Describe the typical relationship between a graphite producer and a graphite buyer.

A: Graphite is an additive used in a myriad of products. Therefore, the graphite producer needs to have a close and continuous relationship with the customer in order to understand its current and future needs. Producers have to essentially partner with the buyers. They not only need to know the specific properties of the graphite needed, but also the logistics in getting the material to the buyers in a timely manner. Every producer-buyer relationship is unique.

Q: Doesn't that limit the ability of junior graphite companies to create offtake agreements with buyers? If buyers are looking for something very specific and very consistent and junior companies have never produced anything, then is it too much of a risk for the companies to take?

A: Yes, most firms won't take the risk. Traditional offtake agreements do not work in the industrial minerals in general and in the flake graphite sector specifically. [Editor's note: offtake agreements are typically formed prior to the construction of a mine or other facility to secure future production.] I've been in that business of producing and selling graphite for over 20 years; I never had one offtake partnership in place. Revenues will come when a company is already in production, has found customers and agreed with them on the specifications, pricing and logistics.