First Graphene roadshow well receivedLast week First Graphene...

First Graphene roadshow well received

Last week First Graphene was on a roadshow in Sydney and Melbourne, the first time in over 12 months. The last year has been a waiting game as the Company has been preparing for large scale trials to be undertaken on graphene-enhanced cement by Breedon, the largest cement producer in the UK. As previously advised in ASX releases, this trial is the largest scale test of of its type ever undertaken. There are plenty of companies telling us how they can make green cement i.e. carbon reduced cement, but most of their efforts have been in laboratory or small scale exercises. Doing the same at industrial scale is the real litmus test, and this takes time. Once these companies publish favourable initial tests results, it can easily be a years before they attract and engage with cement companies. Repeated tests are required, not just one. First Graphene has already gone through much of this phase and it has a ready made offtake partner in Breedon, provided the large scale tests confirm the earlier results.At present First Graphene is selling its PureGraph products to about 30 buyers across a wide range of applications. Sales are growing by 30-50% p.a., from a small base. That is good, but the company is still producing below its breakeven volumes. The real money is in high volume applications with cement being one of the best examples. Success in the current and subsequent trials could require dramatic expansions in graphene production capacity and lead to very strong earnings. Capital expenditure will be needed, but it will be based on firm orders with an element of “bankability”. The business is not capital intensive and most items can be purchased off the shelf. Capital payback is estimated to be much less than 12 months. As significant as the cement initiative could be for First Graphene, it is not a one trick pony. There are several other product lines on the book that could provide the inflection point and high volumes, but more about those later. The main point is that the patience of shareholders could soon be rewarded with a very strong growth curve that would go on for many years. We are not talking about a cyclical company here. It was good to see that many of the investors and brokers visited last week seemed to appreciate the potential. This ties in with my frequent comments about the need for regular promotion to keep a company's name in the front of the minds of brokers and investors, in addition to operational performance. Interestingly, the Company didn’t have a presentation to speak to. Instead, it was a series of engaging conversations without the distraction of flicking through a power point presentation. Maybe there is a lesson in that.