What? Strategic Elements Ltd (ASX: SOR), an ASX-listed Pooled Development Fund (PDF), surged over 600% in early trade on Wednesday after the company announced that it would back a University of NSW (UNSW) technology that could revolutionise the emerging non-volatile memory market for electronic devices and the like.
What's a Pooled Development Fund?
From the company: "Strategic Elements is registered under the Federal Government Pooled Development Fund program. This program is designed to increase investment into Australian Small and Medium companies by providing tax incentives to investors in Pooled Development Funds.
Strategic Elements registration as a Pooled Development Fund by the Federal Government enables most shareholders to pay no capital gains tax when they sell their shares and pay no tax on dividends received.
Strategic Elements is the only Pooled Development Fund on the ASX with a mandate to back resources and technology projects."
Other ASX-listed PDFs include Acrux Limited (ASX: ACR), which is focussed on healthcare products, Austock Group Limited (ASX: ACK) a fund dealing in financial services and insurance, and BioTech Capital Limited (ASX: BTC), which unsurprisingly operates in the biotechnology / life-science sectors.
Ok, what's non-volatile memory?
As the name suggests, it is memory space that's dependable and non-volatile and has an addressable market of $78 billion per annum. Currently, the best memory for this is Flash, however the technology has limitations that can't be overcome by simply scaling it up.
The technology being funded "is a new type of resistive random access memory (RRAM) using tiny nanocubes made from cerium oxides (rare earth). The technology works by applying jolts of voltage to the nanocube memory cells, changing their state between resistive and conductive to create and store digital zeroes and ones (data)."
Development of future products will be performed by Australian Advanced Materials (AAM), which is 100% owned by Strategic Elements to "commercialise rare earth based technology developed by Australian research groups".
Did you say $78 BILLION?
Yes, the technology has an addressable market of $78 billion per annum, i.e. the whole global memory storage market. This includes all of the memory storage on your phone, computer, servers, etc. Could this be one of those: "If I can capture only 1% of the Chinese rice market" scenarios?
Today's share price surge has taken Strategic Elements' market cap to $6 million, presumably from under $1 million yesterday. The company remains tiny, but it certainly has some interesting projects under its belt; other projects include a copper mine in WA and an abandoned WW1 gold mine in New Zealand.
In conclusion, Strategic Elements provides investors with access to an emerging technology option in the global memory storage market, however, without the help of a large multi-national behind the technology (consider how much money companies like Google, IBM and Microsoft must be spending on similar technology) the investment could be a long shot.
