Glorieux3 posted this excellent coverage first on SH.. Remember the coverage here ….Was written first 4 months ago.

Cleantech

Zenyatta Ventures, Ltd. | ZEN.V - $1.97 - TSX | Buy

Initiation of Coverageon APRIL 26/13

ZEN: Enlightened Graphite; Initiating with a

Buy and $4 PT

ZEN is poised to become one of the few natural graphite producers to sell into the premium synthetic market, at a cost structure that is 70-80% lower than synthetic. While ZEN does not have an updated NI 43-101, we anticipate

one by Q4’13, and expect a steady flow of catalysts thereafter. As a result, we initiate with a Buy rating.

Initiating with a Buy rating and a $4 PT. Possessing a vein-type (hydrothermal) deposit, ZEN is a unique play in the graphite market. We believe the company is poised to produce high-purity graphite that can compete in the premium-priced synthetic market at a much lower cost structure ($1.5k/tonne vs. $5k/tonne for synthetic).

Synthetic graphite is expensive to produce—ZEN could provide a low-cost substitute. According to our industry checks, primary synthetic graphite sells for $7-20k/tonne and costs $5k/tonne to produce. This is primarily due to

the energy intensive nature of production, its lengthy process (3-6 months), as well as the cost of raw inputs (petroleum coke, a raw input to synthetic, costs $1k/tonne). We believe ZEN’s product will ultimately compete

in the synthetic market, as the company’s metallurgical consultant has demonstrated low-cost, bench-scale extraction at high purities (99.97% C).

This could make ZEN’s product a low-cost, viable substitute for synthetic. Graphite is a well-developed market with diverse (and growing) end-uses. Synthetic graphite is used in a range of industrial, high-tech, and cleantech

applications, with 50% of supply consumed as carbon electrodes in electric arc furnaces for metallurgical industries. We expect this use to lay a baseline for demand, and grow with GDP. Other emerging applications could spur

demand growth, including low-GHG emission technologies such as li-ion batteries, fuel cells, as well as solar and LED production equipment.

While potential challenges lie ahead…ZEN has not yet completed an NI 43-101-compliant resource estimate, which we view as critical to giving investors visibility into the Albany Project. Furthermore, the company has not provided commercial samples for product verification. Our checks have indicated that beyond high-purity, commercial off takers are interested in certain crystalline structures and shapes. In our view, commercial verification will be key to ZEN’s success and we believe our estimates are conservative. We modeled a blended graphite ASP of $8k/tonne along with production expectations that we believe leave upside potential. We see a steady stream of catalysts ahead:

(1) NI 43-101 estimate in Q4’13; (2) larger-scale beneficiation tests; and (3) a preliminary economic analysis.

As a result, we initiate with a Buy.

Important Disclosures & Regulation AC Certification(s) are located on page 16 to 17 of this report.

Roth Capital Partners, LLC | 888 San Clemente Drive | Newport Beach CA 92660 | 949 720 5700 | Member FINRA/SIPC

Page 2 of 17

ZENYATTA VENTURES, LTD. Company Note - April 26, 2013

INVESTMENT THESIS

We are initiating coverage on Zenyatta Ventures (TSXV: ZEN.V) with a Buy rating and a

$4 price target. ZEN plans to produce high-purity graphite, which it anticipates will compete

with premium synthetic graphite products at a lower cost structure. ZEN is a junior mineral

exploration company focused on developing its flagship graphite deposit, the Albany Project,

in Northern Ontario, Canada.

The Albany Project is a vein-type (hydrothermal) graphite deposit, which is a very rare and pure form of naturally occurring graphite that accounts for less than 1% of global production. ZEN is currently proving out its resource, and expects to release an NI 43-101-compliant estimate later in 2013.

We believe ZEN’s high-purity hydrothermal graphite will likely compete directly in the

synthetic market—at a much lower cost.

ZEN’s Albany Project consists of vein-type (hydrothermal) graphite, a highly pure, rare, and valuable form of naturally occurring graphite that currently accounts for less than 1% of global production. Typically, natural graphite (70- 95% C) and synthetic graphite (95% C) supply different end markets as their purity levels and crystalline structures differ. As a result, end user applications vary. We believe ZEN’s high-purity hydrothermal graphite (99.96% C) is one of the only natural sources, however, that will likely compete directly with synthetic graphite at a much lower cost structure ($1.5k/tonne vs. $5k/tonne for typical synthetic).

Exhibit 1: The graphite market can be broadly broken down into (1) higher-price/cost synthetic and (2) lower-price/cost natural. We believe ZEN’s natural graphite will primarily compete with synthetic graphite, but at a much lower cost structure given its expected lower production costs.

Graphite

2.5mn tonnes/year

Natural Graphite

• Production: 1mn tonnes/year

• ASP: $2k/tonne

Synthetic Graphite

• Production: 1.5mn tonnes/year

• ASP: $7-20k/tonne

Vein

• Purity: 95%C

• Highest price

• 1% of supply

Flake

• Purity: 85-95%C

• Medium price

• 49% of supply

Amorphous

• Purity: 70-85%C

• Lowest price

• 50% of supply

Natural graphite does not typically compete with synthetic. We expect ZEN’s natural product to compete directly with synthetic—at a lower cost. This is because ZEN’s deposit consists of high-purity, vein-type graphite

Graphite Overview

Source: ZEN Company Presentation (Mar’13); Industrial Minerals Presentation (2012); ROTH Capital Partners.

ZEN’s Albany Project is a unique, vein-type resource: one of only two known

commercial deposits in the world.

The Bogala Mine, located in Sri Lanka, is the only commercially producing,

vein-type graphite mine. Once it is in production, we expect ZEN to be the largest

vein-type graphite supplier at 26k tpa, or 2% of the global synthetic graphite market. This

compares with the Bogala mine, which is capacity-limited and currently produces less than 5k

tpa. This is primarily due to its narrow-vein structures, which are 5cm in diameter vs. ZEN’s

breccia pipe deposit, which exhibits drill intersections of 100m.

Management believes that with the larger intersections, it is reasonable to assume the Albany deposit could produce 20x the Bogala mine’s output, although for conservatism, we assume ZEN will ultimately produce 5x Bogala’s output.

Zenyatta Ventures (TSXV:

ZEN.V)

Buy

To read more pages click >>>roth2.bluematrix.com

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On page 9, is where they state their key assumptions for their calculations. Their NPV calculations gave a share price of $10 which they discounted to $4 until they had derisked the project further. Their calculations were also based on ZEN finding 13M tons of raw ore. We are of course way past that with the excellent drill results we have obtained in the last few months.

It is not hard to see where this thing could easily be $50 in the next 12 months. My target share price is $50ish based on the following 2 methods:

From a cash flow perspective, company has said they could produce 100k per year. The resource size supports this easily and for decades. At $8000 profit (feel free to change this number to whatever you feel is comfortable for you), your annual profit would be $800M, at a PE of 4, that is $3.2B over 60M shares, that is>> $53.00.

From an Insitu value, 100M tons, at 4% yields 4M tons of end product. At $9000 value per ton, that yields $36B in resource at an 8% buyout rate over 60M shares, I get >> $48.00 per share.

Sitting tight and waiting for the fireworks!

Glorieux3