Great Lakes Graphite Inc GLKIF

RE:CSPG - what can be learned?

[DoctorFouad]

@Floridas2000 : Brilliant analysis and takeaways of the graphite investment market ! thanks for sharing ! For GLK they have the right vision and strategy but they are hindered by lack of financing, hopefully they could find a solution soon.

Floridas2000 wrote: Not everyone might know but Alabama graphite was bought by Westwater Resources.  It was purchased at a discount, not a premium, and I do feel bad for the Alabama investors.  They were sold on the potential of Alabama and they were let down.  Really unfortunate.  There are some things to be learned about graphite business right now.

- Don't hire Don Baxter.  The guy is smart, very smart.  He has a used salesman type of persona, he's an alpha dog and he has a large ego / pride.  He's been the head of numerous graphite companies and not one has made it into production.  That tells me you need management that is genuine instead of pure sales, willing to work with others instead of demanding to be alpha and willing to admit mistakes and correct them instead of large ego / pride.  GLK's management style fits.   SRG too.
- Funding for graphite projects right now is extremely low.  Alabama is made in America, you figure they can get investors for the project - low grade or not.  But they couldn't get the funding they need taking a discount for the company.  GLK has funding, making revenue and is filling orders.  It's a position that most graphite juniors would love to be in.  
- Gone are the day that b.s. PRs mean something.  Investors look at it now and say production or not interested.  Naturally occurring graphene, STAX, vein, made in america - whatever the spin growth doesn't happen until you're talking about balance sheet.  You can talk about supplying EV but if you are at least 5 years away, investors don't care.
-  How much you can potentially sell graphite means less than how much it costs to produce it.  If you can sell it for $10,000 / tonne but the cost to produce is high then you won't get investors.  What they want to see is low cost, low footprint and low initial investment to get it into production more than how much it can sell for.  GLK is getting their graphite from Brazil at a fixed price.  They don't have the high cost of mining it and setting up mills.  Low, fixed costs is what matters.  Alabama had a grand plan of selling only high end graphite and doing pilot plants, then commercial plants and then a plant for coating and spherical.  All of it increases initial cost and it won't happen in this environment.
-  New technology means nothing if you can't commercialize it.  New technology means nothing if if it isn't proven.  You can come up with all the papers you want and talk about how it makes current processes more efficient but unless you do this research as part of a larger company or you have connections with a large company it won't be adopted.  Nobody wants to be a guinea pig.  GLK is looking at new technologies but they're not bleeding edge.  They have already been applied to commercial products.  Alabama was making fun of other companies battery results, including GLK's.  But GLK's graphite went through the qualification and will be in batteries long before Alabama, if Alabama ever does make it.

If there's more to take out of it, feel free.  Right now you need to leverage, develop partnerships and use synergies to get ahead.  Syrah might be the exception but it's still too early to tell.  Once again I feel for CSPG investors and this is not trying to rub it in.