Special Report: How to Invest in the Graphene Revolution

You might've seen graphene in the news lately because of the incredible advances it's bringing about in the medical field, the energy sector, defense, and so on.

And here's why: It's 200 times stronger than steel, thinner than a sheet of paper, and more conductive than copper.

Researchers at the UK's University of Manchester note it's "almost one million times thinner than a human hair."

"It is not only the thinnest material in the world," says the New York Times, "but also the strongest: a sheet of it stretched over a coffee cup could support the weight of a truck bearing down on a pencil point." 

Bloomberg adds: "Lighter than a feather, stronger than steel, a superior electrical conductor to copper: According to its champions, graphene could unlock a new era of super energy-efficient gadgets, cheap quick-charge batteries, wafer-thin flexible touchscreen computing, and a sturdier light-weight automobile chassis."

Bottom line: Graphene has the potential to completely revolutionize entire industries, creating bendable phones and touch screens... tiny self-powered oil and gas sensors... even synthetic blood that can be used in any person on the planet.Graphene Image

Incredible, isn't it?

And because of its possible future applications in technology, it has been generating significant buzz among scientists worldwide since its discovery.

Strategic metal experts are already calling graphene the "... most important substance created since synthetic plastic a century ago!"

It's no wonder the two Russian scientists who discovered it were awarded the Nobel Prize in physics — as well as knighthoods.

"Graphene doesn't just have one application," says Andre Geim, the Russian scientist who made the find along with Konstantin Novoselov.

"It is not even one material. It is a huge range of materials. A good comparison would be to how plastics are used."

I'd say plastics is a conservative comparison. Graphene has far more high-tech uses than plastic — and is poised to be much more lucrative...

Scientists are hailing it as a miracle cure for industries ranging from fiber optic data transmission to nuclear energy to lithium-ion batteries.

Since graphene has a high strength-to-weight ratio, it's the perfect material for use in automobiles, rockets, boats, turbine blades, airplanes, and more.

Take a look at what hundreds of researchers, companies, and governments are already doing with the strongest, thinnest, most conductive material ever discovered:

  • Engineers at Northwestern University have a made a graphene electrode that allows lithium-ion batteries to store 10 times as much power and charge 10 times faster.
  • MIT Engineering Professor Jeffrey Grossman believes solar cells made from graphene could produce 10,000 times more energy from a given amount of carbon than fossil fuels.
  • University of Manchester researchers have created a device that "could help detect the presence of drugs or toxins in the body or dramatically improve airport security."

According to the Daily Mail: "A graphene credit card could store as much information as today's computers," and that "will lead to gadgets that make the iPhone and Kindle seem like toys from the age of steam trains."

The BBC says: "It could spell the end for silicon and change the future of computers and other devices forever."

Amazingly, the Israeli Army is even using the material to make invisible missiles.

Fact is graphene makes:

  • Solar — 50x-100x more efficient
  • Semiconductors — 50x-100x faster
  • Aircraft — 70% lighter

The applications for this "wonder material" appear endless.

This Super Material "Will Change the World." —Huffington Post

I'm extremely bullish on graphene's future prospects, and so is one of the men who discovered it, Nobel recipient Konstantin Novoselov:

"I don't think it has been over-hyped... It has attracted a lot of attention because it is so simple — it is the thinnest possible matter — and yet it has so many unique properties. There are hundreds of properties which are unique or superior to other materials. Because it is only one atom thick it is quite transparent — not many materials that can conduct electricity are transparent."

And speaking of transparent, scientists at the University of Texas, Dallas have made a graphene invisibility cloak by heating up a sheet of the material with electrical stimulation.

Again, this isn't science fiction. This is happening right now.

Novoselov says, "It's a big claim, but it's not bold. That's exactly why there are so many researchers working on it."

So many, indeed: Over 200 companies are pursuing graphene opportunities, and it's been the subject of thousands of peer-reviewed research papers.

Just recently, Bloomberg reported: "University-led research projects to investigate graphene won $1.35 billion in European Union funding."

That's a true testament of faith in this "wonder material."

"Analysts say the first graphene-intensive products should come to market within 18 months," says Businessweek, "with IBM, Samsung, and Nokia among those racing to be first."

And now the global race is on — with a huge increase in patents filed to claim rights over different aspects of graphene...

The BBC reports: "A surge in research into the novel material graphene reveals an intensifying global contest to lead a potential industrial revolution."
 
Graphite's "Rare Earth" Moment

There are two ways to make graphene. 

One is done in a lab, similiar to how solar cells are made, with a process called chemical vapor deposition. Most of today's graphene is made this way. It's ultra-pure and the process can be easily controlled. 

But it's expensive and often cost-prohibitive. 

The lower cost way to make graphene is by using natually occurring graphite. This market is developing now and will be much larger than the synthetic graphene market because it can be used in high-volume consumer electronics.

Yet only a few companies around the world have access to mineral graphite, which is the resource required to make graphene...

And up to this point, China has had a tight grip on the worldwide graphite supply, controlling over 70% of it.

ea-graphite-piechart

Like it did with rare earths, China is has limited graphite exports with quotas — imposing a 20% export tariff and a 17% value added tax (VAT), causing graphite prices to rise. What's more, due to environmental concerns, China has ordered restrictions on any further graphite mines in two of its largest graphite-producing regions.

All this has set the stage for non-Chinese based production to come online...

Leaving the door open for graphite mining operations in other parts of the globe as most of the world's major economies perceive the mineral as being necessary for technological and industrial progression.

"China has a stranglehold on natural graphite supply," says Simon Moores of Industrial Minerals. "This, together with a generation of under-investment in mines around the world, is creating a very tight supply situation."

Already, Future Markets, Inc. reports a 4,000% increase in demand for graphene-based materials...

Which could send graphite prices higher as demand for this mineral starts outpacing supply as is forecast.

ea-graphite-chart1

That's why graphite has been named a "supply critical mineral" and a "strategic mineral" by the United States and the European Union.

This created sort of a "graphite bubble" from 2010-2013, when prices for large flake graphite tripled, from just under $1,000 per metric ton to over $2,700. 

All of a sudden there were graphite companies coming out of the wood work, just like there were new rare earth companies during the rare earth boom. 

But what most failed to realize is that graphite is a relatively tiny market in terms of both amount of graphite used and its cost. The world uses about 1.1 million metric tonnes of graphite annually at a value of around $1.1 billion. The synthetic market is worth about $13 billion annually.

In size terms, that's much smaller than zinc or nickel or aluminum. And it dollar terms, the annual market for cobalt at $3.5 billion is three times larger than for natural graphite. The zinc market, at $26B is 26X larger than the graphite market.

As the world realized it didn't need ten new graphite mines to come online, but more likely one or two, prices started come back to earth. 

Graphite prices have now gone full circle inside of seven years. 

Graphite Prices 2016

A lot of "would be" graphite miners have gone by the wayside as well. 

And now that the graphene and graphite markets have passed "mania stage," there are a few ways to invest in it.

Background

We've all seen what the commodity supercycle has done to copper, gold, and many other resources.

Copper traded between $0.50 and $1.00 per pound for decades. And then, because of the commodity supercycle, it went over $4.00.

Same with gold. It used to sell for between $250 and $500 per ounce. It went over $1,800 in 2011.

That isn't inflation. That's the commodity supercycle.

Many things have caused this change, the big one being China, with India soon to follow.

And in the mining industry, the deposits we've lived off for years have been the big, low-cost, easy-to-find mines. Just like with oil.

But those mines are all getting deeper and older, so costs are increasing. Engineering and environmental standards have gone up and there's been capital and cost inflation.

So gold can't go back to $400 per ounce. And copper can't go back to $1.00 per pound.

Graphite has been one of the last minerals to respond to this commodity supercycle. And the reason for that is there was excess production capacity from China.

There is still plenty production in China, which accounts for 75% of the world's graphite production. 

But it's that very monopoly that has governments and investors looking for quality non-Chinese graphite supply.

Graphene & Graphite Investment Checklist

The first thing you should look for in a graphite investment is that it isn't being promoted. That is, make sure the article or report where you're getting your information is being paid for by a graphite company. Outsider Club never takes money or other payments to write about a company. 

Second, you'll want to verify not only that the company you're looking at has a graphite deposit and mining plan that is economic at today's prices... but that it has someone to sell the graphite to. 

Graphite isn't sold on an exchange like copper or gold, so a company must secure "offtake agreements," in which they secure a buyer for their mined graphite.

From there, many basic mining due diligence questions apply:

  • What are the capital costs of the graphite project?
  • What is the expected production rate?
  • What are the operating costs?
  • What is the strategy to make and sell High Purity graphite?

One company where we suggest you start your search is Flinders Resources (TSX-V: FDR)(OTC: FLNXF). 

To your wealth, 

-Outsider Club Research Team


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