Pyrogenesis the company - a not so brief summary! (Update 1)[05-23-2020]
This is a modified version of the other day’s post on PyroGenesis’ many torch applications. I’ve made changes to the Iron ore pelletization section & a few others, added a section on Waste management, and fixed a couple of areas that came off as preachy, because that’s certainly not the feeling I wanted to convey. ************* [
TLDR warning, there’s a
lot of content below. Key bits are
bolded/
underligned …
Below is a comprehensive summary of PyroGenesis’ many torch applications, with some thoughts added in between. It's meant to be an aid to anyone who is new to this board or has had trouble following the company’s many developments over the last 2-3 years. I’ve posted links for much of what is written here, for easy reference.]
************* To the new investors, welcome to the board, and congratulations to those who have stuck with the company through thick and thin.
I haven’t been on this forum as long as most of you but
am already a huge fan of PyroGenesis… and after having researched their plasma technology and the markets they are breaking into, I am even more excited. There is just SO much potential revenue from the game-changing avenues that the company is pursuing!
PyroGenesis has turned its fortunes around in the last year. The
upside is now sky-high whereas
the risk in investing in the company has been significantly lessened, more so than at any time in the company’s history. This is because, first and foremost,
Drosrite is now. The company is going to
make around $20M in revenue alone this year ($25M over the first 18 months) from their Drosrite contract with Drosrite International. If you’re wondering what ‘
Drosrite’ is, see
Section 3 below.
Peter Pascali stated in the NR on June 3, 2019:
https://www.Pyrogenesis.com/wp-content/uploads/2019/09/PyroGenesis-Awarded-20M-Approx.-First-Year-Revenues-Contract-With-Over-35M-Subsequent-Years-Revenues.pdf “This is indeed a watershed moment in PyroGenesis’ history. It is the single largest contract that the Company has been awarded,” commented Mr. P. Peter Pascali, President and CEO of PyroGenesis. “With the revenues from this Contract, we do not foresee raising capital for working capital purposes in the foreseeable future as the Company, with this Contract, which is cash flow positive from the start, will be profitable.” Now is the PERFECT time to be invested in the company. Peter has reassured investors and the Drosrite deal money is coming in, meaning the company has been
significantly de-risked for the next two years at least. Even if no there are no further developments from what has already been announced this year,
2020 revenues will be at least 200% greater than any year in its history! That said, the chance of no further developments this year is
extremely low. PyroGenesis can now boast of a strategic partnership with
3 multi-Billion dollar entities (Japanese trading company - Drosrite tolling || Aubert & Duval - AM powders || US Navy - PAWDS). I’ll be going over these, along with several other plasma technology applications in the company’s pipeline.
1. US NAVY The US navy has for a long time been a reliable source of yearly revenue, and Peter mentioned that the
US Navy intends to purchase $12.5M for Plasma Arc Waste Disposal Systems (PAWDS) for 2 aircraft carriers. He has used the word
‘imminent’ in the past, so unless this project is straight up cancelled, it will eventually go through. The navy have also purchased Hazardous Waste Destruction equipment and may do so in the future.
https://www.Pyrogenesis.com/wp-content/uploads/2019/03/PyroGenesis-Announces-that-US-Navy-Moving-Forward-with-Two-Ship-Buy-12.5-Million-Dollar-Contract-Imminent.pdf 2. Aubert & Duval partnership (Europe) || PyroGenesisAdditive (AM powders) Aubert & Duval partnership PyroGenesis has the best
Additive Manufacturing (AM) (t
his term is used interchangeably with
3D printing) powder producing tech in the world in Plasma Atomization. Their production costs are among the cheapest in the industry, due to their
NexGen Plasma Automization System. Aubert & Duval (A&D) is a multi-billion-dollar, world leader in industrializing high-performance steel, super alloy, aluminum and titanium alloys for over a century, and a recognized supplier of metal powders of the AM industry. In 2019, the two parties signed a mutually exclusive partnership for A&D to supply PyroGenesis’ powders to the EU market.
Since this announcement, we have not heard much, and as Peter has recently stated,
the companies they deal with like to play their cards closer to their chest. France has been hit hard by COVID, but things are starting to settle down, so we should be hearing further from A&D soon.
https://www.Pyrogenesis.com/wp-content/uploads/2019/03/PyroGenesis-Signs-Mutually-Exclusive-Partnership-Agreement-with-Aubert-and-Duval-to-Supply-Plasma-Atomized-Titanium-Powder.pdf PyroGenesisAdditive (AM division) https://Pyrogenesisadditive.com/ PyroGenesisAdditive is PyroGenesis’ AM division, which now has its own website. They currently sell both Ti and Inconel powders for the AM and Metal Injection Molding (MIM) industries, but are likely to branch out into selling many more powders once the division takes off.
PyroGenesis management currently has plans to spin-off PyroGenesisAdditive, which will benefit both the PyroGenesis parent company and its shareholders.
Peter has said:
“The reason to spin-off PyroGenesis Additive is primarily to attract an investor base best suited to their unique value proposition, particular business operations, and financial characteristics, thereby maximizing shareholders’ value and placing it in a better position to generate revenues and develop strategic relationships than had it remained part of the PyroGenesis stable of technologies.” The spinoff will also help the parent company, PYR, focus on enhancing the value of its existing portfolio of offerings (US military waste-treatment systems, land-waste treatment systems, Drosrite equipment sales, PUREVAP) and fully realizing the burgeoning number of new revenue streams, like Drosrite tolling, Torches for the iron, steel, metallurgy and perhaps Cement industry, Tunneling, etc.
Over the next few years, PyroGenesisAdditive is likely to steal a significant portion of GE additive’s Ti powder sales in Europe (AP&C is PYR’s biggest competitor in high-end Ti powder sales, they were acquired by GE through Arcam). They are also bound to snag a portion of the total Ti, Inconel & other powder (Ni/Al/etc.) international market,
and even if this portion is a very small (let’s say SUPER-conservatively 3-5% small) fraction of the total AM powder sales this is a nine-figure number by ~2024. https://www.aerospacemanufacturinganddesign.com/article/additive-manufacturing-metal-powder/ That doesn’t even take into consideration powders for
(MIM), thermal coating, etc. The potential is just astronomical!
3. DROSRITETM (Saudi deal + Japanese tolling partnership + Equipment sales) DROSRITE™ PyroGenesis’ DROSRITE™ system is a proven, salt-free, cost-effective, sustainable process for maximizing metal recovery from dross, a waste generated in the metallurgical industry.
https://www.Pyrogenesis.com/wp-content/uploads/2019/09/2012-09-Drosrite-Plus-COM-2012-Paper.pdf The above is a paper describing PyroGenesis’ patented DROSRITE
TM process, in which the savings of using their system over presently used industrial treatment processes are indicated to be about
$191 and $418 per MT of aluminum and zinc dross, respectively.
Drosrite video from PyroGenesis:
https://youtu.be/72dPyULE3wc DROSRITE™ deal with Drosrite International and partner Radian Oil & Gas As mentioned earlier, the biggest reason for PyroGenesis’ turnaround, is that they snagged a Drosrite contract with
a total value of $55 million [$25M over first 12 months + $35M distributed over subsequent years]. The deal was signed with Drosrite International, who are partnered with Radian Oil & Gas Services in Saudi Arabia to provide dross treatment services. Now that they’ve made such a big sale, this will naturally draw the eyes of other big players in the aluminum industry who deal with dross. Zinc & Copper dross is next in line.
https://www.PyroGenesis.com/wp-content/uploads/2020/01/2020-03-24-PyroGenesis-Announces-Receipt-of-First-Payment-Towards-25M-DROSRITETM-Contract.pdf PyroGenesis provides the option to clients to
either buy their DROSITE equipment or pay for dross tolling services. A tolling service arrangement is one in which a smelter provides dross to PyroGenesis to be processed for a fee either on or off site – a turnkey solution for smelters.
Japanese Trading House – Tolling partnership Even more exciting than the DROSRITE deal in Saudi, in my opinion, is the partnership with a multi-Billion-dollar Japanese international trading house, which
opens a recurring revenue market of > $1B in tolling of Aluminum/Zinc/Copper smelter dross! (see link below).
https://www.PyroGenesis.com/wp-content/uploads/2018/11/PyroGenesis-Announces-Signing-with-Japanese-Multi-Billion-Dollar-Corporation-to-Jointly-Toll-with-DROSRITE%E2%84%A2-1.pdf There are 7 multi-billion-dollar Japanese trading houses in Japan, each having thousands/tens of thousands of employees, and the ability to mobilize an international sales force that a small company like PyroGenesis could only dream of. (I will speculate here but I believe the company is
Sojitz; the assets, profit, business with aluminum smelters, and even the 400 subsidary/affiliate description fits)
https://www.pyrogenesis.com/wp-content/uploads/2019/03/PyroGenesis-Signs-Pre-Tolling-Agreement-with-Major-Aluminum-Smelter-in-the-Middle-East.pdf In the same March 2019 NR (linked above) discussing the Agreement with then un-named Drosrite International & Radian, in a March 2019 NR (linked above), Mr. P. Peter Pascali stated:
“In addition to this latest Agreement, we are actively pursuing other tolling arrangements through our new, multi-billion-dollar global partner headquartered in Japan, which we announced in November, 2018. Our business development team, together with our Japanese partner’s upper management, recently returned from our first series of on-site customer visits,
all of whom requested moving forward to the next step. This contract, along with other discussions we are having with various players worldwide,
should enable us, together with our Japanese partner, to provide a cookie-cutter offering, and rapidly roll out our on-site tolling business worldwide.”
Further to this previous statement, the following comment from Peter deserves repeating, because it explains the lag on the Drosrite Tolling front: “
our focus recently was ensuring the transaction with Drosrite International was a success” and “it is safe to assume we are moving forward on projects (with the Japanese tolling company) together”.
[As many on this board have stated, some of these new revenue streams
alone have the significance to turn PyroGenesis into a blue-chip company. Along with the metal powders business, the Drosrite tolling, PUREVAP and high-powered plasma torches are HUGE, like 9-10-digit huge, potential money-makers.]
4. HPQ PUREVAP PyroGenesis in 2016 received an $8.26M contract to provide HPQ Silicon Resources (Ticker: HPQ.V) with a
PUREVAP pilot system, aimed at producing silicon metal directly from Quartz. HPQ is expecting to finalize commissioning and testing of their
Gen3 PUREVAP reactor
this year, and to confirm the key working hypothesis of their Gen1 model’s theoretical calculations, this time at commercial scale. This will lead to big inquiries from big players in silicon metal and solar grade silicon (SoG Si) metal industries. They expect to confirm that their
PUREVAP process can transform Quartz to SoG Si with significant reductions in CAPEX (60% less than China and 80% than rest of the world) and OPEX (30% less than China and 60% ROW), as well as
reduce the carbon footprint of the process by 96%.
That’s an enormous cost advantage over the competition, and the market for SoG Si is expected to go from
US $7.1B in 2018 to 11.8B in 2028.
Corporate update:
https://hpqsilicon.com/wp-content/uploads/2019/03/HPQ-JAN-24-2019-Corporate-Update-Release-Ver_CL6F.pdf Corporate presentation:
https://www.hpqsilicon.com/wp-content/uploads/2019/03/HPQ-NEW-PDAC-DECK-MARCH-2019_V2_02_03_19.pdf (Feb 2019)
HPQ has stated:
The focus of HPQ is to become the lowest cost producer of Silicon Metal (Si), High Purity Silicon Metal (Si), Spherical Si nano-powders and silicon-based composites for next-generation lithium-ion batteries (PUREVAP SiNR), Porous Silicon Wafers for Solid states batteries and Porous Silicon Powders for Li-ion batteries. Perhaps you’re wondering, what will PYR get out of this long-standing partnership on PUREVAP development?
PYR will receive royalties representing 10% of HPQ’s revenues. They’ll make revenue from sales of PUREVAP reactors.
They also happen to own 10% of HPQ’s shares. If all pans out on the Gen3 PUREVAP Si commercialization results, and they can snag
even a small percentage like 10% of the SoG Si market (I’m being
conservative here, because I haven’t delved deeply into competing technologies & companies working on reducing SoG Si cost), that’s $1.8B in 2028 and
PyroGenesis would get $180M+ per year + their shares of HPQ will have skyrocketed (and surely they’ll buy more once the tests succeed).
5. HIGH-POWERED TORCHES (~1 MW+) (Iron pellet/Steel/Metallurgy/Cement industry/etc.) PyroGenesis has traditionally been a manufacturer of torches between 10-550 kW, to suit the needs of their main lines of business. Within the last few years, they have developed the capacity in-house to design and manufacture ~1 MW range plasma torches, and early in 2019 they announced their intention to address this market. The recent news discussing the replacement of fossil-fuel burners in an Iron pelletization Client’s induration furnaces, with PyroGenesis plasma torches, is the
first big leap into this market! ($10B+ for Iron Pellet market alone – and this particular client is one of the biggest in the industry! Vale and LKAB are names that have been discussed).
The high-powered torches (~1 MW) for this application will generate up to $3M-4M in revenue for PyroGenesis. In the case of this Iron pellet producer, who needs
~50 torches per plant x $3M-4M per torch, adds up to $150M+ revenue per plant. And the Client has > 10 plants! Total value of potential contract(s) with this ONE Client could line be up to $1.5B++ in the long run! (One thing to keep in mind, Profit margin on their torches is 35-50% I believe, and this number stands to increase with economies of scale) The following is taken from Peter’s answer a question on Agoracom about industries they are targeting for burner replacement:
“As you might imagine, there are quite a few industries we are targeting, but I do not want to identify specific ones just yet. Suffice it to say that we are finding it a bit challenging to keep up with the inquires coming in the door as a result of our recent announcements/success (with RISE).” https://agoracom.com/ir/PyroGenesisCanada/forums/discussion/topics/740783-torches-for-burner-replacement/messages/2267764#message Peter’s words, not mine
. Elsewhere, he has stated that
they are hearing from the Iron Ore Pellet producers / Steel producers / Metallurgical industry / Cement industry / etc!
Another interesting tidbit here, regarding potential torch competition, in Peter’s words: “[Plasma torch competitors]
would need to obtain a license from us as our patent has pretty much prevented anyone from using torches in induration furnaces.” (induration is the process the where the magnetite in iron pellets are oxidized into hematite).
https://agoracom.com/ir/PyroGenesisCanada/forums/discussion/topics/740540-torch-competition/messages/2267431#message From PyroGenesis’ April 30 2020 NR, on modeling results for a large Iron Ore pelletization company: This all important First Phase demonstrated that replacing fossil fuel burners with PyroGenesis’ proprietary plasma torch (i) has absolutely no ancillary detrimental effects anywhere in the process or with the furnaces, (ii) results in significant greenhouse gas reduction while at the same time, (iii) projecting significant cost savings. All this interest is from producers that use natural gas and heavy fuel oil burners and want alternatives to help them meet greenhouse gas reduction targets/policies. We find that the proposition to reduce greenhouse gases emissions, and avoid carbon taxes, with a simple bolt-on replacement of their current environmentally damaging fossil fuel burners, is too compelling to resist. That, combined with the environmental pressure these industries are currently under (only recently a new trend has emerged where financial institutions are tying credit facilities and debt issuances to carbon reduction targets for multi-national industrial and mining conglomerates), has generated a wave of interest and proposals.” All modeling phases for this Client are expected to be completed by end of Q2. Here are links to news/Interviews on the Iron Ore Pelletizing deal: -Recent NR confirming
final stages of negotiation over supply of Torches to Iron Ore Pelletizing company:
https://www.globenewswire.com/news-release/2020/05/19/2035937/0/en/PyroGenesis-Enters-Negotiations-for-Supply-of-Equipment-with-Iron-Ore-Pelletization-Modeling-Client.html -Recent NR where first phase of Torch modeling for the Iron Ore Pelletizing company was confirmed, along with a statement of potential Torch numbers and revenue:
https://www.PyroGenesis.com/wp-content/uploads/2020/04/2020-04-30-PyroGenesis-Successfully-Completes-First-Phase-of-Torch-Modelling-Geared-to-Reducing-Greenhouse-Gases-for-Major-Iron-Ore-Pelletization-Client.pdf -Proactive Video interview with Peter Pascali discussing this topic:
https://youtu.be/fb7iYkZHQBs 6. TUNNELING TORCHES PYR already signed an exclusivity agreement with this mysterious
US tunneling company and has already received $1M in the first few months. I posted my thoughts on this recently:
https://stockhouse.com/companies/bullboard/v.pyr/PyroGenesis-canada-inc?postid=31043504 Little clarification here,
the commitment of the Client to purchase exclusively from PyroGenesis, and vice-versa on supply, hinges ‘Upon success’ of the project. So there is a risk that the project does not pan out and sales dry up from this avenue, however let’s think positively. Once the project is deemed a success, and the exclusivity kicks in, I believe we’ll get a NR telling us who it really is.
Whether this deal is with
Elon Musk’s ‘
The Boring Company’, Robbins, Akkerman or another US company that deals with Tunnel Boring Machines (TBMs), if it succeeds, that’s another recurring revenue stream. I’m hoping it is The Boring Company for two reasons. 1) Because Elon Musk! 2) At the rate they are innovating TBM technology, it’s highly likely that other than building TBMs for Loop & Hyperloop, The Boring Company starts selling their TBMs elsewhere and take significant market share for traditional tunneling applications, leading to more torch sales.
7. WASTE MANAGEMENT Last but not least, Waste management has been PyroGenesis’ main plasma application throughout the company’s history. The Plasma Arc Waste Disposal System (PAWDS) is what PyroGenesis typically sells to the U.S Navy and has sold to many other clients. They make them for both land-based and sea-based applications. This will continue to be a driver of revenue going forward.
Other Waste Management equipment/services (with links to PyroGenesis’ website):
Waste-to-Energy (PRRS)
https://www.PyroGenesis.com/products-services/waste-management/prrs-2/ Refrigerant Destruction (SPARC):
https://www.PyroGenesis.com/products-services/waste management/sparc/ Hazardous Waste Destruction (PACWADS) :
https://www.PyroGenesis.com/products-services/waste-management/pacwads/ Vitrification (PAGV):
https://www.PyroGenesis.com/products-services/waste-management/pagv/ ************* At this point, PyroGenesis management would have to
actively mismanage the company in order for ALL of these prospective revenue streams to fail. I believe in the management team, and don’t think they will. 2018 was a big turnaround point in the company’s direction; what you’re seeing are the choices management made finally bearing fruit.
In addition, for those interested in other plans the company has to create shareholder value moving forward:
https://www.PyroGenesis.com/wp-content/uploads/2019/05/PR-PyroGenesis-Board-Approves-PyroGenesis-Additives-Spin-Off-Uplisting-Stock-to-More-Senior-Exchange_final.pdf -Uplisting to a more senior exchange (e.g. TSX or Nasdaq vs TSX-V (venture))
-PyroGenesisAdditive Spinoff
-Share buybacks
I tried to pack as much relevant detail as I could on all facets of the company’s technology offerings, but for those who want to delve further, there is plenty of interesting material in the posts and links that many have brought up on this board, as well as in the ‘News Releases’ section of PyroGenesis website, and HPQ’s ‘PUREVAP Project milestones document’ prepared in 2019:
https://www.PyroGenesis.com/releases/ https://hpqsilicon.com/wp-content/uploads/2019/03/HPQ-JAN-24-2019-Corporate-Update-Release-Ver_CL6F.pdf (Nice sumnmary of benefits of using Torches Iron ore pelletization by developbc):
https://stockhouse.com/companies/bullboard/v.pyr/PyroGenesis-canada-inc?postid=30991925 (Nice summary of 2019 HPQ developments by Topseeker):
https://stockhouse.com/companies/bullboard/v.pyr/PyroGenesis-canada-inc?postid=31014837 Peter also has a very active presence on the PyroGenesis forum on Agoracom, both replying to questions from investors and doing interviews with the Agoracom staff. In fact, several of the comments I quoted Peter on were taken from his answers on Agoracom. The interview videos are available on Youtube/Agoracom for those who are interested.
************* To conclude: In the last two years, what management has done would be impressive in any company,
but for a small-cap like PyroGenesis it is nothing short of spectacular. They secured two partnerships with multi-billion-dollar companies. They locked onto several exciting new markets for their products. Now that money from their $55M Drosrite deal in Saudi Arabia is pouring in, management can focus on unlocking the potential from all these revenue streams. I tend to take a conservative approach when putting out numbers … keep in mind that PyroGenesis has the ability to gain a
far greater share than 10% in all of these applications, such is the strength of their plasma expertise (almost 30 years in business and
40+ patents!!) and technical gap with the competition. Sooner rather than later,
the company will be moving into profitability and beyond.
The world and industry at large is just now starting to realize the staggering value to be unlocked within the field of plasma technology. Every year new uses are being discovered. And PyroGenesis is the company best positioned to lead the way forward.
Buckle up your seatbelts and get ready for takeoff!
https://www.youtube.com/watch?v=rnKbImRPhTE Good luck to all, and congratulations for making it this far :P
MazerRR