First Graphene (ASX:FGR) Presentation, FNN Online Investor Event, April 2021

Company Presentations

First Graphene Limited (ASX:FGR) Non-Executive Chairman Warwick Grigor provides an overview of the company, discussing the market for graphene, the PureGRAPH product, and the company's strategic roadmap.

First Graphene is perfectly placed to deliver the graphene revolution owing to its ability to produce industrial scale volumes of graphene fit for delivery into industry, and it can warrant consistently high quality graphene from a continuous, 100 tpa production facility due to world leading process control and proprietary analytical techniques. After five years of developing the process and mastering the science and technical aspects of production, we are now ready to go out into the world to market our products to the global industry, building on the already successful application of graphene to a largely Western Australian customer base. We are in the process of rejuvenating the management of the company with new, younger CEO and CFO, as the focus has shifted to the all important task of generating sales. Please note that this presentation has been released to the ASX, so you can read through it at your leisure if you care to go the website of the ASX or FGR.

What is Graphene? True graphene is a carbon nanomaterial that can be 1 to 10 atoms in thickness. If it is > 10 atoms it is technically a Graphene Nano Platelet (GNP), performing differently and it is less valuable. Beware of companies that try and pass off GNPs as graphene.

What is so great about Graphene? Graphene is mixed with other materials at loadings of generally 1-2%, to provide dramatic improvements in strength, tear and abrasion resistance, thermal and electrical conductivity and fire retardancy.

Who is First Graphene? FGR is a Perth-based, ASX-listed company specialising in the manufacturing of bulk volume, high quality graphene for use across a wide range of products; including
• composites and polymers
• elastomers and rubbers
• fire retardancy and construction materials

We are legally qualified to sell graphene in Australia and Europe and we are working on registration in the US. As a new materials there is a lengthy registration process that takes into account OH&S and environmental considerations. Very few companies have achieved this level of compliance. It is an important question to ask of them, whether you are a potential customer or an investor. We are debt free.

Something that sets FGR apart from virtually every other purported graphene producer is our raw material, being vein graphite that grades better than 95% in its natural state. We have developed two underground mines in preparation for expanding demand for graphene, and we buy from third parties, including the Sri Lankan-government operated mine. Our electrochemical exfoliation production process involves using dilute sulphuric acid (2-3%) and electricity to dissolve the lump graphite in an electro-winning cell. Our jumbo-sized graphene platelets come out of the cell with a diameter of about 70 microns

We then have a series of finishing steps that tailor the size of the platelets to suit the customers. The PureGRAPH range of products can be 5, 10 or 20 microns in diameter with aspect ratios of 2,000 to 2,500, which is much better than the standard 500 to 700 ratios that most other producers who use synthetic graphite end up with. We usually deliver PureGRAPH in the powdered form, but we can also deliver an aqueous product.

The business has two main focuses within the graphene sector. Firstly, and most importantly, we are continuing to commercialise graphene through interaction with industry and customers wanting the benefits of graphene. As part of our marketing drive we have recently announced the appointment of specialist marketing managers in two sectors, concrete and composites i.e. fibreglass. At any point in time we have between 50 and 100 potential customers with whom we are working to determine whether PureGRAPH is suitable for their product ranges, and in what sizes and quantities. A typical time frame involves six months of test work followed by a period of optimisation before working with the engineers to design the incorporation process. We currently expect that the time frame from introduction to execution will exceed 12 months.

While this initially sounds like a lengthy time frame, the know-how that we are developing will enable the shortening of the time frame as we gradually tick the boxes. We will gather momentum as we can extrapolate results to new customers. Secondly, we are heavily involved in R & D in alternative energy applications, be it in adding graphene to anodes or supercapacitors. Most recently we have announced a capability to produce green hydrogen with graphite and graphene products from petroleum feedstock, thereby opening the door for oil companies to become involved in the production of inputs into the battery sector.

This is a list of products we are working on adding graphene to.

We want to be a commercially profitable producer of graphene, not just a promoter of this new wonder material. To do that on a cash basis we need to be selling 6 tpa of product. This graph shows that this level of sales can be achieved with the 3-4 customers that we already have. To make an accounting profit that takes into account all overheads and R & D, we need to be closer to 20 tpa. As we build sales through that level and towards our plant capacity, unit costs will come down significantly with the economies of scale. An important point is that it is not a capital intensive industry. There is no intimidating capital expenditure on the horizon. We could double our capacity for perhaps a couple of million dollars, or we could construct a new, 200 tpa stand-alone facility elsewhere in the world for probably only $5m.

To give you an example of what graphene can do when added to materials, consider the examples of composites - and think of fibreglass here. We have successfully added 1% loadings of graphene to in-ground fibreglass swimming pools, achieving the following benefits:
• can be made in two layers rather than five, and in 80% of the time i.e. this gives the factory a 20% lift in capacity at no capital cost
• they are 30% stronger and weight 30% less
• the hydrophobic feature of graphene prevents the ingress of groundwater that can lead to blistering on the surface of the pool walls
• the same benefits apply to fibreglass boats. You wouldn’t need to dry dock the boats for a month each year as they wouldn’t absorb moisture.
• the fibreglass composite market is worth about US$60bn p.a. Many fibreglass products could benefit from the addition of graphene
• carbon fibre can be made stronger with graphene and according to one of our customers, it can reduce manufacturing costs by 10%

There is a vast range of products that could benefit from graphene, from the obvious ones such as boats, fibreglass roofing and poly pipe to specialised products such oyster pots using in commercial farming, cladding on apartment and office buildings is another potential market and of particular importance here is the fire retardancy that comes with graphene.

Rubber is another area where graphene can make a real difference, but you need to remember that there are many different types of rubber. We need to continue to work with rubber specialists to identify where the greatest benefits are the automotive and speciality tyres for industry equipment will benefit from increased tensile strength, tear resistance and abrasion resistance. Cladding on apartment and office buildings is another potential market and of particular importance here is the fire retardancy that comes with graphene. Fire retardancy will play a role as well.

We are selling graphene to Steel Blue boots, for strengthen soles of boots whilst delivering better grip. I recently purchased some rough terrain walking shoes and I have found that graphene provided incredible grip - they call it graphene grip. We are selling graphene to newGen, which is adding it to polyurethane sacrificial liners for bucket wheel reclaimers in the iron ore industry. Extended field trial have shown that with graphene the liners last six time longer. Up until now they generally last 6-9 months, but with graphene they could conceivably last more than two years. Maintenance downtime is the enemy of the high volume iron ore industry in the Pilbara, moving a billion tpa. Rio is very keen to adopt the new liners.

While talking about the mining industry, the iron ore producers have all had serious fires in their processing plants when their screens have caught fire when changing the screens at regular intervals. Two years ago RIO lost $100m of production through one such fire. We have proved that with 1% graphene additive these screen will not propagate flame at atmospheric oxygen levels. They will smoulder and smoke, but there is no flame and therefore there is no fire. Composite shipping pallets are similar. While the last twice as long as wooden pallet, there is a big fire risk. Existing retardants retard fires, but they don’t prevent them. We have shown that they won’t burn when you add graphene.

Cement-based concrete contribute about 8% of global CO2 emissions. This could be cut by a third with the addition of graphene. We have demonstrated that by adding just 0.08% of our PureGRAPH will deliver 34% improvement in compressive strength at 27% improvement in tensile strength. The result is stronger and lighter concrete. Another benefit is the reduction of permeability by better than 50%. It takes concrete a week to cure and it does so inconsistently, which leads to micro-cracks. The thermal conductivity of graphene assists in the flattening of the thermal gradient so the temperature is more even as it cures. This leads to a significant reduction in micro cracks through which water can subsequently migrate to attract the rebar. Thus, graphene can significantly reduce concrete cancer.

Here are examples of products. FGR has a global patent on FireStop, a self extinguishing barrier paint to flammable volatiles that was developed at Adelaide University. Take wood structures as an example. When wood burns it is the gas that is released by heat and fames which fuels the fire. With fire stop, which is impervious to gas, that gas would not be released into the fire. You wouldn't get the structural deterioration of the wood, and you would avoid the intumescent effect of collapsing buildings. That's very important for firefighters.

On the R&D for graphite for batteries, we have a patented process that makes green hydrogen, graphite and graphene, which is being funded by the UK government. That uses a petroleum feedstock, and it gives oil companies today the opportunity to participate in the EV revolution through making high-quality graphite for batteries. We also have a patented process on superior supercapacitor materials.

Here we have the strategic roadmap showing the products we've been working on, and the direction we're going into.

In terms of financials, the company has just under $3 million cash in the bank at the moment. Our market capitalisation is generally between $120 and $130 million. We're getting a lot more interest out of the US investors, and you see the volumes and the share price improving over the last few months as a result.

The board of directors, we comprise a small, tight team of three directors. There's myself with financial experience, analytical experience. There is Andy Goodwin, who's one of the world's leading graphene scientists, and we're very lucky to have him on the team. And Michael Quinert, he's a commercial lawyer from Melbourne. The senior executives that you see there, Michael Bell, Paul Ladislaus and Dave Bennett, they keep the wheels turning in the manufacturing process.

To summarise what First Graphene is, it's the world-leading producer of high-quality, bulk-scale powdered graphene. We've demonstrated that it can be used in many different materials, and we are at a position now, with a new CEO who's very commercially driven. He's not an operational guy, he's business development and commercially driven. He's leading the push with the appointment of specialist marketing managers in different product lines to take our product to the world, to build on the experience and the success we've had in West Australia and turn this into a truly global company.

The first example of a breakthrough agreement on that front is with Gerdau. Gerdau is a $10 billion capitalised steel manufacturer in Brazil. We are just in the process of closing a deal with them that gives them exclusivity in Brazil and South America. That's the first major step in taking this to the rest of the world. That promises to be very rewarding for us. We are on the cusp of a very rapidly rising sales curve. We know we're the highest quality, we just have to make sure that the rest of the world knows it, and we show them how to use graphene.

Thank you, ladies and gentlemen.