RE: Nice Chart! NGC got hammered after the spring runup in graphite stocks and graphite prices slumped. Then it got hammered again when the BFS came out with very conservative numbers that didn't realistically reflect the production numbers.
By moving higher grade material from inferred to indicated through the latest drill program the project economics will improve (inferred not allowed in a BFS). By using fresh drill core samples for assay rather than weathered surface rock there should be an additional 12% improvement in the grade (new assays to be incorporated in a revised BFS, hopefully by year-end?). These two improvements, along with other engineering tweaks being made, could drop the production cost to drop to around $800/tonne or slightly below and raise the IRR by around 25%.
Also, the proprietary process for spherical graphite is reaching an advanced stage, not sure if it's in pilot tests at Hazen or not. But it's estimated the total cost of production will be around $2000/tonne compared to the FMS figure of $3000/tonne. NGC management chose this course rather than pay $2m in cash and a 7% royalty for a licensing agreement with Hydro-Quebec to obtain a spherical processing method which is more expensive and less environmentally friendly method (NGC signed a licensing agreement for using the same non-exclusive HQ method years ago at 5% royalty and no cash component).
When the final numbers come out showing 82% of NGC's graphite being sold at around $6000/tonne at an approximate $2000/tonne cost the profit will be enormous. In addition, the plant is designed to double production capacity whenever the demand is there for roughly an additional $15-20m if memory serves correct.
The biggest question that remains is into how many pieces that profit number will be divided by to arrive at earnings per share. Will the financing be debt, equity and/or through offtakes? The lower the amount of equity the better for us as shareholders - fewer shares out, higher earnings per share.
It was intriguing to read the following line in Nick Hodge's latest NGC pump:
"... the company is on the verge of a securing a partner to help finance mine construction in exchange for some of the graphite, which is used in batteries and steelmaking."