SYR are planning to produce huge volumes of graphite. The graphite ROM concentrate will produce variable levels of purity and flake size depending upon where the buckets dig. SYR will have graphite to sell ranging from 95.41% to 98.41% pure TGC. The highest quality stuff can be sold for a premium. The lowest quality stuff just needs to be sold. The more SYR sells the more tailings they will have to produce Vanadium. The lower quality stuff (which you should note is still higher than the average of most graphiters anyway) can be sold at a lower price to move it on and still make a very nice yield.
Additionally, to move the volume SYR plans on mining they needed to open up new markets. Otherwise they would saturate the existing market and the old supply/demand curve would kick in and stuff it up for everybody. That is why SYR is marketing to the Carbon Market as well as the Graphite Market. The carbon market has lower basket prices because the raw material is petcoke in the main, plus some energy and time consuming processes! Opening up new markets is no easy business. Only the naïve would expect differently.
I do think SYR were naïve in expecting the Chalco MOU to be signed as a binding offtake within 3 months, as they announced to the market. As I understand SYR was led to believe in good faith that an offtake would be signed in that time frame. I will lay London to a brick they have learnt a big lesson from that! Maybe somebody got sacked over that stuff up? Maybe?
Anyway, that MOU with Chalco has now progressed to a Statement of Sales Intent. That is one important step towards the Offtake. It has defined the type of flake to be supplied and has agreed to price the basket at market prices each and every quarter. As SYR have announced, the Offtake paperwork is with the legal beagles now. Patience is a virtue.
Cheers
MNS Price at posting:
23.0¢ Sentiment: None Disclosure: Not Held
SYR Price at posting:
$3.20 Sentiment: Hold Disclosure: Held
