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“What is this building hiding?” Byron King’s teased “Miracle Material” stock

Sniffing out the graphene pick from Byron King's Energy and Scarcity Investor

By Travis Johnson, Stock Gumshoe, September 25, 2012

“What is this Tiny Tech Company in Maryland Hiding?
“And why could it mean…

“The End of Silicon Valley as We Know It

“Much of what you are about to see remains unknown to those outside of scientific and industrial circles…

“Many researchers are hailing it as a ‘miracle material’ – and quite possibly the most important substance to be created in more than 100 years….

“Located only 30 miles from Washington D.C., the un-marked building … houses a laboratory dedicated to revolutionizing everything from aerospace engineering to tablet computers.

“We are talking about the end of computer chips and the internet as we know it…”

And yes, of course, they include a photo of this unremarkable laboratory building — just to reassure you that yes, there’s a real company in a real industrial park. The building that he’s talking about is 8306 Patuxent Range Rd in Jessup, MD, which is in one of the many industrial parks near BWI Airport between Baltimore, MD and Washington, DC. You can look it up and get the same grainy picture of the outside of the building from Google Maps if you, too, would like to be a super secret stock spy.

That’s all about a little private company, one of many trying to revolutionize the production of next-generation materials by using Graphene, a still-in-its-industrial-infancy material — if you haven’t yet heard any of the spiels about graphene, and there have been many over the past year and a half, it’s a highly-conductive, super-strong material made of a layer of graphite the thickness of a single atom, sometimes described as the only two-dimensional crystal. Demonstrating a way to create and isolate this layer (by using Scotch Tape, of all things) won the Nobel Prize for two UK researchers in 2010, though their initial publication was six years earlier.

King goes into some of the hyperbole over graphene to help whet your appetite — here’s just a small taste of the ad:

“Not only is it the strongest material researchers have ever tested – it’s also the best conductor man has ever found.

“IBM has already created a graphene-based processor capable of executing 100 billion cycles per second. And many researchers believe that in the future, a graphene credit card could store as much information as today’s computers.

“This one material alone could prove more revolutionary than – and soon replace – plastic, Kevlar and the silicon chip.”

And though King implies that this particular Maryland company is going to be leading the charge in harnessing the power of graphene (the company believes so too, of course — here’s a Baltimore Sun article about them if you’re curious), he does say that there are other companies trying to turn this discovery and this remarkable material into real products. But, as you might expect for a commodities, mining and energy focused guy … he thinks the material itself will be where the money is made.

“That’s okay though because, when it comes to this miracle material and the birth of a new ‘Silicon Valley’, they’re not the only game in town…

“I’m going to show you how you can bypass this company and tap into an even bigger, far more promising moneymaking opportunity.

“How? By going straight to the resource that feeds it.

“You see, this cutting-edge company – and a dozen others just like it – relies on one crucial, raw material to make the groundbreaking products you’ve just seen – as well as several more I’ve yet to show you. (Many of which you probably won’t believe even when you see them…)

“Keep reading because in the next few minutes I’m going to show you what this crucial new material is.”

OK, well we’ve already let the cat out of the bag that it’s graphene that we’re dealing with. So which company is going to supply the crucial raw material? Will it be one of the several that have been teased by Frank Curzio, Michael Robinson, Nick Hodge or, indeed, by Byron King himself about a year and a half ago? There are three fairly advanced “junior” graphite stocks that are have all been touted heavily by at least one newsletter over the past year — that’s Focus Graphite, Northern Graphite, and Flinders Resources. King’s initial pick was Focus Graphite, back when it was called Focus Metals well over a year ago … so is that what he’s still touting today?

Well, his big timing push is for his October 28 conference call that discusses this super-material … and which is just a replay of the conference call they held back in the Spring … and the real urgency of it appears to be that he thinks Samsung will be releasing flexible-screen gadgets using these supermaterials for the coming holiday season …

“Samsung has already announced plans to have its first flexible screens out before the end of this year – and expects to have a dozen more graphene-based products on the market within the next five years.

“And IBM, Nokia and, rumor has it, even Apple are right behind them.

“Soon – and I mean very soon – the touch screens… processor chips… casings… and batteries in everything from PCs and HD TVs to tablets, mobile phones and hybrids could be all be made with graphene.

“I take it you’re beginning to see just how huge and important this is. How much graphene could change our industry… our economy… and our lives. And how valuable it’s about to become…

“As a matter of fact, just a few weeks ago, one of my industry contacts informed me that graphene is already selling for FOUR TIMES the price of gold.”

Well, as a true two dimensional material (meaning it’s only one atom thick), you can bet that cost per ounce won’t really be the key concern for graphene like it is for gold — it’s an attention-getting statement, but lots of things cost more than gold, particularly processed nanomaterials that are expensive to produce and engineer but don’t weigh much. In terms of the raw material, graphite, that’s still mostly used in batteries and in steelmaking, and the most expensive high-purity stuff that’s commonly used is in the neighborhood of $2,000-3,000/ton … with the ultra-high-purity large flake stuff maybe getting two to three times that much.

So if even the best graphite is going for a maximum of $5/pound (that’s $10,000/ton, roughly), you can see that obviously the value-add to get it to graphene is immense. If graphene costs four times as much as gold, let’s call it $6,000 per ounce, then the raw material costs roughly 30 cents and the graphene production process adds $5,999.70 of value. Not that this is reflective of how the market will work in the end, when there might be lots of products using graphene in large quantities, but it’s illustrative when we’re talking about mining companies: The silicon revolution was not particularly dominated by the cost of the raw material (silicon — even though high quality polysilicon was a value added product using high-quality silica), but by the cost of turning that into a semiconductor chip. The raw material impacted the price of a silicon wafer to some degree, but by the time it got down to making 20 or 30 semiconductor chips on a single wafer, and the exacting and expensive process to create those perfect wafers and make those chips with nanoscale or near-nanoscale processing, the cost of the original raw material lost much of its impact. Polysilicon producers have made good investments at times over the years, largely because of the waxing and waning supply, but these commodity producers have also often run into supply gluts that crushed their margins. With no one producing graphene on an industrial scale at the moment, there’s no way to know how much of it will be produced or what the dynamics of that particular product will be — but graphite prices have been fairly economically sensitive, driven by demand from steelmakers and Lithium-Ion battery makers who consume most of the world’s graphite.

Here’s a bit more from the ad:

“… therein lies the key to our first huge moneymaking opportunity…

“You see, it takes a very pure, rare form of graphite – called ‘highly ordered pyrolytic graphite’ – to affordably and ‘easily’ produce high-quality graphene.

“And up until now, almost all the graphene that’s ever been produced has been made using a very difficult, very unpredictable chemical process (called chemical vapor deposition).

“All of that is about to change, though…

“I’ve found a little-known mining outfit sitting on some of the purest raw graphite on the planet…

“Their chemist has found a safe, environmentally sustainable, low-cost process for refining it into graphene…

“AND they’re located right here in North America!

“Better yet, at the moment, you can pick up shares for less than a $1 (although I can assure you, they won’t remain such a bargain for long!)…

“And independent tests conducted this past April confirm the purity of their deposits and places them in a very strong position over any potential competitors.

“In other words, the risk is minimal while growth and upside potential is virtually unlimited.

“Bottom line: This one graphite miner alone could alter the course of history – and make you an absolute fortune in the process.”

So … I’ll leave it up to you to decide whether listening to a “re-broadcast” of a conference call means you’re “attending” that call — but yes, it looks like for the graphene portion of his hypstering Byron King is still teasing Focus Graphite (FMS in Canada, FCSMF on the pink sheets). The April “independent tests” were the metallurgical results they publicized here, and they have a well-known high-purity deposit at Lac Knife in Quebec that they’re continuing to explore.

Focus Graphite is the junior graphite miner that has most aggressively pushed the technological/graphene story, including investing in graphene research through their joint venture with Grafoid (that’s where the “their chemist” stuff comes from) — which doesn’t mean that they would benefit disproportionately, necessarily, but they do focus on that value added end of the spectrum, and on quality of deposit over the quantity. I haven’t seen specifics about their process and I probably wouldn’t understand them if I did, but Grafoid’s process, which is designed to use the high-concentration graphite from Lac Knife to produce graphene, is claimed to be “greener” — this is how Grafoid’s scientist explains it:

“Environmentally low impact (by eliminating strong acids, toxic oxidizing and reducing agents, the capital clean up costs to neutralize these harsh chemicals is completely avoided)”

So that sounds like it’s probably good, right? Like Northern Graphite, the other fairly advanced up-and-coming Canadian graphite mine that we hear about a lot, Focus Graphite is planning to start production at their flagship graphite mine in 2014, a date that has trickled backward a bit over the last year and will probably continue trickling backward, as mining construction always does.

Will what is possibly emerging as a graphite bull market, despite the downturn this year, be a bubble that bursts like we’ve seen before for rare earths companies and for uranium companies? Has it already burst and now we’re looking at somewhat more reasonable prices? Honestly, I have no idea — graphite is clearly in rising demand if the world economy continues growing — industrial demand will continue to determine the success of new graphite mines, not least because I’d bet graphene production isn’t going to be ready to consume thousands of tons of graphite in the next several years. So they need lithium ion battery markets to continue growing, and they need steel production to be at least steady, and they need all the other wide demands for graphite to continue to be there, stuff like lubricants and heat sinks and other applications that, together, probably move pretty sympathetically with global industrial growth. The graphite stocks did spike this past Spring, largely due to heavy attention from several wide-distribution newsletters, I’d wager, but they are generally back to where they were a year or so ago, before most investors had ever heard of graphene.

So after all that … I bet we’ll continue to see plenty more graphite and graphene teasers, and if this is anything like the rare earths or lithium markets (and it probably will be, at least when it comes to investment touting) there will be more ephemeral junior companies than just those top three that I mentioned that will trickle up with large new discoveries or re-discoveries that will never be developed or mined in the lifetime of most investment newsletters.

And yes, Byron King is also teasing his Vanadium and Beryllium picks as the two other next-generation materials plays — and I reckon we’ve probably talked about both of those in the past as well, but we’ll take another look tomorrow to see if he’s still riding those same horses. In the meantime, I know we’ve got a good number of graphite fans out there in Gumshoedom, so if you have a favorite graphite or graphene play, well, I’m sure we’d be delighted to hear about it … just use the friendly little comment box below.


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Ron Schumacher
9 years ago

Based on work I have done in the area, John Lettow and Vorbeck are the real deal. I had the pleasure of meeting John and talking with him at length almost three years ago now. DARPA does not hand out 50 million $ research grants to just anyone. Vorbeck ‘s research into graphene-lithium batteries will be ground breaking. Not only will the charge carried be greatly increased but re-charge time will be measured in minutes. Again, based on government research, the money will be in application companies like Vorbeck and not necessarily in mining graphite. Too bad Vorbeck is still family- owned!

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sam
sam
9 years ago

Please follow this link:
http://finance.yahoo.com/news/management-cease-trade-order-123000074.html

Would appreciate comments from Gumshoe.
Please……….

Jeff Williams
Jeff Williams
9 years ago
Reply to  sam

My preferred graphite prospect is Energizer Resources (ENZR).

They have discovered strikes of 321 kilometers (if my memory serves) of high quality graphite. They will be digging it out fifty years from now. Production has been “fast
tracked” for 2013 I believe.

And that doesn’t even count their world class Vanadium deposit.

Check it out!

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John
John
9 years ago
Reply to  Jeff Williams

Yes it is a great resource but they don’t have the financing to undertake this on their own according to Byron King. Their website states and expected production start in 2015, so that is a long way from now and no guarantees that the stock price will stay static or head in only one direction between now and then.

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IAN NICHOLLS
IAN NICHOLLS
9 years ago

Look at SYR and TON on the ASX