20k and 50k tonnes of Vanadium per annum in a few years to support the VRFB industry). As such, cash from a trade sale would be well deployed and should offset any more dilution required to achieve the strategic goals.

Its been bearish for months!

fatbanker,

While logically that sounds reasonable, in reality defining full value is down to individuals. The market is a collection of individuals and whilst there is a difference of valuation there will always be a trading environment. Given the current price of Vanadium, production capacity and costs, if we project these as constant for 2019 (they won't be) then the implied PE ratio of approximately 2 would suggest that we are some way off anyone's definition of full value.

Chartist2,

That is actually the most useful thing that you have ever posted. I have finally succumbed. I hate to filter people as it tends to be a process of bias reinforcement but in your case it would merely be a bias against wasting my time by reading your posts.

Fatbanker, I agree that a dividend would be enormously well received but I still don't believe that the re-rate would bring it to a value commensurate with the performance of the company. That will take a long time in my opinion as the market adjusts to a 'new paradigm' for Vanadium.

Well, it just goes to show what happens when you have a significant holder who doesn't care about the performance of the company. They will sell regardless of that performance. Once they have gone we can look to move ahead again but I wouldn't expect it to reach a value that is commensurate with potential earnings for quite some time as people will be selling all the way up.

I think that people also need to bear in mind that some of the prices quoted in China are tax paid (tax, I believe, is 16%).

Errm. That's a lot of Vanadium by the end of 2019. I confess that I always get this mixed up (I blame age and infirmity) but doesn't 800MWh equate to 4400 tonnes of contained Vanadium? And isn't the new electrolyte plant only planning to produce 200MWh per annum initially? Something has got to happen to step change production.

Chartist2,

I was just correcting your factual error where you clearly link the departure of Steve Hughes with the share price going down from 13p. Since the share price was not 13p when he left, that would be difficult to be the case.

You just refuse to take responsibility for your own transactions and blame everybody else for your own failings and that of your poor TA. It is time for you to grow up and accept that responsibility.

Just to correct non factual statements made by a member of this board who refuses to take responsibility for their own transactions. Steve Hughes resigned as VP when the share price was 10.5p where it remained relatively stable until the non-news of demonstrations and the, more significant, news of a delay to the bfs.

Applying a 4-6 week delay to pricing has proved accurate for the last few quarters. The long term deals in the industry largely appear to be spot price minus a few percent. For BMN this few percent is offset by the Nitrovan premium. Or so it appears.

BMN has already matched SOLG and is likely to outperform it from here on. Its resource is already bigger than SOLG, is producing the best performing metal currently and is massively profitable. Whilst ARS can't compete with that at the moment, I think that copper will certainly have its day and ARS will prove that its assets are considerably larger than is currently visible.

You don't.

Is this being run by the chuckle brothers now? UFO? Alien Metals? Good grief.

To be honest, if this had been trading over the last few months the share price would have been hammered along with the crypto market (and, indeed, gold until the last couple of weeks). I believe that 2019 is going to be very positive for crypto and gold so the timing could be pretty good. Of course, I could be wrong!

Tyfoon,

I believe that the demand from VRFBs will be much greater than that. My calculations suggest that it will be considerably more than 30% should the suggested plans come to fruition. China alone should be accounting for that with their plans. The potential drag is from supply not demand.

Leading on from this, I certainly believe that the way forward for BMN is to have a very large processing capability which I think will be in the region of 20-50k tonnes of contained Vanadium. I think that this is what FM and co. are targeting and the only way of achieving this is on the back of VRFB take up.

Without such a take up the Vanadium market will remain a peak and trough commodity. Whilst this time around the peak is likely to be sustained for some time owing to factors covered here many times, without the long term huge demand coming from VRFBs the inevitable wave of supply will cut the price back drastically and we start all over again. Small markets tend to be very volatile.

A strong VRFB market will multiply the demand for Vanadium. I have seen strong increases in demand projected on the back of VRFBs but in my opinion, if they take off then the demand will grow much larger than forecast. Commensurate with this, the Vanadium market will ultimately become more stable and less prone to price fluctuations. In such an environment BMN could easily be producing the volumes indicated above.

I believe that BMN has a key role not just in responding to this market but actually driving it. Supporting VRFB take up verbally is one thing but they will need to be prepared to back this with actual production. In the short term they may need to take some hit in terms of profitability to support the growth but this will be for a huge, long term benefit from a large, stable profit stream.

Well, that is the theory! Of course, many factors can influence this but I believe that this is the ultimate goal.

I confess that I have not entered but I do think that there is at least a chance that this will be much sooner than most anticipate.

Rather than work with current and future PE ratios I decided to flip it on its head and look at the price of FeV required to deliver annualised net profits to BMN equivalent to the current market capitalisation (which I have pegged around £300m) assuming that all in costs are around $30/kg. This works out as:

At 3750 tonnes per annum - $225.2/kg
At 5000 tonnes per annum - $176.4/kg
At 10000 tonnes per annum - $103.2/kg
At 20000 tonnes per annum - $66.6/kg

$225 looks a little spicy although I certainly wouldn't rule out it peaking at this. I believe that $176 will almost certainly be hit at some point but unlikely to be sustained. However, $103 has obviously already been exceeded and I could see this as being sustainable even if it is somewhat above what I expect the long term price to be. $66, however, is exactly in the sweet spot of where I believe prices may well end up.

20k tonnes can easily be supported by Bushveld's resource base (in fact, it could be supported by Mokopane alone) but we will need a credible processing capability to get to that level, not to mention the fact that VRFBs will need to be adopted to create the demand.

For simplicity I have assumed that 100% of Bushveld's production is targeted at FeV. Clearly the objective is to produce V2O5/electrolyte but the complexity was too great for my simple mind!