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Gold/Mining/Energy : Zentek Ltd.
ZEN.V 1.160-0.9%Oct 30 3:59 PM EDT
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To: George69 who wrote (25384)3/6/2021 10:39:06 AM
From: Garth16 Recommendations

Recommended By
Ace/Ten
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George69

and 11 more members

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Share price is only important in a few situations.
  1. When a shareholder wants to sell a share.
  2. When the company has to issue equity to the market
  3. If a company is buying back its own stock.


I'm fairly young (36) compared to most of the people on this board, and I have no real inkling of selling my stock within the next 4 or 5 years so I don't particularly care about number 1. If the company generates positive FCF then we no longer have to go to the capital markets to continue operating and there is a longer timeline for additional sales agreements to be made and research to be done; the only large capital investment I see would be the mine construction, but the more deals we have that use graphene the easier it will be to get debt as opposed to issuing equity (if you think of the mine as a separate business, it would have immediate 'sales' to the licensing part of the business and collapse the cost structure of the overall business). Lastly, as much as I want share buybacks and dividends from Zen, that likely won't happen until after they have fully developed their R&D segment it's fullest capacity and the mine is at least underway if not fully completed (years away).

This Article points out that Trebor is producing 100K masks a week before their permanent factory is up and running. That is 5.2 million masks annually which will likely represent a fraction of overall production with a corporate goal of under cutting other PPE producers. The article mentions that they're selling the masks at 30 to 50 cents a pop compared to 1 - 2 dollars for competitors products; they stand to gain a material amount of market share with their non coated product based purely on price and will begin offering a superior product at a premium to their base product, but one that could potentially be similarly priced (or cheaper) to uncoated competitors that the instructions were previously buying from.

If you had asked me early last year about my investment with Zen I would have told you I was concerned, but I have no concerns from a company that can justify a 4-6 dollars share price with it's current product road map that also has the ability to collapse it's cost structure in a few years (the mine) with additional products in the medium to long term (literally everything to do with Graphene but in particular the medical aspect currently being vetted).

-Garth
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