GRAPHENE is a new material that experts believe could revolutionise everyday life when its versatility and strength are applied to existing products. News on two siginificant contracts signed by Aim-listed Graphene Nanochem [LON:GRPH] sent the shares soaring by more than 10pc yesterday.

The new material, developed at Manchester University, forms a thin sheet of carbon one atom thick that is harder than diamonds and stronger than steel. The applications are as wide as flexible screens for mobile technology devices, drilling fluid, and super thin condoms.

The substance was isolated by Sir Andre Geim and Sir Kostya Novoselov in 2004 and in 2010 the pair won the Nobel prize for the innovation.

The properties of the material are not in doubt, but persuading companies to apply it will be a challenge. Malaysia-based Graphene Nanochem listed on Aim in March of last year and is looking to take the material and find commercial applications for its use. The company generates revenue and products from sales of graphene enhanced products and biofuel additives that do not include the new wonder material.

Results for the first six months ended June that were relaeased on September 30 disappointed investors as the company warned on contract delays. The profit warning sent shares crashing by 32.4pc – a decline of 18.375p to 38.375p – in particular it was sluggish signing on the graphene-enhanced biodegradable oilfield drilling fluid that was the problem.

The orders may have been delayed but they haven’t disappeared altogether. The company said yesterday that it had agreed a second commercial order of its graphene enhanced drilling fluid called PlatDrill. The order signed with Scomi Oiltools and valued at $4.8m is three times the size of the previous contract.

The announcement came alongside an agreement, sealed with Shell Malaysia, to provide a palm oil-based biofuel additive for diesel products. The contract is for one year starting in November to provide 5m litres per month of PlatAmber. However, the biofuel additives are not graphene enhanced and are lower profit margin.

Jespal Deol, chief executive, is confident that the contract wins now underpin revenues for 2015. Sales are expected to rise about 50pc next year from a target of around £50m this year and a larger proportion of those sales, thought to be in the region of 30pc, will come from higher profit margin PlatDrill products.

Graphene Nanochem is a high-risk investment but if those sales come through as expected, and with new graphene products in the pipeline, the shares are definitely one to watch and we upgrade to buy.