According to
Global Petrol Prices, Mozambique's diesel costs are significantly cheaper than China & Brazil:
View attachment 463247
Mozambique diesel is 26.96% cheaper than China:
View attachment 463244
Mozambique diesel is 35% cheaper than Brazil:
View attachment 463250
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Also, when you said: "
SYR cost are only projected and do not include their Administration and Sales & marketing costs" you're not correct. Syrah's feasibility study
did include General administration costs (although you're right that they've risen recently):
View attachment 463253
In the last quarterly call, Jim Askew said that $300 of operating costs per ton was about right for the current figure.
It's not good news for short term holders, but, because Syrah will be mining graphite for the next 50 years, they can instigate strategies in the coming decades to get the opex lower. They could increase output to reduce the mining cost per ton. They can switch to hydroelectric powered electricity on the grid for approximately 5 cents a kw/hr (whenever it's possible), or build a solar farm with battery storage (think
Alevo or Tesla
Powerpacks when they're cheaper likely
containing our own graphite) for progressively cheaper electricity. They could conduct their own transport operations buying a fleet of trucks (vertically integrating) with the enormous amounts of free cash flow that will be generated in the coming decades (or maybe in the future world, buy autonomous trucks to eliminate the cost of drivers?). And as operations expand with spherical and vanadium, the General administration costs per ton will fall as a ratio.
Where I massively diverge with you, is the constant whining by cynics about how high Syrah's administration costs are versus other small-time (previously big-time) operations. Syrah is continuing to build a very professional corporate team; the professionalization of graphite if you will. A former BHP Billiton General Manager (Shaun Verner) as the CEO, a former Rio Tinto General Manager (Darrin Strange) as the COO, a former BHP Billiton Marketing General Manager as the CCO, and Dr. Christina Lampe-Onnerud on the board to guide management on where battery anode technology is headed. This is likely the best team ever assembled to
sell graphite in the history of the world. Tolga Kumova did a great job getting so many offtakes and MOUs before Balama has even started producing, imagine what this team will do when the mine is producing at nameplate!
With a tier one asset, and many decades ahead, the game becomes expanding output and reducing costs. I agree with you that in the first few years, costs per ton will be higher if tonnage sold is lower than the feasibility study's figure. The value of a business (theoretically at least) is the sum of its future cash flows discounted at an appropriate rate for risk. In that theoretical world, whether Syrah sells 160,000, 200,000 or 250,000 tons in the first year makes little difference as long as the balance sheet remains healthy (which I expect). It's all about those future cash flows, or, at least it will be in the next year or two when commissioning, ramp-up, Mozambique political strife, uncertainty about opex, uncertainty about operating costs, and uncertainty about graphite demand for battery anodes becomes a thing of the past.
Sorry for posting so much (I'm actually trying to stay away unsuccessfully). I don't think that HotCopper affects the price of a mid/large cap like Syrah, but I'm finding the forum really useful as a mechanism to critique my thoughts and consider alternative viewpoints.
Cheers.
(20min delay)