AGM questions, page-37

Heeman, I don't know without looking at the fine detail of the off-take agreement, which I obviously can't do (unfortunately). There are a few options in response to your query though. Funders can take an educated guess (referring to independent industry people) and say that the price is not going to fall below a certain level, and in which case they are happy to fund on whatever the market rate is. Or, clauses could be inserted so that there is a minimum floor price. Or, it could be a market price, but negotiated every 6 months (I think Focus off-take might be like that, but don't take that as gospel, because I can't remember which company had the "rolling 6 month" market price). Or, it could be none of the above, or a combination of all the above, and the funders instead insist on a higher equity requirement. Or, the "funders" aren't actually funders, and are instead non-arms length, and can chose to do whatever they want to do. This is something that excites me, as TK may be assisting with either debt and/or equity. Or, TK provides balance sheet support (via a guarantee as an extension of their off-take) to get any wavering funder across the line who may be worried about future graphite prices.

Like you said though, KNL management are being conservative in their estimates. They've used independent people for pricing, and as one of a very select few companies having actually finalised one and finalising another off-take, they are well placed to have the off-takes structured with future funders in mind. Bear in mind that as per their announcements regarding the EGT off-take, they have already prepared these in consultation with funders. They will be doing the same with the TK off-take.

Irrespective of what the exact answer is, I have a high level of confidence that our management are on top of it. The conservative nature of their forecasts is testament to that. After all, does anyone in the market now believe that LMB is actually going to be getting a floor price of $2K per tonne? Does anyone now believe that SYR will actually get $1K per tonne in the recarburiser market? KNL have a basket price of $1,258 as at today, prepared by Stormcrow on a "worst case" basis. And on that basis, we'll still have capex repayment in 2 and a half years. I'll back the conservative numbers every day of the week.