Member Info for jjhbev

Thank you rgbuk

Your guidance made me have a search for “Petalite Pricing” and that threw up a couple of things.

a) In recent times Petalite has sold at a premium to Spodumene – BUT the info I have seen in my search predated the dramatic 2022 upsurge in Spodumene pricing. Given the scale of changes (Allkem doubling it's Spodumene price guidance between March 2022 Quarter and June 2022 Quarter) you may well be right that Petalite is now priced at a big discount to Spodumene.
b) My search threw up the name of Prospect Resources. This is an ASX listed company which was developing a project in Zimbabwe which it has just sold at a pre-production stage to (inevitably) a Chinese outfit. The info, including SP impact, can be found on their website:-

ASX Announcements | Prospect Resources Limited

Whether there is any particular comparison to ATM’s potential Lithium is an open question – at least until tomorrow! – but from my superficial review figures look potentially bonkers…in a good way!!!

DYOR
Best wishes

Even though the sp has run up very strongly in the past days I am surprised that this announcement has not resulted in that continuing.

Personally, I had already built up my position here based upon what has been happening with Lithium pricing. In particular the announcement by Allkem of pricing for the current quarter plus commentary from Pilbara Minerals about pricing and the ongoing/future demand/supply imbalance. The link to the Allkem announcement is shown below and one can see that they are quoting $5k per ton for Spodumene and $35k per ton for Lithium Carbonate.

457lbj960frdn8.pdf (asx.com.au)

There is obviously a lot I/we will want to find out about tomorrow – e.g. Timelines, costs, quality of product/comparability to Spodumene, methodology for market testing of product by potential purchasers, possibility of offtake agreement etc. etc. etc.

Up until today I had no idea about the potential scale of production but was hopeful that we might be looking at 10kt to 20kt pa as a possible early production number (i.e. within 12-18 mths). At that level we might have been looking at $20m to $45m operating profit pa assuming we could sell for 50% of the latest price quoted by Allkem for their product. Applying a term often used – this would be both “transformative” and would really make Stage 2 funding viable. The possible financial impact of moving towards 60kt pa in a reasonably short timeframe is hard to imagine.

However –

We still do not know the detail. It may well be that our product will be priced completely differently to the established Australian Spodumene. That said, they do refer to the 60kt of product being equivalent to 6kt LCE. Equally reference is made to Revenue increasing to more than $100m. Whilst this is “transformative” it seems low if we actually will have a Lithium product comparable to Spodumene.

My comments here and the numbers have focused only on the Lithium. Of course, the bedrock has been and currently is the Tin. As pointed out by OUFC, the potential impact on tin production – and profits – to be achieved by the uplift in production through ore sorting is enough on its own to justify a major sp uplift IMO.

As ever, DYOR – and join in tomorrow’s presentation and ask lots of questions!!!

Best wishes.

Good afternoon All.

MrO, I agree with your interpretation of the dividend

The policy as laid out for 2022 onwards will see dividends payable following publication of the mid-year and full year figures. Based on the dates figures were released in 2021 that would mean results/dividends declared in August & March and dividends paid in, perhaps, June & April/May.

My reading of today’s RNS – which may be wrong! – is that this dividend is for "just" 9 mths and will be followed up with a dividend for the fourth quarter to be declared with the Full Year results in March next year.

I believe that interpretation is consistent with the RNS wording. I also believe that it is logical in that the interim dividend for 2022 will not be paid until August 2022 – some 10 months from now. That is an extremely long interval particularly given how quickly this dividend is being declared and paid. I therefore believe that a final dividend for the current year will be declared with the Full Year results.

I also believe that the amount of the current dividend is consistent with the financial figures seen for the half-year plus a guesstimate for the 3rd quarter (admittedly the dividend would be at the top end of the guidance range).

If the above is correct, we could be looking at a final dividend of perhaps 9p+. This would of course be dependent on the performance for the 4th quarter and the situation as at next March. However, the copper price thus far has been much higher than the first 9 mths and, even with increased costs (energy etc), looks good.

All the above is just my reading of things so, as always, DYOR!

ATB

Hi Ragnar

As you say, every investment – particularly in South Africa – involves risk and I fully acknowledge what you say on the political risk and Eskom problems. Indeed, on a personal basis, we will all be factoring in these issues when considering our personal investments. One additional cost/risk that I would add is that associated with the maintenance of any smelting/refining operation. As we know from the problems we have seen with smelters, this is not an activity without challenges.

As regards your indicative figures, I have no idea what the capex required will be – but it will certainly be a serious level of investment. $100m+ seems not unreasonable to me. (but thanks for your post Catsick)

As regards the $75m operating cost guesstimate, that seems to me to be extremely high.

If we look at what Thar will have paid over the past couple of years – assuming a 15% cost – we can see (using figures in Thar annual results presentation for production and PGM basket price):-

FY2019 = 140koz x $1.1k x 15% = $23m

FY2020 = 142koz x $1.7k x 15% = $36m

I cannot imagine that Impala or whoever have been providing their services at a loss. In fact, I assume that they made a significant profit from the FY2020 numbers if not the FY2019 numbers. I acknowledge that I have not seen a breakdown in Impala’s financials which itemise this – I am sure that they do not disclose such information on commercial grounds.

So, even allowing for higher throughput and inflation, I really think that $75m is way way too high.

For comparison, apportioning $75m over say 200koz of throughput at the 3rd party charging rate of 15% equates to a basket price of $2.5k per oz. So, Thar would only be “better off” bringing the refining in house if the basket price remains above $2.5k – with that figure needing to increase over time because of inflation etc.

Thar have clearly stated that they are intending to bring refining in-house to “gain additional margin”. They must believe that they can do this at a cost lower than the 3rd party cost and they started this project when basket prices were sub $1.7k.

Personally, I would hope that the op cost would be sub$50m. Obviously, that is purely a wish/guess but it is one that I think fits in with historical refining charge levels (increased for inflation) and would justify why Thar have been looking to do this. I trust that Thar will start to provide some numbers as they move this project forwards.

ATB

Good morning all

Just a minor contribution to the discussion on refining etc.

First of all, a declaration – I hold both Thar & SLP (I also own JLP – even though I can’t stand the Chairman!). I now hold more Thar than SLP having “rotated” some SLP into Thar over the past weeks given the almost 1:1 price ratio. I believe both Thar and SLP are undervalued.

As regards refining costs they are indeed painful e.g. For Thar 160koz at say $3.5k basket price x 15% = $84m Ouch!!!! (and even worse at 180koz & 200koz!)
However, going back to only 2019 the basket price was something like only $1.3k. Neither Thar nor SLP then had the financial resources to develop their own smelting/refining capabilities. Equally, such an investment even if possible, would not have been justified – particularly for SLV which does not have an assured long term production outlook.

Thar are now taking the steps to bring the refining in-house. This is something that takes considerable time (just like Thar’s VULCAN project and SLP’s ECHO project). Personally, I was pleased to hear in yesterday’s presentation that the timeline for Thar developing in-house refining is now as short as 18mths.

Turning to SLP’s refining costs, it is somewhat hard to get a clear handle on the % scale because of the way SLP recognizes (see Notes 1 at the bottom of the figures table in the latest SLP quarterly update).
However, based on the figures in that update, my take of the scale of costs is :-

Average basket invoice price (as per Note 1) was $2.9k per oz.
Production on 4E basis was 18.3koz
Therefore gross revenue = $53m

4E Revenue as per table = $42.4m (excluding $1.25m of sales adjustment from prior period)

Actual/Gross Revenue % ratio = 80%
Implied Refining Charge = 20%

For the avoidance of doubt, I am not stating categorically that SLP are charged 20%. I am simply presenting the numbers as I see them. I do however feel that it is highly unlikely that SLP will be paying a lower % than Thar (15% seems to be regarded as an industry rule of thumb).

In addition, I think that for SLP – because of their uncertain remaining life of production – it does not IMO make sense to commit to developing in-house refining which could take 2+ years to achieve. Hopefully they can however achieve better – perhaps “capped” – refining terms.

Hi all

As per Millsm post on the pages in the Global Offering here are a few numbers which should be of interest.

In 2019 we saw the following numbers for CNEL (all in RMB millions)

Revenue 398
Gross Profit 110
Op Profit 74
Profit before Tax 72.5
Net Profit 60

Outstanding Orders at the end of 2019 were 535m Rmb

From the Global Offering we have the following for 2020

Revenue for first 4 months 136m Rmb
Outstanding Orders at end April 489m Rmb
(These figures re Outstanding Orders are net of 46m Rmb of suspended contracts)

As per pages 5&6 of the Offering, CNEL expect most if not all of the revenue from the outstanding orders to occur in 2020. If that were to be achieved then Revenue for 2020 would be somewhere of the order of 620m Rmb (i.e. approx. 55% up on 2019). One can then project one’s own estimate of profit based on the higher level of turnover (n.b. The company states that 2020 profits will be negatively affected by the costs of the floatation [see pg 286] – but this, IMO, should be classed as “exceptional”).

As regards future business (Pg 293):-

680m Rmb of potential business is covered by Letters of Intent
418m Rmb of potential business is under negotiation/quotation (the largest being 260m Rmb with "Potential Customer D" which is an existing contract customer of CNEL)

IF all of this business were to be achieved it could mean that CNEL would have an order book going into 2021 in excess of 1000m Rmb. However, a significant amount of this business – focusing on that covered by LOI – is indicated to start in Q3/Q4 and therefore should result in some income being recorded in 2020. So, perhaps, Revenue for 2020 could be as much as 700m Rmb with the year end order book being 900m+ Rmb???

One caveat that I would have with all the above is that, even if all of the above comes to pass, the bulk of the increased profitability will be seen in H2 2020 rather than H1.

A final comment/personal opinion is that I would expect the IPO to be priced at the lower end of the price range. This would make the underwriters job easier/safer and would also increase the potential for the IPO to be a “success” in that the sp could then easily rise on launch by at least 10-20%+

Perhaps a lot of upside over the next 12 months????

No advice intended – DYOR

All the best

Squirty - You beat me to it!!! ;-)

As LTHs' will know I very rarely post & generally have no interest in the dismal antics of some who try to disrupt a balanced discussion. Challenging of exuberance and ramping is not a problem but some of the blatant and provocatively challenging negative spin is.

It becomes truly pathetic when it appears that such posters cannot even do basic maths.

As regards 2019 guidance and the sustainability of the March level of production the simple numbers in round figures are:-

Q1 Production = 650 tons

Assume a further 9 months at the March level of production = 9 x 270 = 2430 tons

Deduct 24 days at 270 tons per month = Pro rata = Minus 215 tons

Total of above = 2,865 tons

Quoting the RNS = "Vametco production guidance of 2,800 mtV to 2,900 mtV is expected for the 2019 calendar year"

If you are going to sling around challenges at least show that you can add up and subtract!

Have a nice day!!!

Yesterday EVRAZ produced their Q1 trading update which included the following on Vanadium:-

Sales of vanadium products fell by 5.3% QoQ, mainly due to a sharp decline of demand from the automotive industry and high stock levels at steel makers, accumulated during a period of sharp FeV price increase.

So, on the one hand one can imagine that the current pricing reflects the distortions arising from a stocking surge through Q4 2018 and will correct upwards as a more balanced position returns. On the other hand, given that we are told that there is and has been a structural supply deficit throughout the whole of last year, where/how did that excess stock come from?

So, Zenobe Energy. Ever heard of them – nah, me neither.

Or, more accurately, I hadn’t heard of them until late last year when talking with a City based friend about BMN he mentioned Zenobe. He didn’t say much about their operating model or scale but did say that they are a privately held UK company working in the area of battery storage and that their plans include working towards an IPO.

So, here is their website address - https://zenobe.co.uk/

You will see that there is not much detail but under their “Services” header you can read:-

“Zenobe supplies, finances, owns and operates energy storage assets. We reduce energy operating costs and provide access to new revenue streams. Our solutions require no up-front capital commitment from our customers
.
We use our technology to change the load profile during peak periods when demand and prices are high. By doing this, we can reduce prices by up to a quarter – depending on the customer location and demand profile. We also provide reactive power solutions which lower the operating costs of running certain types of power-intensive equipment.
When a battery is not being used for an alternative application, we look to generate income from providing frequency balancing, power reserve and reactive power services to grid operators. Zenobe’s software and hardware solutions provide access to a wider range of power markets than any other UK battery storage player.”

I had a look on the Companies House website and found that Zenobe Energy Ltd was only incorporated as a £1 company in May 2018. Interestingly, it changed its name this month to Battery Energy Storage Solutions Ltd.
https://beta.companieshouse.gov.uk/company/11339217

The only financial info I have come across is in the “Press Release” on the Zenobe website. You can see that Zenobe has raised some £70/80m of equity plus £30m of non- recourse debt. There is some limited additional information on the website of one of the investors – Jera

http://www.jera.co.jp/english/information/20190219_251.html

From those above sources it would appear that Zenobe started operations in 2017 and now has “73MW of operating assets across 9 sites”. Now, I acknowledge that I am totally ignorant as to what that means in terms of scale but it doesn’t seem particularly large as compared with equity raising of £80m (but the recent equity is clearly going to fund additional growth.

So, why am I posting this? Well, IMO it provides some actual hard evidence that one of the development/growth pathways for BE already exists in practice (albeit it in a different location) and that investors and lenders are prepared to participate in very significant amounts. Given that we have no material SP value attributable to BE this is IMO a small but tangible indicator of how this can change very quickly – if and when the initial battery operations prove themselves.

Anyone know anything more or have any observations?

Hi again BBN and everyone else posting/reading.

The conversation here has been really fascinating & informative to read. Thanks to all (particularly you BBN).

I think that over all I am with mark Smith of Largo in the view of “good look with that!” for the indicative timings and scale attributed to almost all of these projects. Perhaps one or more may be in significant production for 2021 (or perhaps not!) with perhaps Neometals DSO concept looking as though it may be the earliest – but even that has a long way to go with a lot of challenges. Blackrock Mining baffles me. There is the C$248m Quebec fundraising you refer to BBN but then there seems to be nothing else on what is happening, other fundraising, timelines etc.etc. And I have to say, for a $1bn scale project, having a webpage looking like this made me smile: -
https://www.blackrockmetals.com/en/envirogreen/

A couple of questions for peoples thoughts:-

Is there any realistic probability of BMN bringing on additional Brownfield capacity ( i.e. the next 5000kt) prior to 2021?
Is it likely the Mokopane will start as a DSO style operation?

I certainly look forward to the unfolding story here – both the BE story and the mining story. At the present time my only primary concern/frustration is the with the operating performance at Vametco. We appear to be operating at no better than 80% of nameplate which represents a very expensive underperformance. An awful lot of expansion and/or dividends could be covered by an additional 500+ tons pa of production!

(2 of 2)

The Largo CEO also had an interesting comment on production from new entrants to the market:-
“..our view of all of the announcements that have come out recently in terms of some of the junior companies that want to start production and take advantage of this cycle is, my first comment is good luck. To the extent that any -- that we see any production coming out of these smaller, junior companies, it will would be very small, and it will be for a short period of time. So it really can't take care of the current supply deficit that we have.” Plus “if we take a look at greenfield mining operations, I try to be as nice as I can and suggest that it might be a 3-year period before they're online. But in reality, we know these projects take 5 years or longer to get up and running. So we think we're going to be in a high-pricing environment for some time frame

Glencore
Just one clarification here. The exclusive offtake agreement with Largo runs for 18mths to May 2020. Current comments from Largo strongly indicate that this will not be renewed.

So, between now and 2022 a total increase of say 5ktpa FeV and 3ktpa V2O5 plus anything that may come from new greenfield producers (possibly nil?). Perhaps the only other potential new production achievable within this timeframe is from Brownfield expansion at BMN?

Obviously DYODD

All the best

ps I am, to say the least, intrigued as to where the Fastmarkets analyst thinks near term supply is going to come from.

(1 of 2)

Hi BBN & all

Just to expand a bit on BBN’s post 2 of 7 with regard to increased/new sources of vanadium for the market. Most/all of what follows is already well known to most investors but may be of some use to newer arrivals.

Between now and 2022 there are only modest increases in supply scheduled to come on line from sources outside of China & Russia. In chronological order these are

Largo
2.5ktpa (or possibly 3ktpa) V2O5 from mid 2019. Apparently on track & on budget.
See also below

BMN (Vametco)
Stage 3 expansion to 5ktpa FeV by end 2019 as compared with current nameplate capacity of 3.75ktpa and current production run rate estimated at around 3ktpa.

AMG
Doubling of recycling facility in USA to “over 6 million pounds of incremental vanadium capacity” – i.e. approx. 2.75ktpa. Completion scheduled for “early 2021”. AMG have a good track record on capital projects and therefore one would expect this timeline to be achieved

Largo
At Q2 2018 the CEO talked in terms of the next expansion being 5ktpa V205 with a timeline of the order of 3 years from decision/commitment to proceed. Then in a tv interview (in Sep or Oct?) he mentioned “doubling of capacity”. In the very recent Q3 results presentation the CEO response to questions on expansion seemed (IMO) somewhat less bullish “we are taking a very hard look at this time at what the CapEx would be, what the timing would be for a major expansion of this facility, and that would include a market study as well. Because the mining industry has a very -- the mining industry has a long history of not being so smart in terms of bringing additional production on too fast or in too big of a slug. And so we want to make sure that any major expansion that we undertake at Largo is done with a lot of market information at the same time to make sure we can absorb it.”
So, it is hard to envisage significant new production from Largo – after the mid-2019 increase – prior to 2022.

So, revised guidance for Q4 is now 700 to 750 tons

3000 tons pa at current V prices will generate for BMN (at 74% of Vametco) EBITDA of £150m+ pa and net profits around £110m. Enough I would suggest to justify an SP of £1 - if not more - based on Vametco alone. Also, that net profit is more than the figure FM quoted at the recent investor conference for investment over the coming 3 years – so leaving plenty of room for a healthy dividend

Of course, at 3500 tons pa (93% of nameplate) the figures look even better at £175m+ and £125m+

BUT it must be acknowledged that Q4 guidance – at the top end - is for only 80% of nameplate. This is after the completion of the phase 2 upgrade almost 6 months ago and, as just reported, work on the kiln. By comparison, Largo consistently delivers production well in excess of 100% of nameplate. Management at Vametco really need to get their act together.

Depending on my mood at the time, I think I share the two views here: -

Ignore SP Angel. Given the information available to you on this board and The Bushveld Perspective plus Vanadium market information from such a wide range of sources such as Metal Bulletin, Asian Metal and even by listening to what the CEO of Largo has to say in his quarterly Q&A updates the SP Angel valuation is an embarrassing irrelevance.

FM needs to dump them. Whilst their valuations should not be dictated by the company there should be evidence that they reflect some serious effort and I cannot see anything other than tweaking a few numbers whilst continuing to leave unchanged the Jan 2019 FeV long term price at $35. Obviously, for an NPV based method this has a huge impact on the valuation.

Not only is this $35 figure patently absurd it does not even take into account the simplest of maths in putting an updated figure on the “long term” FeV price.

As far as I can see (looking at the European FeV price chart on Vanadium.com) the $35 figure comes from the average for the past 8 years or so to end 2017. Now, let’s say that this year’s average (currently approaching $70) ends up at $80 surely the long-term average needs adjusting: - i.e.

7yrs @ $35 plus 1yr @ $80 = 8 year average of $40.6

And for each year this continues the change continues:-

6yrs @ $35 plus 2yrs @ $80 = 8 year average of $46.2

Even just adjusting the long term average FeV price to $40 would have indicated some minimal effort and could in no way expose SP Angel to an accusation of being too bullish!

Personally, I am more influenced by “our” information sources and those over at Largo (SP up by approx. 25% in little over a week including 3% yesterday).

Draft Doc & Spreadsheet mailed to you

JJH

ps Largo Resources SP Friday C$£.63. Anyone got any views as to what SP Angel and ARC would estimate is fair value based on their methodology???

Hi Guys
A quick few comments & then I have to go out.

PDub
Personally, I think that it’s not just being on TSX as compared with where BMN currently sits on AIM. Largo is also listed in New York on the OTC. It has a “champion” in the form of US investor Leon Cooperman and his appearances on financial tv in the States have certainly helped to galvanise the SP.
I don’t expect particular SP fireworks on the back of the JSX listing (but hope to be proven wrong!). However FM is clearly proud of BMN as a developing South African success story and this helps with emphasising that – it may also help in discussions with government/ministries.

Re dividends, that also applies to Largo. They will be net debt positive prior to year end and have made clear that dividends/share buybacks are their next priority after debt paydown.

Faramog
To quote House of Cards – “You may very well think that, I couldn’t possibly comment”!
However, providing an update at this time based on $35kFeV from Jan 1st 2019 certainly doesn’t smack of hard work!!!

Loudspeaker
You’re right – and it’s a/the key part of what makes BMN so special for the long term. But for the short/medium term it’s a heck of a trick!! ;-)

All the best

Turning to BMN/Vametco. Following the ownership changes (which of course have only just happened) everything is now in place for Vametco to (at least) repeat the progress seen with Largo - with IMO two caveats. One is the actual operating performance at Vametco with evidence of operation at anything remotely near the nameplate capacity yet to be achieved. The second (which is “simply” a matter of time) is the publication of formal financial results and their acknowledgement by “the market”. Given that BMN publishes financial results on only a semi-annual basis then IMO it could very well be that it is only on publication of the H1 2019 results that the SP will get close to fair value when compared with Largo – but I cannot see why that will not then happen.

n.b.

All of this assumes the totally theoretical view of BMN being solely Vametco.

A review of the Largo SP through 2018 shows “sudden” surges in the SP (e.g. SP Apl 2nd 2018 = C$1.30, SP Apl 9th 2018 = C$1.89). Even without other BMN news we are IMOlikely to see the same with BMN.

All of this – for both Largo & BMN – assumes that the price of FeV will not fall to $35 kFeV on Jan 1st 2019 ;-)

So, returning to Fatbanker’s post, and to paraphrase him, give the share time!

All the best

Fatbanker wrote in his post of 20.59pm yesterday “The key to making money is to be invested in a share which over time appreciates in value and then giving the share time to do you what you expect”

Listen to this advice! In fact, consider having it tattooed on some part of your body! (ok -that might be a bit painful & would look a bit odd running up one arm, across your chest and down the other arm. Perhaps etch it onto The Angel of the North!?)

Anyway, the serious point here is that anyone who has read this board and The Bushveld Perspective and does not understand the value in BMN really should not be invested here. But for those of us who have, why does BMN seem so undervalued compared with Largo?

Many (valid) comments have been made about the relative worths of Largo and BMN (on a Vametco only basis). In looking at these two businesses there are many similarities and, of course, many differences but overall there is a fully justifiable basis for directly comparing the two entities – they are the only two stand-alone primary producers of Vanadium outside of China. IMO there is however a simple key differentiator – i.e. the “visibility” of the current and near-term performance of the two businesses in a form that is regarded as “accepted” by the wider marketplace in general – formal published financial results. In this regard Largo is clearly “ahead” of BMN/Vametco.

Largo – as a TSX listed company – publishes comprehensive quarterly financial statements. These statements are very detailed. Also, because Largo is a “simple” business in that its sole activity is its 100% ownership and operation of its mine in Brazil, these statements. are easy to read and project forward. It has to be noted that Largo’s operation of its mine is exemplary with output running above nameplate capacity over the past year. With results being published every quarter, and therefore such results being seen by the wider investor community, the awareness of Largo has increased very significantly over the past year. This then has become a positive feedback loop for the share price. Having said that, there has been a lag in the SP rise as compared with the (very predictable) quarterly future performance of Largo. I would contend that, notwithstanding this week’s dramatic SP increases, Largo remains significantly undervalued – particularly when considering the expansion due to kick in in the middle of 2019.

Thanks WineCellar & Faramog

ps How's the wine cellar doing!!