🤿 Deep Dive: 🤿 Why hasn't Graphene taken over the world? (Versarien)

Intro

Versarien has had a rocky last couple of years. 2018 through 19 its share price tripled as it looked like they had finally found a use for graphene with some mass-market appeal.

You see, Versarien had just announced a tie up with Axia Materials in South Korea, with the view to developing “graphene-enhanced composite materials and smart graphene devices“, specifically related to smart buildings and electric vehicles. Obviously excitement took hold because, as with most stories you’ll read about graphene, the possibilities really do seem to be endless. So are we any closer to finding a use that they can sell? Versarien’s recent annual report shows a meagre £120k of sales growth over 2018 probably answers that.

Having been through a couple of price monitoring extensions over the last few trading days, it’s definitely time to have a look at Versarien and see what value we can find.


Simplywallst isn’t so sure.

What is Graphene?

As its name indicates, graphene is extracted from graphite, the material used in pencils. Like graphite, graphene is entirely composed of carbon atoms and 1mm of graphite contains some 3 million layers of graphene. Whereas graphite is a three-dimensional crystalline arrangement, graphene is a two-dimensional crystal only an atom thick. The carbons are perfectly distributed in a hexagonal honeycomb formation only 0.3 nanometres thick, with just 0.1 nanometres between each atom.

Graphene conducts electricity better than copper. It is 200 times stronger than steel but six times lighter. It is almost perfectly transparent since it only absorbs 2% of light. It is impermeable to gases, even those as light as hydrogen or helium, and, if that were not enough, chemical components can be added to its surface to alter its properties.

From: https://www.theguardian.com/science/2013/nov/26/graphene-molecule-potential-wonder-material - Hard to believe this article is nearly 7 years old!*

That second paragraph alone sets the mind racing, especially as we hit the age of EV vehicles electrification and smart cities. Why on Earth aren’t we seeing more orders when Graphene is clearly better than the alternatives?

Even Boris knows what’s up!

The global market for graphene is forecast to reach $150 million dollars in 2021, which has grown quite rapidly from 2012 when it stood at just $9 million dollars.

Graphene has a ton of uses, here’s an extract from digital trends naming some of the most exciting:

  1. Imagine a flexible, transparent display or light strip that’s just a single atom thick. (we wish we could. Mind-boggling).
  2. Graphene can act as a superconductor, meaning that electrical current is able to flow through it with zero resistance.
  3. Music lovers listen up. Graphene may replace our existing speaker systems with non-moving speakers which create sound instead by varying the temperature of the air at a very high rate.
  4. One to ponder: Two layers of graphene combined can withstand perforation by a diamond tip. (Uses on a postcard please).
  5. Graphene membranes can be used to create a sieve. It can filter 85 percent of salt out of seawater and the colour out of Whisky.
  6. Imagine if you could paint a building with a special coating that changes colour when it senses that the underlying structure is in need of repairs.
  7. Researchers at the University of Illinois at Chicago have demonstrated that it can help detect cancer cells, too.
  8. A Chinese company has built a battery pack which has a giant 4,800mAh capacity, and can reportedly charge from empty to full in just a quarter of an hour. Yes, it is also more robust than your regular lithium-ion battery.
  9. Jog on. And lastly, before you start believing the myth, later this year you’ll be able to buy running shoes made using graphene by sportswear brand inov-8. We would like to be mischievous and tell you they are rubbish, but they’re reportedly “much stronger and more stretchy than traditional materials, making the shoes more resistant to wear and tear”.

Graphene has also been linked with many more products and industries, pick your favorite from any of these 21st century buzzwords:

  • Batteries
  • Transistors
  • Computer chips
  • Energy generation
  • Supercapacitors
  • DNA sequencing
  • Water Filters
  • Antennas
  • Touchscreens (for LCD or OLED displays)
  • Solar cells

Graphene Batteries

Unfortunately, Versarien’s current uses…well, they aren’t as sexy.

Inks

Versarien and MAS Holdings (Asia’s largest textiles)

https://newsnreleases.com/2019/07/26/versarien-signs-loi-with-global-apparel-manufacturer/

Why hasn’t Graphene taken over the world?

Graphene itself has an even bigger issue though, almost every use for this material needs large sheets and at the moment we’re only really making 2mm ‘flakes’. You can’t just make them bigger either, graphene is so complex and minute that a 1cm square sheet would contain nearly 5 trillion atoms. Now suppose you have a near perfect 0.001% bond failure rate, that would equate to 5 billion failed bonds - potentially catastrophic for almost all of the uses above. How do you bridge that gap?

It’s also starting to be ridiculed as an industry:

Even Fool, which tends to be bullish on most things has dropped its support for Versarien:

Codf’s Tedious Tesla Link

One of Versariens smartest moves was snapping up a 62% stake of Gnanomat in Spain, not only did it give them a foot in the EU markets after Brexit, but also allowed them to have a centre of excellence from which it could continue to apply for energy storage grants from the EU.

http://www.investinspain.org/invest/en/press-room/Business/news/NEW2018800277_EN_US.html?orderBy=xfwm_cnt_Fecha1&orderType=desc

In May 2018 Gnanomat filed a patent covering the use of graphene nanomaterials in energy storage. The very same technology Maxwell has been testing in their dry anode supercapacitors.

(To complete the tedious link)

For those that aren’t aware:

https://www.nextbigfuture.com/2019/02/tesla-buys-maxwell-to-eventually-triple-battery-energy-density.html


I hope someone else is old enough to get the reference!

Management

Neil Ricketts is the CEO

As you’d expect he’s super bullish on graphenes future:

(New Year Resolution?)

Rich engineering background. Business not so much.

Chris Leigh - CFO

Over a year of runway according to CFO.

Full team here: http://www.versarien.com/about-us/board-directors/

https://www.lse.co.uk/rns/VRS/us-update-w2u94qrfaedhxyq.html - VRS in the US

:bear:’s Case

CEO took a large pay rise on poor figures.

Institution heavy, retail investors could be dragged around by shorting, profiteering or wholesale sell offs.

A quick look at the competition would tell you it’s a busy sector - with no breakouts so far.

  • First Graphene (FGR) is the leader of the pack yet in their last set of accounts their sales were only ca £12k and they made a loss of ca £4m (figures to 30th June 2019).
  • Nanoexplore (GRA.V) which posts very impressive sales numbers - ca. £30m - however they too are loss making (ca. £3m)
  • XG Sciences (XGS) - which in the 9 months to 30th September 2019 had sales of ca. £1m and a loss of ca. £6m,
  • Talga Resources - basically a Graphite miner with negligible sales (ca. £4k) and a huge loss of ca. £6m
  • DirectaPlus (DCTA) a pure play Graphene company with ca. £1.8m of sales (mainly textiles related) at a loss of ca. £3.5m

Risk of further dilution:

Conclusions

Versarien’s biggest issue seems to be their scattergun approach. I’m a firm believer that one of the best ways to generate demand is to focus on the biggest problem and solve it. Versarien and indeed the industry at large are guilty of finding lots of small projects and spreading themselves too thin working on them.

No one (not even VRS) have ISO approval, as the standards and characterisation methods have yet to be fully documented, and then standard testing bodies approved.

Having said all that VRS are probably closest due having had some level of confirmatory testing done by the NPL (who have published some initial British standards) as part of the Verified Producer Programme run by the Graphene Council. Until there are a single, common, set of standards, and some form of legal / regulatory requirement for testing / proof, it’s still the wild west and easy to belittle all claims.

So Versarien has around 12-18 months of cash left at the current burn rate, with a 4.5% dilution still fresh in the minds, would investors accept another with such minimal improvements in sales.

Time is of the essence. Versarien needs to make use of the flakes now, if they’ve any hope of producing the sheets the future needs.


So here are my notes, I’ve obviously tried to keep it light and interesting so errors and omissions are expected. Please don’t make decisions solely on the above information, make sure you do your own research and always fully understand the implications of investing in such a small, speculative business.

Apologies for the delay in getting this one out - I’ve been ill for a couple of weeks (wrong time to be ill with the flu too!), but really haven’t felt up to writing!

Let me know your thoughts

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Nice one. Every part of me is telling me no about this right now, probably correctly, but there’s such a wide variety of use cases and the price of production is supposed to tumble. Best to wait a year.

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Here’s something more interesting they’re working on that I’ve been alerted too!

Am with you. Even my risk appetite says no at the moment, but then again, their price has now become so low, it may be worth a low-ball bet of a few £100.

Even then, I’d wait a bit longer, it still seems to nosedive, and I can’t see a speedy rebound post-Corona as with other stocks.

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I really appreciate these deep dives @anon810895!

Also on this one. A company called graphene composites (crowd funded on crowdcube) has been making progress with bullet proof vests and other self protection equipment that they’re aiming at the us market. Have had a number of great discussions at various levels (according to them) but it does seem very promising to be able to have stab and bullet proof equipment that’s alot lighter and performs better than anything else on the market.

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Awesome as always! I was only looking at graphene and carbon nano tubes the other day very cool stuff surprised it wasn’t used everywhere already but I understand why not now! Do you think these guys are the best bet out of other competitors or are they only ones on freetrade?

I invested a bit in Graphene Composites, They are one of those rare crowdcube companies who actually seem to be doing something.

They signed a $1.2M contract for “GC Shield active shooter protection technology” recently

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That’s the one, I’m a fan of their updates too, always very helpful but does seem to show the uses of graphene. I think they’re also doing things in other industries too.

I’m a Graphene Composite investor too.

They use a mix of Graphene and Aerogels for their ballistic stuff.

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Great article. Thanks

https://phys.org/news/2020-03-large-scale-production-ultrathin-graphene.amp

The one I am watching in this sector is https://zapgo.com/ . I think they could be a hidden gem of a UK company, a hell of a lot of loan note with warrants though

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Up 95% wish I bought more!

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Joint venture announced in China

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Some good movement today for those interested in graphene/Versarien.

Ofcourse it did I sold mine a few days ago typical :stuck_out_tongue_closed_eyes:

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Em, spoke too soon on this one, gone into administration
Zapgo Into Admin

https://zapgo.com/investors/
Administrators are in…

very disappointed about this one, but have seen that the founder had one do exactly the same before and wiped out some debt holders … I had a decent clip in it, nothing too lumpy but was hoping for a decent bagger on it… very annoyed I didn’t do my DD properly on the founder

I have had my moments with Versarien but I am out now. I would love to get a few Graphene stocks but I personally think its too early. I am going to wait until the industry matures and a few front runners emerge.