Originally posted by zenxmen
I looked at the share price drop and looked at the quarterlyand whilst there may be some concerns, the degree of the fall didnt quite make sense. So thought it may be goodto revisit and look a little deeper.
Well, firstly, the company has done what is said it woulddo. Compared to 12 mths ago, progress is impressive, even 6 mths ago. Thecompany has achieved nameplate of 500 tonnes per month a month early and whilst this may be issues in relation tohow much profit it makes at that production, bearing in mind that they are in the process of ramping up to 20000 tonnesper annum, which will dramatically increase revenue.
In July they achieved 208 tonnies, August 663 tonnes which went up to to 694 tonnes inSeptember. 208 to 694 is a considerable jump and asproduction increases gradually over times, so will revenue. So clearly theirproduction is increasing as they move upwards, aiming for 20000 tonnes perannum or approx 1666 tonnes per month.
In addition "The US$ Cost per Tonne (C1) has reducedfrom $1,437 in July, to US$804 in August and US$630 per tonne sold forSeptember, with further cost reduction measures planned in line withimprovement in production efficiencies over the coming quarters".
So costs are coming down and production is clearly increasing which meansmore profitability. We have a company in its early stages and as it grows, itwill continue to become wiser and more efficient.
We know that world demand for graphite is increasing andthat BSM can produce high flake graphite which attracts a premium. Millie reward and Lithium is in the background.What we need now are more off take agreements, which the company has said it isnow pursuing. This is the missing piece.
In the announcement dated 20/8 , BSM indicated it had sold 100 metric tonnes and in this latestupdate, indicated they have sold 274 tonnes. It is increasing though clearly salesneed to increase especially as i recall a 3000 tonne agreement is in place. Itwould be good for the company to provide some clarity as to why there are 764tonnes on hand and details in relation to the sale of this.
Next, Is the demand for Lithium batteries and graphene stillthere? In the article below, it states "Graphene batteries have the potential to be oneof the most superior available"
https://www.pocket-lint.com/gadgets...in-seconds-last-months-and-power-over-the-air
Next, is there a trade war about to blow up between the US andChina?
The market have bounced due to Trumps talk of a trade deal.His bluster and gamesmanship with the Chinese wont likely end in a trade war. Heis not that stupid.
https://www.cnbc.com/2018/10/29/us-...et-rally-by-year-end-predicts-strategist.html
Even if there was to be a trade war, it is highly likely that Australians companies like bsm may even benefit.
So, in my unlearnedand humble opinion, it appears all is well with a company that has grown impressively over the last 12 month, has good management, is steady and has excellent future prospects. So this may just be an opportunity to buy in at a bargain , especially with the US markets having just experienced what could be argued wasa much needed 10% correction and a bounce back today.
Good luck to all
All really strong points Zenzmen.
I agree across the board with all the points you make. One main take I want to make is that across the materials sector it is considerably down at the present and this can change and be strong for some time. At the moment materials and BSM is down in the trough- and I feel near the bottom. But this can change almost overnight and the world is always going to need the metals market- and I feel the trade war has huge implications here.
Sent an email to Peter Wright just asking how the company was progressing with offtakes and also in general and have his response below...
MY TAKE...
I am a happy holder of BSM and are looking long term. Metals shares will turn around, and BSM will soon announce offtakes, etc. Yep the market is getting hammered presently- but this is across the sector- and BSM is primed to kick goals when the turn around comes... debt free, great quality product, company fundamentals terrific and clear leadership and team.
How many other companies can brag they've their deadlines and achievements like BSM in the last 12 months?
