Hi PaitientMan
Great analysis. I do agree with what you have posted. There was a bit of concern when KNL released their OPEX in the BFS as it was a little higher than I liked. You are absolutely correct that the survival of KNLs business plan is largely upon the graphite price. However I do wish to point out, that's what mining business is about, and we are in a lower end of the mining cycle so hopefully things will become better as time goes by.
Another thing I like to point out is, assuming Andrew Spinks and the team are running the company as they should, the offtakes signed should have taken our OPEX into account. As graphite prices are agreed upon with each contract, I would assume Spinks and team would have signed an offtake at a good enough price for us to make enough money.
Our OPEX if everything goes to plan should fall as we develop with the following.
1. Connection to grid
2. Increased tonnage per year
3. Bridge completion
4. Upgrade of roads
As a summary, PatientMan makes a good point it all hinges on the OPEX and graphite price. Same with Iron Ore, uranium and other commodities.
Since graphite prices aren't published investors just have to make their best guess.
As I mentioned above, I trust management were smart enough to sign our offtakes with a good enough margin for a successful business.
Thanks.
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