1. Sorry I wasn't clear. I was referring to valuations of the spherical graphite plant mentioned in earlier posts and not the Morgans or Hartleys valuations.
2. My understanding is that the risk factors take into account idiosyncratic risks such as financing, construction issues, logistic issues and this is heavily implied in the Morgans report. The discount rate would be used to take into account the other 'big and scary' market-related risks such as sovereign risk. Considering that Mozambique's yield on bonds is currently 20-25%, I would argue that a 10-12% discount rate is far too low. Would love some more insight on how 'the industry' does their valuations, any links?
3. I absolutely agree with that article that battery production and graphite demand is set to sour. There is no dispute here about that and you could find a hundred links and Elon Musk tweets to prove that. Fact is, currently less than 20% of natural graphite is used for lithium ion batteries. The vast majority of natural graphite is used for steel, and we can safely assume no growth there. The majority of lithium batteries use synthetic graphite. There's a reason Syrah is so heavily shorted. I should've been clear that I was referring to an oversupply in the next few years, not a decade ahead. Syrah will be 40% of the entire natural graphite market, which is a 66% total increase in graphite supply. Is demand going to increase by 66% by the time that happens? As for BAT's offtakes, an oversupply does not mean that we can't sell any, it just means that there might be downward pressure on the price.
https://www.livewiremarkets.com/wires/battery-sector-to-drive-major-increase-in-graphite-demand
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1. Sorry I wasn't clear. I was referring to valuations of the...
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