was having a discussion yesterday with an investor mate. He made a couple of comments that he says are critical when looking in investing in a graphite company.
1: Qualification: qualifying you products is key to succeeding in the graphite game. This can sometimes take years to achieve. Having down stream anode companies qualifying your product to ensure it runs with their plant. It’s not like any other commodity like iron ore. Without proper qualification in the beginning, you risk hundreds of millions of shareholders money building a plant and producing graphite that no body wants.
2: Securing Genuine off takes not just (MOU): Only when the qualifying stage is complete, and your customer is happy with the products, flake size and purity things cans start to move.
Completing a detailed DFS and BFS is crucial imo especially in the graphite game. There are graphite companies out the that have had to go back two steps and complete a DFS for qualification.
This is critical imo when it comes to funding also. Means the possibility of gaining a lot of debt financing reducing dilution or not getting debt and raise more equity.
for example, BKT have crossed every T and dotted every I when it came to qualifying its quality graphite in its DFS hence why POSCO has gone all in with them not only paying $7 million in buying equity in the company but pretty much securing a shed load of the products.
At what stage RNU at with qualifying its product with end users?
BKT and RNU although have high quality graphite and in abundance they are definitely going down different paths.
RNU are going down the down stream path and BKT are leaving the downstream work to the industry professionals like POSCO and choosing to specialise in the supply of high quality, high purity various flake size graphite to their customers globally.
Ive chosen to invest in BKT rather then RNU because of my own reasons but they both offer compelling investment options.
