Flinders Resources (OTCPK:FLNXF) announced this morning that it has produced the first graphite concentrate at its Woxna Project since the mine was put on care and maintenance in 2001. The mine has been idle for 13 years as graphite had been out of favor until recently, when investors began to realize the potential for graphite demand to soar as new applications were discovered. While Flinders has remained an under-the-radar name in the space it has successfully brought the Woxna Mine into production with minimal dilution.
As I detailed in my recent article, the mine is expected to produce approximately 13,000 tonnes of graphite on an annual basis, although this can be increased to 16,000 tonnes or decreased in order to meet market needs. Since Europe has very little graphite production (about 85% comes from Asia and nearly 70% from China alone) I wouldn't be surprised to see the company max out its production once it finds customers for its products. Note that graphite isn't like copper or gold: there is no futures market and companies have to find customers for their products. This benefits a company such as Flinders, which is the first of the major graphite players in this new bull market to bring a graphite project into production. It also means that Flinders is the one graphite play that should be cashflow positive in the near future, and investors will reward this.
The shares are down marginally since I recommended them towards the end of July, and so I still believe that it has good value with low risk compared with its peers, as it doesn't need to raise capital and further stockholder dilution is unlikely, or it will be minimal compared with other graphite companies.
Disclosure: The author is long FLNXF. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
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