Odd CR this one. $1.8M isn't a lot of cash when the company is...

Odd CR this one. $1.8M isn't a lot of cash when the company is spending ~$2.35M per quarter and 52c isn;t a great price considering the scoping study and other updates Sprott is so pleased with. Why not go bigger of go higher price for UK investors who otherwise have no liquidly to get set at mid to high 50's even if they wanted to?

Anyway, been giving the graphite angle some more thought and have to say it has a huge impact on the project's economics and requires careful consideration. Without doubt SVM would be the cheapest graphite producer globally (negative cash cost and AISC actually after rutile credits) and would thus win any price war chasing market share. SYR and other graphite wannabes are all looking at around US$400/t graphite product costs for baskets not as good as Kasiya's larger flake size.

Why stop at 80ktpa graphite production? If the saprolite from 15m in deeper part of Indicated Resource extends down to 25m at graphite grades of ~5% then just sit in the pit and keep digging deeper! I say 5% TGC at depth in many holes because the maths using <0.5% TGC for top <7m means the bottom 7m must average 5% TGC for the total 14m donw hole to average ~2.5% TGC as per chart of recent aircore infill results across HG MRE.

Holes with total depth below 8m are almost entirely <0.5% TGC as per known graphite depletion from surface down to saprolite (and fine flake size, poor recoveries etc). Some holes hit areas of low TGC% and thus even at 12m depth are <0.5% or <1% TGC entire hole. The holes in areas of better TGC% clealry lift with depth as the high grade (and coarser flake size) at depth lifts the hole average grades up towards 3%. By definition, and as proven in the Malingunde PFS, TGC grades remain highest at depth right into the sap rock.

5% TGC @ $1000/t is worth US$50/t in-ground, or $30/t inground after only 60% recoveries, which is equivalent to rutile grades of 3.75% @ 100% recovery which simply doesn;t exist even in the top 1-2m. So long as the market can take SVM graphite volumes economics says sit tight and did as deep as possible on the high grade TGC saprolite which still includes say 0.75% rutile (another $10/t ore revenue). US$40/t recoverable in-ground ore value for a cheap, large tonnage soft ore strip mining operation is insanely good, even if you increase opex to something more likely.

The only fly in the ointment is graphite market volumes and pricing, as SYR found out multiple times. SYR's Balama mine not long back on line is producing at 100ktpa and receiving approx US$400/t for product FOB at port (after volume discounts and whatever it takes to secure offtake contracts). Balama has capacity of ~300ktpa graphite but has not been able to secure enough market share above cost of production to get there. China dominates and has controlled the graphite market with internal mine production, and leans on multiple other graphite producers to feedstock into the real profit driver... downstream spherical graphite value-added product for the battery industry.

Graphite is a relatively small market easily filled by numerous large graphite projects around the globe (graphite is not rare). SVM needs a graphite demand boom (generated by EV and other battery growth) and no new anode tech that substitutes for graphite and kills the market/price to be able to muscle their way into the market without a costly price war to force others into closure (eg Lithium market of two years ago). Scoping study graphite basket price of $1085/t would be fantastic result in this circumstance and print money, war for market share in over-supplied market would see much lower pricing obviously.

The financial outcome for SVM is hugely dependent on how the graphite market plays out by 2026/27 or whenever the project is actually built and ramped up to full production. Rutile will be strong and steady longer term imo, a well known market not driven by any large swings in demand or supply. Rutile is substitutable for synthetic rutile and other ilmenite pigment plant feed and so rutile has a market price floor below which the more rutile produced the more rutile will be purchased at that price no problem. Rutile by itself looks somewhat marginal and problematic regards annual footprint at shallower, higher grade pit designs. Deep graphite solves this problem and potentially shoots the lights out, so long as the graphite demand volume and price holds up into the future....