Ann: Kibaran Market Update-KNL.AX, page-94

For junior graphite companies the problem has never been to find potential customers (the infamous worthless off-take agreements in the graphite sector), the problem has always been and is still FINDING FINANCIERS for the construction of the plant.

If these off-takers were serious why not just pre-finance (at least partially) the construction of the plant in exchange of pre-defined advantageous graphite prices for years to come ? the answer is obvious, off-takers arent serious, all what they are saying is : if you are able of getting your plant financed, commission the plant and ramp up production, we are then willing to buy your graphite at whatever market prices warrant at that time. In other words, its a worthless agreement. the intention of off-takers is to create a market graphite glut that will benefit them in the end in the form of cheaper prices.

However most financiers (banks) arent dumb, and they understand that very well, that is why graphite companies are having trouble getting financed eventhough they have these off-takes.

I always said the solution to convince financiers is either to focus on the spherical graphite and vertical integration from the very beginning (integrating the spherical graphite plant in the feasibility study, not treating spherical graphite as an after thought product with additional recquired future studies), or simply start small with smaller capex and grow from there to reduce risks. What is up with all these juniors and their fantasy high CAPEX plans of 50.000tpa+ graphite plants ? Prove that you can produce and sell just 10.000tpa profitably and money will surely come for extensions.