- MRL’s projects have low capex and opex requirements. - Production of 5,000tpa of premium quality vein graphite should generate revenues of approximately of US$10m pa. Capex to achieve this would be - Most other potential producers have capex requirements of $34m and up to $133M. This level is to produce 20,000-50,000 tpa of graphite from grades ranging between 7% to 12% Carbon as graphite.
Another valid peer comparison is with Canada Carbon (TSXV: CCB) which we believe to be the only project developer of a graphitic vein carbon resource. The resource is known as the Miller Graphite Project and is located in Quebec, Canada. Miller is operated as a hydrothermal lump vein graphite mine that shipped 25 railcars of graphite in 1900. Carbon Canada has located the historic open pit, completed surface sampling, electromagnetic surveying, and identified a number of anomalies. Several recent drill holes have been completed that confirm the near surface presence of economic grades of mineralisation. The Company is the 100% owner of Miller and is currently capitalised at C$13.6 million. This is indicative of the valuation that applies to an early stage developer of a vein type graphite deposit.
MRL will reach the same developmental point within the next two quarters and should reflect a similar or higher valuation.
That is equivalent to $0.16 per share (on an undiluted basis). Our valuation and target price reflect a discount to this price.
Proactive Investors calculates that MRL should be priced at $0.09 to $0.10 (prior to recent acquisition to maintain parity with its two ASX listed peers operating within Sri Lanka and based on its advanced project capacity to move to early production than its peers which could see it begin production in 2015 – based on low CAPEX. The significant catalysts ahead for MRL provide value accretive milestones to step up the value of the Company.
Our share price target would increase on release of positive exploration and development data over the next two quarters. MRL has developed a conceptual mine plan for the Warakapola Project that envisions an output of 5,000 tonnes per annum of premium grade graphite to garner annualised revenues of US$10 million. Ongoing exploration and development over the next two quarters should confirm or deny this modest production goal.
End users are very important when considering the differences between Flakers and Veiners...
Vein can be used by Lithium Batteries/Graphene Chips and so on demanding a premium price.
Vein has not had its great strike yet by most estimates using modern methodology.
Vein separates itself because of costs and expenses.
In this age of bubbles and inefficiencies. In my opinion the balance sheet must be taken on a case by case basis as much as possible. Structure is vital at this stage of the game as well as managements ability to use best practices day to day...
1/ Vein is Cheaper and Faster to Market.
2/ Vein End-users can take it as it is without processing.
3/ Vein competes with China.
4/ Vein is involved with the matters of future global dominance of space, military, information technology, energy and transport.
5/ Vein is a niche market.
6/ Sri Lanka's Risk to Leverage ratio is in the positive.
7/ Leverage and risk minimizing aspects driving ever greater investment capital.
It is helpful to compare the Flake versus Vein Market place to gain the proper understanding of the Value and Price.
to maintain parity with its two ASX listed peers operating within Sri Lanka and based on its advanced project capacity to move to early production than its peers which could see it begin production in 2015 – based on low CAPEX. The significant catalysts ahead for MRL provide value accretive milestones to step up the value of the Company.
