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jaberwock  

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  • Graphite Update: Syrah Feasibility Study And Zenyatta PEA [View article]
    micpickle:

    Thank you for that insightful comment
    Jun 8, 2015. 11:26 AM | Likes Like |Link to Comment
  • Graphite Update: Syrah Feasibility Study And Zenyatta PEA [View article]
    I first wrote about ZEN in July of 2013, when the shares were over $4

    http://seekingalpha.co...

    I followed that up with an article written in December of 2013, after I had seen a 3D picture of the proposed Albany mine. That picture convinced me that ZEN's CAPEX and OPEX would be significantly higher than that of the competing graphite producers, and that they would need to come with with some very convincing data to justify their high price assumptions. At the time ZEN was trading around $2.50.

    http://seekingalpha.co...

    The PEA confirms what I said about the very high CAPEX and OPEX, and I still don't see any convincing data to back up the graphite selling price assumptions.

    The share price has now dropped to $1.50.

    Each of these articles has drawn vitriolic and abusive comments from ZEN supporters, and those who have been sucked into investing in the company after reading the endless stream of BS put out by management.

    Don't blame me if you have lost money. Just face reality and sell while you still have some value left
    Jun 4, 2015. 12:19 PM | 2 Likes Like |Link to Comment
  • Buy Graphite, But Do It Right [View article]
    I can see your point about Syrah. I have only a small position which I can afford to lose, so I will and see whether they get funding and whether the MOU with Asmelt bears fruit. Either of those events could give the shares a boost.

    If you think the Chinese off-take agreements are bogus, how do you explain the fact that the Chinese are putting money up-front to finance projects?

    Magnis and Triton have financing commitments from their off-take partners.
    Jun 4, 2015. 11:45 AM | 1 Like Like |Link to Comment
  • Buy Graphite, But Do It Right [View article]
    I am sure we won't find out until it is finalized and announced.

    $138 million would be pocket change for off-take partner Marubeni, a 6 billion company that invests in mining projects all over the world.
    Jun 3, 2015. 04:40 PM | Likes Like |Link to Comment
  • Buy Graphite, But Do It Right [View article]
    The rest sell concentrate to a processor/distributor such as Asbury. I know of only one graphite company outside of China that is vertically integrated, owning mines, processing plants and distribution channels. That supplier is Netherlands based AMG.

    Imerys used to mine concentrate at the Timcal mine in Canada, but that mine is now closed. The rest sell concentrate to a processor/distributor such as Asbury.

    I don't know much about the structure of the industry in China, but I suspect it is similar to the rest of the world.

    Why do you think that selling a bulk concentrate to a distribution company is any different from the way that graphite is sold now? In my opinion, the only viable way to enter the Chinese and Asian markets is with a local partner.

    Syrah's decision to increase their plant size to 356k may reflect a rose colored view by an incompetent management. On the other hand, it may reflect feedback from one or more of its other major partners.
    The cost difference between a 200k and 356k plant is peanuts, and you can always produce 200k in a 356k designed plant while the market catches up.
    Jun 3, 2015. 04:37 PM | Likes Like |Link to Comment
  • Buy Graphite, But Do It Right [View article]
    The problem with going after the synthetic market, is that synthetic and natural graphite are two different materials, and natural can only substitute for synthetic in a very limited number of applications.

    One such application is li-ion batteries, where natural and synthetic compete. The natural graphite preferred for that application, is flake graphite

    Other competing applications are in the low value markets where secondary synthetic (waste from the manufacture of synthetic graphite products) is sold at fairly low prices, just to get rid of it.

    Most synthetic graphite goes into molded products such as electrodes for arc furnaces which are manufactured from coal tar pitch and petroleum coke. It is the manufacturing process that gives these products the strength and properties required for the application. If it were practical to make these from powdered graphite, wouldn't the manufacturers be recycling their waste instead of dumping it on the market?
    Jun 3, 2015. 03:01 PM | Likes Like |Link to Comment
  • Buy Graphite, But Do It Right [View article]
    I understand your skepticism with regard to the high volume deals being signed by Chinese companies. The volumes do seem to be high relative to the size of the market, and they may be just trying to lock up supply as insurance against Chinese mine closures.

    However, my own contact in the business is telling me that the Chinese supply of good quality +50 mesh flake has almost dried up and companies are depleting inventory. Battery makers are turning to synthetic graphite because of poor quality and unreliable deliveries of natural graphite from China. This information comes from someone who is in the business, visits China regularly and is well placed to know what is going on.

    Locking in a supply as insurance would explain the take-off agreements, but it does not explain the offers to finance at Triton and Magnis. Nobody would put money upfront if they had no intention of taking the product.

    I think you are misinterpreting the Syrah/Chalieco deal when you say that prices are to be negotiated every three months. The deal says that prices are to be set every three months, based on prevailing market prices - that is not the same thing at all.

    The more important deal for Syrah, in my opinion is the potential take-off agreement with Asmelt. Not only is that deal a higher volume, but it also provides an outlet for the -150 mesh material. Confirmation of the Asmelt agreement will boost the share price. It would be a brave move to short Syrah, with a financing announcement imminent, and without knowing whether or not the Asmelt deal is still on the table
    Jun 3, 2015. 02:43 PM | Likes Like |Link to Comment
  • Buy Graphite, But Do It Right [View article]
    If there is such a big surplus on the market, why are the Chinese signing all of these high volume take-off agreements?

    I know those agreements might be hard to enforce, but some of the take-off partners are even offering to finance the mining projects. Why would a company do that if they didn't expect to be buying the product?
    Jun 2, 2015. 06:15 PM | Likes Like |Link to Comment
  • Profiting From The Upcoming Graphite Boom [View article]
    Tesla is an unknown at the moment, because they have stated a preference for synthetic graphite, which is more expensive. Possibly, they may change to natural graphite to reduce costs - nobody knows.

    Even without Tesla, there will be growth in the li-ion battery market, which implies growth in graphite - at least until somebody comes up with an alternative anode material.

    If there were no new mines coming on stream, prices would no doubt escalate, probably to the point where natural and synthetic graphites become price competitive with each other for battery grades.

    However, there is plenty of potential new supply. There might be temporary upward pressure on prices, but only until the new mines come into production
    May 31, 2015. 05:13 PM | Likes Like |Link to Comment
  • Profiting From The Upcoming Graphite Boom [View article]
    The Ontario government wastes billions of dollars of taxpayers money every year. The fact that they have given money to Zenyatta for research is no indication of the viability of the Albany mine.
    May 28, 2015. 09:03 PM | Likes Like |Link to Comment
  • Profiting From The Upcoming Graphite Boom [View article]
    I agree, the fully diluted market cap would have been a more useful comparison. The 10 cent MNS options, when cashed will provide cash for the project, but they could also be a drag on the share price if the option holders decide to cash out.
    May 25, 2015. 02:02 PM | Likes Like |Link to Comment
  • Profiting From The Upcoming Graphite Boom [View article]
    Zenyatta has created a lot of hype and speculation around their stock, claiming that they have a "unique" graphite and quoting selling prices of $8,500/tonne - more than five times the market price for flake graphite.

    However, they have never produced any real evidence that they can sell the product in meaningful quantities for above market price. They have never even published an analysis of their flake sizes. It is pure speculation, with no substance.

    The common processes used to purify graphite include:

    Flotation - which is normally the first step in the process. Depending on the starting graphite, and the degree of sophistication in the flotation circuit it is possible to get Cg% in the high 90's with flotation only. Focus, for example is getting over 99% by including a couple of "polishing" steps in the circuit.

    Chemical treatment - usually acid leaching, sometimes preceded by a hot caustic bake (which loosens the gangue materials). Zenyatta is claiming that they can reach battery grade purity with just the caustic bake, which means they don't have to use acids. This would give them an advantage over other graphites, because they would save the cost of the acid leach, and the cost of handling and neutralizing the acid. The caustic bake process is not proprietary to Zenyatta, there is no technical knowledge that they can license to others. (For example, Magnis have reached 99.4% Cg with a caustic bake)

    The purification process will add value to Zenyatta's product. That added value will be at least equivalent to the cost of acid leaching of other graphites, but that is nowhere close to the $8500/tonne they are claiming as their product value.

    Thermal treatment - an alternative (or possibly and addition) to acid leaching is thermal treatment, which is quite expensive, but again, would not bring the value close to $8500/tonne.

    As an example, battery grade spherical graphite sells for $3,000 to $4,000/ tonne after purification and spheroidization. Depending on the graphite, the spheroidization process can waste between 30 and 70% of the product, which implies a value for the starting flake concentrate of less than $2,000/tonne, again nowhere close to ZEN's $8,500.

    The major downside to Zenyatta is that their mine development and mining costs will be extremely high compared to their peers. I explained that in an article last year.

    http://seekingalpha.co...

    It will be interesting to see what pricing assumptions are used in the upcoming PEA (which has so far taken over 17 months to produce, versus a normal 3 to 6 months).

    A PEA for an industrial mineral has to demonstrate that a market exists for the product, at the assumed prices. If ZEN does not have priced LOI's or take-off agreements in place, they will have to use commercial pricing in their PEA, and the mine will very likely prove non-viable. Perhaps the delay in issuing the PEA is related to markets and pricing?

    Enjoy your kool-aid
    May 20, 2015. 05:54 PM | 1 Like Like |Link to Comment
  • Profiting From The Upcoming Graphite Boom [View article]
    Is Thyssen-Krupp the "major European graphite trader", or are we looking at two different agreements?
    May 20, 2015. 05:17 PM | 1 Like Like |Link to Comment
  • Profiting From The Upcoming Graphite Boom [View article]
    Thanks for the information, I will post a correction
    May 20, 2015. 05:12 PM | Likes Like |Link to Comment
  • My Favorite Contrarian Idea: Short Syrah Resources [View article]
    A lot of graphite is sold through intermediary companies rather than directly to end users. Asbury carbons in the USA for example, does not mine graphite, it buys concentrate from other mines, processes and packages it and sells to end users.

    Most of the world's graphite is consumed in China, Japan and Korea. Finding a distributor who will sell into these markets is probably the best way for a mining company to enter the market.
    May 12, 2015. 09:24 PM | Likes Like |Link to Comment
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