some thoughts on the stock for debate/discuss

I thought I would gather my thoughts on this stock. Really looking for an active discussion on this so feel free to comment.

McIntosh
I think the Strategy of McIntosh is becoming clearer
1) Produce a high grade (>95%), low impurity (from announcement “elements such as V, Co, Ni, Cu, Zn, Pb, Ba, Zr are below levels of detection”) product that will command a market premium. From the announcement the focus seems to be targeted to creating a product for the battery market. What that premium may look like I guess will only be really known when there is a buyer.
2) Get into production quickly.. Focus on getting a scoping study out so it is clear what the product looks like, what the costs to get into production would look like and what the opex costs look like. This is when the market can really start to value what LMB is about and when the shareprice and true underlying value will converge. It would seem environmental monitoring of the site has commenced and they are planning all of the pieces to move towards production after the scoping study is completed.
I think after they get production moving they can drill out the other targets more completely and add to the resource.. Not sure if they need to completely drill the target out at this point?
3) Production Costs in Scoping Study.. We saw the first high level version of a process sheet today which shows a relatively low capital/low operational intensive process which should in theory create reasonable capex and production costs. Also port facilities have been secured (announcement from 6 months ago) including space and it should be simply trucking the mined resource to port.
4) Financing. I have not seen mention of a BFS. Even what looks like a relatively low capex requirement should need at least 10M startup (to pilot) and more likely 20-30M depending on size of operation planned(just my guess and interested in discussion). How are they going to fund this is an open question. I guess after the scoping study we will see a valuation closer to the project economics and then a capital raising would be less painful but this is an unanswered question that I am sure will be answered in due course.
So basically watching this closely for more news.. I think the game changer will be finding a offtake partner for the product because Graphite still seems a bit elusive on how the product is exactly valued and what impurities is extremely important especially in battery technology.

Korea.
1) Successful operations in 3 mine sites that ceased when the Chinese flooded the market with graphite in the 90’s. China is no longer flooding the market and the price of graphite has appreciated significantly since then.
2) Historic production looked like “middle of the road” type graphite which at todays prices is still pretty good. However it would seem there will also some graphite there that with todays uses (batteries etc) could be considered premium product.
3) Existing infrastructure is still in place however needs refurbishment.
4) Intention and strategy seems to be drill out some more resource, refurbish the plant and get back into production because the mines are based in Korea which is a massive user of graphite.
So from my side questions are:
a) What sort of drilling results will we see at Geuman.. Is there a reason they are quickly getting drilling in place. Sampling definitely looked interesting.
b) What would be the cost of refurbishing the equipment to get into production? Would the process sheet need to change in light that the potential graphite targeted use may have changed since production in the 90’s.
c) What timeline are they looking at for Korea. Would they start this after they have production and cashflow from McIntosh or sooner?

General
1) We have seen the shareprice double in the past months after the capital raising.. I think there are a few reasons why we saw shareprice weakness from where LMB transformed from FLS to mining and now.
a) The McIntosh plans were clear in the LMB listing and graphite was hot.. Graphite got a bit confusing around the end of 2012 when people tried to understand what was a good project vs bad and what sort of graphite was commanding premium product.. This lead to a uncertainty across graphite stocks (except one)
b) The Korean deal came as a surprise and the conditions and price paid were questioned by a lot of people. Being locked into the deal with a big break fee and the premium price for an asset not well understood and that failed to get up earlier in the year through a backdoor listing made people nervous and coincided with a significant drop in share price. Also how it was to be funded (when funding was tight around Dec 2012) added to the concerns. It now looks like the Korean project looks very good on first samples but we will see with drilling.
c) Some FLS shareholders decided to sell down there holdings. (HHL for example was a significant shareholder that sold down and created downward pressure).
d) LMB did not have the capital backing to fund commitments on both Korea and McIntosh.. Capital Raising where tight and as the dates when LMB would theoretically run out of cash got closer the share price was also heading down. Cash burn rate also was high and remains high. But this is more due to the dash towards building a JORC etc. Capital Raising was done which gives LMB another 2, maybe 3 quarters to harden up their resource and revalue their stock before more money is needed.
e) Communication was not the best. Korea was badly marketed, the strategy and plans were also not well understood.. This has significantly improved as you can see by the announcements. We get an announcement almost every 2 weeks on average now and content is good. The format still probably needs some work but news flow is coming and we know from their activities is a lot more is due.

So I think a lot is going on in LMB. It is not a SYR in terms of pure project size but seems to be carving out a niche around specialized product. Looking forward to seeing more results and also an active discussion on this.


Please NOTE: These are my thoughts on LMB. I am NOT a financial advisor nor analyst. DO NOT take this as investment advice. It is my personal opinion, thought process which I am writing here also to be challenged on and for open discussion. I am very interested in other opinions.