Jaded, sorry, I wasn't ignoring your link previously, I've just...

Jaded, sorry, I wasn't ignoring your link previously, I've just been too busy lately trying to finish a development to have too much time to do anything other than a cursory glance over HC threads, and most of them are drivel, and I don't normally check here in Siberia.

My view (as an ex banker) is that you are on the right track with regards to your comments on financing. Bankers will want to see binding, take or pay agreements. Unlike something like say iron ore, or oil, which has a published price, and which can be sold into a spot market, graphite unfortunately is not as readily able to be substituted to new buyers. It's a niche industrial product, not a bulk commodity. So when a banker does their stress tests, they can't do an effective stress test, because even a 20% or a 50% reduction in price may still not see them able to sell the product if they were to take over someone's mine. Why not? Because graphite buyers have specific uses for their graphite, and tool their machines to take certain specifications of graphite, and you can't suddenly input Tanzanian graphite when you were previously using Canadian. You have to go through a process, and that takes time.

My previous comment on financiers perhaps being likely to be reluctant to lend to a mine on the strength of Chinese buyers doesn't mean it can't be done, but it does mean that the Chinese agreements will need to be scrutinised heavily, and possibly to a higher standard than a normal Western country that subscribes to a "normal" rule of law. At the end of the day, it's unlikely that any bank will take a graphite off-take agreement as it's sole security. If you want to know why, ask yourself why a bank feels the need to register a mortgage on your house, even though they have a legally binding and enforceable home loan contract with you. What's that I'm saying? Does that mean the banks don't trust me or the strength of the legally binding home loan agreement? Absof*cking100%lutely.

This doesn't just apply to off-takes with the Dragon, but the banks do know that the contract enforceability of say the EU or US is sounder than China. But they are still likely to want some skin from the buyer none-the-less. This is why I've repeated before (although I'm actually stealing the line from Andrew Spinks of KNL) that a buyer is not merely a buyer for a graphite mine, but a heavily involved partner.

There is a simple solution to the Dragon problem though. Those companies with genuine agreements seeking to get into production (currently MNS and SYR) will probably find they will get a better response from Chinese lenders. Of course, they are then going to be over a barrel, and the lenders (and buyers) will know this, so the financing terms are going to have to be heavily scrutinised. In such a low interest rate environment (globally) though, there should be a lender for anyone who can prove a genuine binding agreement.