Graphene Up Stream

Build up of the graphene materials industry has progressed a bit more slowly than originally expected a decade ago as scientists and engineers peered through their electron microscopes at single atoms of carbon and counted their many attributes.  At the time the potential to improve performance in end products like metal alloys and electronics seemed limitless.   Unfortunately, reality has not imitated early dreams.  Those companies that have brought graphene to the commercial market will attest to the challenges of jumping off the laboratory bench and into a factory. 

Even more frustrating is the sourcing of graphene to use in research, product development and production.  It is hardly practical to use the scotch tape method used by Andre Greim and Konstantin Novoselov, the Nobel Prizing winning scientists who originally isolated graphene.  There are more scalable processes such as liquid phase exfoliation that strips one-atom thick sheets off graphite blocks.

In this post we look at the production of graphene materials that have successfully scaled production. Which seem capable of extracting value from the upstream end of the supply chain?

Graphene Nanoplatelets

Filaments 

In March 2019, Graphene 3D Lab (GGG:  TSX-V) completed a private placement of 9.4 million units of its common stock and warrants at CA$0.06 per unit to raise CA$525,000 in new capital.  The proceeds will be used for working capital and the company begins commercial sales of its graphene conductive filament.  The filaments are designed for three-dimensional printing of electronic circuitry, sensor or radio frequency shielding. 

The company is under new management that just took the helm in November 2018.  Earlier new sales leadership in sales had been added to accelerate market penetration.  The team is quick to tell potential customers and investors about its products, but a little slower on reporting the company’s financial performance and position.  Financial data is available only through May 2018. 

The company claims over 12,000 customers for its product portfolio of over 100 products.  In the year ending May 2018, Graphene 3D reported CA$909,512 in revenue, resulting in a net loss of CA$1.1 million.  There seems to be a bit of disconnection between customer claims and reported sales, but achievement of some revenue is more than achieved by some companies in the graphene sector.

SELECTED GRAPHENE PRODUCERS
Company Name	SYM	Price	Mkt Cap	Revenue
ACS Material, LLC	Private	na	na	na
Advanced Graphene Products	Private	na	na	na
Applied Graphene Materials	AGM:  LSE	$39.84	$19.7M	$100.7K
Global Graphene Group	Private	na	na	na
Graphene 3D Lab, Inc.	GGG:  TSX-V	$0.05	$4.1M	$671K
Graphensic AB	Private	na	na	na
Graphmatech AB	Private	na	na	na
NanoGraphene, Inc.	Private	na	na	na
NanoXPlore, Inc.	GRA:  TSX-V	$0.93	$103.4M	$23.5M
Thomas Swan & Co., Inc.	Private	na	na	na
Versarien, Plc.	VRS:  LSE	$164.96	$253.4M	$12.9M
XG Sciences, Inc.	Private	na	na	na
Xiamen Knano Graphene Tech.	Private	na	na	na
Xolve, Inc.	Private	na	na	na
US Dollars

  

Nanoplatelets

Applied Graphene Materials (AGM:  LSE) has developed a process for high-volume production of graphene nanoplatelets or ‘stacks of two-dimensional graphene sheets that can be used in coatings, composites and polymers.  The attributes of nanoplatelets are not as impressive as the single layer of carbon atoms that scientists work with on their laboratory benches.  However, nanoplatelets ‘play’ better than single atoms, dispersing more easily into other materials.  Applied’s management says the promise of graphene is better achieved by being practical in transferring its characteristics to other high value materials.

Applied’s graphene nanoplatelets are used in a range of products:  paints, coatings, polymers, composites, thermal pastes, and lubricants.  In February 2019, one of the company’s first customers, James Briggs Ltd., announced first production of an automotive aerosol primer using graphene material for enhanced anti-corrosion performance.  Management claims there are over 100 different projects in its sales pipeline.

The company reported a net loss for 2018, but appears poised to generate increase revenue and earnings in 2019.  At the end of 2018, Applied had $10.7 million in cash on its balance sheet to support operations until cash flows turn positive.

Powder

The largest producer of graphene material in Canada is NanoXplore, Inc. (GRA:  TSX-V) with its patented technology to produce graphene powders.  The company has capacity to produce 25 metric tons per year in a facility that could be modified to 70 metric tons per year. 

Early on the company got a boost from Canada’s government with a CA$3.3 million project to reduce the footprint of electric-motor-driven systems using graphene-enhanced engineering plastics.  The project was aimed at support development and adoption of electric vehicles.

At the beginning of 2019, NanoXplore raised US$31 million in new capital through a private placement of debt to a group of institutional investors.  The debt raise follows an equity investment by Martinrea International in December 2018, that more than doubles Martinrea’s ownership in NanoXplore.  The two companies already have agreements in place for supply of graphene by NanoXplore to Martinrea and for joint development of graphene technology. 

All of these companies rely on supplies of raw materials from other parties.  However, some graphene producers have found it advantageous to adopt an integrated business model that combines natural graphite resources with graphene processing.  In the next post we look at these hybrid graphene companies.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.