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Further comments on leasing model from same interview. All investors need to read these extracts.

“ When we started up BE our thinking was informed by 2 motivations. The first one was we noted that 90% + of V demand was coming from the steel sector and any opportunity to diversify and strengthen the demand profile for V would be something that would be of interest to us. And then the second motivation was when you look at the energy storage market it is a large market, potentially a $100 billion market by the end of the next decade. So it's a market which commercially is compelling. And on both accounts we decided to create BE to drive VRFBs in the stationary energy storage market. Now what also supports that on top of the economic proposition of this market was the observation that the main hurdle to adoption of VRFB technologies in the stationary market are hurdles that are eminently solvable and that we as a company have a lot of opportunity to have direct impact on it. And one of those hurdles is the availability and security of supply of V, given that VRFBs utilise the amount V of that they do. And just to put that in perspective a 100,000 MWH market by 2027 as forecast by Navigant, if you take out 10% of that as the market share that VRFBs can take up and some estimates put that as 18% to 25% you would need something like 55,000 mtV just to meet that. That's more than 50% of last year's total global vanadium production. And the second hurdle that you needed to address is the one of vanadium contribution to the total cost of the VRFB, which we are solving for through the rental product but also making sure that we've got a low cost production base which is scaleable and this is why as a company we have spelt out an intention to more than quadruple production over the next 3 to 5 years. So if you can solve for those two key hurdles then VRFBs have a unique opportunity to emerge as one of the leading technologies in the global stationary energy storage market.”

From an interview with FM and MN in August 2019 on leasing model.

“ Can you tell us a little bit about the deal you have done and what sort of impact that's likely to have on the upfront cost of VRFBs going forward?"

"We are trying to do few things there. One is to reduce the upfront costs. The other is to allay the impact of higher prices and we started this when prices were going up. To be able to solve or taking out the impact of the vanadium price from the battery without taking the V out of the battery. And really what it can do is the Capex can come down to almost zero for an electrolyte lease, depending on how you structure it. The model that we've worked at (1/3 of the) cost upfront or it can be zero, again it depends on what the customer wants. Basically there's a few things that happen. First of all you don't need to recover the full value of the vanadium because there's residual value. So that's incorporated into the product.

(Part 4) Second is we believe that financing for rental or lease is actually cheaper than financing that some other clients would get for that the project finance, so you are actually getting the better cost of capital and the reason is because a) there's an underlying value of the V so its not just about cash flows and so that additional collateral has value for investor or a lender. The third part is were taking a large piece of the Capex and we're putting it into Opex, so again you're not spending that money up front. You can do it over longer period of time and even though you shouldn't be looking at just the upfront costs of a battery you are making a decision in which you should be looking at lifetime ownership costs. Current statistics still show that there's about a quarter of all these decisions even at ultility scale are based upon upfront cost."

What if VRFBs don’t take off.

“and the market didn't take off, notwithstanding all the work that's gone into research into it being a real opportunity. We still have a large resource base, we still have a large processing infrastructure which will only get lower in terms of its cost of production, and therefore competitive supplying vanadium, even if all we ended up doing was supplying that vanadium into the steel sector. So how big is this downside? We think very very limited. Take the upside on the other hand is enormous."

"With the large resource base, with the processing capacity that we have, we think that we are in a very strong position to, one, supply on a low cost basis to the steel industry with a broad range of products and produce vanadium chemicals as well. But we are also in a very good position to respond to, as we indicated earlier, what we see as a growth energy storage market, we also want to be very proactive as a company to unlock that market opportunity. When we are successful to do that, we want to make sure that the security of the supply of vanadium onto that space is not in question, so to answer your question around our strategy, we think that with Vanchem and Vametco, and our resource base, we now are well positioned to really drive up our production, low cost production base, then we really have a solid platform to then do the kind of work that we are looking at in the energy storage market“

From same article on how BMN can medium to long term increase output if required.

“Plus we still retain a lot of optionality to improve the processing capacity that we have, we’ve still got the resource at Mokopane which will be one of the ways that we feed feedstock into Vanchem, but that was our first project, we can still build a whole new mine and processing facility there, we can put another kiln at Vametco, we’ve mentioned that Vanchem has three, Vametco has one. We have more than enough resource to do that, the question is, do we need to put that much more volumes, and if the demand says yes, we can do that a lot faster than someone who doesn’t have the resource, or doesn’t have the grade, or actually doesn’t even have the mining rights. We have the rights to increase the capacity at all those sites.”

MN ‘s View on how BMN / BE make money from VRFBs (11.11.19):

“Let's take an example of a project like our minigrid. There we are the developers so we get a development fee when that project closes. We are an investor so we get the return in equity or dividends from the power purchase agreement that is signed to pay for the energy that minigrid produces. By the way we are supplying a battery too so if we want to we charge a mark up on somebody else's battery. If we are invested in that company we get an additional benefit because our investment has now appreciated in value because that company has now got more deployments. We are supplying electrolyte so we get a fee for manufacturing the electrolyte into that project. We mined the vanadium so now we've got a sale on the vanadium. This integration allows us really to capture the value sometimes 4 or 6 different activities on just one single project. Now I want to be honest we are not going to develop every single vanadium project every vanadium battery project in the world but if it's in Africa then it's extremely (attractive?). If it's somewhere in let's say Australia yes we are probably not involved in the development, but we may be supplying vanadium, electrolyte, possibly having equity stake into the company that invested there. Possibly having a stake into the rental product company that is supplying electrolyte for rental. So there's a lot of different ways and it can be extremely active. I don't know who is getting 6 ways to make money on one project. To some there might be only 2 or 3. But in either case it's more than just vanadium and that's what integration allows us to do."

Here is what Fortune said in an interview on 11.11.19 about VRFB market share:

Let me put it this way, if the energy storage market forecasts something like a 100,000 MWh of energy storage deployments per annum by 2027 come to pass, and if you assume that only 10% of that and bearing in mind that 90% of that is going to be long duration energy storage, which is kind of the sweet spot for VFRB’s. If the area of base could capture only 10% of that we will need something like 50 000 tonnes of new vanadium supply PA going forward and that is more than 50% of 2018’s global vanadium production, so yes I think we would do well to focus over the next few years in unlocking the processing capacity and the growth within the assets we already have now, but make no mistake, the world will need much, much more vanadium than that

Then don’t invest gkb47 if you able to see past the current share price.

Others here seem to have a different view of the potential.

Lucky I think you need to broaden your knowledge of VRFBs and the potential market before posting conclusions that either reveal your level of understanding or seem to be an attempt at a subtle deramp.

A good starting point would be China. Look at what is going on there. The complete opposite of just about everything you have written. Come back when you have learned more about the very large grid scale VRFBs being built.

As for cost of Vanadium the current v price is nowhere near the level that would hold back VRFB development. In fact Fortune and Mikhail see $45 as the sweet spot.

The energy storage market is going to be huge and I have no doubt that there will be numerous different technologies that will be taken up, some filling particular niche markets like grid storage. Only a small % of that market going to VRFBs would be a very big market for participants like BMN / BE. uptake of VRFBs is likely to vary geographically too and Africa, in many areas lacking an effective grid, is a perfect market for locally generated renewable energy backed up with VRFB storage. That is no doubt why BMN are focussing on South Africa and the wider African markets in terms of their own VRFB projects.

Now assuming that V prices continue to rise, and most analysts see a strong H2 into 2022, the Electolyte leasing model that BMN have developed with Avalon (now part of Invinity) is designed to offset that high Vanadium cost. I have no doubt the entire industry will follow on with their own versions of the same.

So you and others can attempt to spread as much doubt as you like about VRFBs (though heaven knows why you appear to be trying to do so) but the reality is that this is an exciting new industry that is beginning to get a foothold in the energy storage market.

If you want numbers don’t be lazy asking others to do your donkey work. Look them up yourself.

Hindsight makes experts of us all.

And Cindercone I’m going to throw that back at you. You are completely missing my point. Covid is a major context for missing production targets, along with what are I would imagine some technical issues with plant and equipment.

Anyway I am not going to play tennis with you.

Enjoy your evening.

Cindercone please do not dress up your opinion as fact. Your opinion is valid if supported by evidence … but it is not fact. That is very misleading.

Thank you for the link Paul.

I know this article was written before the latest RNS and as always it will be interesting to read BBN’s latest thinking. Even so, everyone that has contributed today should read that article again.

Everything has a context and that is so true for BMN. This quote is entirely relevant in the light of some of the harsh criticism voiced today. It should at least encourage a little more reflection:

“It’s important not to forget that Vanchem was only secured in November 2019. Meaning BMN management had barely had a chance to bring it under their wing before Covid struck and the majority of most companies’ plans were thrown up in the air. 2020, whether investors across the AIM spectrum like it or not, was a time of defensive action. Survival. Rebuilding. Preparation. To expect that the same plans and their pace should simply drive on under such risk and unknowns is simply not realistic.”

I think the market significantly overreacted to the RNS. Good to see that despite the selling on Friday there was also a lot of buying. Ended up a blue day. Clearly there are some taking advantage of the very low share price.

Next week will be interesting. Will the buyers continue or will the bears win the battle for sentiment? Looks like the latter have taken over the bb. I hope the market is able to see through the hostility and recognise a bargain when it sees it.

Sanchez I have written a long response to your post which is so full of very questionable assumptions.

However as you think I am stalking you I shall leave it.

I hope others frustrated with the share price will take a step back and examine each point you have made and consider thei accuracy.

Haha now you are an exchange rate expert with a crystal ball that sees a fall in US$ v Rand of how much? 25%? Do us all a favour. The US has a sane man back in charge who recognises reality and is restoring the US position on the world stage, together with a focus on restoring the US economy and dealing properly with Covid.

Sounds like a perfect recipe for a falling US$ …. NOT.

I wouldn’t worry too much about the direction of travel of Vanadium prices.

First the facts. Prices in Europe for FeV retraced a little but in Chine Vanadium Nitride (the nearest thing to Vametco Nitrovan) was up. Most other Chinese prices flat today.

Second, don’t expect the price of Vanadium to go up in a straight line. There will always be pauses and market adjustments as trades volumes vary. Watch the overall trend over time, which is up.

Third consider the factors that have led to rising prices (the big picture if you like or macroeconomics if you are posh!). There has been no significant change there as far as I am aware. Countries, especially China are looking to infrastructure projects to build their way out of the COVID crisis. Steel demand is likely to remain high for some time to come so big demand for V. Supply side of V is very constrained in its ability to produce more.

Fourth most analysts expect this to continue and predict a strong H2 for V prices.

Taking all that into consideration, and that BMN is very profitable even at current V prices the future looks rather good.

Just my opinion of course.

Lucky first I refer to past achievements because it is factual evidence in the public domain that this BoD is a strong and successful one, contrary to what some here are trying to fool people into believing. That does not mean that everything has gone to plan and I am sure Fortune would be the first to acknowledge that.

Secondly the historical achievements are very important to understand because they provide the platform to deliver future plans. An obvious example would be future increases in production that depend on past acquisitions and updates to plant and equipment. The money spent in Q1 was necessary to improve efficiency at Vametco and thus deliver higher productivity into the future. The shutdown, lost production and revenue in Q1 hurts now and is an easy target for anyone with a motive, but this was a necessary medicine to take to improve the health of Vametco. Similarly the purchase of Vanchem, 100% owned by BMN.

The same can be said on the BE side. The partnerships, the IDC investment, the electrolyte rental model, the electrolyte plant, the minigrid, etc are all necessary processes and expenditures to deliver the plan to build a large low cost vertically integrated Vanadium platform. That has been BMN’s plan for several years now and they are well on the way to delivering it. Sadly the 2019 V price fall, Covid and SA Govt delays have shifted timelines and the Vanchem purchase was a one off opportunity that could not be ignored.

It has all meant a little more pain for shareholders. Those that focus so heavily on the daily share price and either haven’t the time or don’t want to wait are right now feeling that pain. Those like myself who focus on the bigger picture see the enormous potential here, particularly with rising V prices.

I think I have explained all this enough now. If there are people who still don’t see the potential here they probably never will (and future potential and getting in at a low price is what long term investing is all about as far as I am concerned.)

Now I am off to enjoy the sunshine. I will leave these shark infested waters to the predatory beasts swimming in them.

Lucky either you are unaware of the history and achievements of BMN or you are but simply can’t understand them. I refuse to believe that you are aware of them but ar3 being deliberately negative for a reason. That would be nasty.

The company’s achievements are considerable whatever you chose to post. Progress has not been without issue of course but the last 3 years has seen enormous challenges for the vanadium industry and the world. Hopefully the former is emerging from a period of low prices and BMN is well placed to maximise the benefits, again whether you believe that or not.

BMN is not in this excellent position by chance. It is their strategy playing out.

Those of you that judge an AIM company by its share price are only getting half the story. Open your eyes and engage with the real story.

Lucky please explain what names ?

I make the exception for gkb47. With respect to you I have tangled with that poster for many more years than you. I accept tha5 I do make exceptions to my rule and he is one of them. Don’t be taken in by him.