C-Note

Hummingbird
Gold Member
An exploratory graphite mining company that I've bought a few shares in is South Star Battery Metals Corp (OTC: STSBF). Their stock is currently priced at US$0.11. They are developing a high-quality graphite mine in Brazil with a goal of starting graphite production and sales around Q1 2023. An independent financial company recently issued what looks to me to be a excellent profile and analysis of South Star:


The report does a good job of explaining the risks of investing in graphite producers and manufacturers. There is competition from synthetic graphite, as well as from cheap, but lower quality, natural graphite from China. There are a number of exploratory, as well as established, mining companies operating or developing higher-quality graphite mines in North and South America.

It seems to me that the biggest factor in determining the future market price for high quality graphite mined in the Western hemisphere is if electric car companies go through with their announced plans to try to establish complete battery materials supply chains in that hemisphere. If they do, then there will be demand for South Star and other companies' graphite. However, I would expect it would be most beneficial for South Star if an electric car company and/or lithium-ion battery manufacturer built factories in Brazil, to lower the cost of shipping the graphite. It might make sense to do so, as there are also lithium mines in Chile and Argentina.

There is risk that battery technology will change or evolve so that it no longer requires graphite. If that happens, graphite is still needed for other manufactured goods, but the quality needed for other uses is lower, so the price of the graphite would be less, lowering the earnings for the graphite producers. So, if demand for battery-quality graphite increases similarly to that of lithium, it's possible that South Star's stock price could eventually reach into the $10-20 range. However, if the company ends up selling most of its graphite for other types of production (tires, etc) then it may never rise much above $1-5.
 

C-Note

Hummingbird
Gold Member
When I was selecting the various, mainly penny individual stocks, to invest in, one of my criteria was that they have a low number of outstanding shares. Besides cutting down on the dilution of share value, I figured that it was sign that the firm's management was running a tight, well-managed ship since they were able to move the company along without having to continuously sell more shares for financing.

Unfortunately, one of the side-effects of a company that is able to develop without issuing many shares is that it apparently makes them a more attractive target for takeover and/or acquisition. As I detailed previously, Millennial Lithium is currently being taken over by a Chinese company. Now, today, a mining stock I mentioned before that I've invested in, called Fiore Gold, is also the target of acquisition.

Calibre Mining (OTC: CXBMF) wants to acquire Fiore in exchange for .994 of Calibre stock for each Fiore stock, plus $.10 (Canadian). Calibre's stock is currently valued at $1.80 vs 1.00 for Fiore so it sounds like a good deal. However, I checked out Calibre and they don't seem to be as well-managed as Fiore. They have 340,000,000 outstanding shares and don't yet have a mine in operation, unlike Fiore. They have several properties in Nicaragua that they're still developing. So, they're apparently trying to jumpstart their business via Fiore.

On the bright side, once Calibre's mine in Nicaragua is up and going, that, plus Fiore's two mines in Nevada, should give them enough gold production (245,000 oz per annum) to get their stock price up into the $2.50-5.00 range of valuation, at least. I just think that if left to their own devices, Fiore would do better in the future than they would being swallowed up by Calibre.
 
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