Member Info for SquirtyFlower

Taking the 2020 Vametco production guidance of 3000-3200mtv and production costs of US$17.20-17.70, then even if we just average today's V prices through the year then Vametco is producing approx $10/tonne of gross profit, so $30-32m for the year if production targets are met and we sell the same amount as produced i.e. the stockpile remains flat at year end. This really shouldn't be difficult to achieve. It is also not much of stretch to see V prices averaging $32-33, so gross profit of $45m. Most AIM businesses (and many FTSE ones too) would kill for that base level of profitability from their current core asset based on some fairly conservative procdution and pricing assumptions and the scope it offers for developing other assets such as Vanchem, Mokopane, Enerox/Avalon, the VIP program, etc - both organically from cash and as leverage for obtaining good financing terms when this is needed. Furthermore, this cash generation is very reliable, week after week, month after month not 'lumpy' or dependent on a blowout 4Q as many companies have.

For me, the combination of this strong and regular core cash generation, a clear company development plan into a massively growing market, and a BoD that have shown great tactical and strategic acumen and deal-making skills means BMN/BE remains a compelling investment. Of course there will be bumps on the road ahead - and probably one or two major obstacles rather than bumps - but we're in a very strong position now and we shouldn't forget this amidst all the day-to-day noise.

.....and all of this is simply talking about V production. Nothing about the impact of Enerox, Redt/Avalon, electrolyte contracts, BESS contracts, Lemur, our share of AfriTin, etc, on the share price, or the fact we'll gain from being the only vertically integrated supplier out there and hence one of the biggest and most influential players in the game.

Te relationship between our share price and the V price is not linear as the original post suggests. As per the RNS, increased production means lower unit costs per unit of production and more profit per unit of production. Therefore even if V prices remain static throughout 2020, our increased production volume will lead to increasing profitability per unit and our share price should increase by more than if if it were just the product of volume and price.

Also, assuming we are not supply constrained, then as our unit costs come down we should be able to take market share from higher costs producers. Our share price should then positively reflect this increased market share.

In summary, our share price potential is far more than a direct relationship with the V price.

BBN - thank you for the explanation about the held back production. That explains my previous comment. I was pleased with the RNS, but I'm even happier now that I understand what has happened. This board really is the best and most helpful to PIs.

Yes, good point, Ophidian. Overall, I'm very pleased with the RNS despite my observation. We clearly had a stonking 4Q19 across the board and are very well set for this year and beyond.

The comment about EBITDA specifically appears in the Vametco section rather than an overall business section. Therefore my reading is that it relates to Vametco and excludes spent elsewhere such as the purchase of Vanchem. However perhaps I've misunderstood or the RNS is badly worded.

Yes and no, Sanchez. Production up, costs down, outlook extremely good. However 1H19 EBITDA was $48m, but FY19 EBITDA is expected to be $42m....so they were right (and I was wrong) about 2H19 being loss-making. However, until we see the breakdown of EBITDA in detail then we don't know why this happened (as V prices were consistently above production costs, we made an operating profit on V production so need to see what pulled the EBITDA down).

Absolutely VauxhallViva - seems to me like the vanadium market is functioning well and BMN is displaying all the benefits of being a low-cost, high quality, large volume producer in such a market. We cashed in when prices were high to enable the business to expand and diversify, as the V price has fallen we have remained profitable whilst seeing other producers fall by the wayside, we've have remained profitable through the absolute V low pricing point in 4Q19 (perhaps not by much, but definitely profitable), and we're now positioned to expand production and benefit from the increased pricing in 2020.

The V market has functioned well (classic supply and demand volume and pricing responses) and BMN has proven its strength through the lows of the market. In other words, a rock solid long-term winner.

As for lithium vs vanadium vs other storage technology. There's a place for all. Just like Windows vs Android vs iOS: all have their place, all have their adherents, all have their strengths, all have their limitations, and all make shed loads of money for their owners.

Entirely up to you, but if it was me I'd just ask myself where I thought my (now) £1000 would get the best return from today. What's happened in the past is irrelevant. You now have £1000 to invest - if you think SXX will produce the best return from here on then stay invested there; if you think BMN will then buy BMN, if you think another share will do better than both BMN and SXX then invest there, and if you'd rather use the money for something completely different then spend it there.

Your money, your decision.

Alfa - maybe for 2020 and beyond, but I read your and bassguy's posts as relating to 4Q19 production not future production. It depends on what was happening to current Vanchem production from the1 kiln. As we only just completed the Vanchem deal then I'd have thought our immediate priority here would be to meet any ongoing Vanchem sales agreements and keep the cash rolling in while we work on planning, financing and implementing the necessary kiln and other plant upgrades needed to expand production here....so probably too late for any 4Q19 stockpile from here either.

I thought the shipping logs provided by Paludina made it pretty clear:

a) 4Q Vametco production continued to be very healthy after setting a new monthly production record in 3Q.
b) we were shipping most/all of production to the US not stockpiling it.

I understand the argument about stockpiling for higher prices to arrive and for 2020 East London electrolyte developments. However we also need to remember that the business is expanding on multiple fronts with increasing financial commitments, so revenue and cash flow remain critical. We will have contractual obligations (both for vanadium shipment and financial) and I'm not sure we are in such a strong position that we can afford to sit back and stockpile.

In addition to the reasons given by Alfa and Ophidian....I don't know how much migrant labour BMN utilises at Vametco, but SA mining generally does have plenty of migrant labour so shutting down for a planned longer period may allow these workers to return to their home communities for the period rather than remain in camp with no work (a combination of allowing genuine family time and reducing the risk of idle hands getting up to mischief). Shortening the shutdown may just annoy this part of the workforce and cause more issues in the long-term.

Electric ferries in Denmark - unfortunately lithium battery powered - but article does give an insight into some of the challenges faced in moving shipping to battery power.

https://www.bbc.co.uk/news/business-50233206

Are you sure the shorters would make nearly £1m? Making 8p per share on 1.2m shares is £96K according to my calculator.

Yes, they could in theory rinse and repeat several times more. However, as you say in a later post, they have undoubtedly lost money on BMN. The REMX fund overall has also been very unsuccessful for them so they are unlikely to be attracting many new investors into it and are probably being hit by redemptions (on top of the dividend payments) so their firepower will be considerably weakened. Therefore I suspect we've largely seen the back of VanEck and another outfit wanting to do similar (if there is one) is going to have to buy in first so this will create major upward pressure on the share price first.

For a V producer like BMN, it is irrelevant whether V is leased or sold with VRFBs as the amount of vanadium required is exactly the same. The vanadium cannot be used in two batteries at the same time so more batteries sold means more revenue and profit for the V producer. Leasing will smooth out the pricing peaks and troughs for the VRFB customer for the duration of their lease and shift the spend from capital to operating cost, but if the demand for VRFBs causes vanadium supply issues and upward vanadium price pressures then this will be reflected in increasing lease costs for new lease customers.

Indeed, and as I commented last week the endless drip of 30k/50K sales looks to have dried up. There's still the odd trade of this size but they are no longer aimed directly at the bid price with the clear goal of forcing the bid down so I think they're probably unconnected to the deliberately targetted selling.

I also said last week that I thought any significant buying might find itself pushing against an open door i.e. little to stop the price rising in response. Nothing has changed in my view on this in the meantime....and judging by the price action in the last few mins I think we're about to see a significant uptick.

Yup, and...

1) even better news when we've just taken ownership of an additional processing facility
2) FM has repeatedly shown himself to be a master of using such additional revenue and operating profit wisely - accelerating V processor upgrades, paying back obligations ahead of time, etc - and now with the additional opportunity to further expand and accelerate recently announced (and to be announced) investments in the BE space.

Article doesn't mention the energy storage side of things, but presumably it will be needed if this idea comes to fruition...........

https://www.theguardian.com/environment/2019/nov/19/bill-gates-energy-startup-sunlight-heliogen-solar-energy

The level of paranoia on this board seems to have reached an embarrassing peak this morning. Lindon's post was perfectly reasonable and I cannot understand why anyone would think otherwise. I've looked back through several pages of his/her previous posts and they too are all good, helpful, and positive. Over the past few weeks I've also seen other good, long-standing posters such as uksteveg, daisan, and faramog attacked for saying things that are relevant and balanced. I made a bit of a t*t of myself over the weekend by giving sharesaplenty credence too soon when it later turned he was just another incarnation of capa, but I do think some other long term posters and shareholders also perhaps need to reflect on whether they have become oversensitive to comments which are perfectly reasonable and appropriate, only different to their own, and seeing negative motives where they don't exist.

BMN are doing very well, BE is doing very well, FM is doing very well, but they get things wrong, the SA economy continues to have issues, the BMN share price has been under pressure all year and there's plenty of other good battery and energy storage technologies and companies out there that means VRFBs and BMN/BE are not going to be the answer in a lot of business cases and are all perfectly reasonable things to comment on and discuss at length. If these things make you uncomfortable or frustrated or you think they are a waste of BB space or a threat to your own investment here, then it's possibly a sign that your judgement is getting clouded, imbalanced or fixated.

Said my piece now and I'll take a step back now for a while.