There may be some confusion here between graphite purity and...

There may be some confusion here between graphite purity and flake size. The purity of the graphite concentrate depends largely on the initial ore grade ( typically 16+% at Balama, which is high by world standards), and on the nature of the deposit. Most graphite occurs, like that at Balama, in schist, which is relatively hard, but from which the graphite separates easily. The simple physical processes to produce concentrate have very little effect on flake size. These processes do not "destroy" the product. Because the greater part of current world demand is still for graphite for traditional applications, such as furnace linings, large flake is preferred, and Syrah is apparently moving to mine those sections of Balama which have a higher percentage of large flake. Makes sense. We just have to hope that the battery market, which needs the fine flake that Balama has in abundance, does a hurry-up.

Some graphite deposits occur in saprolite (which literally means "rotten rock"), which is soft, and easy to dig, but leaves clay particles clinging tenaciously to the graphite flakes - a real no-no to battery makers. In that event, lots of expensive chemical or thermal treatment is needed. This is more costly than the small improvement needed for Balama graphite (with no clay), when going from the 96-97% concentrate up to battery grade.

Regardless of the type of ore, graphite is lost during the production of spheroidal graphite for batteries. In effect, the corners are chopped off, and the flakes rolled up into little balls. These spheroids are smaller than the fine flakes from which they are made. Big spheroids don't make good batteries! If someone wants to make battery graphite from large flakes, it's easy to see that they must grind off even more graphite, resulting in a poor yield.

Syrah's saving grace still lies in the fact that, due to the high grade and very large size of the ore-body, their costs (at reasonable volume) are going to be lower than almost anyone else. This is borne out the fact that almost all attempts to fund other new graphite mines are failing. Any banker can see that Balama is likely to be able to undercut them. The marginal cost of increasing production from Balama will be so low that Syrah is likely to be the world's main producer for many years to come.

The critical question for Syrah remains as one of how they cope with the next 12 to 24 months. If they can achieve positive cash flow within the next two quarters, they are probably unstoppable. If not, there is a big question mark over the company's future.

Cheers