This article was originally published on February 2, 2022, when we first saw Alex Koyfman’s teaser about this “black powder” and a graphene battery company. I’ve provided a small update in the Quick Take box above, but otherwise this article has not been updated in the past year — the company has made some progress, but nothing dramatic (chart of the stock price since the first tease is at the bottom).

2/7/22: This week the teaser ad that readers are asking about is another battery-related story — it’s an ad for Microcap Insider ($1,999/yr, 90-day refund period), and Alex Koyfman lays it on pretty thick on the order form:

“These revolutionary batteries charge 70x faster, last 3x longer than any lithium battery…

“And most importantly… they’ll end America’s dangerous dependency on Chinese lithium.

“This is a matter of national security.

“And the company mass-producing this Nobel Prize-winning material is expected to come out a HUGE winner.

“Their patented technology could mint ‘graphene millionaires.’

“We’re looking at a 6,908% profit potential from their battery business alone.

“That’s enough to turn a $15,000 investment into a million.”

Sound familiar? Indeed, this teaser ad about a company that’s working on a graphene battery started running back in February, and we covered it at the time… but more recently, just today, Koyfman is out with an updated pitch. Here’s what he says in his emails now, as the company has made a bit of progress:

“… today the graphene battery revolution is quietly unfolding all thanks to a relatively obscure company operating out of Brisbane, Australia.

“Just a few months ago, this company started manufacturing coin-sized batteries — the same kind that keep your laptop’s memory stable even when its main battery has been exhausted.

“Last week, however, this company took the next step and began building the first-ever graphene ‘pouch cell’ batteries.”

And the stock? It’s actually still pretty close to where it was back in February — Koyfman’s attention helped drive it up a little bit at that time, it topped out around $5 during happier market days back in November, and popped up to $3.50 for a bit in February and March, but is now back down to around $2.25. Here’s a bit more from Kofyman’s email this morning:

“Its shares, already public on two major North American exchanges, can be bought for about $2.50.

“Compared with the incredible potential of the product and the patented method for making this advanced material, this $200 million market cap is a tiny drop in a very, very large bucket.

“It won’t stay that way, however.

“Once the graphene battery market begins its hockey-stick ascent, this will be a billion-dollar firm in short order.”

So what’s the story with this new battery? Well, the core of the pitch hasn’t changed at all since February, only the introductory emails appear to be different, with that update to note that they are now able to produce a “pouch” battery, so I’ll just update my take from February — the ad hasn’t really changed, but there are some updated numbers and tidbits of news since then. What follows is a lightly updated take on the story we first published on February 7, 2022.

The “special report” that they’re peddling in this offer is titled “Graphene: An Exclusive Guide to the Next Millionaire-Maker” — so, no surprise, it’s related to graphene, one of the most promising nanomaterials… and the focus of many teaser pitches over the years.

Most of those ads were about graphite mines as high-end sources for the graphene that will change the world, and they were generally wildly optimistic during what was a little “graphite bubble” among the junior miners a few years back… but apparently what we’re being teased with today is a little different.

Here’s a little more from the initial email I received earlier this year, to get us the flavor of the tease:

“After a decade of floundering, it looks like graphene is finally making good on those promises as a wonder material.

“The most exciting application for the near future is in next-generation rechargeable batteries. Because graphene is highly conductive, it can reduce charging time, extend range, and remain cooler than any current battery.

“Companies like Samsung and Huawei are already experimenting with a graphene-enhanced lithium-ion battery that lasts 50% longer and stays cooler than its lithium counterpart.

“Needless to say, the electric vehicle market is champing at the bit to get its hands on these batteries. In fact, in 2014, Elon Musk said Tesla was looking into a graphene battery but that it would increase the price of its cars. So in order for a graphene battery to take on widespread adoption, graphene needs to be cheaply produced.”

So it’s a company that has something to do with bringing down the costs of graphene, and the idea is that if graphene moves forward as a battery ingredient it will benefit this company as demand increases. And maybe it will be because of this company, if it’s true that they’re uniquely able to produce low-cost graphene.

What other hints do we get about this company? Koyfman also calls this idea of a graphene battery, a “Plasma Battery” — and that’s because of the company’s technique for making graphene:

“The company I’m going to reveal today uses a proprietary plasma process to make this substance.

“Put simply, it’s making this powder out of natural gas — an abundant resource across the U.S.

“As soon as this technology rolls out on a mass scale, China’s grip on our battery supply will evaporate.”

That “China’s grip” bit is about lithium, of course, not graphene, but that’s part of the rationale — using graphene in batteries could mean using less lithium, which would mean that we’d rely less on China to provide lithium.

And we get the typical investing pornography:

“If this company captures 3% of the U.S. battery market, it could grow by as much as 6,908%, according to my calculations.

“Of course, that’s a very conservative projection.

“In fact, a return of 100 times your investment in the next two–three years is not unrealistic.

“I’m required to temper my enthusiasm for legal reasons, of course. The reality is that I believe even that 100x projection is conservative.”

So just to be clear here, in case you find yourself being sucked in to that projection, no, a company with essentially no revenue and no commercial products capturing 3% of the market or returning 100X in 2-3 years is not a “conservative projection”. When you’re dealing with what is essentially a startup, the “conservative projection” is that it never breaks through with a commercial product or service, and gradually goes out of business.

What, then, is this company? Thinkolator sez Koyfman is teasing the Australian company Graphene Manufacturing Group (GMG.V in Canada, GMGMF OTC in the US).

Here’s how Graphene Manufacturing Group describes itself:

“GMG is a clean-tech, disruptive company that produces graphene and hydrogen by cracking methane (natural gas) instead of mining graphite. By use of the Company’s proprietary process, GMG can produce high quality, low cost, scalable, ‘tuneable’ and no/low contaminant graphene – enabling demonstrated cost and environmental improvements in a number of world-scale planet-friendly/clean-tech applications. Using this low input cost source of graphene, the Company is developing value-added products that target the massive energy efficiency and energy storage markets.”

The company does have a low level of revenue from their early commercialization of their liquid graphene in paints and coatings, and some sales of powder to researchers (they had C$12,000 in revenue in the fourth quarter of last year, for example, though that fell to about $7,000 last quarter). Even for a small company, that’s not much — their market cap is currently about $175 million, and they’ve had sales of about $56,000 over the past year… that doesn’t come close to covering their $6.5 million in “normalized” operating losses, so it’s better to think of them as being a “pre-revenue” startup (they’ve been trading for less than a year, the market cap has seen both $80 million and $400 million in that time).

And they are in the first phase of trying to produce some batteries using their graphene… though it’s extremely early days. They just finished building the first stage of their pilot plant a few months ago, which they’re using to prove they can make batteries and interest potential larger-scale customers, and so far they can make little coin batteries… they say they’ll begin making their first pouch batteries soon (that’s the more standard format used in laptops, phones and, in larger sizes and/or quantities, electric vehicles), but don’t have the equipment yet (update: as of last week, they have the equipment installed for making prototype pouch batteries).

They call these graphene aluminum-ion batteries, or G+Al batteries, and they have so far sent out prototypes to “a number of prospective customers around the world”. I don’t know how their products compare to the other folks who are working on graphene as a battery ingredient (graphite, of course, is already heavily used as the anode in lithium ion batteries — which contain much more graphite than they do lithium).

But, to be clear, this is about finding commercial partners and folks who are interested in investing to scale up the business to develop these batteries — as they noted in their press release when the pilot plant started construction, “Revenue from the Pilot Battery Plant is not expected to be significant.”

From their last 2021 filing in SEDAR (that’s the Canadian equivalent of the SEC’s Edgar database for public filings — it’s always helpful to look at real filings, since they are often more open about the risks and challenges than the investor presentations and press releases might be):

“Near-term revenue generation will depend largely on the ability of the company to generate sales of HVAC coating projects (“THERMAL-XR® powered by GMG Graphene” or “TXR”) and to a lesser extent on being able to monetize the advanced research and testing work undertaken on graphene enhanced lubricants. Medium term, GMG remains focused on R&D and will continue to invest in new product development including in energy storage.”

So… no surprise, it’s early days for GMG. They raised about $10 million last fall, and had to offer a warrant sweetener to raise those funds, so there are also now warrants trading on the Venture exchange (GMG.WT, September 2024 expiration and C$2.60 strike price — as of June, those are slightly in the money, with GMG.V at C$2.90, but the speculative excess has tempered a bit and the warrants are now quoted at about C$.150… which means warrant holders are betting on the stock rising at least 50% or so in two years).

They will have to raise more capital in the future as well — we don’t really know what their “burn” rate is, and particularly we don’t know how much they’re spending on the battery pilot plant ramp-up, so I don’t know if the $10 million they had at the end of March will be enough cash to get them through four months or two years… but we do know that if they’re going to spend on battery R&D and continue to develop their lubricant and other products, it’s going to cost money, and there’s no prospect for their sales to ramp up dramatically to cover those costs anytime soon.

They were actually pretty quiet on the “spending” front in the first quarter, they still have roughly the same slug of capital that they had at the end of the year, but presumably the arrival of the pouch equipment this month, and their steady stream of press releases and their decision to hire some “investor relations” folks, means they’re spending more money now and starting to think about their next capital raise (they’ve agreed to spent about $200,000 on IR, mostly “sponsorships” to get the word out with the typical Vancouver outfits who publicize junior miners). That’s not necessarily a bad thing for a startup, publicity is the name of the game when you’re trying to fund a pre-commercial company in the public markets, but it does mean that they’re pretty fragile — they need constant good news, and constant attention from folks like Alex Koyfman as well as from their paid IR “consultants”, to try to avoid the worst possible outcome… which, for a junior startup like this, would be having to raise capital at a time when the stock price is collapsing.

Is their graphene better and cheaper than everyone else’s? That I don’t know — they say they have a proprietary process for using methane to make graphene, using plasma, but they’re certainly not the only ones using plasma or chemical vapor deposition (CVD) to make synthetic graphene without using graphite. They do say that although they sell some graphene powder to researchers, that’s not their focus, they want to get into value added businesses. Which indicates to me that the core graphene product itself is probably not unique or proprietary enough to be in wildly high demand.

And, of course, the idea of using natural gas as your feedstock probably seemed more appealing a year ago than it does today. The US spot price for natural gas has doubled so far this year, thanks largely to the Russian invasion of Ukraine and the turmoil that caused for European and global gas markets, and I assume the costs in Australia have bumped up similarly — that doesn’t necessarily matter, presumably the spike will have moderated by the time GMG goes commercial, if they ever do, but I suppose it could cause potential customers to reconsider their interest in GMG’s gas-to-graphene process, or even just to take a little longer to make decisions about pilot projects.

Maybe GMG will develop batteries or lubricants or coatings that are indeed uniquely valuable, and that could drive large partnerships and meaningful revenue in the coming years — if you’d like to speculate on that outcome, perhaps it will be an interesting ride.

I wouldn’t expect them to be selling EV batteries in the next five years, investors tend to underestimate how long it takes to go from an idea or a pilot project to a large-scale commercial commitment, but there’s certainly room for innovation and ideas in the battery space, and betting on speculative little ideas can be fun, and sometimes rewarding. I’d just suggest that you get comfortable, first, with the low probability of success, because internalizing that high risk in the beginning generally helps us to make more rational decisions when we’re trying to decide how much money to bet on a speculative idea. Their products might end up being great, but the way I see it they are really still in the process of being invented… and they don’t have any customers yet, to speak of — which means the range of possible outcomes is vast.

In the terms used in the teaser, I’d try to think of it not as a 100X gainer, but as a 1-in-100 chance of building a meaningful business. I don’t know what the odds are, maybe it’s much better at 1 in 10 or worse at 1 in 1,000, and I am certainly not an expert on graphene batteries… but I know that batteries and specialty chemicals are both huge industries, and it’s hard and expensive for new entrants to make an impact. It’s easier to be optimistic and patient with the technology if the size of your investment makes failure a comfortable outcome.

A bit of a buzz kill? Maybe so, but some days that’s my job — the teaser over-promises, I over-emphasize the risk to help you build a little skepticism into your thinking. Perhaps you can find a nice balance in the middle.

Like the prospects for Graphene Manufacturing Group? Think Koyfman is on to a future leader here? Prefer others in this space, or not to speculate on these kinds of R&D projects? Let us know with a comment below… I’ve left the comments from the first version of this story back in February attached, in case that helps with some context. Thanks for reading!

May 2023 P.S. I promised a chart — here’s what Graphene Manufacturing Group’s stock chart looks like (in US$) since we first saw this particular teaser for “Graphene: An Exclusive Guide to the Next Millionaire-Maker” running in February of 2022 (that orange line is the S&P 500P):