Hot Graphene Stock Applied Graphene Materials

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In earlier articles we discussed the potential of graphene and also highlighted the first graphene IPO, Applied Graphene Materials, which floated on the London Stock Exchange under the symbol (LON:AGM) on November 20th 2013. While the placement offering was for 7.7 million shares at $2.55 per share, the first day of trading saw the shares close up 40% at $3.57 a share. As of yesterday’s closing price, the shares have further increased 79% to $6.41 per share giving Applied Graphene Materials a current market cap of $108 million.

LON_AGM_Chart

Source: Google Finance

Process
Applied Graphene Materials believes that they currently have the largest capacity graphene production facility in Europe. The group produces one ton of graphene nanoplatelets per year with ten staff and nine commercial partners. A schematic of the group’s graphene production process is seen below:

AGM_Graphene_Production_Process

The resulting high purity graphene product has minimal graphite content and no heavy metal contamination. It does not require a substrate during production and the by-product is non-toxic and water soluble. Perhaps the most interesting thing is that this process uses a sustainable, readily available, organic feedstock based on alcohol (graphite is not a source material). If this production process proves economically viable as it appears to have, this has some implications for junior graphene miners hoping to attach themselves to the graphite story. AGM’s single production unit which came online in March 2013 operates as a continuous process and can produce one ton per year of graphene. The Company has plans to expand capacity inline with demand over the next 2-3 years to 8 tons per year. Should demand support even further capacity, AGM intends to develop a much larger 30-50 ton per year production unit that will cost between $12-16 million dollars to construct and may require the need to raise additional finance.

Competitors
The company lists their direct competitors as US-based companies Angstron Materials, Vorbeck Materials Corporation, and XG Sciences, all of which use production methods that rely on the exfoliation of mined graphite. Angstron, a spin-off from Nanotek Instruments, is focused on energy storage applications of graphene. Vorbeck Materials was founded in 2006 and licenses its technology from the University of Princeton. Vorbeck has a 40 ton per year graphene production capability as of October 2012. XG Sciences was founded in 2006 and as of August 2012 announced the commencement of commercial graphene production at their 80 ton per year facility.

Instead of becoming a volume supplier of raw graphene nanoplatelets to third parties, AGM intends to focus on the development of value-added graphene-based intermediates that can be added into products. The Company believes that the differing characteristics of the graphene nanoplatelets produced using their proprietary production methods means there is currently a low risk of substitiution for alternative sources of graphene by their nine commercial partners. Provided the company is able to scale their production process and the demand for their graphene increases, the future may bode well for investors in this small company.  US investors who may want to invest in AGM should read our past article titled “How to Buy Foreign Stocks“.

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Comments

  1. Arsenal74 says

    This is a company with 2011, 2012, and 2013 revenues of 882, 1,326, and 11,410 pounds respectively. To put this into perspective for your USA audience this means the company made a whole 19 thousand DOLLARS for fiscal year ended July 2013. This was offset by losses of about 1.2 million DOLLARS. Assets are about 18 thousand DOLLARS. Does this justify a 100 million market cap? Valuations too excessive here.

    • Nanalyze says

      This are great points Arsenal74. I’m waiting for post IPO financials to look at where their cash position sits now and to analyze the rest of their numbers in a follow on article. I am not long, nor a buyer at these valuations. Signs of strong revenue growth in their financial statements or announcements of collaborations with potential milestone payments would help support this valuation which at the time appears to be “irrational exuberance” from investors wanting exposure to the graphene story.

      Joe

  2. Mike says

    Why focus on the European market of grapheme and not investigate/invest in the other companies mentioned in the article? Yes, I’m new to market but this grapheme seems to hold promise over time, that is which I have not much left but for younger market investors [say 20 - 40] put up a few grand and ride it out for a decade and obviously along the way either invest more or sell off [if not too late].

    • Nanalyze says

      Thank you for the comment Mike. At this time there do not appear to be many viable publicly traded graphene plays which is why we extend our focus to Europe as well. AGM would be considered the first real “graphene IPO”. As another commentator mentioned earlier, revenues for AGM are minuscule and the company has some strong competitors like XG Sciences which we highlighted recently:

      http://www.nanalyze.com/2014/02/xg-sciences-and-graphene-nanoplatelets/

      We will look to highlight more US based graphene companies in the future such as the others mentioned in this article.

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