Hang on to the materia, low-level ones are mostly worthless, but if you haven't already unlocked it you can go to the same goblin camp where you learned about converting and he'll exchange 5 materia for a random one. Sometimes what you get out is still garbage, but there's a chance at getting a higher-tier one in exchange. Also for anything with secondary stats on it, check the market board prices, people get through lots of materia melding for relics and they can be worth more than you might expect.