Transcription
Hey everyone, welcome to the KE Report and a company update from Graphene Manufacturing Group. I'm chatting with the founder and CEO Craig Nicol. Craig and I have a lot to talk about. Every month we jump on a call to get more of a corporate update, go over the news, and answer all of the questions that I get, which is a lot of them. So, thank you everyone for sending in your questions. Craig and I are going to be talking Thermal XR news on distribution and sales, a new site for production expansion of graphene and maybe some other products, and a new chief production growth officer. All of this news released over about the last 4 weeks. Craig, I want to start with the Thermal XR news. Let's start with May 11th, the news that Thermal XR will be applied on up to 600 air conditioners for two luxury towers in Australia. Now, reading in the news release, it says the commitment is 300 to 600 of these air conditioners will Thermal XR applied to it. Craig, people are wondering, can you tell us who the developer is? What other sort of projects this could lead to? Big picture, using this as a stepping stone, what does it mean for Thermal XR?
Hey Corey, thanks for letting me back on. Yeah, this this developer is wanting this to be quite confidential. They're using it as a technology lever for their green building program, but it is a a very large developer in Australia. Lots of development sites going on with them. It's particularly useful when you look at this is it's on the coast and on the beach and the corrosion protection is important, but also the energy savings that you get out of it is also important. So, it's a very lucrative kind of revenue opportunity for us. So, when you look at that compared to how many buildings there are in the world and how many this this could be multiplied out to, um it does show definitely the scale and opportunity for Thermal XR.
Now, are you able to market this deal when it's completed to other developers or are you locked into this developer using Thermal XR moving forward?
No, so we we've got many ways to market and one of them is to go through the manufacturers and there are many manufacturers where we're working with. The other is distributors and so that's the kind of the bio riff deals which we're already that's working through many hubs. And then then we have actually you know the ability to go to site and actually spray on the actual existing air conditioners. So the ways to market and channels to market are various and therefore we do get it you know this type of opportunity coming in some various different ways. And and so as a result you know that this as we as we grow around the world, this is you know we'll have to be open to all three different ways of getting to market. And that's actually what we're building right now, building distributors in different parts of the world, being spray hubs, certifying sprayers around the world and then and then providing the ability to kind of work with OEMs directly as well. And all those three are very valuable. This market is easily over 20 billion dollars of sales opportunity a year. It's just how do you uh get to the market is the thing we're working through in each country. We've got to work through that through.
How did you get this sale then? Did it come through one of your distributors? Is was this company within GMG sold?
Yeah, it's it's through uh one of our existing customers who is a mechanical contractor. A lot of HVAC work is done through contracting onto building sites. And so the contractors work through how to you know put this together. The HVAC contractor air conditioning contractors around the world have to install to the builder spec. So we have to be included in the builder spec and the builder spec is influenced by the consulting engineers and the consulting engineers need to be influenced by us to go and include that. So, there's a number of parties and we need to get them all across this and and we're now being specked in building specs to be included as the coding that should go on to air conditioners for new buildings. And that's the key to that next phase to have the specification to be including a graphene coating and then, you know, obviously we're basically the only graphene coating in the world. So, as a result we get we get coded onto those new building air cons.
So, Craig, this is kind of a simple question, but somebody just wants to confirm. You are getting paid for this and this will turn a profit for the company, right?
Yeah, that's correct and you know, it's a scalable outcome and we are definitely getting paid for this this work. It's through our existing spray hubs and you know, we are actually taking the whole service and payment and products offering through to the customer. So, as a result, you know, we're we're taking the whole project as a service and invoice.
So, Craig, does this provide any insights then on further how you market or future sales in the near term for developers, any buildings out there?
Look, there are all sorts of different opportunities in the in this space. As I said, the market is very dynamic and there are many ways to market uh with this product. Uh, you know, I think the OEMs eventually you know, what we're really seeing is the the OEMs saying, "Well, okay, I'm just going to do it at the factory." And those deals uh you know, in the order of tens of millions of dollars per annum and that's you know, one one way and then the other way is distributing through HVAC consultants, contractors in various countries and and spray hubs. So, we've got to take care of both markets, but truly the big sale opportunities are are in the OEM space where they coat everything that comes out of their factories and we are actively in that space talking to people and doing trials and demo demo tests.
All right, Craig, let's move on to the May 19th news release and this is Thermal XR to be applied exclusively and distributed to global oil and gas or LNG industry with Curran International. Now, the news release really outlines that Curran works or has worked with many if not all of the major energy companies. So, more information, please, on how this arrangement is going to be distributed with Curran.
Yeah, so we've already done a number of projects where we've been able to show an increase in performance on different oil and gas facilities around around the world. Substantial increase in performance, double-digit, truly significant outcomes for energy companies. So, we've always needed a company that could do this work and apply it globally to wherever these uh these these energy companies are. And the work is pretty intense because it you're in a pretty hazardous environment and you need to be very professional and you're dealing with very important assets like oil refineries and and LNG facilities. So, you know, when we've been working with Curran for some time and we've done a number of piece of work with them. And so, when they really wanted to take this to market, we you know, we we came together and we saw you know, the opportunity was pretty pretty clear. They've got a team in Saudi Aramco, who's obviously the largest oil company by far. It's about 10 times bigger than any other company there is. And then you've got they've got teams in India, Europe, Southeast Asia, and North America and Canada. And then that what that provides us is is a way to get this our product to these very large oil companies who are really looking for corrosion resistance mostly and then energy performance if possible. And our coating is really the the only one that does that. So, you know, Curran has their own coatings, but the this one is an additional one which is is really providing, I guess, the next level performance which, you know, it's really really good to see a partner of that type of caliber who's done over 250,000 projects around the world wanting to to work with us for many years so far and then, you know, now working us on on this space. So, we'll be working with them to continue [clears throat] to optimize the products into into that market and the service and we've been working with a number of very large companies in the space for some time and this is probably the missing piece we really needed to be able to get this product to market and then enable our coatings to really help the oil and gas industry energy industry cuz it does need help.
So, probably the most important question being any sales commitments or guarantees with this agreement?
Yeah, so each of our distribution agreements basically have the the requirement to have, you know, the certain financial metrics met and, you know, so when we do announce we're receiving sales as a result of this. So, you know, that that's part of the whole process is that they need to go go to market with this as as a result of the exclusivity that they get and then, you know, we'll work with them on the growing that. But yes, that's correct. There is sales commitments.
So, are they looking to sell the product individually or are they integrating it into other products that they use and sell?
So, they take our paint and then they go to site and there are literally, I don't know, a million heat exchangers in the world for refineries and LNG plants and out of plants as well. And then they go to site and spray spray our products onto the heat exchangers for refineries. So, it's it's a service as well as distribution. And so as a result, they provide corrosion protection and high performance outcomes for their customers, and then we can optimize the paint as required, and they'll do some work on it as well. So, it's a complete solution, which is why, you know, they're so effective in what they do cuz all the gas companies do what they do, and you know, they everyone needs to do their helping hand in in in trying to get to the high performance levels that that they're after, and Curran's been doing that for years globally. So, you know, it's a it's both a a product distribution and service.
Any insights on how long they tested this product out for before signing this agreement?
There's a lot of work going on in that space, you know, ongoing. Cuz there's all these different applications, but it's been years we've been working with Curran.
So, I guess on that whole sales commitments or guarantees, could we expect in Q2, even though we're about halfway through Q2, that some sales start coming in from this agreement?
We'll see that in the financials possibly. Yeah, we we should see that, yeah.
Okay. Uh Greg, next news release, May 12th, this new site for production and office expansion. You mentioned that Gen2 production facility being built out and make the comment that this is the next site. So, does that mean that this site you're signing this lease so that when you finish Gen2, you're immediately going into building maybe Gen3 potentially at this new site?
That's correct. Uh we're actually calling it 2.1. So, Gen2.1 is uh a slight upgrade and an effective modularization of 2.0. Uh 2.0 is progressing really well. We can see through the end and we're going to go through the commissioning process over the next month. Uh, which is obviously really exciting cuz that's the future of the graphene production for the battery side of the business. And you know, that once that's up and running, it'll be very clear that, you know, with the sales projections that we have, that we will need to create new production facilities. So, this is really all about that. It's a really important point that we can point to, you know, the ability to make more product so that when we're talking to these very large entities that we're working with on testing a product that we can sell, this is how we're going to keep keep you know, expand production. This is obviously the first of what we expect to be many different sites. And you know, Brisbane uh, is where obviously where our headquarters is and we've got good IP controls. So, safety and security of IP is really important to us. Can't have IP leakage. It's one of the reasons why we are do what we do is that we're able to do what we do is that we're the only ones who really can do it. And so, you know, the next phase, obviously once that works really well, is to to have a site, you know, as we talked about it on the press release, have a site in Canada and then have a site in America as well. So, then we can start to really bring our production volumes up and be able to distribute from multiple sites. So, this is really the first step of that.
Can you give us an update on where Gen 2 stands then? And when will that be done and would you then just immediately move here and start building out here?
Yeah, so it's it's going quite well from what we've seen so far and you know, we're we're you know, well well on track to have it up and running by the end of June. And then commissioning really is the next month, which is great. You know, commissioning completely new technology always needs a bit of bit of time to work through. And then, you know, we'd be expecting to really if you know, success case, we really expect them to push and start building 2.1 plants almost immediately after. So, that's that's how rapidly we expect to see this. The technology for 2.0 is such a big leap. It It really unlocks the whole battery side and not starts to make graphene at a very competitive cost for the battery side. 2 1.0 graphene technology easily takes care of the liquids. We can do that for the rest of the company's life. But, 2.0 we really need for the battery space. And [clears throat] it's just how how much production we'll get compared to the capital we spend uh is the key thing and that's what 2.0 will unlock that question. And then 2.1 will look to reduce costs and increase production again. And then that's the modular scalable production technology we'll we'll take to the world very likely with some small improvements as we go.
So, is this new site also needed for actual product expansion or is this all graphene production?
It's majority graphene. Liquids are very easy to to ex- production on and much lower cost. So, really this is around graphene production. So, we could the liquids capacity we've got is is okay. It's really about making more graphene now for the liquids. So, we and then also for our super G and uh our battery as well.
Okay. Thanks for addressing those. Uh let's move on. Final news release we can talk about. You appointed a new chief production growth officer. He came over from Rio Tinto. Give us the background on this new production growth officer. First and foremost and with that relationship with Rio Tinto, many people noted that because of the battery development. So, tie that all in with that, please, Craig.
Yes, so Stuart's um we've been working with Stewart for some years in Rio and yeah, he's a true true industry leader in terms of how he's able to bring complex technologies together and he was leading the global head of development for Rio, obviously a very successful company, um, one of the largest mining and mineral technology companies in the world. So, he comes with a lot of experience in this space. Um, we're very happy for him to join and this next phase of production growth is going to be quite important that's done framed correctly. First people don't understand what framing or what I mean by framing, it's, uh, really understanding all the levers of how you expand production before you go and do it. When you start building, you want to have everything understood to the point that you understand your levers and the technology and the costs and all all the important things that you're trying to achieve. So, when you go and do it, the engineers, uh, their job marked out really really carefully. We did this I did this in Shell, he did this in Rio, we got other people who've done this in many other places and it's really important the upfront framing is done well and that's what his job is. It's really understand what how are we going to scale production in a global way for all our products in multiple countries in a way that's really proven to get what we want out of it and not in two or three years time find that we just done all in the wrong way cuz, uh, yes, this is important to get right upfront. The value management of this is always before you build anything. That's where you That's where you extract massive value. It's called value engineering for those who who in the space will know it. Uh, yeah, so that's his job and it's really important strategic exercise to get this, uh, aligned with what we're really trying to do as a business and it's the smart smart smart stuff first before any building happens.
All right, Craig. Thank you for that insight. Let's go into some of the nuance questions that we got. We answered a lot on Thermal XR. Let's talk batteries. You recently made the comment that the battery was only using one of three available electrons from an aluminum atom. Can you speak to us in terms of how many electrons of the three are being used or if you're up to three electron usage right now?
Yeah, I think it's pretty clear we are using three electrons. You know, that's that's why we're able to get the high voltage. You know, that the over 3 volts for an aluminum ion battery is pretty special. So, you know, I think that three electrons is quite important for our ability to do what we're doing, high energy density. And so, yeah, I think it's quite clear we are. Of course, you know, you don't get to look at how, you know, you can only presume how the battery is responding. You know, you can't actually verify that through a video or whatever the electrons splitting off from the atoms and making the aluminum ion. But through through the understanding of process we have, and the voltage we have, you know, I think it's fairly we do it. We've done very detailed kind of microdynamics. It's what's called molecular dynamics, which is a very very good way of understanding how the electrons are working. And from that we can see that we believe we're doing three electrons, which is you know, I think probably we're the only company in the world that's done that. Probably any in laboratory even has done that. So, yeah, we're truly leading this space, and you know, it's great, but what we need to do is get it to the product, and that's what we focus on now, getting samples. And many companies are stepping forward saying how the heck can they work with us? And we've got to get to that get to that nexus where we supply a whole bunch of samples. Now, when we do that, we'll be telling everyone that we've done that. That's a big step in the battery development program. And we're really aiming to do that this year. And that's what we're really pushing in this space.
Now, how about a battery assembly expansion plan? Somebody was asking if we can get an update there, if this expansion is with the battery innovation institute, some other location. Really just more information on a battery assembly plant. Or plan.
Yeah, so this is a really interesting topic. Cuz you'd say that, you know, you'd expect that battery plants must be everywhere, and they are. There's some battery plants that are not going too well. And in press, you would have seen that. Some battery plants have gone to liquidation or bankruptcy, which is not good for the industry. There was an increase in battery plant, you know, capex over the last 10 years. And what you can see is there's probably three times more graphene battery production capacity than batteries produced. So, that means there's 2/3 of the capacity in the world that's not being used. And we can generally our battery can generally be made in any lithium-ion battery plant. But it's quite an alternative technology. It does not compete head head on with lithium. It's completely new and different applications, really. So, you know, because it's fast-charging nature. So, you know, there what I guess we're looking at is, you know, how do we access other people's battery plants and get them a technology which is a leapfrog new application area that's you know, really advantageous in the market other technologies. So, that's that's absolutely what we we're looking at right now and we're we're we've got a number of different partnerships. We're reviewing how we can do that.
Okay. Well, I'll follow up with you when we get more information there. Look, we haven't talked G lubricant or super G. I guess that's kind of tied into the batteries. Any updates on those fronts you can share with us?
Yeah, G Lubricant which is really pushing for, you know, truck trial data. It's it's We had this with Thermal XR. We had so much effort to get Thermal XR data and then we would eventually got it and it was completely obvious what we're doing and how awesome the product is, but it just takes time. So, you know, we got to keep got to keep focusing on getting truck trial data. We got a a hundreds of company hundreds of companies people who've tested the product in all sorts of automotive gear, but what we want to what we and good good response. What we want to get is big truck fleet data and we've got some which is all, you know, positive, but we want to get real clear truck data and that means the truck fleets have to be really you monitoring their fuel and driving performance data so it's really clear that the performance of the G Lubricant is, you know, crystal understanding all that and so you've got to almost scientific rigor about, you know, in a truck fleet. So, you know, but meanwhile they're out in the world driving around with different drivers. So, it it is difficult cuz we want to get that to be so clear and then we can just tell everyone what the data is. So, that's really the next phase of G Lubricant. There's a bunch of other stuff going on to be quite frank all over the world and distribution of G Lubricant in terms of those kind of conversations and we really, you know, look forward to kind of telling everyone what we're up to there, you know, in terms of sales and distribution. But, you know, I think the main thing is just getting good fleet data is still the the mission for G Lubricant and it and despite what you think it is difficult, it is just getting the right set of data that was really super clear so that everyone can see what it does and and then announce that. So, those are the two areas we're working with G Lubricant on.
All right. Greg, final question then. Just news flow. I have some people asking about earnings when those are coming, but tie it all together for us. What should investors be watching out for from GMG?
Yeah, look, we're we're in a really interesting commercial development phase. You know, we're we've we've announced our distributor in oil and gas, and what we're now looking at is really looking at announcing different distributors around the world. We're in a race to get as many distributors as we can, get them all locked up together with us, get our product out to market in different channels, in different countries, and you know, we've got more than 40% of the company is now salespeople, and they're all over the world. You know, we've had our Japan, Korean, and Indian sales teams now running for close to a month, and already it's been very interesting what we're what we're doing there. So, yeah, I think the focus on us is uh you know, more broadly is around sales, announcing distribution channels in different countries, and completing those, and and setting them up as supply chains which we can distribute from here uh in Brisbane, and then starting to kind of, you know, make it clear to everyone that we are absolutely in the commercial uh operation space, which is obviously what our target was. And you know, I think that's it's a big it's a big fun time of the company. It's there's a lot of work a lot of work going on, a lot of a lot of deals we're trying to close out. But yeah, so the next uh next few months we're going to be talking mainly around, you know, what what deals we've got, and and you know, which countries we're opening up, and and you know, that should be quite some quite a good some good leads to be able to show that we are doing what we're saying we're going to do, which is a commercial operation, and uh you know, quite what what we believe is going to be quite a successful graphene commercial uh business.
All right, perfect. Thank you, Craig. Thanks for addressing all these questions. Thank you, everybody for sending in these questions. I'll post a link to the GMG website in the show notes so you can read over all those questions. Keep the questions coming and I will keep bringing Craig on at the latest in about a monthly fashion. So again, I've been chatting with Craig Nickel, founder and CEO of Graphene Manufacturing Group, traded on the TSX Venture Exchange under the symbol GMG and on the OTC QX under the symbol GMGMF. Craig, thanks so much for your time and the update today.
Thanks, George.