KNL - MCAP vs Shareprice Diagram, page-68

Harvey, thanks for the confirmation that comprehension (understanding) of what you read is not your strong suit?

I was wondering whether it was just the technical stuff that confused you but seems the simple messages are unclear too. Never mind.

Perhaps this will help

What they said: Three binding agreements for the sale of 100% of its 40,000 t/annum graphite.

What it means: Think of a developer who builds a block of apartments. His goal is to sell them off the plan then build them – it reduces his risk. This is like selling 100% of the apartments. The only remaining risk is to supply the material for less than it costs to supply it. That remains to be seen and applies to every business every day.

What they said: Investigating expanding to 60,000 tpa (before even starting).

What it means: Customers, which KNL already has, want more graphite. This is different to a developer who builds a block of apartments but in a good way. The apartment guy can’t just add 50% to the height or width of his building. He has to find another site. KNL is already sorted there.

What they said: Test work by independent end-users continued to confirm the world class quality of Epanko graphite.

What it means: The customer is very happy with what it is buying, and guess what, the customer is the ONLY one that matters, the ONLY one. The only thing that matters is that the customer buys it and profit is made on it. With the exception of Woolworths customers understand that in order to obtain the product they need, they need their supplier to remain a going concern and they understand that means that they must make a profit. Of course the supplier has a part top play and that we won’t know for a few years