Bushveld Minerals Share Discussion Threads

[alaskin75] 30/10/2016 06:57

Appreciating the fact you are clearly aggrieved at posters from other BBs posting on a thread to a share you are clearly very passionate about, I am struggling to understand how you posting misguided and poorly researched opinions of BMN is any better.

The BMN business model is to establish the world’s deepest intergrated base metal platform whilst employing one of the largest resources (circa 500m ton) with areas that hold the highest in-situ graded vanadium material in the world bar none. It is so good that it is a near 1% higher in grade than their nearest rival Largo. Being well researched you will understand that for the vast majority of this budding industry their best grades are under 1%.

BMN’ fundamental reason to drive this deep integrated platform is to drive the demand for their vanadium. At well over 4m tons of actual vanadium, they ideally would want to be mining minimum 20,000 tons per annum to ensure it is utilized properly and even then they will need many more lifetimes than we have to extract it all. Whilst they have a robust business case in steel strengthening, the best way to drive that demand is through VRFB take up.

To be clear BMN have no intention of being a battery manufacturer more that like all the elements of the value chain, they wish to take a slice of the action. Yes the exact make up of that slice is still to be determined, but as the supplier of the electrolyte they will have a very large bargaining chip. So IPs is of no concern to BMN/BE. As a Redt shareholder, to call out BMN on this basis is unfair when one considers that Redt are yet to declare any financial make up of their partnership with Jabil or indeed their cost to produce per KWh.

But back to that VRFB take up. BMN along with all budding vanadium producers have spotted a hole in the market. The VRFB industry, Redt included, up until now has had a problem with two things.

1. The lack of a guaranteed supply of electrolyte
2. The lack of a guaranteed cost for electrolyte.

This problem mean that all VRFB manufacturer have been limited in their ability to scale up their production and bring down their cost per KWh. Redt may have made a clever move by getting into bed with Jabil but if the orders aren’t there then neither is the economics of scale either. That is why even the likes of UET (BMN’s technology partner) the leading supplier of VRFBs in America and Europe, has only delivered 20MW(80MWh) in its 4 years of trade.

Total world electrolyte capacity in 2015 stood at 400MWh of which Balong New Materials held 70% of the market. This year they have increased their production to 700MWh. Now for the current VRFB industry that isn’t too bad but the problem is Rongke Power, another Chinese enterprise and UET’s partner is with UET building the world’s largest VRFB at 200MW(800MWh). They are doing this at their soon to be opened phase 1 300MW facility, which under phase 2 will be 1GW and phase 3 3GW capacity.

Rongke Power’s facility is just down the road from Balong New Materials. So who do you think is going to corner that electrolyte production? Jabil may be a very larger player in the manufacturing world but I am yet to see any evidence that they manufacture electrolyte. If they are buying it then yes their size would warrant a better pricing structure but if there isn’t enough to go around what does that say about how many projects they can cater for and what price that electrolyte will be.

The fact is the likes of Redt need someone like BMN to succeed in order to expand their operations. They can talk up partnerships all they like but the fact is their portfolio of work is still very limited at this time and so their pricing structure must be a cause for concern.

BMN are the closest junior vanadium miner to production. What you have brushed over is the fact that they are about to purchase Vametco mine and plant with a deadline set for end of March 2017, although many well read BMN shareholders expect this long stop date to be bettered by several months.

When completed BMN will control 2.5% of the world’s vanadium market with expansion plans to increase this to 5%. However, even at the current 2,400 tons capacity BMN with electrolyte capacity added, will have the ability to supply up to 600MWh of VRFBs. Of course that won’t happen overnight, so in the meantime they will continue to produce their Ferro-Vanadium equivalent patented product Nitrovan. This product has a production cost including royalties of $17.33 per Kg in a market that today right now is selling at around $23 per Kg and rising. I will let you do the maths on that.

With the 600MWh of capacity BMN will be able to offer the market an alternative supply to that dominated by Balong and at a price that is affordable. This in turn will give UET and any other take off partners the confidence to expand their manufacturing and work to reduce their own component costs. Remember at the moment vanadium makes up in the region of 30-40% of a VRFBs costs, but that still leaves 60-70% for the VRFB manufacturer to work on. However, without scale they cannot drive their supplier’s prices lower. A guaranteed vanadium price will open that window of opportunity. Together, the cost per KWh should drop to a level where by potential clients start to say yes more often than they say Lithium.

It is important to point out that BMN will own 26.6% of Vametco when it is bought with a silent partner holding a further 33%, which gives BMN the control of the facility they need. It is a very popular belief that BMN will acquire the 33% from their partner when they are able to under AIM rules. BMN’s business model is all about scale with a view to limiting dilution and financial exposure.

Then we come to those demonstration batteries. BMN have reported that they intend announcing/commencing a utility scale battery project in S.A. that will be multiple MWhs in size and one of the largest in Africa. This news is not about the size of the battery but about the potential it unleashes for BE/BMN in S.A. and sub-saharan Africa. To produce a multiple MWh battery as your first project and as a demonstration piece sends a very strong message as to the sort of sized projects you are angling for. In addition, those in the know appreciate fully that the IDC are involved in these demonstration projects as well as the electrolyte and VRFB market studies. They themselves are a multi billion dollar organisation. However, the key with the IDC is that they are government owned and have key connections to the regulators and Eskom also.

In S.A. if you want to get things done you make sure those in power get a slice of the pie. It’s not right but its life in Africa. By teaming up with the IDC BMN are ensuring not only a solid finance partner for the electrolyte production but also an audience and avenue into utility scale projects.

It is relatively early days and yes on paper BMN are a ‘small African business’ but the potential they hold for themselves and the VRFB market is huge. To write that off because Jabil haven’t noticed them is I am sorry to say nonsense. Being a well read Redt shareholder you must surely have noted Jabil’s purchase of the S.A. energy solutions provider Inala earlier in the year. A move they have since followed up with their backing of VIZn Energy to focus on the African Sub-saharan micro-grid sector. If Jabil are such a good partner of Redt’s why have they chosen to back an iron-zinc flow battery rather than Redt’s VRFB technology? I would hazard a guess it has something to do with the shortage of supply of electrolyte and thus the current belief that VRFBs whilst being the best technology for utility scale energy storage, have a problem with material supply.

Where BMN have the advantage over the likes of Redt is that they will supply and control all the elements needed to ensure that the VRFBs contracts they commit to are at a cost that drives mass orders. Redt are reliant on their manufacturing partner to obtain cheap components including electrolyte and to stay focused on VRFBs. For me it’s a big risk outsourcing production in the VRFB sector. I understand the need in order to reduce front end costs, but as the cost KWh becomes more and more key, the lack of control is a risk.

Not all VRFB manufacturers are going to make it and that dynamic may be Redts downfall.

I recognise fully that BMN still have some way to go, but they will soon be in production and that is a very healthy start. They also have the world’s best material in a market where prices are in full recovery, so one way or another its going to get mined. They have already reported that they have their own numbers on electrolyte costs in S.A. so the studies are for the IDcs benefit only. So electrolyte manufacture is going to happen. With those two in place BMN will be a miner and processor of vanadium, and producer of electrolyte. Once they add VRFB sales off the back of their demonstration projects, they will have completed 4 from 5 of their targeted goals at the first stage of scale. Then it will be about growing and expanding off the back of those revenues.

There is still much risk with BMN but I challenge anyone who believes in VRFB technology and who has reviewed their business plan thoroughly to claim that if VRFBs are a success then BMN won’t be one of the greatest successes the industry will witness. The vanadium market is in a supply deficit, it needs more resource to be mined. That means there is a place for BMN even without VRFBs. With VRFBs BMN have the chance to mine significant quantities of their material, which when all is aid and done will dwarf anything Redt could ever hope to achieve without them.

Please don’t assume you are the only well researched investor in this field because I assure you, you are not alone.

[dogrunner11] 29/10/2016 11:35

Btw - just for clarity Nick, Jabil are making redt product in exactly same way commercially as they make for apple. Hopefully you might now understand the difference.

[nickderby] 29/10/2016 11:30

Hahahaha. Thanks Dogrunner, you're such a gent :)

[dogrunner11] 29/10/2016 11:28

Redt are selling their own designed product, they are also developing their own product and new products!!! If you believe Jabil, who are americas largest contract manufacturer, have made a mistake and not fully realised the potential of this small African business that is set to revolutionise the world battery market by selling someone elses technology then I take my hat of to you.

All the best with your investing Nick, I think you'll be needing it.

Oh and don't believe everything that's written in RNS or on websites, research is about checking that information contained within is correct, this has more holes than whinston's vest.

[nickderby] 29/10/2016 11:14

Dogrunner
Redt's IP is of little value if it can't make a profit.
What has held back the mass adoption of VRFB's over the years is both security of vanadium supply and security of vanadium cost. Around 30% of a VRFB cost is made up of vanadium. If vanadium prices get too high then Redt won't be able to supply competitively priced VRFB's in the quantities that it would like and therefore profits will be reduced significantly.

BMN will have the advantage of being able to supply low cost vanadium and electrolyte production through Vametco. Redt may even need to buy electrolyte from Bushveld! ;)

If vanadium prices continue to rise BMN will generate millions in profits from nitrovan/vanadium production, but it could still supply Bushveld Energy with low cost electrolyte at say cost plus % to boost that side of the business.

I repeat, the great thing about BMN's fully integrated vanadium platform is that it will generate profits all the way down the supply line, not just on sale of VRFBs.

I am not criticising RED in any way and I'm sure both Companies will be successful.

However, I don't intend arguing the merits of BMN and RED all weekend, so let's look back in one year and see which company has performed better in terms of share price appreciation.

Enjoy your weekend.

[dogrunner11] 28/10/2016 20:59

> It also has the cooperation of the SA government!

You need do research, you are clearly out of your depth Nick.

[dogrunner11] 28/10/2016 20:50

No Nick, you don't own any IP, you are simply selling another companies product.

You own a mine, that you have no idea if it's feasible or not, nothing else.

The rest of what is written is pure ramping, you have no details of the contract to buy the third party produced VRB and from sounds of things they need raise the cash in order to get the projects of the ground.

We have contracts with REPP and OPIC that are substantially larger than the one you mention, we also have third party sellers such as you are here.... I could go on.....

redT own the IP and have a third party manufacturer in Jabil (who make Apple products) we own the patents and that is what is worth the money, that is exactly why I know what I'm talking about and you clearly do not, unlike as you said on the redT thread earlier.

I could continue Nick but I really have no desire to do so, however perhaps in future think or ask questions before suggesting someone who's researched this industry for 8 hours or so a day for 18 months does not know what they are talking about, they might just know a thing or two more than you.

[nickderby] 28/10/2016 20:42

I think you're probably just trying to be disruptive and I've better things to do on a Friday evening.

Bushveld Energy is a VRFB supplier, just like Redt and will most probably have more turnover over the coming years than Redt, due to its ability to supply cheap VRFB's because of it's own low cost electrolyte supply.
It also has the cooperation of the SA government!

If vanadium prices go up too much then Redt will lose the ability to supply low cost VRFBs. BMN's future is in its own hands.

Good night :)

[dogrunner11] 28/10/2016 20:26

Okay Nick, I understand that but are you suggesting that the two companies should be valued on exactly same basis purely because BMN are investigating installing two large scale batteries?

If we took what you said as being correct then Curry's should be on same valuation basis as say Apple, they sell iPhones, iPods, iPads and of course the MacBooks, or are you suggesting something else?

[nickderby] 28/10/2016 20:22

Dogrunner.
Due to the cooperation agreement that BMN has signed with The Industrial Development Corporation of South Afica (IDC), BMN will have constructed two VRFB sites of up to 1.0 MW each in size in South Africa early next year.
In terms of size this is equal to Redt's installations to date.

Also as I pointed out earlier, BMN is in the process of building a vertically integrated vanadium platform. It will make profits all the way down the supply chain, from mining the vanadium, to producing electrolyte, to sale and installation of VRFBs.
Profitable in both a high and a low vanadium price environment.

It is currently purchasing the Vametco processing plant which will turn the company into a producer of electrolyte (needed for VRFB's), nitrovan and vanadium trioxide.

Ignoring the vanadium/VRFB side of the business, BMN also has tin production on the horizon and iron ore and coal resources.

Incredible assets and prospects for a market cap of only £9m!

[dogrunner11] 28/10/2016 19:59

OK Nick I get that, but why are you comparing the two in terms of valuation?

[nickderby] 28/10/2016 19:46

Dogrunner
Redt and Bushveld Energy are both going down the VRFB route.
Check out the Bushveld Energy website....

'Bushveld Energy will become one of the largest electricity storage providers in Africa by 2020. We will meet the demand for utility scale energy storage in Africa by leveraging South Africa-mined and beneficiated vanadium'

'Bushveld Energy aims to transform Africa by addressing the continent's greatest obstacle to faster growth and industrialisation:
RELIABLE ELECTRICITY SUPPLY

By providing distributed, utility-scale energy storage solutions and finally harnessing Africa's near unlimited renewable energy potential'

[dogrunner11] 28/10/2016 19:28

Nick, can you tell me why you compare this to redT? Interested in how you believe it is comparable.

Thanks.

[dogrunner11] 28/10/2016 13:20

It certainly is a cracker Nick, your research is impeccable, well done.

Keep averaging down fellas, those new should really be filling their boots now!

[nickderby] 28/10/2016 13:07

Thanks for the support guys.

My post over there wasn't supposed to stir people up. I have been following the Redt story for some time due to my involvement in BMN.

The great thing about BMN is it will make profits on both rising vanadium prices and falling vanadium prices.

Falling vanadium prices make VRFB technology more competitive and they will do well (like Redt) through electricity storage with their subsidiary Bushveld Energy.
If vanadium prices continue to rise and VRFB technology doesn't take off as we all wish, then they will make good profits on vanadium and nitrovan sales.

VRFB technology is very dependent on cost, of which vanadium (electrolyte) forms quite a large proportion.

Lets hope the future is VRFB's!

If Bushveld Energy becomes 'one of the largest electricity storage providers in Africa by 2020', its going to be an exciting ride from the current market cap!

[dogrunner11] 28/10/2016 12:41

Come December you'll be laughin!!!

[dogrunner11] 28/10/2016 12:41

Lol

Looks really good this one chaps, fill ya boots!!!!

[chicken01] 28/10/2016 12:00

MrPhiljones, exactly!, I like to hear of opportunities, its then up to yourself whether you invest or not., there's so much ramping going on at RED bb its getting annoying. Some people seem to think they own the bloody thread!.

[chicken01] 28/10/2016 11:47

Nickderby...take no notice of grumpy fools on other threads, I appreciated your post on RED. Keep up the good work.

[chicken01] 28/10/2016 11:45

Sorry...BMN.

[chicken01] 28/10/2016 11:44

I see some people don't like across bb posts??, oh well. Blomer, you've pointed out the potential in BMB, so I will watch and investigate, many thanks. I am invested in RED, and well up, but am always interested in other investments. I was in on REM however have lost faith!, so cashed in square and moved on. Keep up the good work on this bb.