TON (ASX) Quinella

Originally posted by nasabear ↑

Hi Jimmycro;

I totally agree, when the value is there the market eventually realizes it. This goes for Vein Graphite as well.

I would say TON has significant leverage potential of capital the SYR may not have. The question is whether or not the market believes as much. People are going to keep backing what they see as less risky Flakers with the coming projected Flaker market.

TON is making the right signals, with sound fundamentals and is clearly in a peer imbalance.

TON could see a re-rating by the pundits to cover themselves. IO saw that interview as well, good marketing to get in peoples faces, the question is will TON attract new long-termers looking to leverage themselves facing a troubled world over the next 10 years as most industrial nations faces their main spenders retiring.

I would say the biggest imbalance of all is between Vein and Flake. This is a technology gap as well as a competition gap as well as a cost gap. Vein is cheap to dig up, graphene friendly, a major strategic resource to nation states and major industries...

Graphite/Graphene is going to influence.

1/ Nuclear Power
2/ Water Filtration
3/ Communication
4/ Nanotechnology
5/ Desalinization Plants
6/ Batteries
7/ Paint
8/ Military
9/ Satellites
10/ Space
11/ Sealants
12/ Computers/Robots

Like I've posted before it is worth mentioning that these bubbles of imbalance are all over the Graphite industry especially between companies like TON and SYR and over on Vein; BBR and MRF. In general the entire Vein versus Flake is going to dominate the industry before long so I would say the fundamentals are speaking loudly and clearly. Even though I don't own a piece yet of TON it is on my watch list.

Because many Flakers are completely unaware fo Vein, partly because it is an emerging market, here is a list of some of my thoughts about MRF. Maybe I am wrong, DYOR!!!

1/ The U.S.A. is a 100% importer of Graphite, and has recently joined China and the European Union in classifying Graphite as a critical strategic material. This has far reaching consequences in my opinion.

2/ A further 344km2 are currently under application for licence. Assets are value.

3/ Very little upgrading and processing is required to make a high-quality saleable product with Vein Graphite.

4/ Vein graphite is the rarest, most valuable form of natural Graphite. A true safe haven commodity. The Vein Graphite difference from flake is its crystal structure, the end-users use it in specific applications, it is the most competitive with China.

5/ Large tons of graphite don't actually impress as much as you might think. Finding buyers for all those tons is a massive hurdle.

6/ Smaller projects that hit revenue targets are intrinsically valuable. MRL has set sound, achievable targets and that extrapolates into revenue targets.

7/ Supply shortages are to be expected by 2020. A predicted shortage of 100k to 130k tons per year as demand by the BRIC nations expands.

8/ End-users purify lower-grade graphite in-house to save costs and to pay mines less.

9/ End-users are starting large volume buying again after the 2012 dip.

10/ Graphiters are quicker to market all round beating out base and precious metals.

11/ It is easier for small companies to adapt and change to meet their end-users product specifications, allowing them to set the higher price. Larger companies often have invested in one set of specifications and find the costs of changing exorbitant.

12/ Vein Graphite is special, many graphiters face large metallurgical processing costs the Vein does not have. Low cost plays a part whether or not to invest long or short. If the costs are high that has to weigh upon decisions because delays snag up confidence.

13/ MRL can keep capital costs low, this is very important to see in the budget and the management. Paying in shares to keep the management strong is one of the best ways to keep down capital costs. Another is mining in an emerging nation with tax and currency advantages.

14/ Vein graphite is a niche market supplied only by Sri Lanka. Graphiters are at the mercy of the End-users because they have specific requirements from their input material to their finished product and any change to the production line costs. End-users favor smaller tons of Graphite that meet their needs and will favor MRL for that alone.

15/ MRL is not beholden to anyone but the shareholders, they have excellent kingmakers CPS Group Capital and can make JV's and deals with End-users early on in the exploration, mining and shipping steps that they must take.

16/ Whenever low-cost production can be sold at the premium without delays revenue follows. IRR - Internal Rate of Return. Small consistent tons allows for one single customers. Multiple customers multiple headaches.

In the race to the $1 I would say the most leverage of capital and the least amount of risk is essential. Flakers are facing some serious fundamental Chop so to speak that I am sure you are aware of. I think as long-termers accumulate Vein it will cause a culling of the herd where the strong Flakers will emerge strong and better monetized then ever.

Have a great day and good luck to all.

Kind Regards

PS - DYOR !

Expand

Thanks for that awesome reply Nasabear. I like your work on MRF and BBR. but I think I am more bullish on graphite than you are. You need to get on this quinella. Regarding future demand you omitted the area that is going to push this demand the most. ie. electric vehicles. IMO when people start driving electric vehicles they will not want internal combustion any more. Mechanically they are 4 times more efficient and with solar panels on your roof who needs oil and gas anymore. Almost free motoring. Teslas now have a range of 500km.. Of course it's going to be a revolution! Enormous prospects with graphite. You just need stocks with good fundamentals and good management. GLTA

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Thanks for that awesome reply Nasabear. I like your work on MRF...

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Thanks for that awesome reply Nasabear. I like your work on MRF...

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