1/16
It's difficult to call this market but my view is that assuming no more operational glitches #TGR now steadily re-rates as the operations sign off the various stages to 30ktpa.
It's difficult to call this market but my view is that assuming no more operational glitches #TGR now steadily re-rates as the operations sign off the various stages to 30ktpa.
2/
Front-end valuations should depend on where graphite prices go but as Syrah demonstrated yesterday (graphite fines not large flake) orders are buoyant.
Forward orders there running at 90,000 tons which are 50% of their current yearly output. So substantial.
Front-end valuations should depend on where graphite prices go but as Syrah demonstrated yesterday (graphite fines not large flake) orders are buoyant.
Forward orders there running at 90,000 tons which are 50% of their current yearly output. So substantial.
3/
Note also Syrah cannot produce for less than FOB C1 $543/t even at 15,000 tons per month output and that's fines.
It is clear after last night's presentation that TGR C1 costs have also risen but this is to be expected in this current market.
Note also Syrah cannot produce for less than FOB C1 $543/t even at 15,000 tons per month output and that's fines.
It is clear after last night's presentation that TGR C1 costs have also risen but this is to be expected in this current market.
4/
More detail is certainly required from the company to make a thorough assessment. I did try with my OPEX question but exact figures were not forthcoming.
What we did learn was that fuel prices and steel costs were the two main drivers.
More detail is certainly required from the company to make a thorough assessment. I did try with my OPEX question but exact figures were not forthcoming.
What we did learn was that fuel prices and steel costs were the two main drivers.
5/
The answer was that this is being tackled on multiple fronts.
The pre-concentrate change is stated as having "a significant impact on us" with a view that trucks on site will carry less but better quality material to the processor. The hydro plant was also mentioned.
The answer was that this is being tackled on multiple fronts.
The pre-concentrate change is stated as having "a significant impact on us" with a view that trucks on site will carry less but better quality material to the processor. The hydro plant was also mentioned.
6/
I can buy that but in time it would be wise for @Tirupatiuk to demonstrate this in a form that is easier to digest. i.e. a new presentation or video.
Whilst all these things will no doubt feed into the final OPEX number I remain focused on the starting base set in Sept 2021.
I can buy that but in time it would be wise for @Tirupatiuk to demonstrate this in a form that is easier to digest. i.e. a new presentation or video.
Whilst all these things will no doubt feed into the final OPEX number I remain focused on the starting base set in Sept 2021.
7/
It is for me still extraordinary that TGR could produce 1,000 tons of graphite in 6 months at a C1 cost of just $335/t while Syrah even when at a significant scale (be it 50% capacity but still 180,000tpa) remains over $200 higher.
It is for me still extraordinary that TGR could produce 1,000 tons of graphite in 6 months at a C1 cost of just $335/t while Syrah even when at a significant scale (be it 50% capacity but still 180,000tpa) remains over $200 higher.
8/
So whatever the pressures now on TGR's OPEX the introduction of these "innovative" changes + the completion of the hydropower station give me great comfort that TGR still has a great deal of wriggle room on costs. Even if shorter-term they are likely up significantly.
So whatever the pressures now on TGR's OPEX the introduction of these "innovative" changes + the completion of the hydropower station give me great comfort that TGR still has a great deal of wriggle room on costs. Even if shorter-term they are likely up significantly.
9/
Yes, we need to see updated figures but by the time we do these will likely be historic because the production (we are told) will be much higher by Sept.
Still, if/when TGR confirm it has delivered 30,000tpa with just £16m CAPEX...
Yes, we need to see updated figures but by the time we do these will likely be historic because the production (we are told) will be much higher by Sept.
Still, if/when TGR confirm it has delivered 30,000tpa with just £16m CAPEX...
10/
during such a challenging logistical/inflationary period it will likely be one of the most impressive mining developments I have certainly ever come across.
Lastly, the Mozambique deal was stated as being still very much alive.
during such a challenging logistical/inflationary period it will likely be one of the most impressive mining developments I have certainly ever come across.
Lastly, the Mozambique deal was stated as being still very much alive.
11/
Given recent events in Mozambique, it is concerning that this insurgency is relatively close to the proposed Montepuez project (c. 110km) but this pales into insignificance compared to what could happen if the Syrah Resources operations (c. 200km) need to be suspended.
Given recent events in Mozambique, it is concerning that this insurgency is relatively close to the proposed Montepuez project (c. 110km) but this pales into insignificance compared to what could happen if the Syrah Resources operations (c. 200km) need to be suspended.
12/
In their latest report Syrah state that operations were suspended for 7 days as a precaution in June but cited that "with the issues occurring more than 200km from Balama mine site and more than 30km from the N1 road" it wasn't a problem.
That's not very far at all.
In their latest report Syrah state that operations were suspended for 7 days as a precaution in June but cited that "with the issues occurring more than 200km from Balama mine site and more than 30km from the N1 road" it wasn't a problem.
That's not very far at all.
13/
I have not yet looked too closely at the extent of these insurgencies which I must admit weren't the first. So I don't wish to scaremonger. But in my view, it is wise for those interested in the graphite space to keep a close eye on things because Syrah supply is critical.
I have not yet looked too closely at the extent of these insurgencies which I must admit weren't the first. So I don't wish to scaremonger. But in my view, it is wise for those interested in the graphite space to keep a close eye on things because Syrah supply is critical.
14/
In terms of TGR whilst the Montepuez transaction and next stage of development is certainly value accretive it does not directly undermine the re-rate in TGR that I stated at the start of this thread.
The focus, for now, is on completing the 30,000tpa plant.
In terms of TGR whilst the Montepuez transaction and next stage of development is certainly value accretive it does not directly undermine the re-rate in TGR that I stated at the start of this thread.
The focus, for now, is on completing the 30,000tpa plant.
15/
That's enough in my view (macro developments aside) to re-rate TGR. Especially if that scale then delivers TGR an OPEX that is again in line with Sept 2021. A point that was indicated towards by CEO Shishir Poddar in the call.
That's enough in my view (macro developments aside) to re-rate TGR. Especially if that scale then delivers TGR an OPEX that is again in line with Sept 2021. A point that was indicated towards by CEO Shishir Poddar in the call.
16/
This is why for me the TSG debate can also be parked until we have further details on how the transaction moves forward.
I want a fully integrated model in my investment but it doesn't need to cloud my approach for now so long as the trust is there and for it certainly is.
This is why for me the TSG debate can also be parked until we have further details on how the transaction moves forward.
I want a fully integrated model in my investment but it doesn't need to cloud my approach for now so long as the trust is there and for it certainly is.
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