The biggest mistake Graphite investors, researchers, analysts, brokers, media, journalists, financiers, speculators and the public can make is to compare WKT to SYR for example.
WKT is in the Graphite EXPANDABLE Market and SYR is in the Graphite BATTERY Market.
2 different markets and the Battery Market has the lowest pricing.
WKT product split is 75% EXPANDABLE Market and only 25% Battery Market.
The key is to be able to understand the difference in Graphite and the basket pricing and how each Graphite Deposit is different and is valued according to the flake size distribution and the fractions, recovery rates and purity levels that make up the basket prices.
There is small flake for BATTERY Grade - that is NOT suitable for Expandable Market.
The small flake is the lowest pricing on the Graphite fraction scale.
The large, jumbo, super jumbo flake is for the EXPANDABLE markets.
These tiered larger flakes above the small flake command PREMIUM pricing as the flakes sizes increase.
To compare WKT (watermelon) that is predominately in the EXPANDABLE market to SYR (grape) that is predominately in the BATTERY market is like comparing a watermelon to a grape.
They share the word "GRAPHITE" and that's about it as they are in different priced markets.
The next major comparison is to be looking at each deposit and if it is at surface or not.
Another Graphite hopeful in WA for example has very recently announced some fairly respectable TGC grades BUT has 40 meters of overburden to remove to get access. Stripping that much overburden in Australia is going to be WAY more expensive then doing that in Africa, that is if you even have to do it at all.
WKT for example has her Graphite deposit at surface - WKT is NOT stripping 40 meters of overburden.
The next major comparison to be looking at is the TGC (Total Graphitic Carbon) (Total Graphite Content) levels and cut off points.
WKT has grades over 25% TGC that will provide 17.9% TGC over the LOM (Life of Mine) with a cut of grade of 10%.
Other Graphite companies have sub 10% TGC grades for their operations and some have as low as 2% cut off grades. That is a lot of ore to process and does not leave a lot of room for error on the margins with recover rates and final purity results.
There has already been 1 mine in Namibia in late 2018 that has closed down until Graphite prices improve due to costing more to produce than what they can sell their product for. AND that is a company that has been in the Graphite producing business for the last 25 years.
IMERYS have a wealth of experience above most of the upcoming Graphite companies in the world and they closed their Namibia mine down. $50M USD mine under care and maintenance. That is a very real WARNING to graphite investors who are looking at low grade operations.
High Capex costs per ratio of concentrate is another element to be considering.
The higher the Capex the more dilution to be faced by shareholders and the higher the risk is once into production as t
he reason for the high capex is in order to make their projects modelling financial viable with low grades due to the additional volumes of dirt and ore to be processed.
Another Graphite company has a 80K TPA planned operation yet is requiring $160M AUD Capex.
WKT has a self imposed start up of 40K TPA requiring $40M AUD Capex that will require less than $20M AUD to upgrade the plant to expand another 40K TPA to have an output of 80K TPA. That would provide a 80K TPA plant for approx. $50M-$60M AUD.
WKT could afford to be overly generous and blow the figures out and still be comparatively further ahead as you could just build a duplicate plant and have 2 plants running theoretically for less than $80M producing 80K TPA.
There is a reason GRADE is KING !
Just because WKT has only strategically targeted 40K TPA as a START UP number does not mean that is all she is capable of doing when we are open to the North and South and we also have an adjoining tenement with a 4km graphite strike with similar grades to Lindi Jumbo appearing.
Check out the resource upgrade and the DFS 2019 reports and be impressed.
7 March 2019Updated DFS Confirms Standout Graphite Projecthttps://www.asx.com.au/asxpdf/20190307/pdf/4438vk96dh2yw4.pdf
(20min delay)