Lithium-related penny stocks are taking a similar path of the past graphite craze
SmallCapPower | May 3, 2016: For those speculators who remember the most recent junior resource bubbles, the graphite one was a doozie. Today, we look at what happened to those high-flying graphite plays and whether any comparisons can be made to the current demand for lithium-related penny stocks.
As the Chart shows, prices for most types of graphite spiked between 2010 and 2012, only to drop at an even faster pace. Now, let’s see what happened with the stock prices of some of the most popular graphite juniors at the time and where they are now:
Northern Graphite (CVE:NGC): Its share price is sitting at $0.50 currently, down from more than $3 back in 2012. The Company has a 100% interest in the Bissett Creek deposit located in eastern Ontario. Northern has completed a bankable Feasibility Study and was awarded a major environmental permit.
Big North Graphite Corp. (CVE:NRT): This stock has fallen mightily from its 2012 high of $3 to its present price of $0.025. During the past 18 months, Big North failed in its attempt to merge with fellow graphite junior Flinders Resources and was forced to drop its option on the El Tejon flake graphite mine and mill in Mexico due to lack of funds.
Standard Graphite Corp. (CVE:SGH): Standard is a former $1 stock now trading at $0.055. The Company, which claims to be positioning itself as North America’s premier pure-play graphite exploration company with 12 graphite properties in both Quebec and Ontario, has recently signed an option to acquire eight lithium properties in Quebec.
Focus Graphite Inc. (CVE:FMS): Focus’ stock price fared better than most of its sector counterparts during the downturn, slipping from $1.20 to its current price of $0.145. The Company is advancing its Lac Knife deposit in Québec, and also holds an equity position in graphene applications developer Grafoid Inc.
Zenyatta Ventures Ltd. (CVE:ZEN): After hitting a high of $5 in 2013, Zenyatta is now trading at $0.81, despite having one of the most talked-about graphite development projects on the market. The Company continues to develop its Albany graphite project in northeastern Ontario and is now working with Ballard Power Systems to performance test Albany’s graphite in components of a Ballard fuel cell stack.
Both graphite and lithium are key materials in lithium-ion batteries. Considering a large EV battery requires about 25kg of graphite for the lithium-ion anode, it is somewhat understandable that there would be concerns about future supply issues. But did that justify the stock-price movements of some the graphite-related penny stocks and what does it say, if anything, about the current investor demand for lithium juniors?
Let’s take a look at the lithium price movement since 2008. What we’ve seen during the past year has been a sharp spike higher in the lithium carbonate spot price, which helps explain the big volume/share price jumps of many of the lithium-related juniors over the same time. But will lithium penny stocks suffer the same fate as its graphite counterparts?
Chart provided by Economist.com
If the lithium stock craze takes the same path as the graphite one, then charts suggest that we could have another year or so to go. That being said, no two bubbles are identical. Demand for lithium batteries is much greater now than in 2012, and we are that much closer to initial production at Tesla’s Gigafactory in 2017, with full capacity expected by 2020. As far as the lithium juniors are concerned, stick with the contenders and avoid the pretenders – the best projects have much better odds of success.
Find out more about how to the navigate the current lithium stock surge >>
