The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
or sideways? ;)
Interesting...
Conclusion: Bushveld has made significant progress in transforming its primary vanadium business in efficiency and production. We expect strong growth from both Vametco and Vanchem. We are also looking forward to growth in market for VRFB technology and for this to lead to new value at Bushveld Energy and within the new ‘VIP’ VRFB Investment Platform.
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* Bushveld Energy: is advancing towards vanadium electrolyte production in South Africa to enable the roll-out of VRFBs for renewable energy and grid support in the local market.
* Demand for new grid-scale VRFB batteries could take up all of Bushveld’s new vanadium production in future years assuming VRFB’s make up a significant proportion of expected grid-battery demand in South Africa.
* Electrolyte: Bushveld is in an unusually commanding position to supply vanadium electrolyte into new VRFB instillations being managed by Enerox and Avalon/redT as well as instillations in its local South African market.
* VRFB demand: there is significant ongoing demand for grid-scale battery storage with VRFBs now reported to be price competitive with Lithium-ion battery packs while offering better reliability, safety, longevity and terminal values.
* Leasing and terminal values: Bushveld’s innovative rental / lease finance model to spread the cost of the vanadium in VRFB instillations makes these batteries financeable and competitive at higher vanadium prices while also offering high terminal values in the event of battery scrappage as all the vanadium in the battery can be recycled back into vanadium.
* Transactions:
* Bushveld has entered into a number of transactions and potential transactions this year starting with the transformational Vanchem deal with completion announced on 7th November.
* Management also put in place US$25m of new loan facilities in October to support strategic initiatives at Bushveld Vanadium and Bushveld Energy.
* Vanadium prices: Vametco’s realised Vanadium prices may exceed our forecast for the year given the approximate one-month look back in pricing on standard contracts for ferro-vanadium.
* Costs: we expect a number of one-off costs this year including the cost relating to the Vanchem transaction, the completion of recent battery deals and some additional transaction costs.
* Estimates: we are adjusting our forecast estimates for this year on our view of costs associated with the above points though we are reluctant to raise our assumed vanadium price as we do not know how much vanadium has been sold into the US this year.
* Valuation: We maintain our valuation of 82p for Bushveld. We see lower risk within the group through the acquisition of Vanchem and development of the Mokopane mine which we see as diversifying the primary production base and have reduced our discount rate to reflect this. Vanchem has a number of discrete process plants which offer good flexibility in terms of production and product diversification. We have adjusted our assumed rand/USD exchange rate to reflect some further slippage to SAR18/USD from 2022.
* We do not include any additional value for Bushveld’s involvement in Enerox and Avalon/redT though we can see the ‘VIP’ VRFB Investment Platform adding to our valuation of the group in future years.
* We maintain our valuation on Bushveld Energy at 8.4p/s.
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Bushveld Minerals* (BMN LN) 23p, Mkt Cap £265m – Combination of synergies and near-term production growth at Vametco and Vanchem to drive value as Bushveld Energy develops
(Bushveld Minerals owns 74% of Vametco, 100% of Vanchem, 84% of Bushveld Energy in South Africa, 100% of Lemur Holdings, 9.5% of Afritin)
Valuation 82p
* Production growth:
*
* Bushveld are busy ramping up production at Vametco while planning new production growth at the newly acquired Vanchem.
* Vametco: We see Vametco production rising from around 2,900t this year to 3,149t in 2020, 3,914t in 2021 and 4,149t in 2022. We see the Vanchem plant producing around 4,200tpa in future years.
* Vanchem: we see production at Vanchem running at a consistent 80mtV per month through 2020 for 965t for the year supported by concentrates from the Vametco mine before rising to 1,519t in 2021.
* Feedstock from the new Mokopane vanadium mine will add new throughput to the plant leading to significant cost savings.
* Management also expect Vanchem to achieve 4,200tpa on completion of their 5-year refurbishment program.
* Vanadium concentrate from Mokopane should enable Vanchem to raise production to 3,305t in 2023 and have guided to 4,200mtV post a 5-year refurbishment.
* The two process plants combined with the Vametco, Brits and Mokopane mines should enable significant production synergies and further cost savings in future years.
* Group Transformation: Bushveld is transforming it’s business on five key fronts:
* Vametco – production and efficiency transformation.
*
* Vanchem – acquisition and restart of idled plant capacity with new mine production and improved plant utilisation.
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* Bushveld Energy – VRFB instillation and electrolyte production.
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* VRFB investment platform (VIP) – the following investments are part of a strategy to capture more of the market for VRFB instillation and electrolyte sales
*
* The investment in Enerox and Avalon/redT are in line with the strategy of establishing a ‘VIP’ VRFB Investment Platform to lead investments in VRFB ‘OEMs’ original equipment manufacturers with upside potential.
*
* Enerox – Bushveld are part of a consortium to acquire Enerox for €11m and may make a potential investment of 25-49% stake costing ~US$2.75-5.39m
* Avalon / redT – Avalon acquisition of redT to enable development of new VRFB sites. Bushveld is advancing interim funding of US$5m.
Avlon/redT are looking to raise US$30m to support the rollout of VRFB contracts into Germany and the UK
* Vametco transformation: higher production rates, better grade control and better initial feedstock processing is improving Vametco’s operational performance.
* Vanchem acquisition: enables faster expansion towards a group production target of 8,400tpa (Vanchem + Vametco) at lower capital cost while improving flexibility and potentially diversifying the range of vanadium products sold
fyi
BBN, what I hope for, is to see you back in on the basis of strong news from I3E!
Sometimes it does seem to correlate...
*seen
GKP about 7 years ago. SP was a yoyo.
We need google translate... Oil to English
see.
I had more cash to top up now.
The desired narrative among PIs will be a daily increase in the SP because of a leak of positive news. The MMs drop the price to spook PIs to think the opposite. Oil stocks attract gamblers. Anybody leveraged, or sat on an existing profit won't want to lose it, so they are being scared into selling.
Like Ob-Wan said "stay on target."
It's all noise.
Great post. Dare to dream, eh?
Thanks for sharing dude.
Ninja.
...For another 7 days, according to BBN's timetable. If we have no RNS by Wednesday, but the SP starts to go up, then positive news may well have been leaked to an elite few.
GLA.
Great article RK!
I've been away for a few days -- I missed this £1.33 assessment. Where can I get a link to that please?
Thanks
Ninja
49 :)