Finance; The logical conclusion.

Finance; The logical conclusion.

There’s a lot of unsubstituted rumours around finance and odd conclusions being drawn due to the delay in final approval.  

I wanted to add some reasoning to the conspiracy theorists. The banks and German government have been through a fair bit (Brexit anyone?) of late but even these seem unlikely to have caused the delay in final approval. The delay was caused by KNL advising the banks that our funding requirements had changed, we were ramping up production from 44ktpa to 60ktpa. We were changing the deal.

This has changed the metrics in every way. No longer was the NPV ~$197m, but closer to ~$295m. We’d need bigger machinery, more drilling but this would also lead to a more viable and profitable mine.

What hasn’t changed is how Germany needs and defines graphite. They deem it as “critical resource” and until this changes, I believe it is short-sighted to speculate on a negative finance outcome.

Germany needs graphite. KNL has it and contracts with an EGT and ThyssenKrupp, who are politically connected (see post http://hotcopper.com.au/threads/whe...2846205/page-10?post_id=18630867#.V7z7uPl95aQ for my theories). Finance will happen and the delay was only due to the changing metrics related to the increase in production and costs. But this will more importantly lead to increased profitability/viability!

Governments/banks take time, and when you change a deal midway through they take even more time. But these changes to KNL will lead to a stronger pitch. Until Germany changes their “critical resource” label for graphite it is silly to worry.

Recent CR announcement; 83.9% taken up by new shareholders! Nice.