EDITOR: | December 9th, 2015 | 6 Comments

Graphite Comps – Size Isn’t Everything

| December 09, 2015 | 6 Comments

FlakesIt is sometimes said that comparisons are odious but in the graphite space they go beyond that in being fraught because there are virtually no deposits that are directly comparable. In an industry that can have a confusing dialogue with investors at even the best of times the overlay of “flake sizes (and types)” on top of the basic geology has made graphite even more confusing than most. We have had a nagging feeling that while references are made to flake size in the technical NI43-101 (or equivalent) reports on deposits that this is NOT what the geologists or consultants are actually measuring and that they are focusing on the graphitic carbon content and that the companies are driving the designation of their “flake” as the mystery X factor in resource descriptions. Maybe we are wrong but we maintain a healthy dose of scepticism.

To Comp or Not To Comp – That is the Question

Certainly seeing companies in the same sector arrayed in a table can be educational. If a picture tells a thousand words then a table of comparatives can also be mind-changing. The eternal problem is whether one is looking at like for like (or apples to oranges).

I recently came upon this table of the flake distribution of a number of projects:


We would note on this that the comps don’t include the type of graphite held by the deposits of Zenyatta and Elcora (and the other Sri Lankan plays).

Also we would note that these comps are not necessarily apples to apples as the grade cut-offs may be drastically different between the different projects and the companies may yet change these to reflect more up to date pricing and thus rejig totally their plans. Many of these plans were made during the “bigger is better” phase which some have pulled back from (Northern for example) while the rest may also be forced to follow suit.

Tesla & the Dangers of Association

It is reputed that Hermann Goering, of unfond memory, once made the comment “When I hear the word culture I reach for my revolver”.  In fact he didn’t exactly say that, but I tend to know what he felt when I hear/read the word “Tesla” in a press release or a promotional piece of companies in the graphite or lithium space. If Tesla is the prop on which a company needs to support its mining thesis then one needs to wonder what is wrong with their deposit/project.

While cognizant that the word “Tesla” has a more stimulating effect upon those in the cheap seats of the mining investment universe, I am left with a nagging doubt that too many mining companies are hitching their wagons to the Tesla horse and if it ends up going to the glue factory then they will have lost their means of forward propulsion.


Many lessons were learnt in the Rare Earth space, but it seems they were mainly learnt by investors and NOT the companies because the graphite space is repeating some of the fundamental mistakes. Bamboozling the public with science only succeeds in making the company’s promotional task all that much harder when a blizzard of pseudo-science results in informational and comprehension whiteout. Who after all remembers the reams of paper and gallons of ink expended on Eudialyte?

Graphite processing and classification does not need to be rocket-science and we suspect some companies are eager to make investors think that there is more to the process than there actually is. The relatively straightforward processing of the mineral is evidenced by the fact that graphite has been mined and used for at least hundreds of years (e.g. the Yorkshire mine) and that the very basic operations in Sri Lanka have not needed to rely upon “disruptive technology” to maintain production and making profits for successive owners for over a hundred years.

At this point I would like to throw open the debate to wiser souls than I as to whether I am missing something here….



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  • Tracy Weslosky

    ….thanks for the update, you have me wanting more. What would be ideal is an overall industry update with all of the Top 20 market cap companies under analysis.

    December 9, 2015 - 11:16 AM

  • crazyhorse

    I am not sure I get your point Christopher, although I concur generally with your skepticism about the junior graphite space.

    There is reasonable visibility of pricing for common graphite flake sizes and larger (more pure) fake is clearly much more valuable. So why is it not legitimate to analyse the value of average concentrates likely to be produced from a project? Surely value per tonne of product (or ore) is a pretty essential input for an analysis of project economics. Of course, in the graphite sector there seems to be some very dubious data published and one would be well advised to only consider repeatable and representative testwork results from reputable first world laboratories!

    Also – I know you have taken the data from elsewhere, but I cant make head or tail of your table of Opex. For all bar Northern, the sum of the mining, processing and G&A costs per tonne does not equal the total. Is there some strip ratio or other factor missing from the table?

    Thanks and keep the spotlight in this space please. It has cost me a few bob and I am still waiting for someone to credibly explain why SYR is so highly valued.

    December 9, 2015 - 1:59 PM

  • Jack Lifton


    I recently had a conversation with a first-rate chemical engineer whose thesis is that he has “solved” the eudialyte problem, and in all fairness I believe he has, but unfortunately increasing the extraction yield from eudialyte does not matter in a low price for REEs environment; it just means that the mine will lose less money per kg of prodcution. As to graphite I think you have hit the nail on the head. Touting flake size as a metric is just gobbledygook and its staying power has long puzzled me also. Notwithstanding the urban legends believed by teenagers its not size that matters but how one uses it, or, in the case of graphite, processes it to go further downstream. The form of natural graphitic deposits and most certainly its grade are important factors in its economic recovery, but it is the ease and costs of downstream processing to valuable and high tech products that is the true metric.
    A major scientist in the field of graphene told me that “good” graphite deposits are everywhere. Its the intelligent downstream processing of them that’s rare. So, as in the rare earth space, its not the flake size that’s important its where and with what the company is going to enter the market and whether or not it can be competitive at that price point.


    December 10, 2015 - 8:38 AM

  • hackenzac

    Really Jack? Flake size doesn’t have any bearing on supplying for the Li-ion market? It certainly sells for more. Funny thing tho, I thought that Chris was more referring to capex.

    December 10, 2015 - 3:08 PM

  • Stephen Riddle


    Thanks for publishing this write up. Investors and potential investors need to understand how complex the “REAL” Natural Flake Graphite Mining industry is. They believe it is simple as the larger the flake the better or the higher purity of the graphite concentrate the better. yes these 2 feathers are important but a wise investor would need to understand a lot more then these 2 feathers such as but not limited to:

    1) What annual capacity volume is best to start out with?
    2) Does the company have enough capital to make an investment including all expenses during the start up period till the investment becomes cash positive?
    3) Timing. When is the right time to invest in a new graphite mine
    4) Market prices. What Realistic market prices should each new potential graphite mine use today.

    Graphite mining investments are very complicated and as you stated all graphite deposits are different. The CAPEX amounts are very low compared to most mining investments but do not assume that with a low CAPEX that this guarantees an investor a profitable Graphite Mine.

    To date we seen 2 new graphite mines close due to lack of profitability. (Or funds needed to cover the losses) I would think this would be a wake up call to investors. I do feel that their are opportunities for investors to make some money in graphite mining but as you stated it is very complicated. The investors have to be in it for the long term and have to earn their money the old fashion way. (Had work and it takes a long time)

    December 14, 2015 - 1:48 PM

    • Tracy Weslosky

      Mr. Riddle, It is a pleasure to have you on InvestorIntel. Hope you are well.

      Today, we interviewed Greg Bowes of Northern Graphite in-house, and this interview should be out in 4-5 days, and I asked him about flake size as he is a graphite expert too. Greg wrote an excellent update for his shareholders in August where he answers questions on market prices and the catalysts that may occur to impact prices positively. Now with regards to question #1 — this is a good question and I wish that I had read your comments before interviewing Greg, or I would have asked him. #2 and #3 are going to truly depend, but this could indeed be the basis for a good column or two.

      Now — we should interview you. Expect to hear from me shortly, especially since you should be at our Cleantech & Technology Metals Summit on May 10-11th (www.InvestorIntelSummit.com). Thanks again for visiting. Tracy

      December 14, 2015 - 3:23 PM

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