A Q&A With Michael About Graphene

33 | By Michael A. Robinson

In my note to you on Tuesday, I remarked how many of you readers have lots of questions about investing in exotics, particularly the “miracle material” graphene.

Turns out you aren’t the only ones who want to know more about this exciting new field. My good friend and colleague, William Patalon III, decided to interview me for his excellent advisory service, Private Briefing.

Since this is becoming such a popular topic for investors these days, I thought I would share the full interview with you today. It’s a comprehensive look at the forces driving this sector.

And it contains some background material about me that you probably don’t already know.

Here’s the Private Briefing interview. I hope you enjoy it…

Patalon (Q): Michael … during a recent discussion, you told me that we are entering the “Golden Age of Materials Science.” What did you mean by that and what will this mean for investors? How long will it last?

Robinson (A): What I mean by that is that we haven’t seen such an intense, specialized focus on new materials in many, many years. Here’s the thing. We simply cannot get to the next level in a tech-oriented world without having the new materials to help us do so. And I’m talking about new materials of all kinds, novel compounds, tweaked molecules, special polymers and more. I recently had a three-hour dinner with a biotech CEO and we talked about why I think this is the Golden Age of Materials Sciences. I related that I am currently reading about hundreds of breakthroughs a month … taking place all over the world … and said that I’m struck by how many of these teams now include materials scientists as standard procedure. And he agreed.Remember, your smartphone is an amalgamation of materials of all kinds … of rare earths … of gold, silver, plastic, specialty polymers, specialty glass and more.

As I see it, this period will last for at least the next 20 years. If you’re an investor, there will be lots of major breakthroughs that you can make money on … and I’m talking windfall profits … because the materials guys will keep finding new ways to push the tech boundaries forward. Remember, the world at this point runs very much on silicon. Graphene is important because it’s a new, key milestone that is giving the materials guys new territory to explore … by taking the discovery itself and finding all sorts of new applications. The whole field of nanotech is itself pushing materials science forward … like carbon nanotubes and Nano gold that works great for medicine.

(Q): You were one of the first investment columnists to see the great potential in graphene. When was that and how did you manage to be so far ahead of the crowd on that great call?

Robinson (A): As I said, I have been interested in materials for some time. I first got interested in the summer of 1977 when I was working for (Congressman) Jack Kemp as a legislative intern. I commuted with my dad who used to tell me all about Star Wars and exotic materials that were then getting a lot of attention. That interest intensified in the late 1980s when I was writing about President Reagan’s Star Wars program for a newsletter my father had for a time. Space-based lasers, charged-particle weapons and the like needed new materials – as did the detectors and other military gadgets created for the program. So I went to labs and talked to scientists about things like gallium arsenide and other materials used for a wide range of new tech applications.

A turning point that put me on the path toward graphene occurred in late 2009 when I attended a metals conference in San Francisco. It was there that I latched onto the investment potential for rare earths. Again, I had followed that field as it related to military high tech, but not yet for its investment potential

(Q): What made you see the profit potential for graphene?

Robinson (A): I remembered reading about the Nobel Prize that was awarded for graphene and being fascinated by it. Thanks to my years of researching high-tech materials, I very quickly realized this substance had an immense potential. The more I researched, the more I became convinced that this was a material with the potential to change basically any industry you could think of.

About that same time, I had a long conversation with my father-in-law about this miracle material. He had a doctorate in chemistry and did cold-temperature physics research at the University of California at Berkeley for 40 years. He told me that the materials scientists and related experts around the world were getting heavily involved in the field. See, the two guys who discovered graphene won the Nobel in only seven years, which is almost unheard of. That, my father-in-law told me, really got the whole field extremely excited about researching the many possible new uses for this unusual substance.

(Q): As you said in a recent column it’s as if we’re watching the birth of a brand-new industry.

Robinson (A): That’s right, Bill. And as exciting as graphene is for scientists and researchers, it’s even more intriguing for investors. I mean, how often to you really get the chance to be there when a new business begins? I’m not trying to be overly dramatic here … but what if you could go back in time … to Titusville, Pennsylvania, in August 1859 … to see the first oil strike … or in (Alexander) Graham Bell’s lab in March 1876 … to see the telephone work for the first time.

(Q): So just what is it that’s so special about graphene? You said it would benefit multiple sectors … is there one sector in particular that you think graphene will benefit the most?

Robinson (A): It’s special because it is just one atom thick and occurs in a hexagonal pattern, kind of like chicken wire, but one heck of a lot more valuable. In layman’s terms, it’s the strongest and lightest material known to man.

As for what sectors it will benefit, I’d start with electronics … but only after some hurdles are overcome. The big one is getting graphene to conduct electricity: Right now, electrons don’t flow as smoothly as they should. But hang-ups like that are to be expected in something so new. Now the materials guys and the electrical engineers are attacking that problem at a feverish pace, because graphene could be used for everything from capacitors to a new type of semiconductors.

And that’s just the start. I’ve said here – and I know that I’ve told you in our many discussions about this – that there probably isn’t an industry you can think of that won’t somehow be influenced by graphene. This stuff is so unique, bendable, flexible and incredibly strong that the only thing constraining its use will be the imaginations of the researchers who are trying to discover the new applications.

Graphene is lighter than a feather, but 200 times stronger than steel. I know you’re a big airplane nut, Bill … can you just image the fuel savings you could have by using this in aircraft to make parts of seats, panels, wing reinforcement, struts and more?

And how about medicine? There’s a researcher at Wayne State who wants to use graphene for neural implants that would last much longer and be more benign than anything they have now.

(Q): You said during our discussion that we’re in the very earliest stages of graphene-related investing. Do you see a proliferation in graphene-related investments?

Robinson (A): I do – both direct and indirect. Now, I want to emphasize that it is still early. No “pure play” investments exist for graphene. But don’t be deterred. There are some indirect plays right now. And more profit opportunities – direct and indirect – will emerge. You’ll no doubt even find some ETFs that hold graphene-related investments as this new business burgeons.

That said, there are some plays to consider right now.

One indirect way to play graphene is to invest in graphite. And there are two stocks that I like as graphite plays.

The first is GrafTech International Ltd. (NYSE: GTI), a Parma, Ohio, firm with 125 years of experience with carbon- and graphite-related technologies. It’s a hybrid firm that produces both natural and man-made graphite. More than a century ago, it helped Cleveland, Ohio, become the world’s first city with electric street lamps. Now it’s involved in such high-growth businesses as energy storage, semiconductors, fuel cells, lubricants, electronics and aviation.

(Q): It’s also a leading global holder of graphene-related patents.

Robinson (A): That’s right. The stock has been hurt of late because of worries about the steel industry. But it’s cheap and investors can look to invest for the long term by averaging in.

A second, more-speculative, graphite play is Northern Graphite Corp. (PINK: NGPHF or CVE: NGC.V), an Ottawa-based junior producer. Northern Graphite’s main asset is the Bissett Creek graphite project located 65 miles east of North Bay, Ontario, and nine miles from the Trans-Canada Highway (Route Transcanadienne).

With the shares trading at roughly $1.22 (Canadian) each, it goes without saying that this is a highly speculative play – a penny stock. It will be volatile, and could experience big swings. In fact, I would count on that.

(Q): Here at Private Briefing, we typically tell folks to cap their investment in such a stock to no more than 1% of their holdings. That will allow for a wider-than-usual “trailing stop.” But it also caps their maximum loss at about one half of 1% of their total holdings.

Robinson (A): They should embrace the same mindset for my European play … Flinders Resources Ltd. (TSX.V: FDR/ OTC: FLNXF). Flinders was founded by two of the world’s top rare-earths experts. The venture has both mining and materials down cold.

(Q): What about ETFs?

Robinson (A): There are none that play graphene. But there are several that stand to gain from the “Golden Age of Materials Science” that I often refer to. Industry insiders refer to them as “exotics” … for “exotic materials.”

You can do this by investing in one, or all, of three exchange-traded funds (ETFs) that focus on the materials sector. These three provide a good exposure to chemical firms, as well as to other resources, such as metals.

The ETFs are the Vanguard Materials ETF (NYSEArca: VAW), the iShares Dow Jones U.S. Basic Materials ETF (NYSEArca: IYM) and the Materials Select Sector SPDR (NYSEArca: XLB).

(Q): Thanks, Michael.

33 Responses to A Q&A With Michael About Graphene

  1. wilma caswell says:

    please keep me posted on getting involved as an investor at a reasonable price and of course a percentage of dividends.

    Is Canada the only area where graphite is found around the world?

    Long ago I found using grahite dust to unlock a rusty internal door lock.

    If this is a carbon derivitive to coal, I am guessing its abundance is available.

    • pat says:

      I would encourage you to look at an emerging strong play in Graphene, Ottawa based Focus Graphite (FMS.V) and value add top word tier1 play (with an NPV of 244M vs the NGC NPV of 100M), and its ownership in Grafoid Inc. , a pure play in Graphene.

      Grafoid has a impressive graphene manufacturing process that basically conver high grade graphite (eg. >10% vs NGC’s 2%) directly into graphene, thereby significantly reducing costs. VERY impressive. Nobody has currently announced such a capability

  2. ron isbell says:

    Please keep me posted on graphene investment opportunities. I have heard there is one company with 170 graphene related patents. I also understand that only flake graphene can be used, and that there are far less companies mining flake grapene, due to its scarcity. The company to which I am referring may still be private. If so, I would even more love to be able to invest.

    • William Patalon III says:

      Dear Ron:

      You may be thinking of GrafTech International (NYSE: GTI), which has 775 patents overall, including more than 100 related to graphene. It’s one of the companies that Michael has talked about in past columns, as well as in this one.

      Thanks for writing!

      William Patalon III
      Executive Editor
      Money Morning & Private Briefing

  3. Pierre says:

    Very interesting, yes I follow the activity Ref on Graphite. One other mine in northtern Quebec is FMS.V actualy at .69 cents.

  4. C. Frederick Bowser says:

    Energizer ResourceS (ENZR) a start up mine touts they have a graphite mine with graphene potential. Would u comment on this?

  5. Richard S Binder says:

    Enjoyed the interview; it`s exciting. Would like to be kept informed of investment opportunities.
    Thank You

  6. George says:

    Would like to be kept in the loop about getting in on the ground floor of investing in Graphene.
    Thanks for the heads-up

    • William Patalon III says:

      Richard, George and Barry:

      Graphene is a topic that Michael has talked about often. It’s a crucial element of what he refers to as the “Golden Age of Materials Science.” You can bet that he’ll stay on top of it and will continue to search for the latest and best investment ideas that he has.

      You might also want to consider looking at his “Radical Technology Profits” newsletter.

      William Patalon III

  7. John says:

    Anyone can make graphene. You want companys with Application Patents, Best positioned for buyouts AGTT, CVV
    (Angustrom Technology), Super capacitor and battery technology, AGTT
    (CVD Equipment), Graphene Nano chip Semiconductors, Nano tubes and many more Patents, CVV
    (As far as Gallium Arsenide) This is old tech, I made (Gallium Aluminum Arsenide) laser chips in the 70s and early 80s for missle guidence systems. Titan2 nukes, Sidewinders, Heat seeking and Exocet.

  8. John says:

    Graphite has not been mined in the US for 35 years, All grahpite is imported.
    Thats why I suggest GRPH large deposits in VA. High grade flake.

  9. Chris says:

    You say graphene doesn’t conduct electricity that well, but I though it’s high conductivity of electricity was one of its best features – isn’t that why its being added to lithium ion batteries to improve the energy density ?

  10. Mike says:

    Thanks for all the posts

    Just interested to know what is the company Ron mentioned above

    “. I have heard there is one company with 170 graphene related patents. I also understand that only flake graphene can be used, and that there are far less companies mining flake grapene, due to its scarcity. The company to which I am referring may still be private. “

  11. Ozziegeorge says:

    Greetings from Australia.
    I can add 2 other Australian explorers getting high-grade flake graphite results – Talga Resources Ltd and Syrah Resources Ltd. The 1st mines in Sweden (not only located in a “friendly” country but the site is close to roads, electricity, everything), the 2nd explores in Mozambique & Tanzania. I hold stock in both. Although both coys are getting very good assay results, one can still pick them up for a song. Unfortunately they’re only listed on the Aust. Stock Exchange, however I’m sure both coys would be held by ETFs that focus on rare earths/rare metals. The Era of radical Change won’t let me give you a direct link to a free report I get (I’ve tried it), so Google “TMH Advanced Graphite Projects Index”. It is essential reading & full of info for every investor in this sector.
    Hope you found something useful in here.

  12. David says:

    High grade flake being found on the Eyre Peninsula in South Australia
    Archer Exploration is listed on ASX
    Lincoln Minerals also listed on ASX

  13. Donna says:

    FMS (Focus Graphite) is located primarily in Quebec and already has research and development agreements with Hydro Quebec (one of the world’s largest hydro-electric utilities), Rutgers University and CVD among others. It also has significant institutional and mutual fund investment compared to Northern Graphite. Its 40% holding in Graphoid is also significant as Graphoid has applied for patents that will protect its low-cost, environmentally-friendly process for making graphene directly from graphite ore (already at the pilot plant stage, providing tailored product to major names for evaluation in upcoming applications.)

  14. IAN WYLLIE says:

    As Manchester Uni won Nobel Prize after discovering this product, why does Uk seem so sluggish in progressing and why seemingly so little combined work

  15. Donna says:

    Sorry, spelling should be Grafoid. Some further notes from a Stockhouse poster who attended PDAC:
    “Grafoid has 14 graphene industrial application projects under development today. They’re pursuing 56 projects in total.

    Of the 11 as yet unannounced projects (names of partners unannounced for reasons of commercial confidentialty) they include: development of long-life energy storage systems for both industrial and commercial use; advanced aircraft materials; thermal management materials for high-power LEDs; spray coatings; long-life shipping containers; graphene solar panels and various military and defense applications.

    CEO said independent and partner tests on Lac Knife’s graphite confirmed it yielded a better graphene than any other graphite source tested. Comparative testing confirmed Grafoid’s graphene was five times more conductive than any other graphene available on the market.

    Expects Grafoid to begin production next year. Company will have two revenue streams, one from the sale of Its graphene and graphene materials, the other long-term revenue stream from royalties.”

    • pat says:

      Skippy99 (on the Stockhouse FMS Bulletin Board):

      The following macro market observations should be generally accepted:
      the market is quickly rationalizing the graphite space
      funding is extremely challenging
      any serious funding (eg. institutional, strategic,etc) will be based on independent financial analysis, using such tools as DCF and NPV, contrary to some (for example on the NGC BB) that feel that “gut feel” is a decent criteria
      typically, one assesses the current shareholder support base for subsequent financing phases (eg. who has the money to top up in subsequent rounds of major financing?). Refer to the current major shareholder bases for NGC and FMS, which raises serious questions given that FMS has 8 key external players to NGC’s 2….Moreover, York’s (Chairman of FMS) ~$450K in insider purchases over the last year implies strong confidence – what are the numbers for insider purchases (excluding stock options and warrants) for NGC over the last 12 months???
      the current market accepted independently scripted documents state that the FMS NPV 240M vs NGC’s ~100M
      pure graphite based plays such as Flinders, with good cash, grade (>10%), and production potential in late 2014, subject to what I estimate to be sizable new funding (contrary to their initial view) are experiencing significant downward pressure on their market cap (eg. now at 28M based on 46M shares @ $0.61 closing on March 7/13). If Flinders is experiencing such dramatic pressure, guess who else will? A few suggestions follow!!!!!!
      Q1/13 Major announcements (FMS)
      the recently announced very positive metallurgical testing suggest a 9% process improvement , significantly contributing to the current independently publsihed NPV10 of 246M.
      In reference to TeTsuo’ s subsequent analysis, a new FMS NPV calculation would suggest a value ranging btwn 394M and 544M (simply based on the recent process improvement)
      the recent announcement of Fall/12 exploration results imply significant additional adjacent resources and @15%+ grade (and I assume having similar metallurgical characteristics)
      we should anticipate a new announcement in the near future wrt the Infill Drilling program of Fall/12. I assume it will further confirm and significanly increase the current M&I. Subsequent detailed technical reports could easily suggest a LOM extension to 40+ years vs the current 22 year LOM in the NPV10 246M published PEA
      Projections (Skippy99) – do you own due diligence
      only companies with high grades, good distribution of flake sizes and purity will survive (eg. must exceed 10% grade). Why bother financing at less than 5% grade due to inherent cash costs and lower NPVs, and increased risks associated with cyclical parket variances on graphite prices, such as we’re currently witnessing
      companies with cash costs > $500 will not survive
      FMS’s current cash costs (reference TeTsuo’s recent suggestions) could be as low as $319/t, However, I feel that FMS will further reduce their cash cost to below $250/t. Gary has publicly stated that several new initiatives will deliver further improvements. I hope that such will be announced in the coming months. I would also refer to the recent Byron King transcript of his PDAC interview with Gary – it’s quite compelling
      Based on the above, an updated NPV10 calculation could suggest the following:
      LOM extension to 40 years
      use TeTsuo’s recent calculations
      cash costs of $319/t
      improved market value for the higher value products from FMS (based on the recent announcements and analysis)
      a new NPV10 in the order of 750M+

  16. pat says:

    My full BB comments earlier today on the Stcoikhouse BB (Skippy99)

    Very Impressive PDAC (TO Conference – March/13) related statements by Gary (Summary of Key points) – Emphasis on Grafoid

    Skippy99 Macro Observations / Speculation (due your own due diligence)

    In response to several recent questions on the BB, I offer the following brief personal comments
    • Grafoid will go public in CY13 (see Gary’s stmt below)
    • Grafoid will spinnoff a new company (Graflow) with Rutgers University
    • Grafoid’s CapEx and OpEx will be extremely low
    • Grafoid is building a very impressive portfolio of customized applications for a wide array of sectors (11 current JV’s, with 56 projects under consideration)
    • Grafoid will move to full production late CY13

    I’m not aware of any other company that has publicly stated such an aggressive, comprehensive and financially promising graphene focused strategy. This is even more compelling because Grafoid has full control of the higher that 10% graphite grade (for optimum results), through its mother company Focus Graphite 100% ownership of the Quebec based Lac Knife graphite deposit (@16% – one of the highest grade deposits in the world) – see Gary’s stmt wrt 5 times higher conductivity than other current techniques….

    Key points from Gary’s PDAC presentation (March/13)

    The best results have been demonstrated by extracting graphene from “super concentrated” sources – that is any graphite ore grading at greater than 10% with high purity.

    Last year, we proved our ability to mass produce, and reproduce pristine bilayer and trilayer graphene in pilot plant testing. We’re ready now to begin construction of several facilities around the world and begin commercial production of graphene for sales and application development purposes.

    Along the way, we discovered that Lac Knife’s raw graphite ore produced a better graphene than any other source tested. Independent tests at several leading universities, government labs and our industrial partners produced the same conclusion.

    That said, not all graphemes are created equal. Each has an individual footprint. And different applications will require different graphenes. For example, a highly conductive graphene would be considered overkill for a high strength, light weight shipping container. Conversely, a low performing graphene would be unsuitable for collecting and storing energy from a solar panel.

    Graphene today is extracted from mechanically pulverized, highly purified and oxidized graphite. It can require upto 15 steps It is a hugely expensive, time consuming conversion process which degrades the conductive characteristics of the material at the atomic level.

    Our patent pending one step process extracts pristine graphene directly from graphite ore. And that one step, non-destructive process produces a graphene superior to any other graphene we’ve tested.

    Our Grafoid produced graphene is five times more conductive than graphene extracted or exfoliated mechanically from graphite concentrate because our process extracts graphene directly from graphite ore.

    Our relationship with Rutgers University’s advanced polymer materials department where we are co-developing polymer and non-polymer graphene applications. A spinout company, Graflow, will eventually produce graphene infused plastics for various industrial sectors.

    Our research and development partnership with CVD Equipment Corporation – a graphene production company seeking Grafoid’s expertise in application adaption to mass produce graphene from its chemical vapor deposition process.

    Our long term R&D partnership with Hydro Quebec’s advanced materials research institute which aims to develop a formula using our graphene to enhance the effectiveness of its patented lithium iron phosphate (LFP) battery invention. If successful, a long life graphene LFP battery will be capable of charging an electric vehicle battery in a matter of minutes and result in extended range for vehicles and longer usage times between charges for smart phones, tablets and laptop computers.

    The other 11 projects have not been announced for reasons of commercial confidentiality. In time they will be, but I can reveal their nature. They include:
    • Development of a long life energy storage system for industrial and commercial use
    • Advanced, graphene infused aircraft materials
    • Thermal management materials for high power light emitting diodes
    • Graphene polymer materials
    • Spray coatings
    • Rust proofed shipping containers
    • Advanced materials for solar panels
    • Various military and defense applications

    Including the projects I’ve just described, we have identified some 56 potential project areas we aim to pursue.

    The relationship our two companies hold is unique in the world,” Economo said.

    “It’s not simply a unique process, but a unique business model – vertically integrated from mine-to-market – high-grade graphite from Lac Knife, put through a proprietary process to produce highly functional graphene for sales and application development,” he added.
    Economo bemoaned the lack of interest from the investment community in graphene saying that “while the science community is all-consumed with developing graphene applications, the investment community has been shy to fund graphene startups”.

    This, he said, was because markets so far have been unable to monetise graphene’s value.

    “We know the market exists for our services as evidenced by the interest in our graphene and the number of development partnerships we’ve undertaken in the last 12 months,” he added.

  17. ptessmer says:

    It is just to rectify sentence used at the beginning of the text cit.: “See, the two guys who discovered graphene won the Nobel in only seven years, which is almost unheard of “.

    Two researchers, Lee and Yang, received in 1957 the Nobel Prize for the prediction of broken symmetry, Wu and her colleagues proved it experimentally in early 1957.

    The Nobel Committee awarded the Nobel Prize the same year, December 1957, to Lee and Yang. It was nearly unparalleled action.

  18. LeMoyn Wolfe says:

    Bill Thanks a bunch for the report on Graphene.It never ceases to intrigue me how the so called investing top dogs miss the real stories.We have been with you since the inception of Private Briefing and have never been disappinted with any of the reports.Glad that you got in and fought for us little guys.I really appreciate the interview with Michael on Graphene as very few other folks are even covering it.Was wondering if in a future piece you could disect al the lingo that goes with stocks suchc as PE ratio .Book value, earnings etc.You and your team are the only ones who have ever explained things in terms that we can understand LeMoyn

  19. Karl B. Hensel says:

    Interesting. I would have thought that Samsung of Korea would be a great investment. Koreas government is investing millions in graphene research. Bringing to market products utilizing this material would be less of a challenge for a giant like Samsung. If you look closely at all the pictures available on the internet on flexible transparent phones, tablets, etc. You will see the Samsung name on them. China has the majority of the graphite flake material. Korea and lets not forget Europe has the technology. Canada and the U.S are I believe behind when in comes to graphene. Everyone suggests the same few stocks. I do not know if they are paid for it but. Graftech, Grafoid, and the several Canadian mining companies are not the only companies worth looking at. I have listed over 100 stocks on my site (which of course I can not state here) What about IBM, Aixtron,Canon, SanDisk? There are mines in China, India? To narrow this down to a few stocks or companies is amazing. This product is still in its infancy so is stated. Korea had 2011 and 2012 goals established for development and I have to believe they met them Korea will be the big winner in my opinion. Based on my research.

  20. Abu Nael says:

    There are currently no global standards for graphene. The company that establishes the standard for energy and thermal capacitance, physical quality, purity, reproducability, cost and, more importantly, the ability to adapt that graphene to end-users’ unique industrial requirements will win the graphene race.

    Grafoid Inc. claims to be that company, and so does its parent, Focus Graphite, which has a 40% ownership stake in the developer.

    I would have dismissed that claim if it were not for the quality of their application development partners Rutgers University and Hydro-Quebec’c clean energy research division, IREQ, a global leader in energy storage technologies. Sony is an IREQ licensee.

    There is more to Grafoid, I believe, than meets the eye.

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