Nick Hodge is out with a new promo that’s catching the attention of Gumshoe readers — it’s all about the “sixth element” and a company with a massive stockpile of it that should make us all rich.
I don’t want to spoil the whole surprise, of course — what fun would that be? — but yes, we can cut to the chase just a little bit and say that this is indeed another graphene/graphite tease.
Graphite, as you’re probably know, is a form of carbon that’s used for pencil lead, for lubrication, in lithium-ion batteries, and in steel furnaces, among other things. And the high quality, large flake variety of graphite is a raw ingredient that can be used to make graphene.
Graphene is a nanomaterial, essentially it’s a sheet of graphite that’s only one atom thick — and it is conductive, transparent, and extraordinarily strong and flexible. So it really does fit the bill as a “wonder material” that could be a building block of the next wave of incredible advancements — it’s been compare to plastic and the silicon chip as regards the potential impact it might have across all parts of the economy. So yes, it’s big … but it’s new, and no one’s quite sure how to cost-effectively make it in large quantities yet, or what applications will actually turn out to be the critical consumers of graphene.
I’ve been quite skeptical of the graphite exploration companies as they’ve been teased over the past couple years — the story is compared to the “rare earths” story, because most graphite is produced by China (though they don’t have quite as much of a lock on it as they do on rare earths), and most of the stocks experienced a real boom and bust period as they were touted for their graphene potential and collapsed with faltering steel demand and/or the slowdown in investor interest when the newsletters backed off on promoting the graphite/graphene story for a little while.
Most of the “real” graphite exploration stocks — those with a real, at least partly defined asset — peaked out in early 2012 and have come down hard since then, including several that were actively teased by a handful of newsletters (Northern Graphite (NGC.V, NGPHF), Flinders Resources (FDR.V, FLNXF) and Focus Graphite (FMS.V, FCSMF). And most of those assets were either long-known deposits or existing, shuttered mines — projects that had been delayed or closed because of low graphite prices in years past.
Here’s how Nick Hodge introduces us to his latest graphite “story stock”:
“The ‘Sixth Element’
“This ‘inside info’ from a world-renowned explorer could be worth $484,000 to you…
“but only if you heed this advice before May 31st….Are you getting our free Daily Update
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“… a call I recently got was different.
“It was from a man with noticeable conviction in his voice — a man I’d never talked to before.
“He told me he’d tracked me down because he had a story to tell…
“About a massive $8.6 billion plus ‘wonder mineral’ discovery in the wilds of Alaska — and the sub-50-cent company that uncovered it.
“It’s a mineral, he said, that many call the ‘Sixth Element’ because of its placement on the periodic table.
“I was intrigued, of course. I’m always on the lookout for early advantage opportunities for my readers.
“And as I quickly learned, this one has the potential to be an enormous moneymaker for quick-moving investors.
“Fact is, it’s extremely rare to come across an exploration company with a market cap in the tens of millions that is sitting on a discovery potentially worth over $8.6 billion.”
“Potentially” is a important word there, of course — much different than “currently.” Discoveries are great, but before you fill your head with the big numbers you get from multiplying “price per tone” by the “potential” size of the resource there’s a long row to hoe in exploring and defining a resource to become more certain about what’s there … and, more importantly still, to contemplate whether the “potential” mine can be permitted and built, how much it will cost, how and where the ore will be refined to become sellable, and how you can get that refined product to the end markets who will pay for it.
Most of you know all that already, of course — ore is worth more on a ship bound for China than it is a couple thousand feet underground in a remote part of the world — but I just wanted to point out that the big numbers that newsletters almost all toss around in their teasers are based on the somewhat justifiable but simplistic math of “this is how much stuff might be underground” multiplied by “this is what people are paying for the refined version of this mineral right now.”
The company Hodge is teasing is apparently priced under 50 cents (though, given this big teaser campaign, it might be over that price by the time you read this — I’m typing on a airplane at 7am on Monday so haven’t seen the opening price yet), and he adds these extra clues and enticements from his secretive meeting with the man who tipped him to this stock:
“He showed me a government-approved resource estimate quantifying how much of the mineral the company controlled…
“And if it’s as accurate as it’s supposed to be, the enormous $8.6 billion value of this mineral resource discovery could send this company’s stock soaring 2,420% — or more.
“This isn’t just some pie-in-the-sky prediction. It’s based on estimates from a well-respected international certification service.
“Keep in mind, this is just the value of the resource in the ground.
“It’s really an early-stage bet.
“Other companies that have a similar “sixth element” resource are being valued at $55 per tonne.
“And this company possesses over 6.2 million tonnes — meaning it should be valued at over $340 million. With that kind of valuation, you get a current estimated per share value of $3.78 for this explosive Canadian exploration company….
“Exploration on the Alaskan property where the discovery was made began in the spring of 2012 with a geophysical survey.
“This was followed by surface sampling (totaling 591 rock grab samples and 32 channel samples) and an 18-hole diamond drill program…
“The results of this program led to the initial resource estimate of over six million tonnes of graphite, worth over $8.6 billion in today’s market.
“For early-in investors, this record-breaking North American graphite discovery could make them powerful gains of 2,420% or more…
“Ultimately, this company wants to sell its huge graphite resource to a bigger mining outfit or an end user at a massive profit — giving you an opportunity for spectacular gains from a future buyout.”
So … who is Hodge teasing? Well, he’d like your $499 before he’ll tell you, but we toss all those clues into the Mighty, Mighty Thinkolator and we can tell you, for the low low price of “free” that this is almost certainly … Graphite One (GPH in Canada on the Venture Exchange, GPHOF on the pink sheets in the US).
The company is teensy, and if we look at the past experience of little sub-$100 million market cap companies that have been teased by the Angel Investing folks it’s easy to see how the price could spike based on both Hodge’s attention and, because we’re sharing it more widely for free here, on the attention of yours truly. So please please keep in mind that I have no idea what this company should be worth … and if it spikes based on this extra attention, it could easily give up the gains as quickly as they’re made. I expect that Hodge’s copywriter is anticipating that attention in calling it a “less than 50 cents” stock — right now it’s also less than 25 cents (the stock closed at 21 cents on Friday, which was the culmination of a 50% gain during the week — not that unusual for a teensy stock with a market cap of only $25 million and pretty low trading volume, but it does indicate that someone, probably Hodge’s subscribers, took a lot of interest late last week).
I have no particular expertise at evaluating mineral resources or picking early-stage mining stocks, but you can see the press release that accompanied their release of their maiden NI 43-101 Resource Estimate here — it does indeed estimate an inferred resource of over six million tonnes of graphite at a 3% cutoff grade, and the deposit is apparently still open in more than one direction so may well be larger.
The May 31st bit is just that Hodge is going to host a conference call for subscribers on that date, with his “secret” tipster and some other experts on the call — so I don’t know if there will be real news from the company in the interim, but that does give at least some indication that the Early Advantage folks will be pressing this story for at least a few weeks. That doesn’t guarantee a higher price on May 31, and I don’t know what kind of interim price target or “buy under” price Hodge might be providing for his subscribers, but if they keep pushing this stock for a month I imagine it will go higher for at least a little while. But do look at those charts of Northern Graphite or Flinders Resources or Focus Graphite to see what happens when interest in a graphite explorer dries up (and those companies are all pretty far ahead of Graphite One so far).
And my plane’s about to descend, which means my WiFi access will be cut off soon … so I’ll leave it to you to discuss the merits of Graphite One amongst yourselves — it’s in a mining-friendly state, it’s got quite a lot of attention from penny stock and resource investing folks, and it’s quite promo-savvy — even their press releases read like stock teaser stories. So is it worth your speculative cash? Let us know what you think with a comment below.