The folks at the Money Map Press are pitching one of those “kitchen sink” deals where you pay up front to get all of their newsletters for life — these are usually in the neighborhood of $3,000-5,000 with an “annual maintenance fee” that’s generally around a hundred bucks, and this one is right in line with that (and yes, as many publishers do they give it a twist by saying they’ll “send you a check” — for $2,500 in this case, which is pretty much like a car salesman giving you a “cash back” offer, saying “discount” just doesn’t hit your lust receptors in the same way).
The deal, which they call the “Passport Club,” includes more newsletters and trading services than you’d have time to read, from all the heavily teased editors they promote to our mailboxes every day (Dr. Kent Moors, Shah Gilani, Peter Krauth, etc.), but the big teaser pitch behind the promotion is from another guy, Michael Robinson, who used to work for sister publisher Wealth Daily/Taipan, but whose American Wealth Underground appears to have disappeared.
Let’s pause to have some sympathy for our friendly neighborhood Stock Gumshoe, who gamely tries to keep track of all these letters — many of them don’t stick around long enough to even get one year of renewals under their belts.
But back to the point of today’s sleuthification exercise, yes?
The pitch is that Michael Robinson has identified a pick that’s so darn selective and juicy that we can’t even buy it yet … but apparently we’ll be able to do so soon, and it’s apparently a whiz-bang excitement maker.
Here’s how they tease this “not yet available” investment idea:
“Recently the firm closed out a private placement surrounding this deal worth about $5 million. To have gotten in on that round, you’d have to be pretty wealthy… know the partners… or have some pretty high-up contacts in the industry.
“Of course, we all know the ‘burning match’ analogy as it applies to deals like this, where the earliest people in typically see the greatest benefits… and as the match is passed down the line to other investors, it gets shorter and shorter until the flame goes out or somebody gets burned.
“Fair or not, that’s just the way these deals work. Founding partners, friends, relatives, wealthy clients of the banks handling the deal – they tend to get in under the best terms.
“While we can’t be the ones who ‘strike the match,’ we could be the second to hold it – by being among the very first to own shares from a small initial offering set to be released as early as March, at a very advantageous ‘first issue” price.'”
OK, so it’s some kind of junior IPO — they tease that it’s likely to be offered at about 50 cents (and imply that perhaps you could buy 5,000 shares with that “$2,500 check” they’re going to send you).
And the company? It’s somehow related to graphite — here’s the pitch:
“The ‘Next Big Thing’
“There’s a lot of talk about what will be the ‘green energy’ technology that will save us from dependence on Middle Eastern oil and further destruction of the environment.
“Whether it’s wind power, solar, fuel cells, nuclear – one thing is for sure… batteries will be needed to store the excess power these and other sources generate.
“Battery technology has already come a long way with the development of lithium-ion batteries, which allow laptops, cell phones, smart phones, iPads, iPods and other “portable” technologies to hold charges longer while using up less space. But the greatest demand for lithium batteries – and the unique specialty metals required to make them – will come as more and more electric cars and motorbikes make their way on to streets around the world – something that’s already happening in Europe and Asia, where people aren’t so attached to gas-guzzling SUVs.
“The ‘electric’ mineral our company will be mining is a key component of the modern lithium-ion batteries.
“But it’s not lithium… It’s graphite. Specifically, large-flake graphite, of which there is up to 10 to 15 times the amount in the average lithium-ion battery than lithium itself.”
So at least it’s a teaser that focuses on graphite as a key supply item for advanced batteries, not as the raw material for graphene — we’ve seen the graphene teasers a few times, and the stuff is awesome, but the actual quantity of graphite used to make graphene nanomaterials is teensy (flake graphite, after all, is priced by the ton, and we’re talking about materials that are the thickness of a single atom).
But yes, there are high-volume demands for graphite, too, and batteries are a big deal, helping to drive the price up several hundred percent in the last decade. So which graphite supplier is Robinson trying to tell us about?
Well, they’ll apparently have a conference call with the company in a few weeks to reveal more, but this is what they tell us now about this company and their mine:
“Our contact… and a consortium of geologists and rare-earth business professionals recently snapped up an idle mine in Sweden that they believe just happens to have an estimated 30-year supply of graphite sitting in the ground.
“Better still, the mine is fully functional, with production facilities on site… roads and other infrastructure elements in place. There’s even a stockpile of medium- and large-flake graphite ready to be shipped!
“… back in 1993, the previous owners of the mine spent as much as $70 million on the project – a reasonable baseline for what it takes to get a mine like this up and running….
“Problem was, they were about a decade too early.
“It wasn’t until about 2006 – when electric cars and power-hungry hand-held computing products really started to take hold – that the demand for large-flake graphite started to soar.
“Unable to sustain a profit with graphite trading at a paltry $480 per metric ton, the mine closed in 2001. And it’s been sitting idle ever since.
“Today’s a different story.
“With graphite trading at $1,500 for the regular-grade stuff – and upwards of $2,500 for large-flake – they saw an opportunity. When they learned that the property was still available, they went to check it out.
“What they found was a ‘working’ mine 150 feet deep, with enough graphite stores to be productive a full 30 years, and supply Europe with an estimated 8% of its current annual demand.”
And a few more details about this potential IPO:
“… further tests revealed the mine could have graphite deposits as far down as 1,500 feet – which means there could be substantially more graphite than they originally expected the mine to produce.
“So they put in a bid… won the rights to it… got the money together through the $5 million private placement I told you about… and bought the property.
“And now they’re about to go public… with a very small initial stock offering of roughly 35 million shares at 50 cents each. Which brings us to the opportunity at hand.”
And apparently these investors have some sort of nordic connection, because they were involved in a rare earths play in Scandinavia as well:
“This whole situation is unfolding almost identically to another ‘rare earth’ company our contact and his group started back in 2009.
“He found a very productive property, this one also in Scandinavia.
“He put a top-notch team together.
“They raised some startup capital. Then he issued some stock through the same exchange via a very small offering, priced at 60 cents a share…
“Within 24 months, that very stock had climbed to $5.73 a share – an 855% gain!”
Well, I’ll wager that the other scandinavian rare earths pick they’re referring to is Tasman Metals, which I covered when Michael Robinson teased them last fall for his former employer. Of course, he was teasing that not when it ran from 60 cents to $5.73 (which was an all-time intraday high back in the rare earth go-go days in early 2011), but last Fall in the $2.50 range, which is where it still is today.
And today’s graphite pick? This goes into the Thinkolator … and our answer comes out the other end, just as easy as lutfisk … this is going to be Flinders Resources.
The graphite mine and processing plant is called Kringel Graphite, it is in Sweden, and it’s owned by Burke Resources, a private company. They agreed to merge with a Canada-listed (venture exchange) “blank check” company called Tasex Capital last year, which is roughly a $5 million deal, and they will be raising money this year to fund the restart of the Kringel project.
They think they should be able to produce some graphite from the stockpile during 2012, and that they can ramp up to full capacity production while they’re also drilling to expand the resource over the next three years.
With a name like Flinders you probably know there’s an Australian connection, and yes, this is basically an Aussie company despite the Swedish mine and the Canadian listing — the list of proposed directors includes basically everyone from Tasman Metals. The presentation they made available about the qualifying transaction and the basic potential of the Kringel mine is here, the preliminary company fact sheet is here, and the announcement of that “qualifying transaction” with Tasex is here.
And no, as far as I can tell you can’t yet trade this emerging company — Tasex has been in a trading halt since the qualifying transaction was announced, and I assume that the Money Map folks have got good information when they say that the initial offering and additional fundraising will take place sometime over the next month or so. Haven’t seen any news on that front myself. So if you’re interested, you can keep your eyes peeled or get in touch with the company (their contact info is on their very bare-bones website here).
So that’s all I know about Flinders — looks like it is real, it is becoming funded, it is buying that mine in Sweden, and apparently the bull market in graphite is here to stay if the teaser-meisters are on the ball, since several of them are talking it up to no end. Whether or not that means they will manage to IPO soon, and whether buying that IPO right away will be a good choice, well, I have no earthly idea. If you’ve got a graphite opinion, or a Flinders opinion, or, heck, even a Money Map or Michael Robinson opinion, let it loose with a comment below.
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you can do so here.