Gaining offtake agreements for industrial minerals are complex...

Gaining offtake agreements for industrial minerals are complex at the best of times and compounded in difficulty when considered in an already complicated graphite industry. I don't assume to know all the nitty gritty and in's and out's, but I do know this much.

Broadly speaking, there are two types of offtake users in play regarding natural graphite.

1. Direct users.
2. Distributors.

There appears to be many and varied direct users. They also seem to need supply that is relatively small scale when considering high volume usage.

Disregarding potential new players like the gigafactory for the time being, it seems that the high volume usage is obviously going to come from the distributors. For instance, the MOU that SYR has with Asmet. That company is a distribution operation with it's HQ in the UK and distribution hubs scattered around the world. It is companies like this that will open up new markets and extend existing ones. Direct users are narrowed focus besides being many and varied. It would be a nightmare for a "super pit" to deal with so many direct users from different cultures and with different needs and agendas.

The so called "super pits" need to seek offtakes with the distributors because they need to seek large volume users in order to underpin their economic viability. So far there are two "super pit" discoveries and SYR must be commended for seeking the high volume offtake users before announcing any smaller direct users. If they did it in reverse it might please and excite the market in the short term, but the risk is it scares away the high volume distributors because they desire first preference, just like most other users.

There is plenty more to say about this issue. However, I will leave it at that with this final thought. IMHO it would be a huge strategic error if TON chased down a smaller volume direct user as their first offtake in order to please the market. In the short term it would excite the market and maybe pump the SP, but the long term effect could be detrimental to gaining the high volume users that the company would need to become economically viable.

Cheers