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Archer Exploration highlights advanced materials business strategy amid exploration divestments

Last updated: 08:57 21 Sep 2018 AEST, First published: 19:00 20 Sep 2018 AEST

Archer hopes to disrupt current technology for quantum computing
Archer may disrupt quantum computing and information processing

Archer Exploration Limited (ASX:AXE) (FRA:38A) has laid out its strategy for becoming an advanced materials business delivering revenue to investors over the next 18 months.

The company, which met with brokers and fund managers this week and will also be at a Benchmark Minerals event, pulled ahead of the pack in the past year, experiencing 32% better growth than the sector and 33% better gains than the Australian market.

Sydney and South Australia-based Archer also added 31% to its share price in the year to Tuesday.

Milestone events

In the past 12 months, graphite-focused Archer has experienced a number of milestone events for its share price, including setting quantum technologies, Reliable Energy supplies and human health firmly in its sights.

CEO Dr Mohammad Choucair.

Archer chief executive officer Dr Mohammad Choucair told Proactive Investors: “Although we’re across three areas, our focus is on the advanced materials that underpin these technologies.

“We’re in a very good position because we have a suite of materials that can solve problems end-to-end with global impact. We can make these technologies quite accessible to very large markets.

“Over the coming, six-12-18 months we’re looking to progress through to revenue and we’re going to be doing that with the materials that we have at hand and the technology that we’re going to be developing across those three areas that are of critical importance as we move into the fourth industrial revolution.”

Archer plans to spin-out its non-graphite assets as it continues to develop and integrate advanced materials for use in modern technologies.

The new company Archer will spin its exploration assets into and potentially list is called Ballista Resources Ltd.

Archer's magnesite assets will go to an unnamed buyer.

Technology-led growth

The company reported this week it had been executing a “focused strategy for growth in key technology markets” since it acquired 100%-held subsidiary Carbon Allotropes late last year and was granted a graphite mining lease.

Archer’s chief executive was a director of the subsidiary and became Archer CEO on December 1 after the acquisition.

Choucair has said: “We are providing shareholders with exposure to innovative technologies like quantum computing, and the advanced materials that underpin them.”

The company wrote in this week's update: “Our focus on developing end-to-end material centric solutions has resulted in the identification of key advanced materials markets to strengthen and grow Archer.

“Our integrated approach to the materials life cycle is spawning high-value opportunities through our graphite and graphene assets, and wholly-owned subsidiary Carbon Allotropes.”

The Carbon Allotropes acquisition gave Archer access to more than $100 million in research and development infrastructure.

Three types of collaboration deals that the company inked in the past six months were flagged today as cornerstones to its target of “delivering high-value outcomes that position Archer for major, long-term growth”.

Quantum technology efforts

The first and most important of the collaborations highlighted by the company was a quantum technology licence negotiations this quarter with CEO Choucair’s former employer the University of Sydney.

Choucair told Proactive Investors: “The immediate focus is to get the licence agreement awarded to Archer from the University of Sydney — we’ve finalised our terms with the university … for the exclusive licence agreement.

“We have an exclusive period to the end of the year to negotiate the licence agreement to Archer, so we’re looking to get that by Christmas. We’re working with them and that’s going back and forth but we’re optimistic of course.

“I’m the inventor on the work and that sets us apart from anyone else trying to acquire IP and develop it, so Archer will have the key inventor in-house and we understand what the technology can do.”

The parties have agreed to terms, with the licence to be executed after intellectual property milestones are achieved across the world.

During his time at the University of Sydney, Choucair invented the first material known to overcome quantum technology limitations. This carbon cube can hold quantum information (quibits) and allow it to be processed as the surrounding environment continues to be cooled or heated at ordinary room temperatures.

Current technology can only perform the functions at sub-zero temperatures, with one known exception having only a limited application.

A challenge to the widespread use of quantum computers is the inability for core device chips to remain stable at room temperature.

After Archer’s agreement to licence terms with USyd, the university made intellectual property treaty filings in Europe, Australia, the US, Japan, Korea and China with the collaborators are waiting to be returned.

Once the partners finalise a quantum licence, it will help the company tap into a growing computing power market tipped to grow to US$11 billion by 2024 in research released by Industry 40 Market Research earlier this year.

Reliable Energy push

The company’s reliable energy collaborations for lithium-ion batteries, agreed in the June quarter, intersect increasing environmental-related demand for the Li-ion batteries which was put at US$130 billion by 2028 by IDTechEx last year.

Archer says batteries produced from its Campoona graphite deposit on the Eyre Peninsula in South Australia are “industry state-of-art”.

The Australian Centre for Microscopy and Microanalysis undertook nano-scale and atomic-scale analysis for the company, with the company reporting the “analysis of Archer’s graphite confirmed the materials’ near-perfect structure”.

Also related to reliable energy is an MOU with Urbix Resources, LLC for graphite toll processing, further collaboration agreements with FlexeGRAPH and the University of New South Wales (UNSW).

Archer expects the Urbix MOU could bring more than $14 million of capital cost benefits to its Campoona Graphite Project over its lifetime.

The company has tipped its FlexeGRAPH collaboration could present an opportunity to convert graphite from the project into high-value graphene material, as the collaborators sought to thermally manage electric vehicle batteries.

Archer’s collaboration and research service agreement with UNSW has produced lithium-ion batteries with full-cell configuration from Campoona graphite.

Human health focus

Archer’s March human health collaboration relates to biosensors, with increased demand coming from an ageing population and being tipped to reach US$27 billion by 2022 by Market and Markets in a global forecast last year.

The company said its now varied agreement with the ARC Research Hub for Graphene Enabled Industry Transformation at the University of Adelaide had “redefined to focus on carbon-based biosensors”.

The Australian research centre was able to develop graphene-based conductive inks derived from Archer’s Campoona graphite, with the inks “used to print electronic circuits on transparent and flexible substrates that function as basic bio-electrochemical sensing device componentry.”

Archer viewed Campoona graphite as “process agnostic in graphene production” after the graphite material was used for the printing of the biosensing technologies.

A path forward

Archer has set some specific goals for its quantum technology, reliable energy and human health efforts.

Its quantum technology goals include: leading the development and commercialisation of carbon-based quantum technology; and reducing commercialisation barriers to its widespread use by building a practical quibit processor.

The company’s reliable energy goals include: building an operating graphite mine in Australia; and targeting offtake and battery manufacturing partnerships by scaling and integrating the Campoona resource downstream in the supply chain.

Archer’s human health goals meanwhile are to: make biosensing simple; and service niche biosensor market segments by developing commercially viable probes for rapid disease detection and diagnostic medical imaging.

The finalisation of the University of Sydney licence agreement in the next six months will be a milestone event for the company.

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