RE: Leasing contract of vanadium11 Jun 2019 23:20
hi knuttie - I would expect minerals to mine and produce the vanadium, price it as it sees fit, sell it for cash or more likely 30 day terms. I would expect energy to turn it into electrolyte ready to be shipped from south Africa. normally it would then be sold to a specialist leasing company or to a jv leasing entity jointly owned by energy and the leasing company and paid for in cash. if its a jv then energy and leasing company will share profits/losses in agreed split. whichever entity that now owns the electrolyte will then own it through to the final rental payment. this owner can then lease direct to an end user, or lease to a battery manufacturer who will sub lease to the end user. this is all negotiable. the lease can be designed so the electrolyte is recovered at end of term or the end user can buy it or the lease can be renewed for a further term. I would not be surprised if electrolyte is leased with 3 or 5 year rollovers rather than a straight 15/20 yr commitment. at the outset the leasing company would underwrite the credit risk of the manufacturer and the end user, seeking security such as government guarantees and collect rentals and then deal with rollovers, and end of term settlement. 3 other key documents are 1. independent valuation of the electrolyte by a qualified firm, 2.legal documents enabling entry to premises to check and to recover the electrolyte and 3 .adequate insurance of the asset all lease docs have 2 important clauses a) hell or high water which means rental must be paid no matter what, even if battery doesn't work for example and 2. a change of ownership clause which means no corporate changes without lessors agreement, takeovers etc.
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