Integrated Graphene Producers

Graphene is a one-atom thick sheet of carbon atom arranged in a honeycomb lattice.  It is an exceptional conductor of heat and electricity and its strength is unparalleled.  Although synthetic graphite can be used to produce graphene and it offers the benefit of consistency, natural graphite is far less expensive as a source material.  Synthetic graphite is made by combining petroleum coke with carbon black in a high heat process that burns up profits as it purifies the carbon.

There are several methods for producing graphene.  Exfoliation of natural graphite is perhaps the most common alternative because it produces the least defects and leaves the highest mobility in carbon electrons.  The two scientists who discovered graphene used adhesive tape to exfoliate graphite onto a silicon wafer.  This is unfortunately not a very efficient production technique.  Chemical solvents or an electrochemical exfoliation process achieve more efficient results.   Epitaxy is another method that involves the deposition of a crystalline graphene 'overlayer' on a substrate such as silicon carbide.

Several graphene producers have adopted an integrated business model coupling a captive natural graphite source with a preferred graphene production method. The verdict is still out on whether the strategy can deliver high profits.  Nonetheless, the integrated graphene producers are worth watching.

Graphite to Graphene Enhanced Gel Batteries

Saint Jean Carbon, Inc. (SJL:  TSX) is adding value to its natural graphite resources by integrating forward into the graphene market.  The company owns graphite resources in southern Quebec and eastern Ontario, Canada with historic mining track records. 

Walker Graphite Mine

The company is cultivating knowhow cultivated for development of battery-grade graphite.  Saint Jean can already supply low volumes of finished and semi-prepared anode or cathode materials.  The company is developing a prototype for a graphene gel salt water battery that is expected to charge faster and perform longer than conventional batteries.  In January 2019, Saint Jean management announced plans to have the battery design ready for sale by Spring 2020.  

Saint Jean remains in a pre-revenue stage, which means the company needs plenty of capital resources to see it through to 2020 when customers begin buying the planned graphene-enhanced gel batteries.  At the end of January 2019, cash totaled CA$16,860.  However, a private place announced in March 2019,  was expected to bring in as much as CA$400,000 in new capital.  Investors with a palate for private placements can probably count on Saint Jean to be back to capital markets in the months ahead.

SELECTED GRAPHITE PRODUCERS
Company Name	SYM	Price	Mkt Cap	Revenue
Elcora Advanced Materials	ERA:  ASX	$0.18	$92.7M	$154.5M
First Graphene Ltd.	FGR:  ASX	$0.12	$51.7M	$7K
Grafoid, Inc. (Focus Graphite)	Private	na	na	na
Hexagon Resources	HXG:  ASX	$0.10	$28.2M	$8K
Imerys SA	NK:  Paris	$52.27	$4.2B	$5.2B
Saint Jean Carbon, Inc.	SJL:  TSX-V	$0.03	$1.9M	$314K
ZEN Graphene Solutions, Inc.	ZEN:  TSX-V	$0.25	$19.0M	-0-
URBIX Resources	Private	na	na	na
US Dollars

Oxides

Grafoid, Inc.  has been toiling since 2011 to solve the challenges of scaling graphene production.  The company recently launched a new product group of oxidized graphene material that is being marketed under the brand name GNOX.  The GNOX innovation follows three other product groups of gels, solvents and dispersed graphene material.  Grafoid touts its capacity to produce graphene of high purity and consistency.  

Privately-held Grafoid is a spin out of Focus Graphite (FMS:  TSX.V).  Focus Graphite still owns significant interest in Grafoid so investors could consider FMS shares as a proxy for a stake in Grafoid.  For all practical purposes the two companies are operated as one entity as they share executive leadership.  Additionally, Focus Graphite has a long-term off-take agreement from Grafoid for future natural graphite production from Focus Graphite’s Lac Knife graphite mine in Canada. 

It is also possible to gain insight into Grafoid’s financial performance by reading the fine print in Focus Graphite filings with Canada’s public company regulatory authority.  In Focus Graphite’s most recent report, it disclosed that Grafoid recorded CA$600,000 in revenue and a net loss of CA$276,966 for the quarter ending December 2018.  A closer look reveals that Grafoid’s revenue is actually related to a consulting agreement with Focus Graphite.  That means the real loss in the quarter for Grafoid is closer to CA$876,966. 

Crystalline Graphite

ZEN Graphene Solutions (ZEN:  TSX-V) recently teamed up with the University of Manchester, seat of the two Nobel Prize-winning scientists who are credited with isolating graphene.  ZEN management hopes to work with Manchester on commercialization of graphene for a variety of applications, including concrete, composites, membranes, and sensors. 

Albany Graphite Sample

ZEN’s Albany graphite project is located in southeastern Ontario.  In March 2019, the company completed tests on a production process to purify graphite concentrate from its mine.  The purified graphite was near 99.8% carbon per gram and will be used as a precursor material for ZEN’s graphene.   The company plans to use a chemical exfoliation process to convert its highly crystalline graphite into graphene material.  ZEN’s goal is to have a graphen pilot-scale production facility up and running before the end of 2019 and be able to offer graphene samples to customers in 2020.

ZEN’s ambitious goals will be at least partially supported by a cash kitty that was CA$2.8 million at the end of December 2018.  The company has been using about CA$85,000 in cash per month to support operations.  Investors can likely expect this figure to increase over the next year as management moves on plans for a pilot plant and accelerates business development activities. 

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.