SER 10.0% 1.1¢ strategic energy resources limited

extract from article appearing in The Australian - Graphite...

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    extract from article appearing in The Australian - Graphite ain't Graphite...

    GRAPHITE and its variant graphene have been spruiked as the new-age wonder material, with hundreds of potential applications. Despite abating prices, every second release from the resources sector pertains to the abundant yet esoteric material.

    According to SER chief Mark Muzzin, this versatility could well be the undoing of would-be graphite mine developers. That’s because graphite ain’t graphite — there are subtleties in terms of size and grade — and output needs to be tailored to specific usage.

    “There will be so many uses for it you can’t say as a company I’m going to do it all,’’ he says.

    SER can claim to have “discovered” graphite well before it became trendy. It used to own the Uley mine near Port Lincoln before hiving it off as Valence Industries (VXL, 34c). “We felt like we were the only people who understood graphite,’’ Muzzin says.

    Valence is in the throes of reopening Uley, which operated in the 1990s before falling victim to low prices and high freight costs.

    In the meantime, SER has partnered with Monash University on developing uses for graphene, the atom-sized iteration of graphite, focusing on energy storage and water-purifying membrane technologies. The energy side involves developing so-called super capacitors and nano capacitors, which confer advantages such as radically improved recharging time.

    Who wouldn’t like their mobile recharged in 10 seconds, which is theoretically possible.

    Given the success of Valence — last year’s best performing float — SER plans to spin out this technology side as Ionic Industries. Post this demerger, SER will be left with exploration assets and $24 million of tax losses, which comes in handy should it decide to sell its 11 per cent Valence stake (or future 10 per cent stake in Ionic).

    Arguably SER — which does not yet have a product — is also in danger of succumbing to the gee-whiz factor pervading the sector.

    But SER’s raw valuation is compelling, with the Valence stake accounting for $6m of SER’s $17.5m market valuation. That implies little or no worth for the Ionic business and the tax losses, so we ascribe a spec buy on the something-for-nothing rationale.

    A sector veteran, Muzzin is bemused by the marketing hype enveloping the sector, one example being the emergence of “jumbo” and “super jumbo” flakes in resource descriptions.

    http://www.theaustralian.com.au/bus...te-aint-graphite/story-e6frg9lo-1227257513088
 
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