Zentek Ltd V.ZEN

ZEN Revaluation in Order?

[LTGoldBull]

ZEN MCap $147M, at SP $2.54, 58M shares F/D
Now within a month of the Official Resource Estimate. For this exercise we’ll use a conservative estimate 80MT’s at 3.0% avg grade, which is 2.4 MT’s Cg at 99.97% Purity. The Synthetic Market is currently $13B/yr and 1.5 Mt’s/yr with an avg price/tonne $8666 and growing 5%/yr.
By the various (3) Valuation Metrics, “In-Situ”, a projected “Cash Flow” on earnings and “NAV” (Net Asset Value) that is discounted to today, all suggest ZEN is extremely under valued.

1. In-Situ value of 5-10% (Buyers Offer) would suggest SP and MCap 7-14x times today’s SP.
   1. 2.4 MT’s Cg x $8666/t = $20.8B
   2. In-situ at 5% = $1.04B / 58M F/D shares = SP $17.93
   3. In-situ at 10% = $2.08 B / 58M = SP $35.86
   4. Todays MCap $147M an In-situ Value 0.7%

Stresses the importance of Tonnage, Average Grade and projected Minelife based on Production at 100 KT/yr, in the upcoming RE (Resource Estimate). Todays MCap of $147M and SP $2.54 would reflect, the market pricing an Insitu Value discounted to 5% for the Albany deposit, to be worth $2.94B and only 340 KT’s of 99.97% pure Cg = todays SP $2.54 and MCap $147M discounted to 5%.

2. Cash Flow (80MT’s at 3.0% = 2.4 MT, Target Production 100KT)
   1. Synthetic Avg Price $8666 less $1000 aisc x 100KT/yr = $766M Revenues – Taxes (40%) $766M – 40% Tax = $460M
   2. F/D shares at Production 100M = EPS $4.60
   3. Applying a Market Multiple x10 =SP $46.00 and MCap $4.6B

Annual Production of 100 KT’s is only 6.6% of the existing Synthetic Market. ZEN has been proving Synthetic-Like Characteristics ref: NR’s 03 Oct and 10 Oct. Even at the lowest Synthetic price of $5000/tonne for finished product, ZEN would have eps $2.40, supporting SP $24.00 and MCap $2.4B, 10 times the current SP.

3. NAV (Net Asset Value) the most indepth value assessment
   1. See the Roth Report https://roth2.bluematrix.com/sellside/EmailDocViewer?encrypt=217db938-01aa-410b-8166-bc88a30537f5&mime=pdf&co=Roth2&id=[e-mail]&source=mail&pdfFileExtension=.pdf
   2. Initial Report based on a Resource 13MT and Target SP $4.00 based on 26 KT’s finished graphite.
   3. Revised Report now based on a Resource 23MT and Target SP $6.00

Facts are the Hydrothermal Graphite at Albany, can be processed to 99.97% Purity through a simple less costly process; we have already proved and are still proving Synthetic –Like Characteristics, which will garner Synthetic Prices and Drilling to date, has proved x2 large Breccia Pipes, that will provide a minimum 2 MT’s pure Cg and minelife 20+ years. End-users and Synthetic Producers will soon be calling to deal, as the economic advantages are just to great to pass up! (Ex 1: Synthetic Producer A – costs $1000/t, Producer B - costs $5000/t, who wins the market? I think Producer A, owner of the Albany would win in the Marketplace. Ex 2: Ten End-User(s) currently have to pay $10,000/t for Synthetic Product, who would have the advantage on market pricing, if one end-user bought Albany with production costs $1000, some 80% lower on costs input on end product and the same qualities or better than Synthetic?)
Cheers, Mark