DNI Metals Inc. (DMNKF)

[Luke_McCain]

TESLA needing a lot of graphite and more mega factories in the works

No company would buy DNI lock, stock & barrel, at this point in time, since:

1.) Economic viability and technical feasibility have yet to be properly established.

2.) There are no mineral resources/reserves supported by either a PEA or PFS.

Graphite-wise, anyways. If a company wanted to steal DNI, it would be for the trillion dollars worth of various in-situ resources in Alberta, and then they would have the same exact problem that the previous DNI team had: Come up with 3 to 4 billion dollars to get the project off the ground.

Even down the road, there are a lot of things to consider:

Tesla is working with Pure Energy Minerals in Nevada to obtain cost-effective lithium, and if there was a graphite company that had the rights to a massive proven deposit of battery-grade feedstock anywhere near Nevada - that was also cost-effective - Tesla would buy it, or partner with them, but it simply doesn't exist.

There are a few companies that own graphite properties in Nevada, but they are all "hard rock" projects. Are they worth purchasing outright, and then Tesla can pass on all the production costs to the consumer? Last time I checked, Tesla doesn't make much money - if any - on any car it sells. Take away all the tax credits, and other .gov "free cheese" programs that Elon Musk is the undisputed king of, and Tesla Motors might not even survive.

So, if the idea is to reduce costs, are graphite projects in Nevada, or for that matter anywhere in North America, economically feasible? Last time I checked, National Graphite Corp. had merged with a biotech firm, or some BS like that. Are they even a minor player in the graphite space today??

There is also Tesla's partnership with Panasonic to consider.

One Tesla-spec battery contains over 7,000 Li-Ion cells.

Cathode: (NCA formulation) 80% nickel, 15% cobalt, and 5% aluminum. Small amounts of lithium.

Anode: Natural (or synthetic) graphite to hold the Li-Ion cells. Small amounts of silicon.

Electrolyte: Lithium salt. In addition, copper, aluminum, etc. are also used.

Panasonic would need to build a dedicated mining/natural resources division, to control the entire supply chain. Highly doubtful you will see that happening.

As far as DNI is concerned, Vohitsara, if the preliminary results are confirmed, is actually better suited for the expandable graphite market, as well as refractories.

DNI does have access to spherical graphite feedstock right now, through Brazil, but:

1.) Tesla is not going to buy graphite through a wholesaler

2.) It wouldn't meet their needs anyways, since DNI can only sell so many metric tons per year, and NdG has its own clients with contracts/agreements to fulfill.

Any remote chance in hell in the next two years, or in the near-term, would have to occur via Panasonic, in a supply chain like this:

1. Tesla (Automaker)
2. Panasonic (Battery Manufacturer)
3a. DNI and/or "Strategic Partner" (CSPG)
3b. DNI (Graphite Supplier)
(4. NdG (Additional Supply))

Or this:

1. Tesla (Automaker)
2. Panasonic (Battery Manufacturer)
3. GLK Strategic Partner (CSPG)
4. Great Lakes (SPG)
5. DNI (Feedstock)
(6. NdG (Additional Supply))

I am guessing that the tonnage required would be substantial enough that DNI might have to buy Brazilian graphite, and sell it for no profit, or even at a small loss, to secure an offtake agreement with these types of "Gigafactory" companies. Pure speculation, nothing more.

I could paint you a lot of pretty pictures in the long-term, with DNI having three producing properties with a central processing plant, but let's wait until they prove they can get one going, shall we?

DW has reached out to Tesla and its peers, just like every other graphite company on earth, so they are aware of its existence. They insist that they will source non-Chinese graphite, processed in the USA to their exact specifications. The problem is that companies say one thing in public, and then like politicians, do the exact opposite behind closed doors. Time will tell.

DNI is going to pursue several market segments, so it does not need a Tesla/Panasonic contract for its survival. If they can be part of their supply chain, that would be fantastic, of course.

The expandable graphite market doesn't get the same press as battery-grade spherical, but there is a lot of money to be made there. If a company wanted to make a bid for DNI, odds are better that it would come from that segment.

Anybody still awake? My coffee is just kicking in, so I can write for another hour or two, but I'll spare you poor, masochistic bastards who made it this far. LOL!