Bushveld Minerals - Fundamentals, Aug 2018
14 August 2018
Working as a team here we try to highlight everything anyone needs to know about Bushveld Minerals. To build a picture and clarify as much as we can at this time about the company and its fundamentals.
For sure we all anticipate all the news that is coming, this is because our research helps read between the lines.
In any investment we all can question is this the one? Is there any potential for it going wrong? However, what sets this investment apart is the fundamentals.
There is no speculation with respect to the core operation and backbone of this company. The flagship of Bushveld minerals is Bushveld Vametco. It is a mining and processing operation. If we only had Vametco, the mine and process production plant which produces high quality Vanadium, of which in the greater part is sold in the US and used as a critical additive for high strength steel production, this company is and would be extremely undervalued and be a massive buy at its current valuation.
Even more so when you consider any figures currently showing in previous quarter production (Q1 2018) were when the production rate was 3035 tonnes per annum, but since the plant upgrade was completed in June we now we are at an annualised rate of 3700 tonnes per annum. We have low production costs based on Q1 the given figure was $18,891 per tonne.
Then factoring in the market price rise of vanadium to over $80000 per tonne from around $61800 previously (Q1). That is significant. Then factor in we are already committed to a plant expansion to 5000 tonnes per annum by the end of 2019 when the price is highly likely to exceed $100,000 per tonne due to market pressure and the global current constrained supply. These are exceptional numbers.
So whatever happens we are in an amazing place with just this asset.
However we have news due over the coming months which will accelerate our growth: -
- Brits - a huge Vanadium reserve right next to Vametco (see below)
- Mokopane - an even larger reserve of Vanadium for which we are awaiting a mining licence.
- Lemur - A huge coal asset in Madagascar where we are going to supply into a new power station being constructed which will bring huge benefits to the people of that third world country.
- Bushveld Energy - A new technology which may well change the way we globally produce electricity making renewable power source viable where previously they would have been inconsistent. VRFB have the potential to change the world and to do this there needs to be a plant to produce the electrolyte and Bushveld Energy are going to build one and more news will be coming very soon on this.
- Potential opportunity to increase our share in Bushveld Vametco from 59.1% to 74%
- Potential to purchase an existing mothballed processing plant and bring it back into operation to process ore from the Mokopane Mine once all permits are granted and the mine becomes operational.
So on the above this list of things to come there are questions on how this will play out. But one thing is for sure as each one is turned into a reality this will take this company to a new level. Are there any risks?
South Africa is not the most stable place in the world and the difficulties with the changes over the last decades of changes bring lots of challenges to the people who call it there home. There are elections due in 2019, but its governments need companies like BMN. Companies that are led by a new generation of black entrepreneurs leading their own people and creating a positive future. Someone like Fortune Mojapelo with impeccable business acumen will be well respected and held high with the political establishment and will likely be a focus of business growth in a country trying to build from these tough times. That is very good for us as investors.
So there are risks, but the reward for success here far out ways any risks.
So for the weeks ahead we are in a great place. If you are wondering should I invest? If you can find a company with better fundamentals then maybe not. But I can’t find one and I am not alone.
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