Haydale Graphene (LON:HAYD) chief executive Ray Gibbs believes his company may now be getting closer to a breakthrough commercial deal.
Potentially significant customers have now had close to a year to kick the tyres.
And several ‘sample’ sized shipments of the so-called miracle material have been dispatched to customers.
Gibbs and his team are zeroing-in on Korea and could soon be set for transformational deals.
“We’ve now spent twelve months speaking to and meeting up with very significant corporations in Korea,” Gibbs told Proactive Investors.
The Haydale boss explains that the company has now firmed up a hit-list of twelve major customers and this is will be the initial thrust of the commercial effort.
These unidentified companies are said to be key players - with annual sales in the order of US$800 to US$900mln, in the Korean manufacturing ecosystem that exists almost exclusively to supply consumer electronics giants Samsung and LG.
Those on the initial target list have all bought sample size consignments of Haydale’s product and, according to Gibbs, they’ve been suitably impressed.
“We’ve put ourselves firmly in the spotlight and I want to put dedicate sales staff on the case and give them nothing else to do but bring home those twelve key accounts.
“If any of those twelve accounts kick off we will be in great shape, and my biggest issue then will be supply.”
Gibbs’ comments are revealing, particularly for those following Haydale in recent weeks, as they give context to the deals with 2-D Tech, the graphene arm of AIM peer Versarien (LON:VRS), as well as a this month’s earlier collaboration with Australian firm Talga Resources.
These new relationships add to an existing partnership with German group AMG Mining.
And they are significant because they potentially add customers as well as a degree of diversity to Haydale’s supply chain.
Haydale now has a degree of assurance over the extra security of its graphene supply and can re-assure any major commercial customer of its production contingencies.
The group’s capacity has already been a focus over the past year, and it now allows for ‘tonne capacity’.
A tonne may not, by international trade and export standards, sound an awful lot. But these are ‘nano-materials’ and, as you can imagine, a little bit can go a long way.
In some applications the graphene element may only constitute about 1% of the end product, so even a cursory analysis suggests the group could already satisfy quite a high level of demand.
Large commercial deals, like those Gibbs covets in Korea, may however create a need for extra capacity and naturally that is likely to involve additional capital spend.
It is, at this point, important to note that Haydale is effectively an intellectual property and technology firm.
It is an intermediary - dare I say it, a ‘solutions provider’ - but in the grand scheme of things it doesn’t intend to become a fully-fledged manufacturer.
Proprietary plasma reactors are used to ‘functionalise’ bought-in graphene supplies and so far it has sold on value-added product, albeit in smaller volumes.
This has allowed large commercial customers to carry out research and product development, ideally as a precursor to longer term deals.
The specifics of a commercial roll-out are likely to vary from customer to customer depending on their own requirements, and the particulars of the end-product.
It is expected that Haydale will in some cases provide equipment and expertise under licence and the customer will manage its own processes. But, in other cases the UK firm may see sub-contracted manufacturing as a solution.
Gibbs hopes a commercial graphene success will be just the start for Haydale, as he aims to expand further in the future to broaden the group’s portfolio to incorporate similar and/or complementary advanced materials.
Gibbs says in terms of customer demand and potential product applications there are new possibilities opening up all the time and he believes the group will have to remain fleet of foot.
“It is very fluid marketplace,” he said.
“We’re not a start-up, but, we are in a market place that is looking around for the couple of commercial applications that will matter the most.”
Cantor Fitzgerald analyst Richard Hickinbotham, who last week upgraded his view of Haydale to ‘buy’ from ‘hold’, said that although timing might be uncertain there can now be “sufficient justification” that development agreements and commercial orders will be received in the nearer term.
“Over the last year Haydale has achieved significant technical and commercial progress,” Hickinbottom said in a note.
“As a result of these developments there are good reasons to anticipate increased commercial traction over the coming months and years, which is the assumption within our forecasts.”
With a price target of 200p per share, Cantor’s ‘buy’ recommendation sees some 30% upside to the current price of just over 140p.