It's good to see Ken out working the world tour. I really think AE wants a miner to invest a sum of cash to show the big miners there is "interest". Then release the PEA to show margins that will make every miner drool. This should be enough to force the hands of the big miners to make a play for ZEN and for the miner that invested early.

Sorry, I am a CA so my nature is to keep looking at numbers..lol..even though I swore off them on this forum. So here is a different angle to the valuation question.

Let's look at this from a miners perspective since Jimmer mentioned Stowe working his mining contacts. I found a reasonably good comparison in the takeover of Osisko (OSK) this year. Osisko owned a large, low cost, high reserve gold producing property in Quebec (same country risk). I know gold and graphite are two very different markets but I think we can agree that high purity natural graphite can at least have the same metrics placed on it. The Gold price is of course not a secret but it can also fluctuate wildy whereas I assume the graphite pricing would be more long term stable with contracts in place.

Using round numbers here to simplify the comparison:

OSK had reserves of 10M oz which at $1300 gold is $13B insitu value.

ZEN has reserves of 1.5M tonnes and at $8500 that is a insitu value of $12.75B.

So insitu value is fairly close. Both deposits open to further expansion of reserves.

OSK is operational at 600K ounces per year @ cost of $700 per ounce. So margin is about $360M.

ZEN at 50K tonnes per year and cost of $2K per tonne would margin $325M annually.

Again, similar numbers. ZEN numbers of course not yet PEA certified.

There was a bidding war for OSK this year as follows:

(1) Goldcorp hostile bid of $2.6 Billion for 100%

(2) Yamana friendly counter of $1.37B for 50% ($2.74B value for 100%)

(3) Goldcorp raised hostile bid to $3.6B

(4) Yamana/Agnico Eagle friendly bid of $3.9B for 100%

Obviously, the OSK project is already in production and capex spent, so it has been derisked to a large degree.

But I think that deal exemplifies what a miner will pay for a cash rich project. Most gold mines typically operate at a cash cost in the $900-$1100 range so this one being much lower had much more value to the purchaser.

Since there are no graphite buyout comparisons we can make (that happens when you have one of these one-of-a-kind projects), we can only compare some other mining projects and the financial metrics they have in the public arena. Every deal is different and has to be taken on it's own but large miners do work with cash flow, NPV, etc as standards.

So some have asked why a miner would pay $1B+ for Albany the OSK example shows it is done with some regularity. We at this point have to guess at the ZEN selling & cost numbers as well as the timing of production. Just from the production side there is the time value of money for the wait period to full cash flow compared to OSK which is generating cash flow.

My main point is - miners will pay good money for cash generating projects.

The secondary point is to note the increase in the buyout when another bidder joins in. The first bid was hostile but still a huge number. OSK fought pretty hard to secure a second bid and publicly rejected that first bid.

The third point to note is that during the bidding process Goldcorp mentioned that it had had on and off informal talks with OSK to buy them for the last 5 years, which of course shows that there is pleanty of back room discussion ongoing that we will never hear.

As already stated ad naseum, it all depends on that selling price number. But even at the $8,500 figure this has the potential to attract multiple miners let alone the end users. Any miner bidding would have to be comfortable with the graphite market and it's secretive pricing models. But if our numbers prove out, miners should in fact be drooling as Jimmer noted.

Have a good weekend folks, good discussions of late but even better ones coming soon (whenever we get some damn news!!).