A New Resource Sector

The energy sector is under significant disruption. Investors in Australia are acutely aware of this having seen the demise of energy favourites along with the fuels that have powered the developed world for several decades. The oil index has crashed, and the demand for Australian mined coal has subsided in recent years.

There is a new frontier in energy, and today we are going to have a closer look at this and how we can profit from it.

Renewable energy. There are endless companies entering the field of renewable energy. Australia saw a boom in solar panels on roofs and there is an emergence in electricity powered cars.

The challenge to date has been how to store excess energy so it can be used later. Like how much charge can we get on an electric car? Or even watch TV at night when the solar panels are not producing electricity.

Well enter Elon Musk and Tesla Motors. Musk has been developing battery power technology designed to power cars and houses. Close to home we know that Australian households has taken to solar energy enthusiastically, and as such are a key market for these Tesla batteries. More broadly it is important to recognise the need for all countries, companies and citizens to embrace this kind of technology for the sake of the environment.

An important component of these batteries is a precious commodity called graphite. Musk, and other producers of these batteries continue to refine and improve these batteries. But the power of graphite should not be understated. There is potential for batteries using graphite to charge batteries faster than previously thought possible.

Now enter Lincoln Minerals (ASX:LML), a resource company looking to play in this space. LML have highlighted the potential of graphite with the below quote.

It is an excellent conductor of both electricity and heat with the highest natural strength and stiffness of any material to extremely high temperatures (+3,500°C). Unlike most metal, when heated it does not expand.”

The good news continues for LML who recently won a favourable outcome from the commonwealth to undertake major project in South Australia. The Kookaburra Gully Graphite Project, which is 100% owned by LML is now closer to taking graphite out of the ground and selling it to the lithium battery makers around the globe.

That news bought a temporary spike in the stock price, which has since settled at a price of $0.041 (2:30pm 18/01/2016). Well within the desired hitting zone of speculative investors.

The potential for this stock is significant. They may be about to commence mining a resource which will be critical in supporting renewable energy around the world. In a time when the local resource sector is struggling, this could be the spark speculative investors are looking for. The market cap is 11m, hence a sale/takeover is possible.

I’ve added this stock to my watch list. I often write here about my watch list and speculative stocks like ASX:LML (here is a sample), if you want to keep informed then subscribe in the below box today.