Myles McNulty Profile picture
Mar 3 25 tweets 12 min read
Two weeks from entry into @BushveldMin_Ltd, and the SP (and vanadium market!) is really heating up.

Russia accounts for almost 20% of global V production. With sanctions potentially about to bite, panic buying is evidently already occurring.

The #BMN investment case ⬇️

@BushveldMin_Ltd controls one of the largest and highest grade vanadium resource bases globally, at 549 million tonnes.

It controls:

- 3 major, high-grade deposits, one of which is a working open-pit mine;

- 2 processing plants;

- an electrolyte plant (in construction).

#BMN's operations are located on the Bushveld Complex in the North of South Africa.

Prior to 2017, the Co was a pre-revenue mineral explorer. Its flagship asset was the Mokopane vanadium deposit.

A 2016 prefeasibility study suggested a 30-year mine-life, producing...

...9,525 tonnes of vanadium pentoxide ('V2O5') per annum. It calculated a pre-tax NPV of $418m, on capex of $298m.

Key points to note:

1) The 30-year life of mine was only based on 9.7% of Mokopane's 298 million tonne resource.

2) V2O5 price used was $7.50/lb, which...

4/25 35% lower than the current V2O5 price of $11.50/lb.

In 2016, however, V2O5 pricing was at 13-year lows. The development of Mokopane was an impossibility.

#BMN's mgmt thought outside the box. Through innovative financing, it acquired a stake in Vametco from @evraz.

Vametco is an operating mine with a processing plant onsite.

#BMN's initial equity stake of 26.6% was acquired in April 2017, for $16.5m.

In Dec. '17, it increased its stake to 59.1% for an eventual total consideration of $25.8m;

And in Sept. '18, it increased its...

...stake again - to 75% - for $20m.

The acquisition was perfectly timed -as the V2O5 price chart above shows.

From a mkt cap as low as £8.7m in Nov. '16, #BMN went on to generate an EBITDA of $101m on revs of $192m in FY 2018 (and $33m on $117m, in FY 2019).

But #BMN did not stop there. In Nov. 2019, it completed the acquisition of a standalone processing plant - Vanchem - within 100km of Vametco.

The 100% stake was acquired from Duferco for $53.5m.

Unfortunately this second deal was not quite so well timed: originally...

..announced in May 2019, the price of V dropped by an alarming 50%+ - in just 6 months - by the time the deal completed in November. Prices remained depressed throughout 2020 and much of 2021.

Coupled with operating issue at both plants, #BMN was lossmaking in '20 and '21.

Nevertheless, the acquisitions left #BMN in control of two of only four primary vanadium processing plants worldwide.

Ore from the Vametco mine currently feeds the two plants. In the longer term, Mokopane will feed Vanchem (it's located closer), and Brits (BMN's third..

...mine, which lie adjacent to Vametco), could also feed the Vametco plant.

At current nameplate, #BMN's two plants have a combined output of various ferrovanadium ('FeV') products totaling 3,600 tonnes per annum (Vametco @ 2.5 ktpa; Vanchem @ 1.1 ktpa).

However, mgmt plans to have stabilized Vametco production at 2.8 ktpa by end 2022;

And ongoing expansion at Vanchem will increase output to 2.6 ktpa by end 2022.

At a runrate of 5.4 ktpa going into 2023, #BMN will control 6%+ of global production (113,000 t in 2020).

#BMN is also carrying out feasibility studies to increase production beyond the current ongoing expansion works at both sites.

These studies target an increase in production by a further ~25% "in the medium term" (going into 2024?).

Mgmt's longer term target is 8.4 ktpa.

A very detailed intro into vanadium is provided on #BMN's website ⬇️

Over 90% of vanadium demand comes from steel production (specifically, in reinforced steel rebar).

A rapidly growing source of demand, however, is vanadium redox flow batteries.

The 'VRFB' has numerous advantages over Li-ion batteries in large-scale, stationary energy storage (explained on BMN's website ⬆️).

Whilst global commercialization is at a nascent stage, it is growing rapidly.

To keep it short, re: the #BMN investment case, mgmt has...

...created an innovative financing solution to catalyze growth of the VRFB industry:

Because V does not degrade, it can be recycled from the battery at the end of its life (20 years+). As such, #BMN is able to lease the metal to customers. This both saves upfront capex...

...for the customer (V constitutes a major cost of manufacture of a VRFB), and provides #BMN with a annuity-esque rev stream.

= premium valuation rating over other miners.

But that's long term stuff. Most reading this are here for the currently exploding V price.

So, what's going on? Prices have exploded upward by 20% in the past week.

Why? Panic buying from traders and industry players, most likely, in the face of sanctions to Russian output.

China does not import Russia's vanadium slag for use in its own steel production (as it produces its own vanadium slag, as a co-product of steel production!).

So we have almost 20% of global production, that may not find a home outside Russia.

The only other major...

...producers outside China and Russia are South Africa and Brazil.

Between those two countries, there are only three major operators:

- @Glencore (a single operation, near to #BMN's Vametco mine and plant);

- Largo Resources (TSE-listed, single operation in Brazil);

- #BMN.

Given that the global market is extremely inelastic (as explained on BMN's website ⬆️), controlling two of only four primary processing plants in the world is highly significant.

BMN's basic numbers for 2022, extrapolated from market forecasts.

To reiterate a previous post:

For those saying, "FeV is only at $53/kg - why are you suggesting impossibly high average realized prices for #BMN of $70/kg and $80/kg?!"

I would answer: "FeV was at $41/kg at the start of 2018. It reach a high of $128/kg in Q4 2018....

Throughout the calendar year, #BMN achieved an average realized price of $81/kg."

FeV is up 60% since the start of 2022. It is up 20%+ in a few days.

History has demonstrated just how quickly V can move.

Given the extraordinary geopolitical events, FeV at over...

...$100/kg this year seems entirely reasonable.

There is so much more to say on the @BushveldMin_Ltd story - but the short term thesis:

At current prices, BMN turns net cash positive by end 2022. If V continues its move ⬆️⬆️, #BMN becomes a cash elephant.

Given its market positioning (immense resource, 2 of 4 processing plants worldwide), its electrolyte plant, and its planned VRFB annuity-rev stream... I think #BMN deserves a v. punchy EV/EBITDA multiple.

As ever, plenty of risks to consider.

Always do your own research.


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More from @MylesMcNulty

Feb 18
Rare earth elements continue to fly largely under the radar of the investment community.

The reason being that they're used in traction motors of EVs, and not the ever-discussed batteries.

The key REE, Neodymium, is now up 376% since 1 July '20.

Valuation check on #MKA ⬇️

@MkangoResources is due to complete its bankable feasibility studies for each of its rare earths mine in Malawi (Songwe Hill), and its separation plant in Poland, by the end of next month.

Details have been scarce, but #MKA has indicated the intended output of the...

...mine and separation plant - which is more than double that of the output suggested in the 2015 pre-feasibility study.

Presumably with a little guidance from #MKA mgmt, @MkangoResources' broker provided some very basic headline numbers of how the integrated operations...

Read 8 tweets
Feb 16
@PetraDiamondsIR #PDL is now at 96p / £186m and threatening to break out. It's in touching distance of the post-restructuring, intra-day high of 97.5p, with blue skies above.

Interim results are due out next Wednesday.

A basic summary of the investment case ⬇️

#PDL is a diamond miner, with interests in 4 mines:

3 underground mines in South Africa (all 74% owned), namely: Cullinan, Finsch, and Koffiefontein;

1 open pit mine (75% owned) in Tanzania, named Williamson.

The mines were all acquired from @DeBeers between 2007-11.

The mines had all suffered from underinvestment when owned by @DeBeers. As such, between 2006 and 2019, #PDL invested approximately $1.6bn in improving the operational efficiencies of the mines and in extending their lives.

Much of this came in the form of debt...

Read 25 tweets
Jan 28
The contrasting opinions on @avacta's valuation on FinTwit is fascinating.

Those who think #AVCT is overvalued, just can't seem to get their heads around the possibility that a £250m British biotech could be on the cusp of revolutionizing cancer treatment.

The bull case⬇️

#AVCT has four platform technologies:

1) Affimer Diagnostics
2) Affimer Therapeutics
3) pre CISION
4) TMAC (a combo of 2+3)

The purpose of this thread is to focus on and explain pre CISION and its potential value. This is the greatest near-term value driver for @avacta.

pre CISION - what is it? The most basic of explanations would be:

"Chemotherapy with dramatically reduced side-effects."

Chemotherapies are highly effective treatments for cancer, and have been used for decades. The issue with them, however, is that their effects are...

Read 26 tweets
Jan 17
There are so many ways to arrive at the conclusion that #AVCT's valuation is nonsensical.

Another, beyond the below, is to look at #APTA - owner of a first generation antibody mimetic platform, Aptamers - that recently listed on AIM.

On Friday it surpassed £100m mkt cap. 1/14
For each of its past two FYs, #APTA has generated no more than £1m in revenue.

The Affimer platform is a next generation antibody mimetic platform. It was "engineered to overcome many of the problems associated with aptamers or with antibodies". ⬇️

To my knowledge, #APTA (or its partners) has not put in place manufacturing capacity of 30+ million per month to sell propreitary, Aptamer-based SARS-CoV-2 LFTs.

#AVCT has.

So @avacta not only possesses a next gen., superior antibody mimetic platform; but from it has...

Read 14 tweets
Jan 14
@PapaDoc3333 @TrivChannel Thanks Malcolm, very kind.

The air of failure surrounding #AVCT this week on Twitter and the bulletin boards - largely from non- and ex-holders - is truly mystifying.

We will have a very good idea of whether the pre CISION platform is working, in the coming few weeks…

@PapaDoc3333 @TrivChannel …either from dose escalation in AVA6000 P1a; or from candidate selection for AVA3996.

One vital, silver lining of #AVCT’s RNS on Monday:

Alastair Smith has made it very clear that he is a man of integrity. He could have allowed M19 to continue selling MeduFlow in the EU, 2/n
@PapaDoc3333 @TrivChannel … and continue with their application to the FDA for EUA (home-use) in the US - whilst improving the strip simultaneously in the background.

All other LFT providers are doing this, after all.

The fact that AS didn’t tells us two things:

1) he will inform the market of…

Read 6 tweets
Dec 2, 2021
I came to appreciate long ago that AIM is an inefficient and irrational market.

But the share price of @avacta this week takes the biscuit. Following Monday's RNS, I was convinced we'd be at ATHs by now.

My explanation for what I think the market is missing on #AVCT ⬇️

On Monday, #AVCT announced that it had received FDA approval for its Investigational New Drug ('IND') application, to expand its Phase I clinical trial for AVA6000, into trial sites in the US.

The timing of the submission and the length of review are critical.

The FDA has a 30-day review and turnaround time. Given #AVCT announced the approval this Monday, owing to LSE disclosure laws we must assume it received the approval sometime between Friday and Sunday.

Give a few days for post / admin / comms delays, and we can assume...

Read 25 tweets

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