Dear Readers,



The following article re ZENYF/ZEN.V was released today on Bloomberg:

http://www.bloomberg.com/news/2013-08-27/sting-inspired-zenyatta-climbs-on-canad
ian-graphite-find.html

The comments are correct in my view ""They have to prove the size of their deposit, the cost of producing the graphite and that there's demand for the production," Jon Hykawy, a Toronto-based analyst at Byron Capital Markets Ltd., said in an Aug. 22 telephone interview. "The sooner the better for everyone."

My thoughts are 1. 43-101 is anticipated in the next 60 days. This is only an initial report, which I expect to grow, but will be a significant landmark to validate Zenyatta indeed has tonnage at Albany. I believe there is more high purity graphite in the ground than most imagine. We only need to sell 100k tonnes per year and this is a $1 Billion plus revenue company. 2. I believe the cost will be lower than anyone (even though there is still basically no analyst coverage!!) is modeling, including myself. $1,000 per tonne is conservative but I'm guessing it ends up being lower...$500-$700 per tonne. 3. There is ample demand for the market to absorb 100k tonnes of this stuff per annum. In fact, I'm speculating we see verification that Zenyatta can indeed sell some of their end product into the highest end of the market ($25,000 plus per tonne) and that, after testing is completed, we'll see supply locked up swiftly by end users.
"Some analysts are taking a wait-and-see attitude about what Zenyatta has, said Simon Moores, a London-based graphite-industry analyst at Industrial Minerals Data."
"There are doubters only because it's hard for people to understand the deposit," Moores said by phone on Aug. 22. "Its size and formation is unique and therefore Zenyatta's plans for it will have to differ somewhat from that of other juniors in the market."

This is a blessing in disguise. It's exactly the reason we've had the chance to make 25 times our money in the past 12 months....because others are taking a "wait and see attitude". I am well aware of the risk factors Zenyatta presents at this stage of development and was well aware of them when I was (still am??) the only newsletter writer on the planet recommending their stock at 20 cents last August. However, I feel very confident that any 'surprises" Zen will roll out to the investment community will be on the upside. Upside in tonnage, upside in end uses, upside in ultimate pricing the product commands, upside(really downside) in costs, and lastly, upside in stock performance. I still think $10 is in the cards for Zenyatta. I posted this 'long term' price target in February of 2013 and said we'd hit $10 within 2 years. I'm sticking with that call....and there's 'quite possibly upside to both the price target and in the time frame it takes to get there.

The bottom line is we're on the cusp of having all of the questions answered. If we indeed see the tonnage needed reflected in the initial 43-101, results from the studies in terms of applications being bullish, and more high purity graphite discovered in the West (2x the size of the east), the stock will bust through the old high of $5 like a hot knife through butter. I just bought more stock today.....I think the chart looks great and we're way overdue for news(buying right on the 50 day moving average is a low risk entry point with stops just below for traders and has been wildly profitable anytime the opportunity has rarely presented itself in the past). I would be quite surprised if we don't see something at least by the end of next week. I also have to imagine that Roth will upgrade their target price soon and any way you slice their modeling, I think they have to bump it to $7 or $8.

Anyway.....good trading opportunity here! We'll be proved right or wrong yet again soon enough but I like our odds:)


Best,


Eric