Hello again
I noticed some people are wondering what the plan was with the TGC graphite at Zaveliesky. As of last week, Volt have sold 800t of TGC graphite. Turns out because of there accounting set up (with regards to the 70/30% ownership) there are some polices that didn’t allow what portion of that 800t that had been sold before the latest quarterly to show up in that announcement.
800t is roughly what Zavaliesky produces in a month. Sounds like the cost of start up and sale of graphite were proportional.
This is because the mine has had some headwinds:
- Electricity supply has been intermittent.
- Blending and other consumable products have been either held up by the supply chain deficits or, un-importable because the boarders had been locked down.
- Almost an entire shift was lost during the conflict.
It cost volt $500/t to produce TGC and they sold the 800t at a price of $750/t
TGCs market value ranges between $650t - 1,200t
With these headwinds, they are still on track to producing 8000t of graphite by the end of this financial year
8,000-9,000t/pa is Volt’s current target. The mine is capable of 20,000t/pa
8,000x750= $6,000,000
I believe that’s a fair valuation of this financial years revenue.
The optimist might say:
9,000x925= $8,325,000
925 is the average of 650 and 1200
With Zavaliesky purring:
20,000x925= $18,500,000
My personal opinion is that volt is currently valued as if this is its only reality.
With upgrades to the mine site:
100,000x925= $92,500,000
#
Lets be honest, upgrading a mine site is easy to type but hard to actually do. Currently Zavaliesky is only producing TGC, why is that, I can only speculate but in order to put the graphite through thermal purification, Volt needs to mix the TGC graphite with caustic and heat it.
Who knows how hard it is to get hundreds of thousands of litres of caustic in Ukraine right now?
And to heat it? What if there’s a power cut and the solution starts to cool? Im not sure with graphite but with alumina they have to dump the mix to save it from solidifying in the tanks.
Im speculating that they’re not purifying the graphite because of the power cuts. Anyway, onward with the evaluation. Let us speculate.
With Bunyu and upgraded Zaveliesky combined:
300,000x925= $277,500,000
All these calculations are for TGC graphite which is as cheap as the grey gold gets!
Another surprise to me was that Zavaliesky is capable of thermal purification. Im not sure if this is news to any of you but I was under the assumption that TGC graphite was all it was capable of producing.
30% of TGC will be purified into UHPG
UHPG market value is TBA
70% will become spherical purified graphite and then (and here’s the kicker) Coated Spherical Purified Graphite.
Spherical purified graphite = $3,600
Coated = $8,000
70% of 300,000 is 210,000t of spherical Purified Graphite mined per year:
210,000x3,600= $756,000,000
And then once its Coated:
210,000x8,000= $1,680,000,000
Thevalue of the remaining 30% (ultrahigh purity Graphite) is yet to be announced but if you search it up on google you’ll be very happy with the results.
Multiply that number by 90,000 (the remaining 30%)
What does and does not come to fruition is in the hands of Trevor, the laws of supply and demand and to some extent…Putin
I encourage empathy and patience with regards to Zavaliesky, some of the employees of the company we’re invested in are involved in a war. Their lives are more important than our money.
Keep in mind, those numbers did not capture the shared ownership, that shared ownership should reduce 10% off of all the numbers after the hash and 30% off of all the numbers before it.
Please correct or critique this analysis by all means! My intent is to be as accurate as possible.
“Once you've bought a company, the hardest decision is no decision... patiently waiting to be right.”
Chamath Palihapitiya
