Focus Graphite Provides Little Exposure to Graphene
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In a previous article, we mentioned how publicly traded investments in graphene are limited, although recently we have seen several graphene IPOs on AIM; Haydale (LON:HAYD) and Applied Graphene Materials (LON:AGM). We also discussed how some junior graphite mining companies are attaching themselves to the graphene story. One graphite exploration company with no revenues, Focus Graphite (OTCMKTS:FCSMF), has been attached to the graphene story since 2012 via their investment in privately held Grafoid.
About Grafoid
On September 9, 2011, Grafoid Inc. was incorporated. The Graphoid website does not make mention of company leadership but a fact sheet on the website lists Gary Economo as the CEO and co-founder of Grafoid. Gary Economo is also stated to be the CEO of Focus Graphite as seen in this November 2013 investor presentation providing a whole new dimension to the relationship between these two companies. The fact sheet also lists Dr. Gordon Chiu as a co-founder and CTO along with Jeff York who is Chairman and co-founder. Mr. York is currently CEO of Farm Boy, an Ontario based food store chain. The company recently appointed Mr. Thomas H. Cruikshank as a strategic advisor. Mr. Cruikshank was previously CEO and Chairman of Haliburton and resided on the Board of Directors at Lehman brothers until its demise.
The website fact sheet also makes the following statement:
The Grafoid partnership is currently the largest producer of graphene in the world. The company has raised some $10m over the last year and established a $6.9m research, development and joint venture partnering budget for 2013. With locations in Ottawa, Kingston, Montreal, New York, London, Munich, Athens and Singapore, the company is moving forward with MesoGraf™ production facilities in Canada and United States to complement its current production facility in Singapore.
The “Grafoid partnership” consists of the below “publicly announced” entities:
It hardly seems likely that the entities in this collective constitute “the largest producer of graphene in the world”, so Grafoid would most likely need to have undisclosed partnerships with producers such as Vorbek, Angstron, or XG Sciences in order to make that claim. Nevertheless, Grafoid debuted MesoGraf™ in May 2013 in Singapore which they claim is the “first graphene to be trademarked in the world” and is “the global standard for graphene”. According to Grafoid CTO Dr. Chiu, the production of Mesograf is a one-step process that will “allow you to skip the fifteen steps you go through in the purification of graphite”. Tom Konrad of Forbes expressed his reaction to Grafoid as “too good to be true” after a brief interview with Gary Economo, CEO of Grafoid and Focus.
Grafoid announced last month the signing of a memorandum of understanding (the legal equivalent of a gentleman’s agreement) between Grafoid and Mitsui to identify and develop market opportunities in Japan for Grafoid’s MesoGraf™. Grafoid has also recently announced that they have “entered into the additive manufacturing space” by signing an agreement with Altamat to Mass Produce MesoGraf™ 3D Printed Materials. Altamat is said to be an “advanced materials manufacturing consultancy” yet nothing can be found on Google about Altamat.
Focus Graphite and Grafoid
So does being an investor in Focus Graphite (OTCMKTS:FCSMF) provide you with an investment in Grafoid? The answer is yes but very little. While previously Focus was a majority holder in Grafoid, dillutive financings by the latter brought Focus’s ownership of Grafoid to 13% as of December 2013. Focus values this investment at $1,882,924 . With Focus Graphite having a current market cap of $52 million, an investor who owns Focus Graphite will have minimal exposure to Grafoid through their Focus shares. Given that the Grafoid investment represents just 6% of Focus Graphite’s current $30.82 million in assets of which 19% is cash and 60% is exploration and evaluation assets as well as exploration properties, an appreciation in the Grafoid investment will have minimal impact to the bottom line at least for now. While investors may not achieve meaningful exposure to Grafoid by investing in Focus Graphite, at least the financials which value the Grafoid holding will provide some sort of proxy as to the valuation of Grafoid going forward. A 13% investment valued at $1.88 million would give Grafoid an implied valuation of around $14.5 million.
UPDATE 01/31/2014: Focus Graphite announced that its Board of Directors has approved the conversion of a $1,500,000 loan provided to Grafoid into 3,000,000 common shares in Grafoid at $0.50 per share. At face value, this brings the Grafoid investment to $3.38 million which would then represent 11% of total assets.
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What a scruffy little article.
It is Angstron, not Anstron.
Why is there an update when the article is published today, 24th April? Is this recycled? Or just symptomatic of laziness?
Thank you for the comment Marcus. The typo on Angstron has been corrected.
This article was published today and the update was last minute due to the fact that on the last page of Focus Graphite’s December 2013 quarterly update, this fact was mentioned and only noticed at the time of publishing by our editor.
If you think the update contradicts the premise of the article, please let us know why you believe this to be the case.
Not a fan of FMS and have reduced my position by 2/3. But your article is unfair to say the least. I have questioned the claim to be the largest producer of graphene in the world because none of those involved in the “partnership” have provided any supporting data. We know Grafoid produces no graphene and that Graphite Zero is responsible for production. Grafoid owns 50% of Graphite Zero. FMS owns 19% of Grafoid according to the April presentation. They owned 15% prior to the loan conversion.
You list 6 parties which have various types of arrangements with FMS and or Grafoid. None of the six claims to be large producers of graphene. Some are potential users, not producers.
FMS boldly states its’ all about the numbers and then omits to supply many of those that the market would be most interested in.
Bottom line, however, is that if Grafoid is capable of doing what it claims to be able to do a 19% interest will prove to be of great benefit to FMS. I have seen what appears to be a letter from Economo which states that Grafoid will make a private placement at $5 per share. Admit I still am not sure if if this was a real letter or just a StockHouse posters parody. If Grafoid shares trade a $5 then FMS should have an investment worth above $50,000,000 when they do.
Thank you for the comment George. I’m not sure what you mean by the article being “unfair” but I think you are implying that it is inaccurate regarding Grafoid’s statement regarding being the “largest producer of graphene in the world”. Like you, I also question that statement (as the article states) and based on publicly available information, it is not likely.
Regarding Grafoid trading at $5 per share, that also seems unlikely. It first needs to list on an exchange and in doing so, provide potential investors with their financials. If you would like to see Grafoid’s balance sheet as of July 2013, see page 11 of their Dec 2013 Quarterly Report.
At this time, Grafoid’s assets were listed at $1.6 million and liabilities at $2.4 million.
I have a friend who got into Grafoids first private placement at .50. They are now doing another one but at $5 a share. His initial investment is up ten fold, good for him. I believe according to Grafoid managment, they intend to go public on one of the big boards.
I am trying to learn as much about the graphene industry before I decide to start buying shares in potential companies. I like CVV, a bit pricey for my wallet but They seem to have great potential in supplying companies with the equipment to make graphene from graphite. Most of the smaller companies trade on the OTC. Even the QX gives me the willies being that I have lost much money investing in OTC companies. I am enjoying the articles on your site and look forward to more updated articles on graphene and potential companies. As mentioned by your site, patents prove to add value to new companies especially if they are still in the R&D stage and lack revenues..when checking for patents in graphene, IBM seems to hold a nice bunch of them. Could you make any recomendations on smaller cap companies that I could do some research in. Thanks for your time and I will be reading your site on a daily basis.
Thomas Anthony
Thank you very much for the comment Thomas. Per the analysis we presented in our article, Grafoid is making claims about being “the world’s biggest producer of graphene” which seem to be far fetched. Announcing partnerships with entities you cannot find any information about is always suspect. They may most likely seek an OTC listing in which case we would stay far far away as we would with a vast majority of all OTC companies.
Graphene while exciting, may be a bit too premature to invest in at this point:
https://nanalyze.com/2013/08/investing-in-graphene/
Regarding investing in CVV, there may not be any graphene exposure in that company as we highlighted in this previous article:
https://nanalyze.com/2013/09/is-cvd-equipment-a-graphene-investment/
Regarding companies to invest in, there just aren’t really any viable publicly traded pure plays yet. You can read about all the “graphene” companies we have covered (most of which were private) in the below tag:
https://nanalyze.com/tag/graphene/
We’re glad to have you as a regular reader and very much appreciate your commentary as it helps drive ideas for future articles.
I should not have used the word “trade”. If a private placement is done at $5, I will accept that as the per share value just as I presently accept 50 cents as the nominal value of each Grafoid share.
Given the astounding values placed on social network companies and 3 D printing companies I can see higher values placed on real contenders in the graphene space. Just not yet sure who is or is not a contender. But as Focus Graphite says. It’s all about the numbers.
Grafoid has never claimed that the 6 public companies you list compose part of its’ production team. Production is done by Graphite Zero.
“Grafoid unveils MesoGraf™ high-energy density graphene; links with NUS Graphene Center; launches global platform with Graphite Zero”
However no data has been supplied to support claims of mass production.
Thank you for the comment George. As you say, Grafoid has not claimed these 6 publicly disclosed partnerships are the means to support the claim of being “the world’s largest producer of graphene” which begs the question just who is? Graphite Zero alone? This doesn’t seem likely.
The National University of Singapore owns 50% of Graphite Zero. It was transferred to them by Grafoid in exchange for their participation and collaboration and is responsible for the production of Graphene.
This arrangement is of significance as it puts world renowned scientist and facilities behind the production of MesoGraf.
The claim them relates to Graphite Zero and NUS. Grafoid is the “marketing” arm.
Focus Graphite which owns. or rather may own 19% of Grafoid says , “It’s all about the numbers” but then omits the supporting numbers needed to make sense out of their claims.
What a web the largest producer of Graphene in the world weaves. Perhaps they can answer the following so that this outfit gains just a crumb of credibility
Does Focus produce graphite if yes supply production outputs for the last six months
Does graphite zero produce Graphene ok again let’s see the production sheets and QC control data of the last six month (surely worlds leading and biggest supplier can do this)?
The cancer cure show clinical peer reviewed clinical data, and whilst you are at it how about samples of your battery tested by an accredited laboratory
Failure to respond to the fore mentioned should raise some red flags
I guess there won’t be a response the excuse will be secrecy yet a positive response would send the shares into orbit
Thank you for your comment David. These are all good questions and I suggest that you contact the company directly for answers. In our research we have found few “investments” in graphene that sound promising and our belief is that graphene is in the early stages of development and the creation of economic value from graphene just isn’t there yet. We also believe that graphite miners are not likely to benefit now or in the medium term future.
There may be a chino of light regarding garphene check out Perpettus, is this real or another false dawn for commercial volumes?
Hello David.
Focus has released information from its Lac Knife mine containing its QC of its graphite including what they expect to mine over time. This is new to me and I am trying to learn as much about the industry in order to build a quality portfolio of companies mining graphite and those producing graphene.
I am sure you have read the recent filing by Focus and I would like to hear your thoughts on it if you have the time to reply to me. Feel free to point me in the direction of other companies so I can do research on them. I was interested in seeing if I could get into the Grafoid private placement, but it is up to $5 a share from .50 last year..pricey for a company without financing and zero revenues, but they seem to have some potential from the limited DD that I have done on them.
Have a good night.
Tom
Hi Tom, here are the facts sales of graphene in 2014 were nothing or near to nothing. Grafoid and the two UK listed companies that make a lot of noise currently claim to be the big hitters in the game AGM and Haydale the UK outfits have sold less than $50,000 worth (their shares have dived). Grafoid sales appear to be even less and they claim to be the biggest producer in the world.
The market for graphene is massive – globally more than 200 million tonnes of polymers will be consumed in 2015 if 10% of the market for polymers included graphenes to enhance the properties of the polymers at 1% 250,000 ton of graphenes would be required.
At $20,000 a ton ( and this is where the price point needs to be before the big three Dupont BASF and DOW would use graphene the value $5000,000,000. per annum.
These players will wait until a producer hits the market who is capable of producing 1000’s of tonnes at a viable price. The only noise such a producer will make is we have it come and get it. Right now no one as claimed this ground so don’t invest. Only believe the science if its peer reviewed. Don’t believe the biggest producer in the world claims unless the claims are verified with a list of customers and how much the customers consume. As regards the Lac Knife Mine ask to buy a 1000 lbs of graphite. see if they will or even can supply. As regards the QC its flake graphite and no better or worse than other flake graphite mines produce. Ask then for 20lbs of graphene see how much they charge test if they can even supply.
Nanalyze will always be unpopular with the junior graphite to graphene miners and others in the space that hype as it hits the spot that hurts the truth
Have a great new year
David
As a shareowner of FOCUS ,I too wonder what the current ownership of GRAFOID is . I bought Focus for its ownership or perceived ownership of GRAFOID . I just received the fifty six [56] page FOCUS financial statements [ for years ending Sept 30,2014 and 2013 along with the NOTICE OF AN ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS.. The meeting is May !st ,2015 at noon at the OTTAWA HUNT AND GOLF CLUB.. I was not able to totally understand the current FOCUS/GRAFOID position in this information, but there was mention of FOCUS having a position on the GRAFOID BOARD somehow signified an ownership position of GRAFOID .. sounded rather nebulous ,but I am hoping others reading this can add and clarify… Lastly I believe GRAFOID recently received a “grant” of eight million dollars [$8,000,000 +/- from the Canadian govt .. I hope some can go to the ANNUAL MEETING and also add to this conversation . Best Regards , Frank