I believe you may have got a few posters off guard as usually when a post of such nature shows up on a thread, particularly when a new poster creates a new thread to do so, it is perceived as being for a particular reason. I wont judge you mate (Not Yet Anyways )
In future just post your query on the general thread without the need to create a separate thread and you should be fine !
In regards to your line of questioning, comparing SYR with RNU, there are advantages and disadvantages of each project that an investor must weigh up. The demand growth for Battery Anode Material over the coming decade will see both companies succeed, the world needs every tonne of natural flake graphite that is in production and planned to be in production (and there is still a shortfall of over 2 Million Tonnes later this decade). I personally believe the ASX Listed Graphite Plays with their own Tier 1 Mining Projects that will provide feedstock to their own downstream processing facilities provide the best value for money i.e. RNU + TLG + SYR should do extremely well over the coming decades. At the end of the day with a significant global deficit emerging, the companies are not in competition with each other. The EV game is still in competition with the ICE after all.
Syrah Resources had first mover advantage in not only the Graphite Mining Space, but also the Down Stream Processing aswell. There have been a number of hiccups along the journey that has caused the SP to be where it is today:
- Syrah Released a Feasibility Study for Balama in 2015 which contained a number of assumptions which looked fantastic on paper, but reality has been a completely different story and hasn't matched what was initially planned
For example the company modelled a LOM Cash Cost of US$286/t at a plant recovery rate of 92.5%
A Quick Glance at the December 2021 Quarterly Report and you will see the company had a C1 Cash Cost of US$1,159/t at an overall recovery rate of 82% which is Significantly Lower than what was modelled pre-production.
In conjunction with the higher C1 Cash Costs per tonne, the company received US$530/t for the sale of its basket flake. Yes you read correctly, Costs at US$1,159 and sales received at US$530/t. They essentially operated at a US$629/t Loss in the December Quarter.
Multiple reasons of why this occurred include: - The company highlighted Shipping Container Disruptions + Pricing of Shipping - Lower than expected Recoveries - Long Term Legacy Contracts with their Chinese Offtake Partners - Plant Design and Optimisation works - Lower than expected Final Purity i.e. could be attributed to feed grade or processing plant issues which I discuss below
Another Key Factor that I have been following along closely with is the existing resource and reserves statements issued by the company (Reserves Shown Below). In terms of JORC compliant reserves, the company has 0 reserves within the Proven category, with 100% of reserves in the lower confidence probable category.
Whilst the size of the deposit is a giant, the geological certainty is at a lower confidence level than in comparison with Renascor which has the majority of its smaller sized deposit in the higher confidence level. This is a critical point to make that if you have lower confidence in the heterogeneity of the resource, it can lead to issues in operation if your feedgrade is not as expected or if the lithology contains contaminants or other impurities. Whilst the headgrade was expected to be world class at 15.73%, the recovery rates and purity of end product today suggests that one of two things are occurring. 1) The Feed into the plant is not as great as what was expected; or 2) The Plant is not operating as expected
The other point that you touched on regarding being located in Mozambique also plays a significant role on the SP of the business. It goes without question that Mozambique is a 3rd world country in comparison with Tier 1 Mining Jurisdictions like we are afforded in Australia.
Another ASX Graphite Player Triton Minerals had their #1 Project located a short drive away from Syrah. Unfortunately for Triton after spending years developing the project which contained a world class Mineral Resource, the Government took back control of the project and cancelled their lease without warning or consultation last year. This dispute between Triton and The Mozambique Government is apart of ongoing Legal Action which is not good for the African Mining Industry in general or for Triton. It goes to show that when you Operate in a 3rd World Country, just how safe and secure is your mine ? Particularly if you are a foreign owned business sending those profits offshore
In summary Mate, Both Companies I believe have a great future, particularly if Syrah can Iron out the creases that have plagued the company over the past few years and If the Mozambique Government doesn't pull a Triton Minerals on the business by taking the project away without cause.
In regards to Renascor - Yes the overall Resource is Smaller at Present (Future Drilling can increase that), but the majority of the resource has been drilled close enough together that a large portion of the reserves are within the Proven category that provides geological confidence that when in production, recovery rates and purity of end product will not be an issue - Costs per tonne for Renascor if they can achieve close to the US$355 modelled within the 2019 Study will place RNU at a much lower cost per tonne than what SYR are achieving today - Renascor are currently negotiating Pricing Terms with potential offtake partners. The game has shifted from a buyers to a sellers market, we have the ability today to not be locked into long term legacy contracts that SYR is currently locked into, leading to potential higher margins for RNU - Location Location Location. There is absolutely no substitute for being located in a Tier 1 Safe, Stable, Secure Mining Jurisdiction. Mozambique + Tanzania + The Congo + Cameroon + Chile + Serbia + DRC + Zimbabwe are just a few countries that have screwed over Western Mining Companies over the past couple of years, the list of Investors who have been left high and dry in the process is large if you have been caught up in the mess.
RNU Price at posting:
32.5¢ Sentiment: Buy Disclosure: Held
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