Great Lakes Graphite Inc GLKIF

RE:RE:New Corporate Presentation

[Floridas2000]

Legitimate concerns.  The companies in the supply chain are Brazil Co.  -> Shamokin -> Ashland.  That is not complete of course because it doesn't account for logistics, GLK getting it's percentage and storage.  Also Shamokin and Ashland may not be used in all cases.  GLK will manage what is needed by the customer and which chain it should follow.  From the presentation Shamokin might get a higher volume because they can work with micronized at a higher volume.  Ashland will have less volume but at a much higher margin.  This year there will not be a ridiculous amount of tonnes to sell.  I would take GLK's estimate of revenue for this year and cut it in half to be safe.  They probably will not be cash flow positive until 2020 or 2021.

I like to look at Syrah and / or Bass Metals for a better picture.  This year Syrah was getting mesh size - 100 between $350-700 USD.  For +50, +80, +100 they were getting 550 - 1,700 (all per t).  So that will most likely be the range we would need to pay to Brazil.  Syrah's BAM facility (think graphite for batteries) is at least 2 years behind Ashland and have a limit with their milling equipment of 5ktpa.  Plus BAM is at a disadvantage starting from scratch where Ashland is established.  They need to get their ISO certification, etc. or some customers will question their quality control.  If anyone is wondering spherical graphite is over 2,500 USD.  Prices for it are slowly going up as China will be importing more this year.  From this you can picture a range that GLK will be selling their value-added graphite.

Also note that Syrah only does natural and not synthetic.  Synthetic saw an increase in price in 2018.  Also for sources only consider Brazil and N. Armerica.  Everyone is else not really close to supplying a meaningful amount and some will most likely never get into production.

Now Bass Metals has higher end graphite from Madagascar.  Their +50 mesh was selling at just under 2,000 USD.  That graphite will need less processing of course and will get a premium when selling so if you value add to that it will be well over 3,000 USD and GLK do have a potential source from Madagascar.  

Long story short - looks like they will do well this year but be conservative.  There are a lot of factors that need to be managed and there will be both good and negative surprises.  Supply chain is complex and will vary according to what the customer needs.  There will be a pp this year, expect that.  The ramp up will be slow and controlled, expect that too.  Figure out if it's worth waiting for and don't expect huge sales volume right away.