Peer comparisons

Trying to get my arms around graphite stocks having bought small parcel of MRF and considering more.

There seems to be so many budding plays with different technical and market dynamics and find the market caps quite bewildering, given most are no where near production - which is why MRF appeals.

Proactive Investors wrote in March and apologies for repetition as expect many holders have seen this before:

Risk v Reward
- MRL’s projects have low capex and opex requirements.
- Production of 5,000tpa of premium quality vein graphite should generate revenues of approximately of US$10m pa. Capex to achieve this would be
- Most other potential producers have capex requirements of $34m and up to $133M. This level is to produce 20,000-50,000 tpa of graphite from grades ranging between 7% to 12% Carbon as graphite.

Another valid peer comparison is with Canada Carbon (TSXV: CCB) which we believe to be the only project developer of a graphitic vein carbon resource. The resource is known as the Miller Graphite Project and is located in Quebec, Canada. Miller is operated as a hydrothermal lump vein graphite mine that shipped 25 railcars of graphite in 1900. Carbon Canada has located the historic open pit, completed surface sampling, electromagnetic surveying, and identified a number of anomalies. Several recent drill holes have been completed that confirm the near surface presence of economic grades of mineralisation. The Company is the 100% owner of Miller and is currently capitalised at C$13.6 million. This is indicative of the valuation that applies to an early stage developer of a vein type graphite deposit.

MRL will reach the same developmental point within the next two quarters and should reflect a similar or higher valuation.

That is equivalent to $0.16 per share (on an undiluted basis). Our valuation and target price reflect a discount to this price.

Proactive Investors calculates that MRL should be priced at $0.09 to $0.10 (prior to recent acquisition to maintain parity with its two ASX listed peers operating within Sri Lanka and based on its advanced project capacity to move to early production than its peers which could see it begin production in 2015 – based on low CAPEX. The significant catalysts ahead for MRL provide value accretive milestones to step up the value of the Company.

Our share price target would increase on release of positive exploration and development data over the next two quarters. MRL has developed a conceptual mine plan for the Warakapola Project that envisions an output of 5,000 tonnes per annum of premium grade graphite to garner annualised revenues of US$10 million. Ongoing exploration and development over the next two quarters should confirm or deny this modest production goal.

I'm encouraged by this review, see full http://www.*.com/companies/news/525...te-production-in-sri-lanka-by-2015-52575.html and wonder how others see MRF market cap in comparison with some of the others - so provide this table below where blues are Aussies and brown are Canuck miners.

Does anyone have any striking comparisons to make? My early view is the market hasn't absorbed their acquisition announcement which provides them a mining licence and their plans to move into production asap - this is huge for me.

Perhaps market isn't convinced they have the resource and probably more importantly have concerns about obtaining off take agreements. Again, any insight into these factors?

Hope this generates some discussion on peer comparison and various comfort levels on the company's resource and strategies.