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Updating my Amaero price target/valuation based on their on their ASX Announcement released to the market on 27 March 2024 and their Investor Briefing Recording on 3rd April 2024.
Binding Offtake Agreement and Institutional Placement details below:
Amaero has entered into a binding offtake agreement for the supply of Niobium C103 AM powder. C103 is one of the leading metals used in propulsion and space exploration technologies because of its exceptional high-temperature strength.
The counterparty to the agreement is a leading and deeply resourced additive manufacturer of C103 and refractory alloys for the defense and space industries. The company has industry leading technical and applied research capabilities operating out of multiple locations in the United States, and collaborates with U.S. Department of Defense (“DoD”) funded laboratories, as well as prime defense contractors.
Under the terms of the agreement, the supply of the C103 AM powder is conditional on Amaero’s C103 AM powder being qualified to the counterparty’s specifications. There are no other material conditions precedent to the supply of the C103 AM powder. Amaero and the counterparty have agreed to collaborate throughout the qualification process, which Amaero expects will commence in the coming months.
Amaero has previously stated to the market that it expects to achieve breakeven operations in CY2025 and the revenue contribution from this agreement is reflected in the expected revenue mix. There are additional opportunities for further supply of C103 AM powder for the term of the agreement, however, there is no commitment from the counterparty to take a minimum amount of C103 AM powder.
If qualification of Amaero’s C103 AM powder is achieved, the agreement will run five (5) years. Either party may terminate the agreement for material breach by the other party, the insolvency of the other party or by mutual agreement.
Hank Holland, Amaero’s Chairman and CEO, said:
“This is a very important milestone for Amaero. Amaero aspires to be the largest U.S. domestic producer of C103 and specialty alloy AM powders and to be the most responsive, agile producer. In order for additive manufacturing to achieve its potential, it’s imperative that we stand up an alternative U.S. domestic supplier of C103 and specialty AM powder. Time is of the essence. There must be a sense of urgency to collaborate with and to assist DoD-funded laboratories and prime defence contractors to advance hypersonic and strategic missile programs from the development and demonstration phase to the production phase. The alignment and collaboration will be an important development for demonstrating manufacturing readiness and for advancing the insertion of additive manufacturing into the most strategic and most critical defence and space applications.”
Amaero has raised $20 million through the placement of the New Shares to eligible institutional investors.
Hank Holland, Amaero’s Chairman and CEO, commented:
“I’m pleased to share that we received bids from investors in excess of the Placement amount including cornerstone investments from a U.S.-based internationally respected mutual fund, a top tier Australian based global institutional asset manager and a leading Sydney-based investment management firm. As Amaero’s largest shareholder, I’ve often commented about the importance of attracting sophisticated, long-term shareholders to the registry and the addition of these institutional investors is an important affirmation of our progress. We have worked very hard over the past 18 months to re-position Amaero to be a valued and integral stakeholder in a generational opportunity – the re-shoring to the U.S. of critical industrial capabilities. In the coming months, the executive team will be relentlessly focused on commissioning the first atomizer in Tennessee and commencing powder production. Exciting days ahead.”
Amaero expects to use the proceeds of the Placement for general corporate purposes, including working capital, operating expenses and capital expenditures.
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
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
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 :
“Additive Manufacturing in Aerospace: Opportunities and Challenges on the Road Ahead”
“Digital Additive Manufacturing at Boeing: The Opportunities and Challenges towards achieving Quality at Scale”
“Additive Manufacturing of Aerospace Components”
“Challenges and Opportunities in the Certification of AM parts for Aviation”
“The Future of Additive Manufacturing for Boeing Global Services”
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 :-)