Hi, thanks for your kind words and appreciation, but LOL I am not a financial adviser. I am a simple long term shareholder who tries to understand the companies he is invested in.
IMO Bass Metals (on ASX) and Elcora Advanced Materials (on TSX venture) are completely different types of companies with different ambitions and business plans. I am invested in both for the long term, and true they both produce graphite, but I would say Bass Metals is your traditional junior mining company, while Elcora is a value-added vertical integration carbon company.
Bass Metals is interested in mining raw graphite in madagascar (IMO the best FLAKE graphite quality in the world and one of the cheapest costs of production per tonne), while Elcora is more interested in the processing side of the business (they also mine VEIN graphite in sri lanka which is the highest quality of graphite in the world and the best precursor to graphene, but comes with lower quantities than flake graphite and it is much more difficult to mine (underground narrow veins mining). Elcora is more of a R&D company (they have a graphene R&D laboratory and they are finishing a graphite anodes R&D laboratory with a worldwide battery scientist as its head), and they are in the process of getting graphite feedstock from other mines in affrica, while Bass is more of a traditional mining company concentrated on its own mine.
As such, the risks/rewards are completely different. Bass is less risky and it is easier to see where they are going and calculate its future cash flows (if they succeed refurbishing and recommissioning teir mine), while Elcora is the more riskier investment with higher rewards (new graphene applications commercialization, graphite anode factory) and it is therefor difficult to predict its future. In case of success in the medium term, Bass may become a multi-hundred million$ company, while Elcora has the potential to become, but in the longer term, a 1billion$+ company (if its not acquired before that).
What are the odds ? of course it is more probable that Bass becomes a multi-hundred million $ company, than Elcora becoming a 1billion$+ company. However, as they say : Higher risks / Higher rewards ! To each its own!
Finally, you have to always remember that all investments are risky and nothing is a sure thing, and that randomness and luck plays an important role in investment, especially in the short term, your investment thesis may be right (good management, good resource, good business plan...) yet the stock price may fail to appreciate compared to a poorly managed company with unrealistic business plan and low quality resource !
Why is that ? because there may be discrepancies between the value of a company (objective based on expected future cash flow) and its price on the market (subjective based on supply-demand and speculation), and the market may take a long time before the price catch up to the value or vice-versa. There is also price of entry, and the concepts off under-over valuation, that is why a good company may be a bad investment if you buy at an overvalued price, and a bad company may be a good investment if you buy it at an overvalued price.
For the role of randomess and luck in markets, I highly recommed this book :
- Fooled by Randomness the hidden role of chance in life and in the markets, by Nicola Nassim Talib
To understand the concept of risk in investing I highly recomment this book :
- The most important thing : uncommon sense for the thoughtful investor, by Howard Mark
To understand how to calculate the Value of a company and why this differs with the concept of the Price of a company, and why a good company could be a bad investment and a bad company may be a good investment, I highly recommend the blog articles and videos of the brilliant NYU professor Aswath Damodaran such as :
Aswath Damodaran: "Valuation: Four Lessons to Take Away
Explaining a Paradox: Why Good (Bad) Companies can be Bad (Good) Investments!
http://aswathdamodaran.blogspot.com/2017/03/explaining-paradox-why-good-bad.html
Hope that helped,
Happy graphite investment to all,
