ICD, you write

I still remain somewhat astonished that no one has taken a run at this yet. But I guees it is not how this graphite market works.

Allow me to speculate about what the reason might be. First question is who would be the potential bidders for ZEN. I suppose there are three potential bidders, miners, graphite producers and end users.

The issue that keeps miners from bidding might be, that their business is to mine e.g. a mineral with fairly standard properties, and sell it on the open marked via intermediaries to unknown end users. In general miners don't worry about producing the end product and selling it to end users, hence this is not their core business.

The thing that can make ZEN attractive for a miner is, that they have Charhar and Yamashita on board taking care of the production process and marketing. So with an optimized flow sheet and a proven large scale production process, and off take aggrements, the issues that are probably keeping miners from bidding IMO would be mitigated.

I suppose ZEN has taken care of the marketing issue first, sending samples to end users for testing, before negotiating price and quantity - and this is the easy part. After the testing, IMO it's a pretty straightforward negotiation.

After confirmation about the buying interest, and the specifications required, AE has been able to be specify the desired production process to SGS, who then have the job to develop the production proces - which is the hard part, and time consuming. From what we know from the news releases, and your conversations with AE this work should be well under way, so there is nothing that suggest problems.

We know from the latest NR that the optimization work is exessive compared to what's normal for a PEA, and I suspect that the reason is that it is a very important mile stone for derisking the Albany graphite, as it is probably what's keeping miners from bidding for ZEN, because with the issues of production and sales resolved, the remaining issue is how to get the stuff out of the ground.

The producers of synthetic graphite are IMO not potential bidders for ZEN. My presumption is that they are the competitors. As far as I remember, the annual output from Albany wil only cover about 1-2% of the current demand. Add to that an annual increase in demand of 7-10%, and the the result is that the output is not big enough to disrupt the market conditions for synthetic graphite. ZEN will be nothing more than a nuisence as it will have not influence on the pricing and hence will be ignored, as the the producers will stick to their core business of producing synthetic graphite via e.g. thermal treatment. Buying ZEN would cause them to loose focus and would not provide a desive competitive advantage towards their rivals.

It's harder to predict if end users would be interested in bidding for ZEN. I suppose end users generally buy the graphite to their specifications, so they would not know how to produce the graphite themselves. Consequently they would probably not want to bid until the production process was resolved, just like the miners. If an end user could buy out Zen at an attractive price, let's say 0.5-1.0 billion, it would surely provide him with a significant competitive advantage towards his competitors.

But if the end user is not a miner allready, he would have to partner with a miner to get the graphite out of the ground thus complicating the operation, and he would have to build and run a production/upgrading facility that would not be his core business.

Another issue is the question, would an end user be able to use all the graphite from Albany?Let's say the end user is currently buying synthetic graphite from a producer to a specific set of properties. I suppose the end user might end up with some (or a lot) of graphite that doesn't suit him, that he would have to sell to other end users, and they might not want to buy from him, as it meant giving away the specifications they require for their products to a competitor. Just speculaing here, but if he graphite is purified in a specific way, wouldn't there be a byproduct?

Yet another issue for an end user, would he want to be stuck with a graphite deposit, if the technology changed so that graphite was no longer required for his specific product? I mean, graphite might still be used for a large variaty of products, so he could sell the stuff, but he would have lost the competetive advantage, that was his motive for buying the deposit in the first place. For that purpose, an end user would probably have to be pretty sure that he was going to need graphite for the next 20 years, and if we think about the rapid technological development, that might be a hard bet to make. So the risks for and end user might keep him from bidding.

So we are back to the miners as my best bidding candidates, who will be free to sell the graphite to a large number of end users suited to their speific needs as they might change over time.

However if the miners don't want to be stuck with a deposit whose value might drop significantly due to disruptive technologies either, we might find ourselves owning shares in a company that just ends up having to mine the graphite itself, which right now probably would be an extremely profitable operation - but a long way away for us investors, as most of us would probably want to see a bidding war for this gem.

Again all just my speculation.

Best regards DRA