It took me awhile to wrap my head around this one, and I was about to just give up the research, then an idea came to mind: check the price of graphite flakes. Genius right?
Now I’m no expert, so I just assumed 20 tons is a lot of graphite, and would thus constitute as a large shipment, but to my surprise, after performing some quick “due diligence”, per se, I discovered that 20 tons of graphite is relatively cheap, only costing roughly $200 000.
They bought the graphite business for $6.4 million in common stock in 2018
And the next year they sold the royalty rights to their Uranium business
But they don’t plan on beginning production of graphite for a very long time, and they have very little cash considering how much money they lose on a quarterly basis.
PR dated Sep 19, 2019
Why is the price up so much then? Well, when in doubt, refer to Charlie Munger’s famous quote:
“SHOW ME THE INCENTIVE AND I’LL SHOW YOU THE OUTCOME”
So who stands to gain? Well, there is a particular underwriter who is buying stock from the company, then selling it in the secondary markets. They have so far registered 526,784 and 707,750 , and the initial agreement, dated June.06, was that the underwriters would buy up to $10 million in stock from the company. Based upon this, you can know that there is still stock left on the table to be purchased and sold by the underwriter.
‘S-1’ on 6/11/19
‘424B3’ on 6/24/19
The underwriters were only able to sell 319 643 at that time because of the Nasdaq exchange cap; a rule that forces a company to obtain shareholder approval before they can sell anything above 19.99% of the company’s market cap/outstanding shares.
‘8-K’ for 8/6/19
And you see the share price spikes as much as 64% between Aug.06 and Aug.08
When they announced the Graphite facility news on September.19th, the price again spiked 40% intraday
The company then filed a prospectus for 707 750 shares on September.26th
This article has been updated. .It was initially stated that their shipment was only for $20 000 worth of graphite, and this was incorrect. Battery grade graphite is more expensive
DISCLAIMER: This is all my opinion, and I am not a financial adviser. You should consult a financial adviser before making any decision with regard to publicly traded securities, or any security for that matter. I make no assurances as to the accuracy of the information contained herein. This company carries an extremely high degree of risk and you should not use this article as the basis of an investment decision. You should consider this information as similar to personal insight from a peer/friend/acquaintance, and thus it should obviously not be the primary source material you use for basing an investment decision because similar to any opinion from a peer/friend/acquaintance, it could be completely and utterly incorrect!
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