Thesis Leap as opposed to Thesis Creep with Amaero (ASX:3DA)?

Board make-up changes and Executive team additions announced during the quarter appear to have strong-industry relevant backgrounds. This re-invented business is in its infancy, so time will tell how their leaders operate as a collective. Fair to say, that the "key-man risk" with Chairman / CEO Hank Holland driving both strategy and opertions is somewhat reduced.

Hank Holland's expertise in Capital Markets will be still crucial in the coming months as there is only an estimated 1.68 quarters of funding remaining as at the end of September 2023.

Their chosen niche is the production of C103 which is a niobium alloy used in high temperature operating environments (Propulsion systems in Defence and Aerospace).

I'm still willing to speculate in the Additive Manufacturing space, assuming that US Federal and State Govt support remains strong. Very confident that the Industry pie will grow for many years. So, first things first, need to see if the company can hold on to a slice of the Alloy powder production pie.

Amaero's shift to the US will see it terminate its Australian premises leases and any ongoing Australian commercial contracts. Equipment and inventory held in Australia may be shipped to their Tennessee facility or will be sold. As a result, the Company expects to have additional funds to support its flagship operations and associated working capital requirements.

September quarter Operational highlights below:

• First Atomiser production to be dedicated to Refractory Alloy, C-103

Niobium alloy with high performance, heat-resistant properties critical to hypersonic and space applications

• Initiation of operations in McDonald, Tennessee

15-year lease signed on a 9,300-sq-metre modern, purpose-built facility

Fit out activities underway

Installation of 1st atomiser expected to commence in 2Q CY2024

• Post quarter end, Amaero announced the cessation of its Australian operations

The decision allows the executive team to focus on its U.S. flagship operations

and to prudently manage operating expenses

• Cash balance of $5.4 million as of 30 September 2023

RAAS flash comment on the raise. "We anticipate that the next significant milestone for the company will be the release of the Fairmont Consulting Group’s review of the company’s business model early in the New Year. 

Our expectation is that Amaero will deliver revenue from FY25, profitability from FY26, and achieve “at capacity” earnings in H2 CY28. Our forecasts anticipate Amaero will opt to produce a range of powders, first C103, followed by specialty alloy and Ti64 titanium powder. Our modelling has incorporated only three gas atomisers as per 3DA’s commentary, despite having capacity in its Tennessee facility for five. A decision to add additional gas atomisers and/or to focus entirely on C103 or a mix of C103 and specialty powders would have a significant impact on our forecasts. 

Retail investors left out of CR for US facility. Looks like a takeover on the cheap as Pegasus moves closer to a 50% stake.

Amaero secures firm commitments from new and existing institutional and sophisticated investors to raise A$10 million

Subscription price at A$0.1600 per share, representing a 15.8% discount to the last traded price on Thursday, 16 November 2023 and a 18.3% discount to the 5-day VWAP

Funds raised will be used for the Tennessee facility fit out and purchase of capital equipment

Pegasus Growth Capital leads the two-tranche Placement with A$4 million commitment. Increasing shareholding to 45% and 47% after options taken up

In addition to Pegasus, the financing had broad participation from the Board of Directors and from senior management. Further, an investment fund at Wilson Sonsini Goodrich & Rosati, a premier and pioneering law firm that specialises on emerging growth businesses, participated in the financing

Free attaching unlisted options exercisable at A$0.2400 per Share and expiring on the date that is 3 years from the issue of those options,

The Company proposes to use the proceeds from the Placement as follows: Facility fit-out A$5,680,000 Capital equipment A$4,320,000

Reading the EGM documentation an issue of 62M shares which is a dilution of nearly 60% for an input of 14% of market cap.

Disc small holding in RL

I had a brief look into Amaero International Ltd following recent news that the company is building a “world-class” titanium powder plant in VIC. 

Brief overview:
- Operations based in the US, with new facility to be build in Victoria. 
- The firm has approval to supply large US defence contractors courtesy of approval it holds for various ITAR-regulated projects. 
- High annual growth anticipated, 105% according to Simply Wall Street (this is possibly a touch optimistic)
- Recent insider buying, albeit small levels. 
- 10% insider ownership. 
- No debt, although shareholders have been diluted in the past year - which doesnt surprise me given the company is running at pretty significant losses (more on this below). 
- Industry with tailwinds, but various competitors listed in the ASX. 
- Amaero has attained exclusive rights to commercialise two patented and proprietary alloys developed by Monash University - who the company has worked with since 2013. 

Competitors:
Four ASX stocks specialise in 3D printing - AML3D, Titomic, Aurora Labs and Amaero. Amaero appears to be impressive, with some obvious tailwinds in the 3D printing space - but there are several competitors with similar tailwinds. Research
conducted by stockbrief in 2020 suggested Amaero actually had the lowest revenue of its four competitors, with the highest loss margins.  

A brief description of Titomic Limited (ASX TTT) below, as they appear to be the main ASX-listed competitors:
- Also focuses on titanium metals
- Claims to have world’s largest and fastest metal 3D printer using the Cold Spray process, developed jointly with CSIRO
- Competing in many of the same areas as Amaero (defence and space), but also consumer goods, construction etc. 
- Two global CSIRO patents. 

3D printing companies are all vying to compete in a global market that is anticipated to reach US$23.6bn by 2025. While it appears Amaero are establishing themselves as a key player, particularly with allied defence partners, this doesn't meet the risk/reward ratio for me to invest. The commercialisation of its products and consistent revenue/profit will obviously be key for the company. Until this occurs, Amaero will sit nicely on the watchlist. 

Would appreciate anyone else's thoughts :-) 

3DA has had a couple of recent announcements which start to show some significant progress toward taking a strong position in specialist manufacturing. Share price has been lagging of late.

HoA will lead to a long-term supply agreement for the manufacture of rocket components for Gilmour Space

The resulting supply agreement will be for a three-year term and is expected to deliver total revenues to Amaero of approximately $1.7 million

Gilmour Space is a venture-backed Australian rocket company which is pioneering

innovative hybrid propulsion technologies that will offer lower cost access to space.

 Production of the components for the supply agreement will commence in FY2022

Also following the announcement of the Boeing manufacturing centre to be built in Queensland https://statements.qld.gov.au/statements/93300

3DA are part of a webinar series supported by Boeing.

https://kapara.rdbk.com.au/landers/994608.html

Australian Additive Manufacturing Forum webinar series for 2021. 

After Boeing and BAE Systems are bringing together the webinar series for this year to continue supporting the Australian Additive Manufacturing Industry. 

Our distinguished speakers for 1st Webinar are :

• Ms. Melissa Orme , VP Boeing AM 

“Additive Manufacturing in Aerospace:  Opportunities and Challenges on the Road Ahead”

• Mr. Nicholas Mule, Director Boeing AM

“Digital Additive Manufacturing at Boeing: The Opportunities and Challenges towards achieving Quality at Scale”

• Mr. Barrie Finnin, CEO Amaero

“Additive Manufacturing of Aerospace Components”

• Doug McPherson, Engineering Manager Memko

“Challenges and Opportunities in the Certification of AM parts for Aviation”

• Mr. Dan Braley , Boeing Global Services AM

“The Future of Additive Manufacturing for Boeing Global Services”

Amaero on a big profile push with coverage on Share Cafe and Research as a Service resulting in a bump in the SP and a speeding ticket.

RAAS update gives a valuation of $0.85 fully diluted. Predicting July 25 as revenue start from Ti production. CY26 for profitability.

Key hires and capital funding arrangements coming

Making progress. Atomiser plant arrives in Port September 27 to be installed April 24 three months early and they have managed to squeeze it in to the existing building reducing fit out expense by $15M and rent by 30%. Now just need $12 M not $27 M.

What a shocker of a strategic revue. SP down 28%. US based private equity firm Pegasus Growth Capital takes over. Not focusing on 3d printing and not making Titanium powder in AU despite taking out a lease on a location. As a result, it is no longer anticipated that Amaero will become cash flow positive in CY2023. (after projecting 40M revenue)

In terms of the Company’s Fletcher Insulation, Rio Tinto and Boeing projects, these projects are continuing but are not anticipated to produce significant revenue in the near term.

As a result of the strategic review undertaken:

o Amaero will not proceed with the titanium powder manufacturing facility in Victoria, Australia

o The Board is taking active steps to pursue alternative opportunities for titanium powder production with Mr Holland exploring a number of opportunities in the Middle East over the past four weeks

o The Board has determined that Amaero’s operations will be primarily focused on titanium powder production

Hold a small parcel in RL not worth selling will hold and see if anything comes of the titanium powder production

Like musical chairs and now we are off to the US! Another pivot in search of subsidies. Cash flow positive in CY26. Not sure how long this will remain listed now. Investor briefing recording

Amaero Green Lights Flagship Titanium Project in the United States Tennessee Location Delivers Financial, Operational and Strategic Advantages. Accelerates Breakeven Operations by 12 months and Reduces Working Capital Need by $22 million.

Amaero will pursue US government funding and incentives that target re-shoring advanced manufacturing and critical materials supply chain

Amaero continues to have strong relationships in the UAE and will pursue “offset credit” funding for other strategic projects 

The “nearing completion” facility in Tennessee will reduce the required working capital for the same 3-year period to $56 million and we expect to be cash flow positive in 2026.

Amaero Announces Key Executive Hires for U.S. Leadership. Seem to be good names added to the team.

Amaero Chairman and CEO Hank J. Holland said: “Amaero is fortunate to have attracted some of the pioneering and leading minds in the industry just as the Company shifts its focus to operational execution and excellence. Attracting talent of this caliber to join Amaero at this exciting juncture is another important milestone for the Company. I’m confident that Eric Bono’s longstanding and industry leading experience, along with Fred Yolton’s renown as a pioneer in the industry, Dr. David Schmidt expertise and the collective skillsets of the rest of our existing team, will help Amaero deliver one of the most advanced titanium and specialty alloy powder manufacturing facilities in the world.”

Eric Bono brings extensive experience and relationships in powder metallurgy and additive/alternative manufacturing. Over the past 28 years, Eric has held leadership roles across technical and sales functions for various industry leaders, including 6K, Carpenter Technology, Puris, Summit Materials and Crucible Research. His education includes a Bachelor of Science and a Master of Science in Mechanical Engineering from University of Pittsburgh, and an MBA from Carnegie Mellon. As Amaero’s President and Chief Technical Officer, Eric will lead corporate strategy, project planning / management, process development and equipment procurement for the McDonald, Tennessee facility. Mr. Bono has been nominated to join the Board of Directors, subject to predicate regulatory approval.

Fred Yolton will lead Amaero’s powder metallurgy and materials engineering, including titanium and specialty alloy powder production and consolidated HIP manufacturing. He is a well-respected authority in these specialised industrial sectors. Fred pioneered the development and production of advanced powder metallurgy and invented the atomization process for producing titanium alloy powder. He has published over 50 peer-reviewed papers in the areas of powder metallurgy and advanced materials and is registered as an inventor or co-inventor on 12 patents. Mr. Yolton is a Fellow of ASM International. He received a Bachelor of Science in Metallurgical and Materials Engineering from the University of Pittsburgh.

Dr. David Schmidt will lead Amaero’s simulation-driven design and computational analysis efforts. Dr. Schmidt has over 20 years of invaluable industry experience across aerospace & defense, automotive and power generation. His expertise in blending simulation tools with traditional engineering design will aid Amaero’s alloy powder production, as well as its manufacturing of near net shape parts via consolidated hot isostatic pressing. Dr. Schmidt received a PhD in Computational Mechanics from Carnegie Mellon University and Bachelor of Science and Master of Science degrees in Civil Engineering from University of Pittsburgh.

First atomiser being dedicated to C103 Niobium alloy for Hypersonic applications closely tied to defence. Investor presentation and briefing tomorrow.

For the past nine months, Amaero has described the opportunity in alloy powder production as “titanium and specialty alloy powder;” yet, we have provided financial guidance based on solely producing titanium alloy powder. Based on the critical need for refractory alloy powders for hypersonic applications, we will now dedicate production of the first atomiser to C-103. The Niobium alloy’s high performance and heat-resistant properties are utilised in hypersonic and space applications. The determination of production priority and production mix is a direct response to the industry’s demand pull. The production of C-103 powder is expected to be beneficial to the Company. We look forward to updating investors and taking questions.”