Talga Resources (TLG:au) has been classified as a Phase I company and rated '2' on the five point PortfolioDirect rating scale where a '5' rating is the lowest...

Talga Resources (TLG:au) has been classified as a Phase I company and rated '2' on the five point PortfolioDirect rating scale where a '5' rating is the lowest risk category. Talga Resources has been caught up in the excitement over graphite exposed companies. Since the cyclical trough in sector returns in June 2013, the company's investment performance has placed it in the top 2% of outcomes in the sector, including a near fivefold rise in its share price beginning in March 2014. Whatever the prospects for the graphite market and subsequent commercialisation of applications involving graphene, Talga Resources must undertake further work in resource definition, metallurgical testing, product specification and customer sourcing before it is able to fully understand the economics of its mineral assets and have sufficient certainty to make a production commitment. The prospect of eventual success may not be enough to sustain current market values if the necessary analytical and commercial activities extend beyond an acceptable investment time frame. The PortfolioDirect rating reflects this possibility.