Wednesday, October 27, 2010

Strategic Energy Resources, great exposure to Graphite

When you hear of graphite you immediately think of the material that they use to make pencils, right?  Graphite has many other traditional applications in that it is used for steelmaking and is consumed for refractories, brake linings, clutches and lubricants.  This is all a little boring thus far however the exciting part is that the global demand for Graphite is increasing as it becomes more utilised in new age applications such as fuel cells, semi conductors and nuclear energy.  Other applications also include lithium ion batteries for electric and hybrid cars.

Strategic Energy Resources (SER) is one stock with exposure to Graphite through it's Uley project in South Australia.  The company through former management and under a different name have had Uley project for some time however due to low prices for graphite the project has been under care and maintenance since 1993.  This is about to change.  Demand for graphite is increasing and the mineral has been noted as one of 14 by the European Union as critical as a result of it only being produced by a small amount of countries.  China produces 80% of the world's graphite and recently introduced taxes to curb export of the mineral.  Sound familiar to rare earths?

Strategic Energy Resources recently made a non price sensitive announcement to the market on 05/10/2010 detailing much of this information in the form of a project update.  The market took a day to respond but did push the share price to a high of $0.057 on 06/10/2010.  Since then we've seen the stock hit a high of $0.079 on 18/10/2010.  The share price has been a bit of a rollercoaster ride but it's only been in the last few days has the volume really dropped off and the share price steadied so maybe now is probably the time to accumulate.

Catalysts for the share price over the next couple of months include the possibility of a joint venture with Japanese companies and thus the recommencement of production.  Shares in Strategic Energy Resources last traded at $0.062 (12:30PM).

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