Before we run off with zillions of earrings, there are a few other that we need to consider. This is not mean to say that ZEN deposit is not valuable.

- Precious metal equivalent: Convesion of a graphite deposit to a precious metal deposit may be a simple way to size up the graphite deposit, to have a ball-park figure for the "in-situ" value of the deposit below. TD Security Research Department has done it (imo, this is too simplistic) but this has been quoted by various companies, e.g. Mason Graphite in one of its slides in the Corporate Presentation (Average grade of 20% = 9.1 gpt Au = 800 gpt Ag = 6% Cu). If one considers the richer zone, the grade is 27% (pretty rich, much better than FMS at 15.6%) the gold equivalent would be a whopping 12.3 gpt Au...But other factors would need to be considered before we start counting oz of Au.

- In-situ value is not to be considered as the value on the ground: Depending on the mining and processing methods that are required to bring the metal up to the ground. These costs could vary significantly depending for example the depth of the deposit, the waste ratio, the geology/rock type, etc...

- Cost to refine the graphite to the form that can be sold: Depending on the graphite properties price varies significantly from less than $1000/tonne to over $1000/tonne, e.g. $1500, 2000, 8500 (the last value has been assumed for ZEN in Roth report). I would stay away from values like $20,000 - 30,000/tonne (too high a price for me to imagine, unless the company can provide proof that it has fetched this kind of price for its product...i.e. "show me the money"). The processing would include upgrading to a certain Cg level and producing things like spherical graphite. Anything would be possible but at a price. The higher the price for the value-added product would require higher cost (and loss during the conversion). It would boil down to the profit margin. The overall operation must be profitable, since nobody would want to produce something at a loss (there are always special situations, but they are not for a commercial outfit with shareholders to report to).

- Gold versus graphite: The price for gold is simpler to determine, current POG is currently about $1230/oz, for a universal standard. While for graphite, an industrial commodity, the price depends on many factors and the agreed price as negotiated between a seller and a buyer. Hence it's impossible to have a meaningful comparison.

- Comparison among graphite companies: Let's leave Au comparison out for now. Even among the same sector (graphite), comparison of the in-situ values of the deposits using the grades alone (even though grade is an important factor) would not be so meaningful. For example, Focus at 15.6% and Mason at high grade of 27.4% would be equivalent to 7 gpt and 12.3 gpt Au, which are quite rich rocks (in-situ). However, one cannot just conclude that Mason deposit is almost twice the value of Focus, for other factors are involved in the extraction and value-added processing to arrive at the price and the profit margin. There are size distribution, purity, electrical properties, etc...to be considered.

In summary, one would need to wait for the PEA (or even better a BFS with all supporting facts) to come out to pass any judgment on the economic viability of a project. The profit margin is key in this business.

It's only my take on this folks.

goldhunter