Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
New here, but building a stake from a few weeks back around 5pence. Topped up today across my accounts as the future does seem compelling.
Normally, I would suggest the gap down at 5.3 would close (and it may still - great buying op. if it does), but the upcoming newsflow if the new targets perform as expected may hold that off....
The diamond drills are what will be really interesting though - am I right in thinking the plan is to commence those later this year?
Clearly there is a lot of speculation here still - but I guess that is why you get a 4 million MCAP (or less!) but the team here are exceptional.... Seeing ARC today..... it is a way off for CHF, but the future here could be quite remarkable regardless of the necessary dilution if these targets perform as expected.......
Finally:
Chart of BMN SP vs. V (euro) price
Make of it what you will.
https://invst.ly/pwbyh
The chart has been boring / misleading for a long time now as the market has stagnated.
The rising V price is beginning to inject new life though it would seem…..
Critical thing is that it looks like the downtrend has been broken, at least on the daily chart.
Important thing will be if it holds for week-close as we’ve been here before and it has fallen back.
Big difference now is the rising V price with an increasingly encouraging SA energy environment with WB tender release looming, even if the politics are still a shambles.
It does feel like 2020 is ringing in a little more awareness of the optimism and potential here.
Daily
Upper resistance has broken (green line)
Next bullish target, the 200 day (EMA or SAM) around 23 (ish) (blue curve)
RSI is moving back above the 60 line - above here is where you start seeing good price appreciation (teal coloured line on the RSI chart)
MACD threatening to go positive again (last time it did this was the foiled Mokopane move - but this move correlated with a drop in V price towards the 20 USD / kg level so was sadly always against the trend)
Chart: https://invst.ly/pwbxo
Weekly
Always good to check the long-term outlook
Currently we are on the upper resistance, so nothing yet broken on this chart.
See how nicely the move this week was off the 200 day EMA here (pink curve on the main chart)
MACD has a long way to go, but worth watching - this going positive on the weekly will really confirm a long-term positive move (although we’ll be well in the green by the time that happens).
Again, bullish target here is the 50 and 100 day EMA, again around the 23.2 - 23.5 (ish levels)
Chart: https://invst.ly/pwbv-
Takeaway
Would be nice to see the week close at or above 24p to really suggest the trend has changed
Equally, would be nice to see volume increase. It’s building, and the buzz is returning on the various networks, but moves upwards accompanied by solid buying are usually (but not always!) more reliable
This just popped up in my feed as being tweeted by Vanitec - old (ish) news from June, but I hadn't seen it before.
https://finance.yahoo.com/news/kingdom-mugadza-tirisano-partners-battery-141700818.html
The wording in the article is a bit sloppy, but to quote "the partnership between Tirisano Partners and vanadium flow technology providers will center in the further development of vanadium redox flow batteries or VRFB"
I figure it might have been discussed on the BB and I missed it. Has anyone come across this partnership in more detail or which technology partners are being engaged? Kingdom Mugadza was (is?) on the board of Bushveld Vametco https://ideamensch.com/kingdom-mugadza/
Hi BBN - yup, I see your logic. A shame it is quite so complicated, but therein is the value of the fine toothcomb!
On the plus side, the numbers still look very good. Even assuming cash attributable to BMN is circa $42 million, and with a post-tax income attributable to the parent of $21.5 million from the consolidated income statement - based solely on H1 figures the company is still trading at a EV/Earnings of 11.3. Considering an EV/EBITDA of 10 is considered reasonable, this would still appear to be low and we are only half way through the year (with the caveat that earnings in H2 are likely to be markedly down from H1).
I hope that is right ;)
However, not to to get too bogged down in the fine detail, as important as it is, I would very much agree the exciting aspect is all about the doors that will be opened with these revenues in particular the Vanchem / electrolyte aspects of the business.
A lot to look forward to.
Another thought that has been on my mind is the line in the latest update about BE “Negotiating larger rental agreements in Africa, Asia, Europe and North America”. This sounds intriguing to say the least - and I wonder what the implications may be for the company’s electrolyte production strategy?
Even if BE only win say 50MW / 200 MWh of tenders at Eskom (and despite their clear advantages of technology and local beneficiation their still largely unproven development background means I would be surprised if it were more - delighted to be proven otherwise of course), but if “larger rental agreements” are announced in multiple locations, then how will their proposed 200 MWh electrolyte facility be able to keep up?
The company could of course import electrolyte for the Eskom mandates, but equally if their order book were to grow as the pipeline of potential projects suggests it could, might the expansion of the facility (which has already discussed by the company), be fast tracked? Could we see a situation where electrolyte demand supersedes the growth in production capacity such that some of Vametco / Vanchem’s current production might be sidelined out of the steel market? This would support earnings in both markets with a premium on electrolyte across the whole supply chain, while removing product from the steel market potentially supporting prices there as well…….
Hi BBN, yep, still very much here and as positive about the future as ever!
Good call on the attributable costs - these as well as the changes in ownership between periods does make comparisons a little awkward!
Having said that, since the figures I used came from the interim summary under the heading “group financials”, would this not mean these figures were the BMN group attributable figures, i.e. post discount for the non-controlling interests?
I may well be mistaken on this, so very happy to be corrected if I am!
And for a bit more fun, looking at PEG ratio between H1 2018 and H1 2019 using the figures from the H1 update gives a PEG ratio of 0.49
This should be close to 1 for a fairly valued company.
The share price would need to be more than double what it is now - closer to 42p - for fair value based on its earning growth between H1 2018 / 2019.
I’m playing a little bit loose with that last calculation as H2 2018 will mean that YoY the 2018 / 2019 PEG ratio won’t be nearly as good, but equally by contrasting H1 2018 and H1 2019 we effectively cut out the turbulence from the V price spike in the latter half of last year and probably get a better sense of the underlying growth in the company.
Some figures from the last interims (which were superb even if the market ignored them… )
With 66 million in the bank the company’s Enterprise Value is approx GBP 184 million.
Their earnings from H1 alone appear to support valuations well above this.
EBITDA = USD 41 million.
Company value, x6 multiplier = GBP 196 million
Earnings = USD 30.8 million
Company value, x 10 multiplier = GBP 248 million
Even free cash flow with a x10 multiplier puts a value over the current EV
And these estimates are all conservative by most standards - Often an EV/ EBITDA multiplier of around 10 is considered fair - BMN are currently at x 5.5 for H1 alone……. So we could quite fairly double the current valuation closer to 40p and still be considered perfectly fairly valued….
Well, we continue to see the price trading ever more closely within the downward triangle.
The volume blip last Thurs seems to be just that (was there an explanation for this?) and thus, we are back in the doldrums…….
There are tentative rising trends in the RSI and arguably the MACD. It still feels to me like it is itching for a reason to break-out.
Vanchem is if course the obvious potential trigger coming up, but the triangle will end before the 31st October….Considering the low volume, I suspect we’ll just trade sideways out of the formation if news doesn’t arrive before….. but plenty could potentially set things moving before then ..…
Chart:
https://invst.ly/i2pgt
Quick view of the weekly chart, which gives great insight into the longer-term trends.
As you might expect, we've been set in a downtrend since Dec last year. Pushing against that today - a week close above 23p would crack this - although as always a convincing break on volume is better than rather limp dribble over the line - and volume remains elusive for now at least.....
Perhaps most interestingly though is the MACD on this chart. I've expanded it to make it easier to see but the signals have crossed back over with the faster moving signal (blue) now above the slower lagged signal (red). First time we've seen this since Dec last year and with an optimists hat on it does rather suggest we are very close to seeing a favourable reversal.
Days end could change everything. Not worth getting excited about yet. But slowly the pressure feels like it is mounting......
Chart:
https://invst.ly/c8w3k
Well, agin we seem to be flirting with a break-out.....
I have a descending triangle on my chart that appears to have settled around support and resistance (see chart below).
The current price suggests we are moving out of it to the upside.
IF (big if) the price can hold positively above this at end of day, it would suggest a the downtrend may finally be reversing.
The price would still be in the long-term downtrend though which I have needing a break above about 25.5p currently (dotted purple lines on chart below).
RSI and MACD oscillator also signalling more favourable winds, but nothing yet confirmed...... all recent attempts to break the trend have failed, but each time it tries it feels closer to achieving it. It's going to happen at some point and it really does feel, to use a great bushwacker phrase, imminent! :)
Big issue: volume......it still isn't there! This does suggest this could all still collapse by day-end sadly....... that volume really needs to come in to support these moves, but let's see.
Chart:
https://invst.ly/c8pk9
Gosh, what a roller-coaster few days......
Technical analysis has seemed fairly irrelevant of late with SP shenanigans taking on a mind of their own...I've no idea whether rationality is starting to return to the SP, or if the shorters will seize the higher SP to renew their attack, but on the chart I have some very broad trend lines that would be nice to see broken to suggest the short-squeeze is truly over and sentiment (and sense) starting to return)....
On the chart, closing (and holding) above somewhere around 34 - 35 region would be very good and suggest we might finally be out of this interminable down-trend. It won't necessarily be a signal that the SP will go higher, but it will suggest at least, that a plummet back to the low 20's is unlikely....
On the RSI, breaking the downtrend (see chart below) would be good. The RSI has been very bearish recently, often dipping below the long-term resistance around 40. It looks like we may be not far-off a change there already. Need confirmation on the main chart though to add confidence.
Until we are back in the mid to high 30's I would remain cautious short-term at least. The games that have been played recently here are outrageous and nothing would surprise me right now.....
The company continues to release belter after belter of newsflow. Hats off to FM and company for their continued successes. Just got to ignore the noise.
Chart:
https://invst.ly/aurnz
That's great - thanks Nick. Makes perfect sense. Appreciated your time.
Looking forward to seeing the final audited 2018 results once they are released. It will be good to sense of some of the inner workings on last years balance sheet. There might be a few more technical questions at that time I expect ;)
Thanks Nick, that is super useful. I had been wondering a similar question myself.
Quick follow up (if you have a chance) - do you know how this reporting influences EBITDA figures? i.e. will EBITDA be inclusive of the 50 million investment in Alastair's example, or would this cost / investment be capitalised on the balance sheet and excluded from EBITDA?
Hi Kalan - indeed! What you describe is very similar to how I rationalised the move.
Happy to put my cards on the table for a bit of fun.
The investment I have shifted to is actually an off-market EIS play that comes with a 1.5 times preference payment due in the last quarter of this year. If that comes through, the special dividend will return x1.5 and retain the underlying equity stake.
From my sell price this would be the equivalent of a WRES rise to 0.78 (very close to your 0.8 which is also where I think WRES will be heading towards in the latter part of the year). Thus, my gamble is that if the preference payment comes through from my off-market investment before WRES hit 0.78 I will be able to buy back my full stake here.
If it turns out WRES put in a stellar performance and rise higher, my buy-back will be less, but my core holding will be performing very well in that case anyway so I won’t be losing too much sleep, and either way I retain the equity in the off-market investment which is higher risk but has substantial growth potential.
I also have 1.5p as a very conservative target here that will move as the W price outlook shifts and depending on how the ramp-up progresses at W’s projects. With the right wind in the sails 1.5p could be surpassed very easily by my calculations (for what that is worth ;).
9 million sell was mine OMR - needed the capital for another short-term play. I intend to be back with a larger stake if all goes to plan - no change in my faith in WRES, but circumstances required it unfortunately.
Still holding 25 million in my core holding which won't be going anywhere.
Not much to add to 1onic's chart, it seems to cover the situation as I see it as well.
I tend to prefer Exponential Moving Averages, EMA (which places greater emphasis on recent prices) solely for the reason that I have found them to be more reliable as resistance / support points than standard moving averages in the past, but that is splitting hairs somewhat and just a personal preference - it doesn't change the story.
As others have posted, the price settled on support at close yesterday (solid red line in chart below). This line used to be the upper resistance of the old rising channel.
It also bounced almost perfectly off the 50 day EMA in inter-day trading.
Breaking out of the current downward trend (the shaded tramlines), ideally on good volume and holding, would imply a new pattern will emerge, quite likely a bullish recovery short term at least.
Only other comment is that the RSI is close to historic support, so maybe we will drift a little lower to touch this, but the price seems to be at, or very close to the point where one would be looking for a bounce.
Average volumes are tailing off, and the market seems to be in a period of consolidation and wait and see. If there is no news forthcoming this week (let's face it, we're all anticipating the dividend announcement I think) It will be interesting to see how the price reacts this week as it is squeezed between the current support levels and the upper bound of the current downtrend.....no guarantee it will respond as we might hope, although the price has been moving in a fairly consistent manner off resistance points for a while......
Recovery target could be towards 58p from these levels based on FIB ratios.
Chart:
https://invst.ly/9ht9o
Hi Ophidian,
It's interesting to follow your Elliot Wave assessments - thanks for posting.
Now for my stupid question! The figures you posted yesterday in the convo with Loudspeaker, I'm trying to work out what they relate to...(see, I warned you it was going to be a stupid question!)
I'm assuming they should be formatted in columns, with the first column (1 - 4, 5 prediction) relating to the wave patterns.
The percentages in columns 4 and 5 I assume relate to gains and pullbacks.
It is the 2nd and 3rd column that I am struggling with (2nd: 79, 63, 175, 21) (3rd: 24, 6.3, 62, 20.5). I assume one is the SP, and maybe the other the V price (hence following on from Loudspeaker's V price peaks and troughs), but I can't make this match historic SP movement or understand why the entries in row 4 are 21 / 20.5 if this relates to part 4 of a 5 wave pattern (which should be higher than the peak in wave 3....)
Anyway, please don't feel obliged to take time to respond unless you feel inclined - I appreciate you have better things to do, and I'm following the larger and finer scale wave patterns as you are, but not being able to match this numbers has me both intrigued and somewhat frustrated as I am sure I am overlooking something quite obvious!
Thanks!