Hi Graphite, it's not immediately obvious how you can conclude...

Hi Graphite, it's not immediately obvious how you can conclude that, after adding in sales and admin costs, Syrah is no longer a low-cost producer.

The US$17m which you quote is the figure from the Equity Capital Presentation (June 2016), and represents costs from 31 May 2016 until significant cash flow from Balama commences, in 3Q 2017 - certainly more than 12 months. But let's not quibble. Assume that is an annual figure. Those costs add just under US$50 per tonne to opex at Balama, yielding an all-up cost of US$340 per tonne.

That puts Syrah well and truly at the bottom of the cost curve, for volume graphite producers in the world.

And can they really be viewed as coming to the market "at least three years too soon"?
Yes, adding 350K tonnes per year to world supply could have a significant effect on prices. But which companies will be most impacted? The first to feel the pain will be small-volume, high-cost producers, and those would-be graphite miners which have assumed sky-high basket prices for their product to make their financials look superficially good. Syrah, with its conservative basket price assumption of US$1000 per tonne, would seem well-placed to cope with price pressures, while simultaneously (and rapidly) acquiring a major market share.

As chairman Jim Askew pointed out in the New York presentation (13 Dec 2016), the first year of production is 90% covered at the moment. So where are the "losses for the next three years or longer"?

It looks more likely that the company will be quite quickly operating profitably. I expect that to happen less than a year from today.

Cheers,

Prime1