I remember reading the below article talking about South32...

I remember reading the below article talking about South32 mentioning an interest in graphite a while ago, and I’ve long thought that the UFK (German Government Guarantee) wouldn’t just trigger a re-rate, but our compelling BFS, binding European contracts and graphite monopoly (operated by China) would attract interest and a possible takeover offer. Yes, the article was published in 2016, but I suspect if S32 was considering graphite, even in the ‘flavour of the month’ stage in 2016, I’m betting there’s much more interest nowadays, especially since their finances are greatly improved. Have they said anything about graphite recently? No. But at the same time I don’t tell anyone what I’m buying until after I’ve done it.

Here’s South32 in 2016; ‘I think lithium and graphite have attractions, but they can be quite unique in terms of they are the flavour of the month if the technology moves’ – not to mention mineralogy. And while it was correct back then, it’s less true nowadays. Here’s a recent KNL announcement quoting Merkel ‘The German Government has announced on 18 September (2018) that it will develop lithium-ion battery manufacturing (Gigafactory) capability in Germany, providing a critical source of additional battery supply to complement existing Asian battery production. German Chancellor Angela Merkel stated that “As part of our strategic capabilities, we should also work together with other European countries on our own battery cell production.”’ – and lets not forget KNL’s European contracts (TK & the EGT) and ‘program attracting significant interest and discussions in progress with several groups about collaboration and partnership on business’ and ‘hosting a tour to the major electric vehicle (EV) manufacturers in Germany (Daimler, BMW and Volkswagen)’.

Germany changed the graphite rules and dynamics (danke!).

And Epanko has some compelling metrics; NPV US$211m, EBITDA US$44.5m with preproduction cost of US$89m (expected to be largely funded by KfW Bank/EFIC). Not to mention Merelani, EcoGraf (high probability of ongoing royalties from the HF-free technology), plus the spherical processing plant (NPV ~US$145m).

I’m certainly not saying S32 is/will make an offer, just that I wouldn’t be surprised if someone does when the GGG is confirmed (I’m not even going to mention SYR and their need for customers. Bugger. I just did. But I doubt anyone here wants SYR script, even at 3-4 times the current MC. 10 times, maybe?).

It has been a long slog but I’m more bullish now (thanks to Tanzania finally sorting itself out) than I have been in years on KNL (in isolation, thanks to our contracts). Bring on the whiplash which I expect to be caused by the GGG, EcoGraf and development/commissioning of the spherical graphite plant…. And possible takeover?

Just a thought to start this Monday.

Article 2016 mentions S32 graphite interest
http://www.mining.com/south32-looking-for-assets-despite-1-75bn-loss-massive-layoffs/

S32 Annual report; US$1.3b profit.
http://imagesignal.commsec.com.au/d...nZXNpZ25hbC9lcnJvcnBhZ2VzL3BkZmRlbGF5ZWQuanNw