Ausheds, thanks for the reply. I realise that VXL historically quoted $1,400 per tonne of basket price, but they dropped that reference in their last presentation, and I suspect that's because they now realise they won't achieve that. Now let me publicly state that I wish VXL would achieve that basket price, so I'm not talking them down unnecessarily. I want to be wrong on this. I'd like to see graphite prices in the stratosphere. However, as at today, the basket price for their product should be lower, because their flake distribution and purity aren't world beating. They have 40% below 75 microns, which is the cheap stuff. So, either everyone else is working off too low a number for their feasibilities and scoping studies, or VXL are working off an optimistic number. Either way, an explanation should be forthcoming. I for one am very curious as to why they believe they can sell graphite with a realistic basket price of less than $1,000, for $1,400 instead.
Three possibilities that could see my assertion wrong are:
1. If VXL are dealing with a variety of small "no name" buyers, and due to the lack of volume, they have told those buyers that there is a $1,400 per tonne minimum price, in much the same way that it's cheaper on an individual beer basis to buy a case of beer than it is a single beer from the bottle-o.
2. VXL are going to temporarily benefit from being one of the only new producers to come on-stream in 2014 and actually start digging stuff up. KNL, SYR, MNS, if successful, won't be delivering product till 2016. But this is only a temporary price hike at best, and can't be relied upon for long term profitability measurements.
3. Purity. I can't remember, but I think VXL may have had above average purity from their metallurgical results. If that's the case, that may assist it's pricing. But the difference between $1,400 and it's realistic basket price is still quite significant.
Overall, a quick look at the comparison by Patersons in their report is that VXL is the odd one out with regards to basket price. I notice that Patterson's also priced LMB at $810 per tonne based on their basket. LMB subsequently announced a supposed off-take at $2K per tonne, which is now unraveling at a rapid rate of knots. Are buyers really going to pay $1,400 per tonne long term when they can get a better flake basket for cheaper?
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