RE: John Meyer on BMN10 Oct 2019 20:55
John Meyer 10 October 2019
"For those brave value investors out there, the guys that like to try and take advantage of tough market conditions BMN came out with their Interim Results a week ago. They're still producing pretty good profit numbers despite the pull back in Vanadium prices. We've pulled back our Vanadium price forecast just a little bit from $50 kgV to $45 kgV, which I think everybody's happy with. The company itself is long term planning on a price that's not far off that, and I think they have the added benefit of the Bushveld Energy subsidiary which is looking to build VRFBs which are good for grid power storage, and I think that's going to be a growing business for them.
So it's a business that's nicely underpinned by the earnings coming off the Vanadium. It's expanding that by buying a business called Vanchem, very cheaply in my view, and so they will be investing in that and pushing the production ahead. They can actually transport material from their existing Vametco mine straight into Vanchem and ramp up the production there, which looks really good.
So I think the market has missed the increase in production moving forwards because certain analysts just focused on the Vametco production whereas actually next year it's going to be Vametco and Vanchem, which will drive earnings growth. The margins on Vanchem will probably be a little bit less but that's just because they are taking over a facility that they need to learn how to run properly. And I think this is good. I think it will be a dividend paying stock going forwards. I think it's going to be a stock to watch as something that does well in the London market for some years to come."
"Looking at the charts it's a nice support level, 20p, it's been tested several times on the way up and on the way down and barring any bad news fundamentals will always break technicals. Like I said the chart looks very good. It's bottomed out and tested that level. It may be the bottom ... it seems like a good base level."
"That's how it looks to me. I feels undervalued. It feels that it's been oversold on the back of the pull back in Vanadium prices. That Vanadium price got overinflated last year. Lots of investors piled in to that, and it did drive earnings really well. BMN have enough cash to pay for the Vanchem acquisition which they do at the end of this month. They can run that relatively easily. They can build the Mokopane mine to feed into that, but while they are building that they can feed extra material from the Vametco mine. It all works very nicely together."
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