C103 alloy qualification completed ahead of schedule and announcement of partner identity. This was expected but is a further derisking of the company's business plan.

Amaero Completes Qualification of Niobium C103 with ADDMAN

Amaero completes qualification of C103 AM powder to ADDMAN Group and its subsidiary Castheon’s technical specifications.

Positions Amaero as the largest capacity and most responsive U.S. domestic producer of C103, refractory and specialty alloy powder for additive manufacturing.

Amaero’s successful qualification of C103 AM powder triggers ADDMAN’s offtake obligation with 0.25 tonnes expected to ship in CY2024 and 2.0 tonnes expected to ship in CY2025.

The qualification commences a five year preferred supplier agreement whereby Amaero will be the primary supplier of C103, refractory and titanium alloy AM powder to ADDMAN Group and its subsidiaries, including Castheon and Keselowski Advanced Manufacturing. Expected future sales are material to Amaero’s revenue; moreover, the attributable revenue is a key assumption underpinning Amaero’s expectation that it will achieve EBITDA breakeven in FY2026. 

Investor presentation and financial guidance update. CR incoming. $12M in the bank and an estimate of $43M needed for FY25, $206M MC. SP has fallen back from near 50c highs to 35c and I would expect further falls following today's announcement.

Strategy built on subsidised electricity price, reshoring of manufacturing to the US, securing government grants and Defence contracts, focus on high-value C103 and Ti64, cost savings in additive manufacture for high-end products and successful testing of C103 powder which appears to be a longer time frame than expected.

Company estimates that capital expenditures over 3-year period of FY2024 to FY2026 to equal $71.5 million; prior estimate was $71.3 million. $7.4 million of expenditures budgeted for FY2024 have been deferred to FY2025. • Company estimates that EBITDA breakeven to be achieved in FY2026; prior estimate was CY2025.

Company now expects that EBITDA breakeven will be achieved in fiscal year 2026 (six months later). The estimate assumes that the company achieves qualification of C103 prior to end of 2 nd quarter of FY2025; moreover, the estimate attributes revenue to the offtake and preferred supplier agreement, to scaling production of 1st atomizer over calendar year 2025 and to commercial demand pertaining to isostatic powder pressing (IPP) manufactured components.

Only after qualification is achieved, counterparty is required to take 2.25 tonnes of Amaero’s C103 AM powder (expected in late CY2024 and CY2025) • If qualification is achieved, agreement will run five years with additional opportunities for further supply of AM powder (beyond the initial 2.25 tonnes)

C103 powder prices are ~20x greater than Ti-64 powder prices; Ti-64 prices are ~5x greater than stainless

The synergy of this high performance alloy with AM not only enhances the design and functionality of critical components but also provides cost savings and environmental benefits.”

Additive manufacturing can reduce traditional manufacturing buy-to-fly ratios of 40:1 for machining and 15:1 for forging to below 1.5:1 • Implementation of additive manufacturing results in significant design and manufacturing process efficiencies

Milestones

Ship C103 powder for testing

Achieve C103 qualification; disclose offtake and preferred supplier agreement counterparty

Order Atomizer #3

Commence commercial sales of C103, specialty and titanium alloy powder; manufacture developmental refractory alloys

Deliver multi-ton HIP-manufactured components and commence revenue scale

Commission Atomizer #2

Complete Phase 1, 2 and 3 improvements to Tennessee manufacturing and HQ facility

Secure 1st U.S. government grant and advance other grant opportunities

Advance collaboration with preferred supplier partner

Advance collaboration with U.S. DoD-funded labs

US ownership moves to 50% +if all options are taken up which opens up US govt grant options.

Held in SM and RL.

Atomiser Commissioning Completed Ahead of Schedule. Good to see things progressing ahead of schedule (original Jun30). You can see the strategic direction but it is such a shame that this tech couldn't have been kept in Australia considering some of the hypersonic testing has been done at Woomera.

Installation and testing of atomiser in accordance with technical specifications in Purchase Agreement have been completed and Acceptance Agreement has been duly executed.

Amaero’s technical and manufacturing team will commence proprietary modifications of the atomisation process and optimization of the operating parameters on 3 June.

Final commissioning of the atomiser is an important step toward C103 and specialty alloy powder production and toward the expected achievement of qualification.

“This is an important achievement for Amaero and an important step towards addressing gaps in the U.S. domestic supply chain. Given the importance of advancing priority hypersonic and strategic missile programs from development and demonstration phases to serial production as quickly as possible and the pressure to achieve material properties and performance criteria, additive manufacturing plays an important role. The insertion of additive manufacturing in high-temperature applications is enabled by improved resiliency, scalability and responsiveness of U.S. domestic production of C103 and specialty alloy powders. Amaero is committed to collaborating with the U.S. government, the Department of Defense, prime defence contractors and suppliers to address priority initiatives to reshore strategic industrial base capabilities.” 

Held in RL and SM

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

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 :-)