The Fox Davies report provides a nice summary of the graphite...

The Fox Davies report provides a nice summary of the graphite market.

The key points I take out of the report are that:

1. Triton is about 12-months behind Syrah in the development cycle. Both have large, good-quality resources and may well be leasholders of a contiguous resource; and
2. There is a limited market at present for graphite products, although this will improve incrementally in the short term as the Chinese shut-down polluting graphite producers, and in the longer-term as the electricity storage market evolves.

This suggests that the first developer of their large, good-quality resource could disrupt the market sufficiently to make it difficult for the laggard developer to justify the business case for developing their similarly large and similarly good-quality resource. This is understood in the market-place and undoubtedly one of the reasons why TON trades at a discount relative to SYR.

TON is rightly moving very quickly through the approvals and feasability stages for Cobra Plains and Nicandra Hill to try and overtake SYR in developing a producing operation. This is sound leadership which should continue to be supported.

Another strategy to leap-frog SYR into production could be to purchase the old Ancuabe mine which is owned by AMG Mining, which is being recommissioned after it was mothballed in the late 1990's. Whilst the capacity of the plant, at 6,000tpa of graphite concentrate per year (from the Fox Davies Report), is a fraction of that being targetted by Triton, the purchase would be strategically advantageous for Triton because:
1. It would enable TON to become a graphite producer almost immediately, thereby allowing it to prove up the processing and logistical processes in preparation for upscaling to the Nicandra Hill resource;
2. It would enable to TON to engage with buyers and to develop these relationships in preparation for establishing marketing contracts for known and established products as well as offtake agreements for Nicandra Hill products;
3. TON's Ancuabe exploration licences surround AMG's and it is likely the resource is contiguous.