A couple of comments:

1. Cost of Productions: As one poster has already said, the production cost should not be of great concern here. It's the profit margin that counts. For example, just example for illustration purposes.

Case 1: All-in production cost of $1000/tonne for a sale price of 8500/tonne; profit = $7.5k/t.

Case 2: Cost =2k/t, sale price = 20k/t; profit = $18k/t.

Case 3: Cost = 2k/t, sale price = 10.5k; profit = $8.5/t

In the above, case 2 is clearly a winner (the additional process and equipment required to get to the quality to fetch 20k/t is justified). Case 3 is marginal, since the additional required process and equiment may not warrant the extra price/profit. Company may decide to sell the stuff produced in case 1 to avoid getting involved in a more complex factory. However, graphite is not Nickel (or gold) and hence it may be a good strategy to give propective customers (buyers) options, or to have your options to sell stuff to different kind of buyers, since not everyone would want to pay $20k/tonne product (assuming the profit margin would be $18k/t (cost of production could be a lot more than $2k/t). It boils down to the business/marketing model a company may choose to follow. If there is a lot of demand for the basic product (case 1) and you have a lot of it (the volume sale) then perhaps it would be quite lucrative to dig it up from the ground, process just a bit, just enough to sell for some decent profit margin.

This strategy is not new, and has been discussed by other companies.

2. Open pit vs underground (UG): The assumption has been that Albany deposit will be developed as an open-pit mine, which would involve quite a bit of removal of the overburden (costly, and the overburden would need to be put somewhere) Since, the deposits (two of them) are well-defined and in a columar (pipe) configuration, it may be economically possible to extract them using bulk tonnage technology in a UG operation. Start with one pipe first (whichever that has the higher head grade, the east pipe?), and extract to stuff in the other pipe later. These days, a UG operation may be an attractive mining operation as far as EA is concerned (out of sight out of mind advantage).

This should be a good question to pose to AE at the AGM, can someone please do the honour? Pretty sure that all the talented engineers at ZEN and its consulting firms have discussed various mining option among themselves. Sometimes, political considerations (EA is one of them) may play a key part in the decision making process.

In summary, ZEN has (a) a good size deposit; (b) good head grade in a low range which makes it easier to separate from the impurities (Ref: Interview with Dr Ian Flint of Elcora); (c) it can be processed to very high quality graphite suitable for high end batteries. Potential suitors already know all of those factors, they don't even have to wait for a PEA which is just a formality. If a suitor decides to strike it will strike. Those deep pockets have plenty of talented people to play with options.

Just my speculation in trying to figure out what's going on in the heads of those actors.

Cheers,

goldhunter