In my opinion, the best investment in the graphite sector is Magnis Resources. Magnis' ore deposit is lower grade, and has higher operating costs, but it contains a very high proportion of large flake sizes, and will attract a higher average sale price. Magnis has off-take agreements for all of its production for the next ten years, and its off-take partners are major Chinese trading companies with significant graphite experience. One of its off-take partners, SINOMA, has committed to provide debt financing for 90% of the project, so the major risk with junior mining companies, that of lack of financing and share dilution from capital raising, is not present here. I consider Magnis to be grossly undervalued relative to its peers, with potential for significant upside.
MNS Price at posting:
23.5¢ Sentiment: Buy Disclosure: Held
