I believe we all agree it would be good for the natural Graphite industry if a new graphite mine could be successful out side of China.
However the reality is it will be extremely difficult for both Syrah Resources and Bass Metals especially now that China has eliminate it's 20 % export duty and as a result market prices will now be 20% lower.
Syrah Resources timing is not good knowing that the flake graphite market is continuing to experience over capacity and declining market prices.
Also shareholders need to understand Syrah costs (USD 290/mt) are only projected costs and I assume do not cover and of their sales and administration cost. When you add in all their sales & admin. costs (17 million is what they budgeted) Syrah is no longer a low cost producer.
Syrah is at least 3 years too soon to the market especially with projected capacity of 350,000/mt and as a result the question shareholders must ask is do they have enough capital to support all their losses for next 3 years or longer?
Bass Metals being smaller might support a better opportunity to sell out its 6000/mt annual capacity and thus not experience the losses for next 3 year.
As a potential shareholder I be concerned with both companies and would ask the following questions Can they support their current Market Cap values once they start to generate revenues and are valued like other revenue generating mining companies?
Time will tell if graphite mining companies are good investments today.
SYR Price at posting:
$3.05 Sentiment: Sell Disclosure: Not Held
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