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PyroGenesis Inc T.PYR

Alternate Symbol(s):  PYRGF

PyroGenesis Inc., formerly PyroGenesis Canada Inc., is a Canada-based high-tech company. The Company is engaged in the design, development, manufacture and commercialization of advanced plasma processes and sustainable solutions which reduce greenhouse gases (GHG). The Company has created proprietary, patented and advanced plasma technologies that are used in four markets: iron ore palletization, aluminum, waste management, and additive manufacturing. It provides engineering and manufacturing expertise, contract research, as well as turnkey process equipment packages to the defense, metallurgical, mining, additive manufacturing (including 3D printing), oil and gas, and environmental industries. Its products and services include plasma atomized metal powders, aluminum and zinc dross recovery, waste management, plasma torches, and innovation/custom process development. It offers PUREVAP, which is a high purity metallurgical grade silicon and solar grade silicon from quartz.


TSX:PYR - Post by User

Bullboard Posts
Post by LastZazon Dec 03, 2020 11:04pm
351 Views
Post# 32034802

A few positive items/reminders to be considered..

A few positive items/reminders to be considered..

I'm sure some of these items have been considered or noted by various users/investors, but here's a few takeaways as I re-read some press releases. Feel free to share your thoughts if you may disagree or otherwise:

From press release 11/24/2020: "PyroGenesis Signs Initial Plasma Torch Contract with Major Iron Ore Producer"

Pyrogenesis is pleased to announce today that it has signed an initial plasma torch contract (the “Contract”) to provide one high powered (approx. 1MW) plasma torch with ancillary equipment (the “Torch”), with Client A (the “Client”), a major iron ore producer, for approx. $1.8MM. This does not include continued after-sale services, which was not the subject of these initial negotiations. It is expected that future sales with this Client will include a separate continued after-sale services agreement... The Client is a multi-billion-dollar international producer of iron ore pellets, one of the largest in the industry, whose name will remain confidential for competitive reasons. The Client, which has committed to reduce its greenhouse gas (“GHG”) emissions, has over ten (10) plants, each possibly requiring up to 50 plasma torches.

Item: 1: "It is expected that future sales with this Client (A) will include a separate continued after-sale services agreement... "

So what? This signals long term, recurring reliable revenues, seperate from torch sales or leasing as more plasma torches are adopted into use. More torch sales = more recurring revenues from service agreements.

Although I did read this on my first go over as I'm sure many of you did, I think this "after-sale services agreement went a little under the radar in my mind" as I was focused on the concept of "future sales" (woohoo!).  Presuming you share what I believe is a reasonable conclusion that additional torches will be ordered by Client A (the above press release alone indicates likelihood of future sales), so this not only means significant cashflows from future the outright sale or lease of torches - but also that of additional recurring revenue related to these service agreements. I imagine that this will likely be included in (and priced into) some lease agreements, but it did not quite register to me how this further opens to the door to consistent, forecastable and assured revenues assuming this iron ore giant continues to adopt this technology as I, and many others, believe it will based on the facts we know as of today. I believe this consideration is something that could be significant for the growing valuation of PYR going forward. Given the number of torches required if full adoption of the torches takes place, this means significant and ongoing revenues from service agreements as well.

Item 2: The significance of adoption by iron ore giants, and Pyrogenesis' advantage in the iron pellitization industry... 

Something to consider is that PYR has an edge in the iron ore pellitization industry through their owning the process patent to replace fossil fuel burners with their clean plasma torches. This gives PYR a significant advantage over possible competitors in this specific industry, on top of their already specialized and unique technology which is in itself difficult to recreate without years of testing and data. This means that for clients A, B, C PYR not only is the first to the table with this value offering, but uniquely positioned to be the only one to show up! This increases the likelihood of negotiations materalizing into significant deals.

Further, the initial contract with Client A is significant because not only does the client have a specific known need (mandated reduction of GHG emissions) but it signals this client is actively working with PYR to implement this technology and will likely implement a buying or leasing program to further adopt this tech. This is not like taking a car for a test drive. This is a process that Client A has invested in from the time spent negotiating, to the modelling contract to this $1.8m capital expenditure for 1 torch.  You don't just fill a plant with 50 plasma torches in one night in hopes that things will go smoothly. Client A and PYR both clearly understand the scope of the adoption of this tech and know that as Peter says "Slow is smooth and smooth is fast" - this is a search for cost and operational efficiencies, for pricing in unforeseen benefits on future contracts and to ultimately ensure future purchases and tech adoption goes smoothly.

I'm sure some of you were upset with the 1 torch deal, but it is a significant and extremely promising that PYR is where it is at today with Client A. As I said earlier, this deal is not performed for charity - this is a careful rollout of technology that this iron ore behemoth NEEDS. It is prudent and highly beneficial for both parties to work through a smaller order first. Refer to my previous posts today if you need further explanation as to why that is. The ultimate point here being that this isn't like a first date where you're testing the waters with someone new - this is far beyond that, and a purchase of 1 torch does not mean "maybe there won't be more purchases since I expected more". It means the exact opposite - that there will be future purchases and/or leases of more torches, as Client A and PYR are continuing to invest in one another and Client A is highly interested in PYR's value proposition and needs this kind of tech to reach their GHG reduction goals.

Now consider this crystal clear intention to do more business in context of Pyrogenesis' unique strategic position, as a patent holder of this process in the iron ore pellitization industry. There are few competitors, and Client A has already invested over $2 million in this process already, they do not intend to let it go to waste...


Item 3: The Positive Impact of Leasing (For impatient investors) and the other signals mentioned in that same press release

Benefits of Leasing:
- earning a higher margin over a longer time
- recurring and consistent cash flow
- Allowing clients with less CAPEX or cash available to buy and pay for your tech - effectively expanding your client base.

and last but not least - as per the press release - Move deals faster:

From Press Release 11/12/2020 "PyroGenesis Provides Update on its Iron Ore Pelletization Torch Business"

"At this stage, we see this [leasing] to be the fastest way to grow this business segment [plasma torch iron ore pellitization], and is a significant strategy-shift for the Company as it relates to this offering, and which we expect will play a key role in our position/ongoing discussions with clients"

This indicates to me that discussions between existing potential clients likely forced the lease play into their hands - perhaps client B or C did not have the cash available to purchase 4+ torches at once. And that leasing was the "Fastest" and most effective  solution to keep these negotiations and deals progressing into revenues. This signals two things to me: 

1) PYR is willing to change their strategy to ensure sales and quicker adoption of their tech. 


2) PYR does in fact wish to grow this segment of their business quickly in order to penetrate this market ASAP. They want these companies to adopt this technology right now because they know the significant of getting there first.

This may be a very nice thing to hear for some of the Sad Sally's i've seen out here who think this year wasn't quite good or fast enough yet for PYR. Don't worry - more deals are coming and so is more market penetration. Hope some of this was thought provoking or interesting to you investors. The stock price will take care of itself as PYR continues to deliver.

Take care and GLTA...

 

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