PatientMan You asked a very good question. Remember SYR cost are...

PatientMan

You asked a very good question. Remember SYR cost are only projected and do not include their Administration and Sales & marketing costs.


1^st I define where costs come from:

1. Cost of mining the graphite ore
2. Cost of processing the graphite into sellable graphite including drying, screening & packaging
3. Cost of internal transportation to ocean port
4. Administration and Sales & Marketing Costs

Syrah Resources costs vs. Chinese & Brazilian costs

1. I believe all 3 locations have around the same costs to mine the ore. 30 to 50/mt
2. I believe the Chinese & Brazilian costs are lower since they have direct electricity and lower fuel costs use to operate the dryer and lower supply and maintenance costs since all equipment is purchased locally while Syrah has to import all or most supplies and most qualified trained personnel.
3. I believe the Chinese & Brazilian have lower inland transportation since fuel cost are much lower and their trucks are able to get back hauls vs. Syrah transportation costs.
4. Administration and Sales & Marketing Costs is where the major difference is. The Chinese and Brazilian are all privately owned companies (currently over 90 % of the natural flake graphite mines that are in operation today are privately owned) vs. Syrah which is a public shareholder company. In reviewing Syrah financials I believe the have about 20 M in Administration and Sales & Marketing Costs vs. a Chinese graphite mining company with less the 1M and the Brazilian graphite mining company with less than 5M. Thus this then calculates out as follows in cost per ton.

Chinese typical mine is 20,000/mt of annuals sales thus their Administration and Sales & Marketing Costs are around 50/mt

Brazilian mine and is 70,000mt of annual sales thus their Administration and Sales & Marketing Costs are around 71/mt

Syrah mine capacity is 360,000/mt but we can only consider annual sales so their projected cost base on various annual sales volumes are as follows:
30,000/mt of annual sales their Administration and Sales & Marketing Costs are around 700/mt
80,000/mt of annual sales their Administration and Sales & Marketing Costs are around 263/mt
150,000/mt of annual sales their Administration and Sales & Marketing Costs are around 140/mt
200,000/mt of annual sales their Administration and Sales & Marketing Costs are around 105/mt
300,000/mt of annual sales their Administration and Sales & Marketing Costs are around 70/mt

The net result is Syrah will have to substantially reduce its Administration and Sales & Marketing Costs or sell over 300,000/mt per year to become competitive with Chinese and Brazilian. Thus can the management of Syrah do this?

The other option for Syrah Resources is it raise additional capitals and build a graphite anode plant in USA and then have the graphite anode plant be required to cover the losses from the graphite mine by paying higher then market price for their graphite.

Being that SYR is only about 6 months from start production so they report. We both will find out soon how SYR costs play out and how well management does selling the volumes need to get their cost inline with Chinese and Brazilians.