First Graphene : Quarterly Report

ASX ANNOUNCEMENT

27 January 2022

December Quarterly Activities Report

Advanced materials company First Graphene Limited (ASX: FGR, "First Graphene" or "the Company") is pleased to provide this update on its financial and operational performance for the quarter ended 31st December 2021.

HIGHLIGHTS

• Close to 100 per cent revenue growth compared to first half of FY21
• Foundation clients continue to drive commercial revenues coupled with increased development revenues
• Growing momentum in cement and concrete sectors on emission reduction opportunities with key industry partners
• Advances made in high-tech research and development programs
• Market maker strategy sets company on path to greater commercial success

Commercial developments

Revenue growth continues

First Graphene is pleased to announce it has ended its second quarter of the 2022 financial year with an improvement in revenue compared to the previous December quarter. This modest growth completes a very strong first half of sales for the 2022 financial year, with a

94 per cent growth in revenue compared to the first half of the 2021 financial year. Continued growth and commercial momentum puts the Company in a strong position to achieve its FY 22 revenue targets.1 The bulk of growth continues to come from early adopters - Aquatic Leisure, newGen Group and Steel Blue, but was also supplemented by new opportunities outlined below.

1 Final numbers to be reported by the end of February 2022 following the H1 external audit

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Major steps in coatings market

A commercial agreement with nanotechnology developer Protectology Ltd has led to the launch of a range of PureGRAPH®-enhanced conductive coatings, opening the way to the lucrative European coatings market.

Protectology is a UK-based specialist manufacturer of protective coatings for applications across multiple sectors include automotive and multi-media surface protection. The agreement is to grow its range of PureGRAPH®-enhanced coatings, which are marketed under the PROGRAPH® brand, and increase market share.

Coatings and inks account for a $151 billion global market and the addition of a suitable graphene formulation is proven to enhance resistance against water, corrosion, abrasion and fire, while imparting increased flexibility and strength to the product.

Momentum in cement and concrete industries

Addressing CO2 emissions

Globally, the cement and concrete sectors are expected to account for a $774 billion market by 2027, with more than 4.2 billion tonnes of cement produced in 2020 alone.

While successful incorporation of graphene into cement and concrete production offers significant mechanical performance improvements, First Graphene is focusing its work with industry partners on realising major reductions in carbon dioxide emissions. Cement production, and in particular clinker calcification, is responsible for up to 8 per cent of global CO2 emissions, with 900kg of CO2 produced for every tonne of cement manufactured.

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According to a UN Global Status Report from 2017, the global building sector is growing at unprecedented rates. Over the next 40 years, an expected 230 billion square metres of new construction will occur globally - the equivalent of Paris - to the planet every week.

PureGRAPH®-enhanced cement additives have been found to reduce emissions in cement production by between 16 and 22 per cent, providing the industry with a substantial boost in achieving a targeted 40 per cent reduction in carbon emissions by 2030.

The Company is working with a range of global cement manufacturers to develop PureGRAPH®-enhanced cement additives and grinding aids for use in cement production. Simultaneously, the Company is working with industry partners to develop a range of concrete admixtures to facilitate graphene incorporation into concrete production processes.

Cement patent filing

First Graphene has established a protected position for its PureGRAPH®-enhanced grinding aids and admixtures by filing a patent specification with the United Kingdom Intellectual Property Office. The filing describes a novel method for scaling up the production of graphene suspensions for use in cement additives and concrete admixtures.

Fosroc collaboration agreement

First Graphene has formed a collaboration agreement with global construction chemicals manufacturer Fosroc International Limited for the development of PureGRAPH® graphene- enhanced cement additives or grinding aids.

PureGRAPH®-enhanced cement additives will assist cement manufacturers to gain superior strength and improved physical properties, while improving grinding efficiency in the grinding phase of cement production. First Graphene's patented technology will assist enhancing green credentials of cement products.

Wollongong research update

Early results from a research program underway by the University of Wollongong show First Graphene's PureGRAPH® enhances the properties of mortar. The University of Wollongong's initial findings confirm the addition of small amounts of graphene enhances the compressive strength of concrete and mortar systems.

In addition, results have confirmed PureGRAPH® graphene products reduce the permeability of mortar and concrete systems whilst also improving resistance to sulphate-induced corrosion. The research shows promising signs for application in concrete infrastructure such as wastewater collection and treatment, and coastal ports.

According to a 2019 study, the global water and wastewater pipe market revenues are expected to see an incremental financial opportunity of over US$18 billion over the next decade.

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Technical developments focused on major markets

Supercapacitor materials development and testing continues

The Company has been awarded funding from Innovate UK EDGE to progress development work on its supercapacitor graphene hybrid materials with a Research and Technology Organisation (RTO) based in the United Kingdom. The Innovate EDGE fund supports high- growth small to medium enterprises to scale up and innovate, working alongside the UK's RTO and Catapult Network. The Company will engage world-leading experts at the Energy Innovation Centre based at Warwick Manufacturing Group (WMG) - part of the Catapult Network.

The £15,000 funding from Innovate UK will be matched with approximately AU$100,000 in- kind funding from First Graphene's internal resources to advance the technology, which is an important milestone towards the commercialisation of the Company's supercapacitor technology. Funding will be used to progress development of novel supercapacitors using First Graphene's unique hybrid-graphene materials and optimised protic ionic liquid electrolytes.

Ongoing development has enabled First Graphene to establish a commercialisation roadmap and build relationships with development partners for further optimisation of supercapacitor devices, opening the way to a high-tech market predicted to reach revenues of US$720 million by 2025.

Purchase of Kainos patents

In October 2021, First Graphene completed the acquisition of patents from UK-based Kainos Innovation Limited (Kainos). The acquired patents consist of two patent families filed in multiple global regions. Patents have already been fully granted by the US Patent Office for both families.

The part cash, part stock acquisition included an initial cash payment of £25,000 and a share allotment of 200,000 shares with a voluntary trading escrow for 12 months, and a milestone cash payment of £25,000 linked to the completion of patent grants.

Game Changers grant

First Graphene has secured funding for a 12-week development project to investigate the feasibility of enhancing long rubber gloves, or gauntlets, used in the nuclear decommissioning industry. The project, conducted through Sellafield Limited's Game Changers Programme, aims to develop needlestick and puncture-resistant gauntlets for operators at the United Kingdom's Sellafield Nuclear Site. Initial development work showed addition of PureGRAPH® in certain rubber systems could increase tear strength and puncture resistance.

First Graphene sees potential to expand applications for improved mechanical performance into the broader protective glove market, which had a global value of US$12.37 billion in 2019 and is projected to reach $35.2 billion by 2027.

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AICIS variation

The Company successfully applied to the Australian Industrial Chemicals Introduction Scheme (AICIS) to vary the terms of the current assessment certificate (CERT8864) enabling several new products in the PureGRAPH® range to be covered under the existing assessment certificate. In addition, First Graphene applied to have additional end uses of products for textile coating and concrete assessed and included as part of the variation.

Foundation partners continue commercial rollout

Several of First Graphene's foundation customers are progressing the commercial rollout of graphene-enhanced products utilising PureGRAPH®.

Aquatic Leisure Technologies, owner of the Aqua Technics brand of fiberglass pools, launched its Graphene Nano-Tech process in the first half of 2021 and is now manufacturing every Aqua Technics pool using the technology. The company reports that its laminating process results in pools that are 30 per cent lighter and 30 per cent stronger, as well as highly resistant to water and chemicals. ALT reports it has produced more than 1500 PureGRAPH® - enhanced pools since the launch of the Graphene Nano-Tech range.

Safety footwear manufacturer Steel Blue launched its range of ultra-durable Southern Cross® GraphTEC™ safety boots in June 2021. The boots feature a PureGRAPH® enhanced scuff cap and outer sole, providing significantly enhanced strength, durability and wear resistance.

Wear protection and lining solution specialist newGen Group has expanded its ArmourGRAPH™ range of graphene-enhanced lining solutions for the mining, mineral processing and bulk materials handling industries. Field testing completed in 2021 showed that ArmourGRAPH™ bucket wear liners lasted more the six times longer than standard bucket liners. The company was also named a finalist for its ArmourGRAPH™ solutions in the global Mining Technology Excellence Awards for both the innovation and safety categories, and in the Australian Mining Prospect Awards for the innovative mining solution category.

'Market maker' strategy released

Following a comprehensive review of its go-to-market strategy (GTM), First Graphene prepared and commenced implementing an aggressive "market maker" strategy. This is a step-change approach in the graphene industry focused on proving the benefits of graphene- enhanced products across several different industries.

The Company achieves this by identifying partners for active downstream collaboration, investing and taking ownership of solutions to develop and commercialise products. Results are already being realised with opportunities progressing into trial phases with paid sales. The new approach is designed to supplement and supercharge the work done through First Graphene's Tier One partnership with the Graphene Engineering Innovation Centre (GEIC) in Manchester and other research partners, including Warwick, Wollongong, Manchester and Adelaide universities.