Production20 Oct 2020 20:59
...and so a while ago someone asked me about the cost of production for FAR.
This is my understanding from the little research done:
2018 massive profit on poultry production and high margins due to absurd vanadium price spike...thank yo very much.
2019 production increase a little but vanadium price collapse. One of the cost that affected most the profit and loss is the change in price from production chain to shipment, for 2019 it was minus $1 million this is not cost incurred is just less money for the finished product. Moreover it appear that unfortunately FAR payed its raw material to process at high price ie. 2018 price and was selling it al low prices ie. 2019 price, hence the substantial loss.
..and we come to 2020 production will double and even more if wasn't for covid19. Cost of raw material will be lower than 2019, is my understanding that money raised from the last bond and shares issued, will also be used for purchase of raw material, meaning that FAR will pay the stuff much lower than in 2018.
Still I doubt in 2020 FAR will se a profit but with production capacity reaching almost 10 times 2018....you just imagine what would happen to the share price if vanadium price next year would start to rise. We would sit on a low cost of raw material purchased this year and an increasing production volumes and price , only this potential prospect would justify a multiple of today sp....forget about Bala mine development.
In the last financial a couple of month ago I thing the company still had some 700k in the bank. They might have to rise cash or not it also depend on the cash flow which is increasing as production is increasing, anyway if any money need to be raised it would be a small amount and done at higher sp. Then again we could get a BFS out next week and financing ready a month after. Nick Bridgen mentioned that was already in talks with some financial institution but couldn't progress further due to lack of BFS...
I just wanted to shed a bit of light on few facts in particular cash needed or not and production costs and profit, because I read quite few deramping where the prospect/need to rise $1 million for this company seem the unsurmountable obstacle that will definitely bring down this company. In the other hand there are some wild sp predictions especially the one without a reasonable time frame that are a bit embarrassing..
This is a high risk high reward investment, I like it because the high risk side are attenuated by some factors like operation that is quickly increasing production, the potential of vanadium price increase (use for battery, world wide infrastructure spending spree in the green space, price of V at its historical lowest point) and not lest the cheapest capex/opex around for mining.
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