NORTHERN GRAPHITE COM NPV (OTCMKTS:NGPHF) gives us this week one of the more remarkable mysteries we have come by in our travels among the universe of OTC stocks. We see over 34% in upside in a single day on just about exactly 25 times the stock’s average volume, according to the three-month rolling average of single-day transaction totals. And we see no accompanying filings, no accompanying news, and no insights on any forum anywhere that typically works like an “ask the audience” function – as in “Who Wants to be a Millionaire”.
We also went through our library of connections and email lists and OTC off-center sites, and do not see any clear evidence of any promotional activity on NGPHF. We haven’t come across a situation quite this causally opaque probably this year. It’s dumbfounding. But let’s take a look at where this story is coming from and see if we can’t arrive at something of a profile from which to think forward. In the end, we will arrive at the view that the company has ties to the lithium-ion battery market, and the monster move seen there in recent days has driven some major pin action on the OTC.
NORTHERN GRAPHITE COM NPV (OTCMKTS:NGPHF) bills itself as a company whose principal asset is the Bissett Creek graphite project located in Eastern Ontario and close to required infrastructure including roads, towns, natural gas supply and a port. Bissett Creek is a very advanced stage, development project as the Company has completed a bankable Feasibility Study and received its major environmental permit.
The Company believes Bissett Creek is the best new graphite project as it has the highest margin, the lowest capital cost and the lowest marketing risk. Graphite is the anode material used to make lithium ion batteries and this market is growing at over 20% per year due to continued strong demand for personal devices and electric vehicles and grid storage are two big, new emerging markets. New, non-Chinese sources of supply are urgently needed and Northern Graphite is well positioned to benefit.
According to company materials, “Northern is a Canadian company that has a 100% interest in the Bissett Creek graphite deposit located in southern Canada, relatively close to all required infrastructure. Bissett Creek is a well advanced project that has a Full Feasibility Study and its major environmental permit. Subject to the completion of operational and species at risk permitting, which are in the final stages, construction could commence in early 2018 pending financing. The Company believes Bissett Creek has the highest margin, best flake size distribution and lowest marketing risk of any new graphite project, and has the added advantages of low capital costs and realistic production levels relative to the size of the market. Gregory Bowes, B.Sc. MBA, P. Geo., a Qualified Person as defined under NI 43-101, has reviewed and is responsible for the technical information in this press release.”
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For those keeping track, the company’s most recent presser hit midway through last month when NGPHF announced that it had hired Mr. Ivan Cisneros as a Senior Consultant to assist the Company in developing a strategy for upgrading Bissett Creek mine concentrates into value-added products.
According to the release, “in particular, Mr. Cisneros will focus on the two fastest growing markets, spherical graphite, which is the anode material used in lithium-ion batteries, and expandable graphite. Mr. Cisneros has a B.Sc. in Chemical Engineering and Masters and Ph.D. degrees in PetroChemistry from the University of Poitiers (France) and has many years of experience in the petrochemical and graphite industries. He was General Technical Manager of Nacional de Grafite, the largest graphite producer outside of China, and recently consulted to a large, Australian graphite company with respect to manufacturing LiB anode material.”
Gregory Bowes, Chief Executive Officer, commented that; “Our Feasibility Study economics are based on only selling basic mine concentrates. While we believe the economics of the Bissett Creek project are already very solid using a realistic assessment of current prices and market risk, there are a number of opportunities to capture additional margin by upgrading concentrates into value-added products. Mr. Cisneros will advise on process development and assist with the cost/benefit analysis of these opportunities.”
As noted above, recent action has been listless until Monday, when we saw the stock explode higher for as much as 40%. However, in actuality, and making the move even more indecipherable, the action on the upside got started on Friday, when we saw several times the average volume go off the board, and the stock advanced by a solid few percent. But the volume was the key.
Earning a current market cap value of $17.3M, NGPHF has a significant war chest ($2.6M) of cash on the books, which compares with virtually no total current liabilities. The company is pre-revenue at this point. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $NGPHF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $NGPHF, either long or short, and we have not been compensated for this article.