Redstripes, I'm still here, and will be for a long time, because this stock has only just started to nudge upwards on it's re-rate path, and it's not even in full swing yet. I monitor the threads on a regular basis, but don't always post/reply. As Mark Twain says, "Never argue with a fool, onlookers may not be able to tell the difference". I argue with fools occasionally, but I try not to make a habit of it.
I've read the report today. I'll highlight some good passages in their words, not mine (bolding and underlining is my instigation though):
"The recently completed Scoping Study for the Epanko Graphite Deposit in southern Tanzania has, with an NPV of US$213m, returned excellent results, indicating a long term, robust project with substantial upside through both resource and planned production expansion.
A key to the project is the likely quality of the graphite concentrate – testwork indicates the production of low contaminant, large flake graphite suitable for all applications, including the production of the value added expanded and spherical forms, which should command a premium price. The quality is superior to that of most other ASX-listed graphite hopefuls." (If I could help everyone understand that one key point about all the various graphite deposits, and get away from this inane focus on grade and tonnage, then I would).
And this line, something I've also publicly stated repeatedly:
"The Merelani-Arusha Project in Northern Tanzania is also a potential company-maker in its own right, with significant high grade graphite mineralisation close to a historically operating mine that could become a second producing asset for Kibaran." Refer back to my previous post where I had the links to the two geo reports on Merelani for those interested. Once you read them, you will be as excited as I am about "potential company-maker" nature of it.
Now, without basically repeated the whole report here, the overall tone of this report (and other recent reports by others) is that this is a company with a world class quality graphite deposit, and that is making all the fundamental steps necessary to become an actual producer, with many of the risks mitigated or in the process of being mitigated. I think a lot of traders (as opposed to genuine investors) are getting drawn like moths to the bright flame of drill hits, grades%, and other "blue sky" promises (you know, those companies with 100ktpa MOUs that will absolutely, positively, for-sure translate into binding off-takes at several $thousand per tonne of inferior graphite). But many (most?) of the listed graphite hopefuls will never (and I repeat loudly, NEVER) make it into commercial production, even if graphene, EV takeup and grid storage does reach it's potential in terms of global demand.
A lot of recent announcements by KNL, as well as updated (or initial) reports by brokers/investment researchers are drawing attention to the steps that are being undertaken or already achieved on the process to becoming a producer. The share price isn't reacting (yet), but these announcements and reports are of large substance to the long term fundamentals of the company, and they are being missed in the pursuit of other shiny baubles (drill hits) by traders. Good luck to them too, all pursuing their thousands and tens of thousands in profits, but that doesn't interest me. I'm interested in the $millions I will make over the longer term in a quality company that mitigates my risk while also offering me tremendous upside.
SImpa said it well, but I'll adjust his numbers a little to use some concrete comparisons. I'd much rather turn my share of $40m market cap into $400m, than turn a share of $100m into $500m, or a share of $900m into $2billion. And lest anyone think anyone think I'm talking pie in the sky numbers for KNL future value of $400m, I'll point out that we have a conservative NPV of $213m on one deposit which is only partially drilled, and the second site (Merelani), to quote the section heading in the report "Second Project Could be Even Better!". And for all those who believe that another deposit is going to be "the one" to supply all the future growth potential for EVs, grid storage, graphene, etc, then I will merely highlight that the growth potential for graphite is heavily skewed to the large flake distributions, and the deposits with truly large flake will sell out before the smaller flake stuff does. So while other deposits will indeed be necessary to supply the world, there are few that will sell out their entire production capacity. You could suggest that I'm wrong on the large v small flake argument, but you'd also therefore be suggesting that every single graphite commentator or industry professional has got their flake distribution pricing incorrect. Somehow, I doubt that's the case.
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