As this information starts circulating to a wider audience, it can only help our share price!

Thanks to Chief from TradingChief.com for sharing this great post.

This post is from a person named haitokin on SI
The guy has the entire concept cased and has obviously done a lot of work.
http://www.siliconinvestor.com/readmsg.aspx?msgid=28729719

I haven't posted for a while, but this Zenyatta story has captured my imagination. I wonder if there's anyone here thinking the same.

So, here's the rub on the article's implications:

Clearly, the person being quoted (Mr. Fulp) is trying to frame this in a way that points towards the value of a high quality deposit. And, in his mind, that means that Flinders has one of the gems of the graphite investment space. Because when it comes to economic value, low production costs and higher per tonnage revenue plays a big part.

But then Zenyatta (zen.v) comes out with some purity test results (99.96% pure Cg - after a relatively simple and low cost extraction method) that absolutely blow the rest of the graphite development stories out of the picture. (Er, two weeks ago before the pop on the chart if you weren't paying attention.)


Zenyatta's purity results indicate the very highest value per ton will be obtained from their 'natural graphite product' (once they start producing), and that their product may very well be able to make inroads into the various markets which currently use synthetic graphite (at an even higher price of $10-$20,000/tonne) for its higher purity characteristics.


I'm not making this up. When you read what this impartial source is saying, and then you read what it implies for Zenyatta, you realize that Zenyatta will be a big big winner. Here are some extracts from article to think about:

>>>Graphite, he noted, has three market sectors that include synthetic graphite selling for around $10,000 to $20,000 per tonne and mainly used in for carbon electrodes for the steel industry; carbon fiber that has replaced fiberglass; and natural graphite, a $1 billion market, with 1.1 million tonnes of mine supply in 2011.

>>>“Natural graphite, which is what we’re going to talk about mainly today, constitutes about 8% of the world market,” Fulp said. “If you know commodities, that's a lot of material.”

>>>Graphite as a whole and especially flake graphite market is priced according to size of flakes and according to carbon content. “Generally you want your carbon content to be higher and so all these flake graphite criteria are based on 94% to 97% CG, which means carbon as graphite,” Fulp said. “You have to produce a very pure product.”

>>>Natural graphite can be divided into five different products. “We have a very specialty market for vein or lump graphite and that is very coarse-grained graphite,” Fulp said. “It is very high priced, selling for something on the order of $8,000-$10,000 per tonne” This is produced by small, hand-cobbed mines in Sri Lanka, he noted.

$8-10,000/tonne. Gee that's a pretty high payload. At Zenyatta's 5%+ graphite grade, their in-situ resource value must be huge. For every 20 tonnes of dirt below ground, they get $8-10,000. That's $400-$500 value per ton in the ground. And, in a short period of time (in the mining world), with estimated capex of only $250million, Zenyatta will be extracting this mechanically, much like any other modern mining project. Read: Easily extracted, Bonanza-grade ore. And perhaps a few less well-employed hand cobbers.

>>>Other natural graphite products are large flake graphite produced with +80 mesh or 150 micron size; medium flake graphite of 80 to 100 mesh; fine flake graphite of 100 to 300 mesh and amorphous graphite, which is essentially powder at -300 mesh, Fulp said. “Generally as the flake size decreases the price decreases,” he added.

And, so, Zenyatta's 'vein'/'lump' graphite which is 'coarse-grained', is like having flakes that are so large they are in the HUGE category, which spells a higher price. But also, for future discussion, it means that Zenyatta's resource has the potential to open up completely new graphite markets that don't exist today for a simple shortage of 'hand-cobbed' product. You don't base battery development on a resource with supply constraints when you are thinking of mass producing your product. If your graphene is meant for medical uses but the chemical content (processing) is too high to make it successful - you might want to buy Zenyatta's extremely pure natural product instead of synthetic graphite because it's pure enough and graphene produced from it is chemically different (clean - due to simpler beneficiation process).

>>>“It's of interest to note that that this business has been driven lately by demand for lithium ion batteries and that market is increasing 20% to 40% per year,” Fulp said, noting that medium to fine flake graphite is mainly used for these batteries. “And what we're seeing is a concomitant increase in graphite prices.”

>>>Over the last five years prices of amorphous graphite have increased from about $250 a tonne to current prices around $550 a tonne, while some flake graphite prices have climbed from under $1,000 a tonne to, in some cases for large flake graphite, more than $2,500 a tonne.

>>>Fulp said the supply and demand picture for natural graphite has been influenced by technological advances in the past few years that have increasingly allowed flake graphite to substitute for synthetic graphite.

In part, because natural graphite is is less chemically polluted than synthetic graphite.

>>>“That's the key here,” he said. “We've made inroads with technological advances so instead of paying $10-$20,000 a tonne for synthetic graphite we can now use large flake graphite or flake graphite in many of these applications.”

>>>“So how do we evaluate a graphite company?” Fulp asked. “The project really is the key for a graphite company. So you want in my opinion – and bear in mind this is what I am looking for and you must do your own due diligence and decide what works for you – but an advanced deposit or former mine is what I'm looking for. I'm also looking for a geopolitically stable and mining friendly country.”

Canada's pretty stable.

>>>Projects should also be close to infrastructure, Fulp said. ”These are bulk industrial minerals. These are not specialty metals. These are not critical metals. It's a critical commodity but it sells by the ton and it does not sell on the open market. It sells in off-take contracts.”

Zenyatta's project is within a few clicks of a highway, easily truckable. And with only 10 tons on board, and

>>>These contracts might involve 5,000 tons of large flake graphite at negotiated price, he said. “So you want to be close to infrastructure and that certainly requires a highway, power and water to the site or very nearby and I prefer a port nearby so we can ship this graphite where we need it.

>>>“You want it to be high-grade. What do I mean by high-grade? I would put a minimum grade that I would most generally be looking for at greater than 5% of carbon as graphite. You want it to have a high percentage of flake. We’ve seen the price differential that has occurred so you want to make sure that it's mainly a flake graphite deposit and not an amorphous graphite deposit. The flake size is not nearly as important as the percentage of flake.

Er, actually, you'd want it to be vein or lump graphite because you get paid even more.

>>>“You want it in my case to be an open pit mine because it's cheaper to mine and you want a low strip ratio – the strip ratio being the ratio of waste you have to mine to ore that you mine. And finally the metallurgical process. As I’ve already told you, you have to produce a high-grade concentrate of more or less ± 95% to command a good price for your graphite.”

>>>Graphite beneficiation is a standard mineral process – unlike the rare earth element sector where each deposit was approached differently. “We’re still five or six years down the road for some of these rare earth element mines to come into production because they still have to solve the metallurgical processes,” Fulp said.

>>>“This is easy. You crush, you grind, your float, you dry, you pack, you ship. That's how pretty much every commodity in the world, every metal commodity in the world happens in a milling situation.”

>>>Graphite mines generally involve low capital expenditure prices of less than $100 million. “A savvy junior with the right management, the right connections, the right project, can raise $100 million or less,” Fulp said. “It will be a combination of off-take contracts and I think private debt because it's small. I look at hedge funds, small institutions and high net worth investors to be the people that fund this in combination with perhaps strategic alliances with established multibillion-dollar synthetic and carbon graphite companies.”

>>>Fulp said he wants the graphite company investment to avoid equity dilution in the financing. “You want to be as always in the lowest quartile of operating cost,” he added. “You want to protect yourself in times of low commodity prices. If you are the lowest quartile, you will succeed during periods of low commodity prices. That's another key.”

Zenyatta's share structure seems very tight, capex requirements are not large, and latest warrant exercising will have cashed up company so that equity dilution won't be an issue.

>>>As graphite companies near production, Fulp said he believes there will be “extreme merger and acquisition activity” either through off-take contracts or strategic alliances and business combinations. Of close to a dozen major companies in the synthetic graphite and carbon fiber segment only a couple currently have their own sources of natural graphite, he noted..

>>>“I see the synthetic and carbon fiber companies being major players in this industry,” he said “I see a couple of juniors that will develop graphite mines very early on in the process will eventually probably go and cherry pick some of the struggling companies as the bubble starts to burst. What I envision is completely integrated mine to market companies for the most part.”

>>>Fulp also listed a few companies he described as being among the cream of the crop in the graphite junior sector based on project, share structure and experienced personnel. “My favorite by far in the graphite space is Flinders Resources,” he said. “They have a deposit in central Sweden which is a past producing mine. Another contender with the richest deposit in the world is Focus Graphite with the Lac Knife deposit in northern Québec at 16% carbon as graphite.

Ah, that is WAS the richest deposit in the world. Once drill results come in, Zenyatta could put that in distant second spot. That, IMO, will start a new 'gold rush' as everyone starts looking around the globe for other vein/lump graphite formations. There are other small-scale 'hand cobb' type vein graphite mines (pencil producers) that have existed around the globe. Sri Lanka seems like the only other historical massive deposit, and it's been producing for over 100 years so the resource isn't there in quantity anymore. But other deposits might be. Zenyatta will have a leg up on any future finds though, and is in a geopolitically safe location.

>>>He noted that he has participated in three private placements for Flinders and that the company is also a paying sponsor of his website.

So, basically, he's biased towards their story. But what he says means that Zenyatta has trumped Flinders, and any other flake graphite play in this investment space.

Is that why everyone disappeared from this thread? You could expect, based on either the story alone, or the strength of the latest share price appreciation that there's an investment idea here that's going to reach a wider audience.

But, do your own due diligence. I'm not recommending anything to anyone. Sell sell sell. Buy buy buy. It's overbought! I think I'll short! And cover when it closes the 1.08 gap! I'm a genious, but I haven't bought in yet. Fib retracement says $1.66, don't buy until then. Or, wait, I'll buy when it hit's a new high. Or, is this the only pull you can't afford to miss? Make up your own mind. Don't listen to me, I can't even spell.

Some gaps never fill. Momentum breaks the rules on fib retracement all the time because you don't count the pull that happened halfway through the move. Don't count on your emotions working very well when the stock is being whip sawed by brokerages sitting on the outside looking in, or when the stock outperforms what you were expecting so that you never pull the trigger on something you believe in. Er, want to bet on.

To those of you oldtime SI folks that used to read my posts, Chip in.

Apparently the last moderator was abducted by aliens? Hope that doesn't happen to anyone still lurking here!