KNL Strategy ticking all the FA boxes, page-30

I really want to believe the KNL story but there are a few nagging concerns I cannot shake. If anyone can help dispel my concerns please respond.

1. KNL's valuation in their Bankable Feasibility Study suggests the basket price for their graphite is going to be USD1466 per tonne. That does not seem to gel with the type of off-take agreements they have in place. Half of their slotted production is for a refractory graphite off-take with Thyssen, which will not garner that sort of price per tonne (not even USD1000/t). Hence their BFS valuation is too high.

2. The metallurgical results for Epanko don't have much detail around how they were sampled except that 7 holes were drilled. Even the co-ordinate for the 7 holes drilled for the purpose of a bulk sample does not fall within the Epanko deposit (does anyone have the real location?). Given that the previous metallurgical results released were from a trader that received a 5kg sample I would have to assume the coarse flake was selectively sampled in the drillholes as well. Where is the sampling information regarding the bulk sample? Was all intersected mineralisation sent for metallurgical testwork? I would really like to see some detail before I invest. If they have selectively sampled then the flake distribution cannot be applied to the JORC resource figures.

3. Also, where is the 60kg Mintek sample that was collected? There was mention on 7th of May 2013 that they had sent Mintek, presumably 22.3m of quarter core from hole MHDD001, a bulk sample to determine milling and flotation parameters. The results of that work don't seem to be in any later ASX releases (unless I missed it and someone can direct me to it). It seems to me that all the metallurgical work referenced in releases up until the 7 drillholes relates to the 5kg sample sent to the trader. So it seems that if they did receive the results they never reported them. Is there something I don't know about the sample sent to Mintek? Did it get lost on the way?

4. They signed an off-take agreement with a trader based on metallurgical test-work on a 5kg sample (that is what it appears to have happened based on their ASX releases, and if it did that is freaking amazing, well done). They even appear to have based their scoping study on the results from the 5kg sample metallurgical test-work...again, freaking amazing. If I am wrong about this please direct me to information that says otherwise.

I believe, in my opinion mind you, that the KNL story needs more transparency regarding the metallurgical test-work completed. Without that detail I cannot believe that they have that many tonnes of such extremely coarse flake.


Although I have put None for Sentiment, I would consider a tentative Buy if my queries can be answered and my concerns alleviated.