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 by 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 in line 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 substitution 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“.

U.S. investors who want to invest in Applied Graphene Materials (LON:AGM) will need to sign up for an Interactive Brokers trading account.

Most people don't know that Interactive Brokers is the biggest online brokerage firm in the U.S. and the only firm we know of that allows you to buy stocks directly on 125 different foreign stock exchanges. We've used IB for many years as a cheap platform to exchange currency, for trading stocks on foreign exchanges, and for trading shares in U.S. stocks. Click this link to get started.

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