| ZEN's website suggests they have a deposit in hand, however, THE two elephants in the room are: the size of the global graphite market is only 2.5 million tonnes/year; and graphite is similar to rare earths in that the only way a deposit is financed and developed is IF they can put together enough letters of intent to purchase sufficient production and for a long enough duration. This would also go for any potential buyer of ZEN. Graphite isn't like say gold that can be sold to gov't mints for cash, or say copper, where concentrates can be easily sold to smelters around the world. Economics suggest that at say $1000/tonne, and a grade of 4%, in situ rock value might be $50/tonne. To supply 10% of the natural market (100,000t/y), that would require annual production of 2.5 million tonnes of mill feed at 4%, or about a 7,000 t/d operation at 365 days/year.......to make a long story short, this is going to take a huge marketing effort provided the existing management can convince the buyers they can deliver.......my take is that ZEN is dead money for quite some time. The most likely scenario is the big shareholder, Cliffs, will get more involved and put up development money, provided the oportunity in big enough to be material to their balance sheet. Personally, I am staying away. |
