First Graphene (ASX:FGR) completes capital raising


by Rachael Jones

First Graphene Limited (ASX:FGR) Non-Executive Chairman Warwick Grigor talks about customer field trials for graphene-enhanced products, the company's capital raising and focus on the mining industry.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from First Graphene (ASX:FGR) is Non-Executive Chairman Warwick Grigor. Warwick, welcome back to the network.

Warwick Grigor: Thank you, Rachael.

Rachael Jones: Now, First Graphene is commercialising graphene for a wide use of products. How's progress?

Warwick Grigor: Progress is very good. Morale's never been higher. We've never been kicking more goals. We have established ourselves as a world-leading supplier of high-quality powdered graphene. Now we have to convert that leadership to sales and take us through the path to commercialiality and profitability. No one else is in our position. The rest of the world, they might be selling a kilogram here or a kilogram there, but what we're about is selling tonnes of graphene to industry for adaptation for vastly improved products.

Rachael Jones: Now, a question many investors are asking companies at the moment is about COVID-19. Has it had any effect on you?

Warwick Grigor: Some effect. The Australian operations are continuing unhindered, but in the UK where we do some of our research, that's based at the University of Manchester. And with the shutdown they've had over there, that slowed things down. But on the commercialisation, it's not really impacting us at all.

Rachael Jones: And now could we get an idea of some of your products, starting with the work safety boots?

Warwick Grigor: Blue Steel safety boots, they're putting it into the soles and other parts of the boots. They'll want at least a couple of tonnes of graphene a year. It might cost an extra two dollars for a pair of boots, which is nothing considering that the life of the boots could easily be 50 per cent longer and give you a better grip.

Rachael Jones: And can you tell me about the bucket liners for the mining industry?

Warwick Grigor: The big iron ore companies in particular, Rio, BHP, Fortescue, Roy Hill, they all use bucket wheel reclaimers as they're loading their iron ore onto the ships. Each of the bucket wheel buckets have a 200 kilogram liner in them, and they get replaced every six to nine months. By putting graphene in at a rate of 1 per cent, we're doubling the life of those, which gives much reduced maintenance costs. And this is leading us into other areas of the mining industry, where you're using polymers, such as in conveyor belts and chutes. Having the world leaders using graphene is a great door opener to the rest of the mining industry.

Rachael Jones: And what can you tell me about customer engagement?

Warwick Grigor: A potential customer rings up and says, "We've heard of graphene, it's wonderful, but can we use it?" That starts off a process which can easily take six months, where we look at what they're wanting the graphene for. Sometimes it's not going to work, wrong materials. But if it does, six months to 12 months, and then we can start to talk about sales contracts and actually putting it into their products. And each time we deal with one customer with one particular product, we increase our skill base and our awareness, and that makes it a lot easier for subsequent customers that might come along.

Rachael Jones: Now, let's talk about financials. You had a cap raising recently. How much did you raise and why did you do it now?

Warwick Grigor: Well, we've got a one for 10 entitlement issue to shareholders. That will raise six million when fully closed, which will be some time next week. We're raising it because we're an expanding business. All expanding businesses need more working capital. With the emergence of the virus, we went a bit more conservative and thought, "Well, let's raise the money now so we don't have any issues later."

We've done an entitlement issue instead of a placement because it's fairer to shareholders. It's the most equitable way of raising money. And we've done it at what is quite a good price. And we wanted our shareholders to get the benefit of that. A share and an option for 13 cents when the package is worth more like 17 cents in the market. And it's just a responsible thing to do at this time.

Rachael Jones: Now to the last question, is there anything else you'd like to add?

Warwick Grigor: Well, I think the announcement we brought out earlier this week on the graphene sales to Aquatic Leisure Technologies, the largest swimming pool manufacturer in Australia. We've been working on that for over 12 months, and finally we've got that over the line.

Now, that's initially 2.5 tonnes per annum, but we think that'll grow to many multiples of that. It shows that, in fibreglass manufacturing, you can save 30 per cent on production costs, which is enormous. Now with the advertising campaign that's going to take off next week, more and more companies are going to see that leading edge companies will be using graphene. That's going to open the door to many sales for us going ahead. And then we will progress to the more longer-term items, such as supercapacitors, fire retardants and concrete, which all offer great growth curves. So, from this point on, I think you're going to see some very exciting growth over the next few years.

Rachael Jones: Excellent. Warwick Grigor, thanks so much for the update.

Warwick Grigor: Thank you, Rachael.


Subscribe to our Daily Newsletter?

Would you like to receive our daily news to your inbox?