Chapter 21. KNC International (4)

After the market closed, I was looking up news articles when Seonwoo, who had just finished work, burst in breathlessly.

"There really was some information."

"You didn't believe it?"

"How did you know about the cobalt mine?"

Well, it's because I had a regression...

"I told you. I overheard it before I joined the company."

In reality, it's not uncommon for actual securities company employees to be involved in market manipulation or to get insider information and buy stocks in advance.

Of course, as a low-level employee like me, I wouldn't have access to such information.

"Shouldn't you have invested in futures and options with such solid information?"

"I did consider it."

"But why didn't you buy?"

"How can you buy something you don't have?"

Both futures and options are derivatives, and they need to be issued by someone.

However, such small-cap stocks have low value and stability as underlying assets, and there is no demand for derivatives, so they are not issued.

If a call option had been issued, the issuer would have taken a loss.

"So, is this true? Is there really a million tons of cobalt buried in the mine?"

"Is that even possible?"

Of course, it's a lie.

With a little common sense, you can easily see that it doesn't make sense.

If this were true, the cobalt market price should have dropped immediately. Moreover, leading battery companies like GL Chemical and Yuseong ES would have contacted KNC International to sign contracts.

But there was no such movement.

"The company that sold the mine isn't stupid. If there was cobalt, they would have known long ago."

"But what about that announcement?"

"The estimated reserves are just that—estimates."

These estimates can vary by a factor of ten or even hundreds.

"You can't just dig up the mine to show it. Who knows how much is really there until you dig it up?"

"That's true."

"Even if there is cobalt, extracting it is another issue."

Just as digging up soil or rocks will yield something, mines will have something buried in them. The important thing is the value of what's buried and the cost of extracting it.

If the latter is greater than the former, it's better not to extract it. This is called profitability. Most mines are closed because they are not profitable.

"There are also mining rights, the mining period, relationships with local governments and officials, and labor relations with local workers, among other things to consider."

In short, overseas resource projects are not something that small and medium-sized enterprises without relevant experience can easily undertake. Moreover, there are several oddities in that report.

Everyone will soon realize it's a lie.

Seonwoo was surprised to hear me.

"What? Then shouldn't you sell quickly?"

"But if a reliable source guarantees it, it's a different story."

"