Hi,
The issue with your over-optimistic posts about Syrah, is that you are not taking into consideration "Risk of Execution". You are basically making implicitly and confidently AT LEAST 3 unrealistic assumptions :
1- Syrah will be able to produce 360.000tpa of high purity graphite (94%+) at all flake sizes spectrum (according to syrah metallurgical test results mostly small/medium flakes (75%) and some large flakes (25%)) at their targeted timelines.
2- Syrah will be able to sell (=the market will be able to absorb) ALL its production output.
3- Syrah will not suffer from some unforseen execution issues extremely delaying its commissioning of the plant (second half 2017) and ramp up of production (by 2018) targeted timelines.
Now, IMO all these assumptions are extremely unrealistic to say the least. For instance, and please correct me if I am wrong, I HAVE NEVER HEARD of any junior mining company who didnt suffer significant delays commissioning its plant or ramping up its targeted production figures. Please provide some examples if you know any, I am openminded and willing to learn.
Moreover, please explain to me how could a 400.000tpa flakes graphite market absorb an additional 360.000tpa output ? You like to mention "Economic 101", well let me tell you that when supply exceeds demand, not only prices fall, but STOCKS do increase (just look at the oil market), and stockpiling a product does cost money for customers. At some point, the supplier will have issues convincing its clients to stockpile the product NO MATTER WHAT THE PRICE IS.
Finally, assuming a smooth ramp up of production and achievement of targeted recovery rates (80%+) / purity levels (94%+) during the first months of the project, or even the first year/2 years of the project, is extremely naive....I really do invite you to look at the experience of other public graphite companies (Flinders resources, valence industries, stratmin resources) ramping up their production...
You are saying investors are underestimating syrah because of their lack of due diligence....I guess investors who are over-estimating syrah, are those who need to do more due diligence on graphite market and previus efforts from other junior graphite companies.
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