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There are many ways to hype investor enthusiasm for early stage companies and at the top of the list is the attribution the company is poised to cash in on “the next big thing.”
Technologies or new products that qualify as having “next big thing” characteristics are those with the potential for having a major impact on the way the world works.  Investment advisory firms frequently earmark a technological breakthrough as having potential impact of biblical proportions.  Here is an example, from LarrainVial, a major South American firm based in Chile with substantial operations in the US, on the impact potential of graphene.
“The attributes of graphene – transparency, density, electric and thermal conductivity, elasticity, flexibility, hardness resistance and capacity to generate chemical reactions with other substances – harbour the potential to unleash a new technological revolution of more magnificent proportions than that ushered in by electricity in the 19th century and the rise of the internet in the 1990s.”
A few years back investors bought the hype and flocked to stocks set to benefit from what many were calling the new black gold – graphene.  This is a relatively new material, tracing its origins back to 2004 when two researchers at the University of Manchester – Andre Geim and Konstantin Novoselov, were able to create it from graphite.  Exactly what is it?  Here is a definition, suitable for technophiles, from the website gigaom.com: 
Graphene is made of a single layer of carbon atoms that are bonded together in a repeating pattern of hexagons. Graphene is one million times thinner than paper; so thin that it is actually considered two dimensional.
For investors the relevant issue is what this material can do, not how it is made. The possibilities are tantalizing, to say the least.  Graphene-based solar panels and a graphene based replacement for silicon chips are two undergoing research, but the application generating the most buzz is the use of graphene in battery technology.
The lithium-ion battery is the current technology of choice, and graphite is a major component along with lithium and cobalt.  Demand for graphite is expected to increase 200% over the next four years, according to Benchmark Mineral Intelligence, a data collection firm.
However, as investors revved up their engines and climbed aboard the graphite miners, the fact current demand for graphite came primarily from steel production may have been overlooked.  As the steel demand dropped so did the price of graphite, as seen in the following graph.

This may explain in part the decline of one of hottest graphite explorers on the ASX in 2012, Kibaran Resources (KNL).  Kibaran is an exploration stage company with its flagship project in Tanzania, Africa.  Not all graphite is created equal and the company’s Epanko site is expected to be a source of high quality large flake graphite. The stock price rocketed upward in June of 2012 on positive results from the Tanzanian site, collapsed by year end, lingered for a year before rising and collapsing again.  The rocket ride was also fueled by the company’s venture into a joint venture company, 3D Graphtec, to explore graphene applications in 3D printing.  That venture went nowhere and the newly named 3D Grapthec (333D Pty Ltd) is being acquired by Oz Brewing and will go public under the symbol T3D.  The company began as 3D Group before the deal with Kibaran at a time when 3D Printing was being hailed as a “next big thing.” Such is the path of many early stage companies in search of the often elusive next big thing.  Here is the price movement chart for KNL.

While investor impatience coupled with lower graphite prices can lead to wildly volatile moves in stocks like KNL, the forecasted demand for graphite remains high, as does the potential for applications for graphene.
Demand for lithium batteries for EV (Electric Vehicle) use is expected to climb to $22 billion by 2020.  The following graph illustrates the increase by region from 2012.

But there is a problem with Li-Ion batteries – fire. The long awaited Boeing Dreamliner had problems with its batteries shortly after the plane finally launched and the aircraft was grounded.  The holiday season last year saw numerous reports of hover boards powered by these batteries catching fire. A few days ago a hover board in a home in the state of Kentucky exploded, setting the house afire.  The latest version of the Samsung Galaxy smartphone launched with a “minor flaw” that caused some batteries to explode.  The company is recalling about 2.5 million phones world-wide with the US Consumer Product Safety Commission first issuing a formal warning and then recalling one million Galaxy 7’s in the US.
A typical lithium-ion battery has two electrodes and a liquid electrolyte within them that allows the electricity to flow. However, overcharging the battery generates excess heat than can cause the electrolyte to set on fire or explode.  Puncturing or shorting the circuit between the electrodes can also cause fires or explosions. Researchers have been working on the problem.  In early January of this year Stanford University professors announced a solution that involves using graphene to create a coating for the electrodes that shuts down the process when overheating occurs.
There are other solutions popping up and graphene is a component of most of them.  A Spanish company working with a Chinese partner claims to have a graphene battery ready to go into commercial production by the end of 2016.  At the University of California at Berkeley a material called sulfur graphene oxide is part of another new battery technology, the Lithium Sulfur battery. Another researcher at Stanford is proposing an aluminum ion battery with electrodes made of graphite.  Chinese researchers introduced their solution on 28 March of this year in a paper entitled A Novel Aluminum-Graphite Dual-Ion Battery. 
It is likely to be some time before these newer technologies make the leap from concept to commercial success, but it certainly seems graphite and graphene could be part of whatever comes to the forefront.
Chasing the next big thing almost always involves the risk early stage companies will run out of cash before profitability sets in or lose out to competing technologies.  The ASX has multiple miners from which to choose, some pure play graphite explorers and others diversified, also involved in other minerals.  The following table lists four ASX miners to consider.

Syrah Resources (SYR) is by far the largest company but it has yet to reach the production stage. Technically the company is diversified, with a vanadium project and exploration licenses for copper and uranium. However, the company is currently focused squarely on bringing its Balama Graphite Project in Mozambique into production by the second quarter of 2017. 
According to company management, the Balama project has the potential to produce 356 thousand tonnes of graphite concentrate within ten years of going into production, making the Balama mine the largest producer of graphite on the planet.  In addition, the company has longer term plans to commercialise spherical graphite – think flakes of graphite rolled into balls – which is the end product needed for battery use, once coated.  Syrah has the plant in place and now has a licensing agreement with a Chinese company to use that company’s coating technology to create coated spherical graphite for sale around the world, excluding China.
The company has offtake agreements – contracts to purchase future production – in place and recently completed a successful capital raise to fund the work at the Balama Project.  While a certain level of product diversification is something investors are taught to look for in companies, having too little cash chasing too many projects can drain a company’s coffers quickly.  Syrah has reduced its exploration focus over the last few years in order to concentrate on Balama.
In September of 2014 Magnis Resources (MNS) changed its name from Uranex Limited and its focus from uranium exploration to graphite exploration. Magnis now has plans to spin off its uranium assets into a separate company.  It seems investors liked the move as the stock price has been on the rise ever since. Here is the price movement chart for MNS.

The company’s Nachu Graphite Project in Tanzania has been through extensive metallurgical testing that shows high purity levels of graphite there as well as a mix of “super jumbo, jumbo, and large flake” graphite. The graphite is close to the surface and a Banking Feasibility Study released in March bode well for the future, showing a “post tax Net Present Value10% of US$1.69 billion with an internal rate of return of 98%”, according to the Magnus website.  Investors liked what they heard as the share price stood at around $0.30 at the time of the release.  Here is how the price has performed since.

The Banking Feasibility Study was impressive enough to send the company off in search of offtake agreements to further fund the project.  The company already has two agreements in place with two Chinese groups.  The Nachu Mine is expected to go into production in late 2017, with analysts already forecasting EPS (earnings per share) at $0.072.
Kibaran Resources (KNL) is another miner switching its focus exclusively to graphite, abandoning its former name of Kibaran Nickel in 2012. The company’s flagship Epanko project is located in Tanzania, with rights to an additional potential project, the Merelani-Arusha Graphite Project. Epanko is expected to begin producing in late 2017, with 100% of initial production already sold in offtake agreements with a Japanese company. 
On 1 September the company announced it had successfully processed flake concentrate from Epanko into spherical graphite, without the use of chemical purification.  China may be the largest graphite producer in the world, but the purity of the mineral is low enough to require chemicals to purify the product.  Kibaran’s graphite also boasts an extremely high purity level after processing into spherical graphite – 99.99%.
Talga Resources (TLG) began in search of gold and iron ore but changed its name from Talga Gold to Talga Resources in 2012, beginning the process of shedding its gold assets.  Talga is the only company in our table to focus directly on the manufacture of graphene from its graphite mines in Sweden, making its first graphene sale to a German 3D printing company in 2014.  . ..
On 13 September of this year the company announced an agreement with German based JenaBatteries GmbH  to explore the use of Talga graphene in Jena’s flow batteries. On 22 September Talga announced the positive results of a study – ‘Functionalised Graphene as a Barrier Against Corrosion’ – demonstrating the ability of Talga graphene to reduce corrosion when used as a metal coating.  The company’s Swedish mines and processing plant are expected to begin shipping 46,000 tons or graphite per year along with 1000 tons of graphene starting in 2018.
Despite the volatility of the graphite mining sector all the companies in our table managed positive total shareholder return over the last five years with the lone exception of Archer Exploration (AXE).  Archer is the only company that has not shifted its focus to concentrate on graphite while shedding its non-graphite assets or putting them on hold.  Archer is still spending money exploring for a variety of minerals and metals, including magnesite, barite, manganese, copper, gold, and coal.  The company has lost more than half of its market value over the last two years. 

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