Off-take Schedules

There's been a lot of exploration action happening over the last couple of years in graphite. There doesn't appear to be any critical shortage issues so there is no urgency for customers to sign up. If I was a customer I would be sitting back waiting for all the explorers to establish JORC resources and PFS's and then start shortlisting potential producers. Last thing I'd want to do is sign a rash contract only to see a better quality/quantity resource hit the market and then be stuck with a binding contract for an inferior product or supply problem.

The fact MNS has MOU's with the Chinese to the tune of 200kt is big news, considering the rest of the market looks like it's made up of comparatively small and niche customers. How much room is there for large producers if SYR and MNS are successful? I'd be very nervous if I was TON who are behind - still trying to put metallurgy results together to excite the market. At this stage TON's 200kt pa goal looks like it's based on what they would like to produce (to be viable) and not what the market is looking to source.

For the same quantity production (200kt pa) MNS could produce around 160kt large and jumbo flake compared to TON's 74k based on metallurgical results I read (this may not be be their latest results!). Most of TON's also appear to be medium flake so the price difference could be considerable.

I wouldn't be surprised if the Chinese want to take some equity in MNS to help fund its development because that's what they've been doing in numerous commodities to ensure future supply. TON announced in their scoping study a capex of $100m so if we can assume similar for MNS then the question will be how will financing be split between debt and equity? Just a question of how much equity MNS wants to/has to hand over when, if the figures stack up, the operation could be funded 100% by debt. But I would have thought in this case the better value (for the financier) would be in the equity and not the debt.

Based on MOR.