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Amaero Ltd (ASX:3DA) has seen shares jump just shy of +4% in morning trades as the refractory powder player inks a supply deal with US-based Velo3D.
Based on demand from Velo3D over the next 5 years, Amaero anticipates on netting $35M in revenues from the sale of C103 niobium powder, and, titanium powders. That’s first and foremost.
Also included in the deal are molybdenum, tantalum, tungsten and zirconium alloys; all of which have defence properties. Which is to say these materials, particularly Amaero’s niobium C103 alloys, go into the production of missile components.
“Velo3D will exclusively use Amaero’s C103, refractory alloy powders for all parts production,” Amaero wrote on Tuesday, adding: “Velo3D will exclusively offer Amaero’s C103, refractory and titanium alloy powders for sale to its 3D printing machine customers.”
While Amaero specialises in producing the feedstock materials needed for weapons design (and other aerospace applications,) you can probably guess what Velo3D’s bread and butter is: 3D printing.
To date, the potential $35M that Amaero expects to make is unlikely on its own to see the stock become a profitable company. Worth considering is that the relatively junior high-tech materials company already has a $23M loan to draw down from the Export-Import Bank of the United States.
At the same time, as Amaero sees it, Velo3D has until November to qualify its niobium and titanium powder products. If no such qualification arrives by December 1, Amaero is inclined to take business elsewhere – though, this would suggest Velo3D doesn’t like the quality of material it receives.
As far as Amaero CEO Hank Holland sees it, however, the company’s tapping into an obvious good thing – that being the intersection of Trump’s enthusiasm for defence, and, domestic US manufacturing.
3DA last traded at 26.5cps.
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