As with all agreements of this type, there are a number of...

As with all agreements of this type, there are a number of escape clauses and metrics that have to be met.

It is important to note that not one new graphite project has come online based solely on the battery industry as there is an abundance of natural and primary / secondary synthetic graphite powder in the market and why prices are ~30% lower over the past 18 months even with the limited Chinese restrictions. Also, automotive OEM's outside of China use only primary synthetic graphite anode grades in EV batteries with China the only country using natural graphite CSPG for EV's which means BKT will be selling fines at the lowest price quartile to a processor without the knowledge of knowing which battery OEM in China will be using anode product from POSCO. These are the facts of the EV battery and graphite powder market.

Stationary battery systems as well as a wide range of traditional and advanced applications that use non CSPG natural graphite powders that would generate critical cash flows with short qualification timelines. But unfortunately, all final qualifications are based on commercial production and not pilot or lab production which are done under near perfect processing conditions. This translates to an entity willing to take significant risks to fund a project that would introduce ~170,000 Mt (mod 1 & 2) into the graphite powder market that was done by SYR in the past that crashed the fines market and ultimately put their project into care and maintenance for almost two years until the market stabilised into equilibrium. The anticipated ultra-demand as pontificated by specific third-party marketing firms has not materialised spouting the same narrative over the past 10 years with each year moving the demand targets back with each missed demand forecast.

There is no evidence from the market that any new graphite project will be able to come online or survive over the next 3 to 7 years with limited working capital basing corporate success on a potential a battery processor agreement will meet market and corporate expectations.