Jaded: Good summary of the key points to look forward to in the Quarterly.
The Graphite race should be based around lowest cost of production for quality flake graphite.
From my understanding, both Syrah and TON should end up being in the first quartile on the cost curve if their resources deliver on the promise they have shown to date. This position will be important because the potential opening of the numerous new resources being defined at present over the next 3 to 5 years will put downward pressure on graphite prices even as demand continues to grow.
One aspect impacting on cost of production is the capital expenditure needed to develop an appropriate sized mine, processing plant and transportation infrastructure. Low capital costs up front often result in a less optimal production cost, while high capital cost may deliver a lower production cost. The Board, and the shareholders they represent, will need to consider a range of capital options before they'll be able to justify spending the capital to build the mine and processing plant at the scale they believe appropriate for the market conditions at the time of approval.
This is a long way of saying that the size of the resource, and later the reserve will need to be confirmed to some degree of certaintity before the Board will sign off on the construction capital.
I'm thinking that there'll be some fast-movers who will make it into production within the next 3 years while graphite prices increase with increasing demand. Then Syrah and/or TON will ramp up to their production levels at a low production cost with high volumes of quality product. The less efficient producers, at the high end of the cost curve, will then begin closing as the price for graphite begins to decline with the increasing volumes.
TON Price at posting:
65.0¢ Sentiment: Buy Disclosure: Held
