May as well throw my hat in the ring.
You had better hope that the quality of NGC graphite is higher than all other graphite in the market. This really is the only 'selling point' for NGC. If this is proven to be the case NGC may be able to supply the market as a speciality producer of graphite. If not there could be problems here, potential issues only that I can see. You guys, scissors and slash talk a good talk, but the numbers give it away (they always do). These are potential commercial businesses in competition with each other and the bottom line numbers are what matters here. Numbers tend not to lie.
I think we can probably agree here that grade directly equates to mining and production cost in general terms. Low grade, more mining, more processing = higher costs per tonne. High grade, less mining, less processing = low costs per tonne. We know the grade 2% vs 16% is 8 times more mining and processing and considerably greater cost, even when accounting for economies of scale. There is not much to talk about here, not discussed before.
Much comment is made on the 70% recoveries for NGC for spherical. Fine, IP process, competitive advantage, yada, yada, yada. But what does this really mean for the numbers. Firstly, it is not 70% recovery. The related NR states 'up to' 70% recoveries, no long term average is provided. Say the average is 60% recovery (so you can see, i'm being fair to NGC) versus the usual recovery say for FMS and others at 30%.
What does this mean? It means FMS for example would have to process twice (x2) the input graphite to produce a tonne of spherical. Kudos to NGC you might say, until you look at some very simple numbers:
| | Recovery | Input | Grade | Spherical Grade |
| NGC | 60% | 1.67 | 2% | 1.20% |
| FMS | 30% | 3.33 | 16% | 4.80% |
| An Other | 30% | 3.33 | 6% | 1.80% |
When you adjust the head grade for the spherical process (at 60%), NGC comes out at 1.2%. But a ‘normal’ 6% graded deposit using the old technology (at 30%) recovery can return a 1.8% grade, this is a 33% improvement on NGC and you would therefore expect the cost for NGC to be higher per tonne compared to ‘An Other’ mine at 6%. FMS comes out at 4.8%, 4 times the result of NGC and 2.7 times a 6% mining operation.
Therefore, regardless of the NGC improved process, the head grade is so low it cannot compete with even a 6% producer using the 30% recovery process and is a long way off attaining the production cost the 16% graded Lac Knife deposit at 30% recovery. In fact the competitor grade has to drop to 4%, using the 30% spherical recovery for NGC to achieve parity in grade at 60% recovery. Now, if like me you prescribe to the simple idea that when you do more of something in a business, it costs you more money, it is difficult to see where there is any competitive advantage with NGC.
Economically, there appears to be no advantage, no matter what NGC does. Whatever it produces, it will always cost more per tonne than FMS. When you then consider revenue, producing spherical is just that, producing spherical. Both companies (indeed any company) producing spherical will attain the same revenue per tonne. So, same revenue per tonne, but costs I would estimate to be at least 3 times as high, down from the head grade differential of 8 times, due to the process improvements. In conclusion then, the IP effect for NGC is simply not enough to arrest the negative effect of low head grade. BC cannot compete economically with Lac Knife, period.
FMS will therefore always have the ability to undercut NGC on price. At 95%, 99%, spherical or anode, it makes no difference. This is the economic reality here, regardless of management experience, BFS, off-takes or other factors. Hopefully demand will mean that there is room for other producers, after FMS’s low cost product is all sold out, but as a customer there would be only one place in Canada I would want to buy my graphite in the first instance. IMHO, DYOR.